bl interview. The worst of commodity-linked inflation and volatility is over: Marico’s Saugata Gupta

Rural consumption has been stressed for the last 3-4 quarters. High food inflation led to tightening of spending and downtrading in the FMCG sector, especially in the home and personal care categories. I think broadly the commodity-led inflation is moderating, and there are signs of rural slowdown bottoming out. So, there are expectations that with the food inflation easing, consumers will have more disposable incomes to spend on HPC categories driving higher consumption. One will also see brands passing on some of the benefits of moderation in inflation to consumers. In certain cases, there will be price cuts and in certain cases, grammage cuts will get reversed. We have also dropped prices for both Saffola and Parachute and, if there is further softening, we will keep on passing the benefits to the consumers.

So, I think the worst is over and we will see a gradual recovery. I am pretty hopeful as we move towards the next 2-3 quarters, we will see a reversal in the decline.

Urban consumption trends are good. During the pandemic, there was a significant movement towards e-commerce and general trade, while modern trade was impacted. But now, modern trade is coming back, while e-commerce continues to grow at a healthy rate. The other thing that happened in urban regions was that some of the discretionary categories, which were closely linked to people going out, experienced a fall during the pandemic. But they have now come back. So as a result, overall urban growth, especially in food remains robust.

Given the Government’s focus on growth, investments in infrastructure and employment generation through various schemes, such as PLI, we are extremely positive that India is a standout story and the Indian economy continues to be robust. One must understand that some have been impacted due to the slowdown in western countries. In the case of some sectors, such as start-ups, there was far too much easy money and there is now a little bit of rationalisation happening.

The premium personal care portfolio is back to pre-pandemic levels. We expect our digital-first brands portfolio to exit FY23 with an ARR of ₹250 crore. In terms of our food portfolio, we aim to get to ₹850-1000 crore of revenues by FY 24, and we are on track to achieve that. If we have to grow in double digits in terms of turnover, it is extremely critical that our digital-first portfolio, food portfolio, and premium personal care continue to grow at 20 per cent plus.

We will launch some new categories. Broadly, we are playing in 3-4 categories of healthy snacking, breakfast, in-between meals, and immunity with honey. We recently entered the ready-to-eat category with Saffola Munchiez offering ragi chips and roasted makhanas. So we have managed to expand the total addressable market and transitioned Saffola as a “better-for-you” brand for healthy living. We are also looking at exploring millets. With launches, such as Soya bhurji, plant-based protein is another vector that we are driving.

As far as inorganic strategies are concerned, we will primarily continue to focus on digital brands. We are also open to inorganic opportunities in foods and tuck-in acquisitions in international business. But we are not interested in commodity-linked spaces as we want to focus on value-added and profitable portfolios with higher operating margins.

Our international business has been extremely resilient. Obviously, in markets, such as Bangladesh, Egypt and South Africa, there have been challenges of inflation and currency depreciation. But we have been organically growing our business. In the last couple of years, we have made strong strides in building robust businesses in Bangladesh and Vietnam, and now we are doing the same in the Middle East and North Africa.

We will continue to make prudent investments but we won’t go for some deal just because something is available for cheap. We look for founders that have a cultural fit and who want to “build to last” rather than “build to sell” and we are seen as preferred strategic partner to do that.