Marico raises focus on digital brands, eyes more acquisitions after Beardo

Firm has seen share of its e-commerce sales within domestic FMCG business rise to 8% from 5% in one year, thanks to the restricted lifestyle of people

Consumer goods major Marico intends to continue investing in digital brands after tasting success with the acquisition of Beardo in the men's grooming category. In the June quarter, Marico acquired the remaining 55 per cent shareholding in Zed Lifestyle, Beardo's parent firm, after first picking up a 45 per cent stake in the company three years ago.

The men's grooming category, according to experts, has grown over three times in the last four years to touch Rs 10,000 crore, led by a number of start-ups. Marico's rivals such as Emami, Wipro Consumer Care and Colgate-Palmolive have already picked up minority stakes in firms such as The Man Company, Ustraa and Bombay Shaving Company, respectively, to increase their digital presence in the category.

Saugata Gupta, managing director and chief executive officer, Marico, said that digital brands were a good route to grow and getting into strategic investments of entrepreneur-driven brands was something the company was exploring.

"We will continue to look at digital brands from an acquisitions perspective. Investing behind entrepreneur-driven brands is great from both a learning as well as a growth point of view," Gupta said in an interaction with Business Standard.

Areas the company had identified for acquisitions especially in the digital space include segments such as hair care, skin care, male grooming, healthy foods and nutraceuticals.

Digital has increasingly become a key pillar for most fast-moving consumer goods (FMCG) companies after the Covid-19 pandemic accelerated adoption of online habits in the lives of consumers.

 

Marico has seen the share of its e-commerce sales within its domestic FMCG business increase to eight per cent from five per cent in one year, thanks to the restricted lifestyle of people, triggered by the pandemic, which has forced many to depend on online channels or neighbourhood stores for their grocery and other requirements.

About 77-78 per cent of Marico's overall topline comes from India, while 22-23 per cent comes from international markets.

A recent report by Avendus Capital estimates that the share of e-commerce for FMCG companies could get into double-digits in the next three to four years as online adoption grows steadily. 
 

The report says that online will be India’s organised retail in the next few years and that consumer-facing businesses would have to think digital-first to survive the new normal. Direct-to-consumer brands, it said, would become an important part of the portfolio of companies, implying that investments would have to be made now to take advantage of the trend.
 

Gupta says that Marico would continue to offer differentiated products using the digital channel as it sought to tap into the online momentum.

During the pandemic, Marico had launched a slew of new products including sanitisers (under the Mediker brand), honey and immunity-boosters (under the Saffola brand) and fruit and veggie cleaners on e-commerce platforms as well as the company's new direct-to-consumer platform.

Gupta says that the company proposes to keep up the pace of digital-first launches and is looking to scale up its direct-to-consumer platform in the months ahead.