In a strategic move, Godrej Consumer Products Ltd (GCPL) has launched world’s lowest-cost Iiquid mosquito repellent device and no-gas spray. In an interaction, Sudhir Sitapati, MD & CEO, spoke about expectations of a revival in rural demand and India faring well in post-Covid consumption trends. Excerpts:

Q

Are you seeing green shoots when it comes to rural demand? 

There has definitely been a problem in terms of impact on consumption post-Covid among low income consumers, who have variable income, for some time. Its not just a rural problem, its also an urban poor problem as economically they are taking some time to recuperate.

But the good thing is in many ways, India is faring better than other countries. Small countries such as Sri Lanka and Chile (where we have our businesses) are having a much tougher time. But I hope that the recovery will happen in the next few months.

Q

What is the key strategy behind the launch of the two innovations in the household insecticides segment?

In FMCG, many categories have now achieved universal penetration driven by low unit packs. But household insecticides is one category which has not seen low unit packs. So our focus is on finding ways to democratise the category. We have seen that every time you bridge a price point in terms of accessibility, large number of new consumers enter the category. So our focus is on category development which is the big driver for us in households insecticides business.

For the last five years, the household insecticides business as a category has not done well for us. I feel these innovations will certainly change the fortunes of household insecticide segment not just for us but for the industry as a whole. A lot of households in India still use cheap illegal incense sticks which are not safe. Only a quarter of Indians use the electric vaporiser format and less than 10 per cent use mosquito repellent sprays. There is a huge potential to grow this category penetration.

Q

What will be the distribution strategy for the mosquito-repellent device and refill combo as well as the spray, which are priced at ₹50?

Fortunately, we have a large soaps and hair colour business which gives us a deep rural distribution reach. But there are lots of outlets that still don’t stock up on vapouriser machines and sprays. So we are hoping for a pretty dramatic improvement in distribution of the category. Rural will be a key focus of these products.

Q

Are you seeing inflationary pressures cooling off or will you need to take more price hikes to maintain margins? Do you expect better volume growth?

In the last three-four months, costs of commodities have fallen sharply. They are still higher in comparison to a few years ago. But compared to the peaks seen in March-April, there has been a significant deflation. So I certainly don’t see further price hikes in the short to medium term, unless commodity situation changes dramatically. I see price drops in categories such as soaps. In fact, we have taken a round of price reduction in soaps very recently.

Volumes are under pressure due to two reasons — post-Covid effect on consumption and hyper-inflation. Now that the hyper-inflationary scenario has cooled off, we expect to see better volumes. If we also see revival in consumption momentum, which it should, we should see brighter times ahead... over the next 9-12 months.

Q

Are you continuing to see strong growth in e-commerce channel?

E-commerce is doing really well, especially quick commerce. Probably e-commerce is not growing as fast as it was in Covid but it’s still growing significantly faster than average and share of e-commerce is continuously going up. On quick commerce, we are seeing high salience for household insecticides and air-fresheners. I personally feel for a company like us, directly doing D2C ourselves will not be the right strategy. D2C is an interesting space and we will need to approach it differently. We are a mass market company and our key focus will remain on deepening our rural coverage.

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