There is a silent kirana revolution happening in India: Marico MD & CEO

In an interview with Viveat Susan Pinto, Saugata Gupta responds to questions regarding competitive intensity in honey, overall consumer confidence and the way ahead for the market

Consumer goods major Marico has navigated the pandemic successfully over the last 15 months, tapping into emerging trends and launching products fast. In an interview with Viveat Susan Pinto, company managing director (MD) and chief executive officer (CEO) Saugata Gupta responds to questions regarding competitive intensity in honey, overall consumer confidence and the way ahead for the market. Edited excerpts:
 

Dabur has taken Marico to court over the packaging of Saffola Honey. Were you prepared for this kind of action when you entered the category?
 

Our job is to win the hearts of consumers and we will continue to do it in a focused manner. Our market share in e-commerce and modern trade within honey tells us that we are on the right track and we will not get distracted by what is happening otherwise.
 

The penetration of packaged foods in India is very low. At the same time, food is more localised than personal care. So, there is room for all to grow. We are looking at those segments of the market where the tailwinds for growth are significant, such as honey, soya nuggets and noodles. In oats, for instance, we took a western breakfast concept and turned it into a savoury product, which could be served hot and between meals. It clicked. Similarly, in noodles, we have a differentiated offering.

Our noodles are round-shaped. In honey, we are speaking of purity, which is important. These actions are working. Our revenue run rate of Rs 100 crore in honey is visible to us. We see it happening.
 

At an overall level, we have crossed Rs 300 crore in foods and should achieve our target of Rs 450-500 crore this financial year.
 

As you get aspirational in foods, you will also have to contend with the well-entrenched, global players. Will that be easy?

Nothing will be easy. But we have to stay focused and win in the marketplace. Our job is to deliver the best product to the consumer and we will continue doing it.
 

Kiranas were hit harder in the second wave of Covid-19, compared to the first wave. What are you doing to help them?

We’ve focused on making life simpler for our traditional trade partners. We have helped reduce their stock levels, while investing in automation and digitisation of stores. We are also helping our distributors with automation.
 

Contrary to what many said about the death of kiranas with the growth of online distribution, traditional trade has been remarkably agile. There’s a silent kirana revolution happening in India. During Covid, we have seen consumers turn to kiranas for their needs. Also, there has been a smart recovery among kiranas despite challenges of the second wave. It will remain an important channel for companies.
 

When is consumer confidence expected to kick back?
 

The impact of the first and second waves of Covid-19 on people has been different. The personal loss for people across socio-economic classes, including those in the middle and upper-middle classes, has been significant in the second wave versus the first wave.
 

While the share of categories such as healthcare, immunity and insurance will be more in the wake of the pandemic, I don't see revenge consumption happening any time soon. It will take time to set in. Much will depend on the pace of vaccination and Covid-appropriate behaviour of people.
 

What are the trends you are seeing in fast-moving consumer goods (FMCG)?
 

Items of daily consumption will come back to their original runway of growth. However, discretionary and out-of-home categories will take time to get back on to the growth path.
 

While the supply chain continues to operate in the second wave for fast-moving consumer goods, unlike in the first wave, when there was a national lockdown, there have been other challenges to deal with. This included a shortage of beds and medical supplies.
 

Overall, the second wave was bigger than the first one and the loss for many was more than the first wave.
 

I see companies prepared for the third wave. The processes to manage distribution and production of FMCG products during a pandemic are in place. If the pace of vaccinations continues to grow, it could help avert a third wave.
 

Will larger players continue to gain market share from smaller players? Won’t the situation change as things normalise?
 

Larger players, with direct distribution, will gain when there is an impact on category growth due to a crisis.

They have resilient supply chains and can put alternative distribution models in place when there is a disruption in the marketplace.
 

Smaller players are constrained in that sense. They could also face working capital challenges, which may take time to resolve.

Larger players have an advantage.