Volume growth improving with most firms' sequential improvement: Marico CEO

Marico sees stable consumption, margin recovery and strong foods growth, with CEO Saugata Gupta bullish on premiumisation and the 4700 BC acquisition

Marico expects consumption trends to remain stable. In a virtual interview, Saugata Gupta, the managing director and chief executive officer of Marico, talks about the company’s plans on its latest acquisition and its margin improvement with Sharleen D’Souza. Edited excerpts:

 

Do you expect urban and rural demand momentum to sustain and till when? 

Budget tax reliefs and GST rationali­sa­tion have made FMCG products signifi­ca­ntly more affordable across categories, providing a strong tailwind to consum­p­tion. Volume growths are improving with most companies reporting sequential improvement — a momentum that is well positioned to sustain into the coming year. 

Consumption trends remain stable. Rural demand has expanded steadily for the last 3-4 quarters, while urban growth is accelerating at the premium end of the market. Notably, digital-first and D2C brands are seeing strong traction, a trend that is not yet fully captured by traditional retail panels. Overall, the FMCG consumption outlook looks solid and closely aligned with India’s broader economic momentum.

 

How do you expect margin recovery to play out for Marico? 

Barring any black swan input cost sho­cks, sector margins are poised for a healthy recovery. After prolonged high inflation, we at Marico see scope for a 150–200 basis points expansion, delivering mid-teens bottom-line growth as our base case in the next financial year. Margin growth next year will be driven by three key vectors. First, eas­ing raw material costs will naturally boost profitability across core operations. Second, our high-margin premium portfolio is pos­it­ioned to deliver double-digit growth, further accelerating the premiumisation trend. Third, our Foods and Digital businesses are expected to drive strong revenue growth while maintaining a sharp focus on disciplined and sustained profitability.

 

Do we see any pricing changes in the coming quarters? 

We continue to closely track commodity trends through the peak season and will take calibrated prici­ng actions where necessary. Even factoring this in, a significant margin expansion remains firmly on track. 

The foods portfolio is a key category for growth for the company, how do you see the growth levels panning out in the portfolio? 

In our foods portfolio, our ambition is to deliver a 20-25 per cent annual growth over the next few years.

 

Marico recently entered into an agreement to acquire 4700 BC, how will this acquisition play out? 

Our acquisition approach remains disc­iplined — highly selective and strategic. We pursue only those adjacencies wh­ere we have a clear right to win, rather than being gui­ded solely by market size or near term attractiv­e­ness. Our foods portfolio has been anchored in hea­lth and wellness. The acqu­i­sition of 4700 BC fits perf­ectly in our portfolio as a premium, ‘better-for-you’ gourmet snacking brand, that is well-posit­i­o­ned to benefit from the rising in-home consum­ption, driven by OTT-led viewing and evolving snacking habits. 4700 BC brings strong brand equity and premium margins and will meaning­fully benefit from Marico’s ecosystem in terms of sourcing, backend efficiencies, and distribution. Leveraging these advantages, we are confident of scaling the brand to ₹500 crore in reven­ues over the next three years, while stre­ngthening our presence in premium foods. 

At a time when companies are witnessing growth in alternate distribution channels, you’ve launched Project Setu to push for general trade, what is the objective behind this? 

We believe that the direct distribution strength and General Trade networks of large FMCG companies remain a long-term competitive advantage. The rise of digital brands and lowered organised trade entry barriers have not diminished GT’s importa­nce. In a market like India, where GT supp­orts large-scale employment, its role will sustain alongside modern channels. This is very much an “and” growth opportunity, not an “or” choice. While organised trade is a channel that supports premiumisation and innovation prototy­ping, we consistently remain disciplined in avoiding what we des­cribe as ‘steroid-based’ volume growth — growth that is margin dilutive and unsust­a­inable. From a profitability standpoint, GT channel continues to outperform and rem­ain superior. We’re investing heavily across sup­ply chain, technology, and retailer sup­port programmes to further strengthen the GT ecosystem. Despite the stress in this ch­annel, we have delivered growth in GT this quarter. Project Setu is a multi-phase pro­gr­amme, with Phase 1 already delivering ben­efits. Phases 2 and 3 are underway and are ex­pected to further enhance execution efficiency.

 

How do you expect the international portfolio to perform in the coming quarters?  

For our international portfolio, as a base case, we expect mid-teens constant currency growth, and we remain confident in delivering that growth. The business has demonstrated strong resilience. Over the last couple of years, we have invested heavily in the right portfolio, go-to-market strategy, cost structure, talent, and operating processes, supported by empowered, localised leadership across markets, which has been a key differentiator. Even during multiple external disruptions, we have steadily reduced country and portfolio concentration risks. This includes launching shampoos across markets, introducing body care in select regions, and seeing robust e-commerce growth. Importantly, our international business has remained consistently profitable throughout this period. With these structural levers firmly in place, we expect the current momentum to continue over the next couple of years.