FMCG company Jyothy Labs Ltd has increased the frequency of retail servicing in rural areas, provided additional staff support to increase service levels, as well as introduced smaller price points, as a part of its strategy to cope with the slowdown beleaguering the sector. In the urban areas, it is aiming at premiumisation, in a bid to improve its profitability and margins.
The company, which has brands like Ujala and Exo, has also increased its retail reach in both rural and urban areas to a million outlets, up from the reach of 8 lakh outlets it had three months ago, Ullas Kamath, Joint Managing Director, Jyothy Labs, told BusinessLine .
These efforts have resulted in Jyothy Labs garnering a volume growth of 9 per cent this quarter, up from the previous quarter’s 6 per cent, he said. Before the slowdown started beleaguering the FMCG sector, around eight quarters back, the company’s growth used to be 10-12 per cent, he added.
Retail servicing in rural areas involve visiting these areas, explaining to them about details like products and pricing, as well as taking orders and getting it supplied by stockists within 24 hours, said Kamath. “In rural areas, to mitigate the slowdown, we are visiting the retail every week instead of once a month earlier. Smaller price points have also been introduced so that the consumer will stay with the brand. We have provided additional staff support to increase service levels,” he explained.
In the urban markets, the company used to undertake weekly visits for retail servicing even before and it is continuing now. However, in some key wholesale markets, it is visiting twice a week, he said.
On the company offering smaller price points in rural areas, he said that during the time of a slowdown, people will opt for smaller stock keeping units (SKUs) of the same brand. This will enable the consumer to buy at a price point at which he/she wants, because, rather than buying for a month or buying for a week, he/she can buy for a day instead, he explained.
These efforts are in the backdrop of the country’s FMCG sector being privy to the worst performance in the rural market in the last seven years, with the rural growth dropping below urban growth for the first time in seven years, as per Nielsen’s India FMCG Growth Snapshot for the July to September 2019 quarter.
60 per cent of Jyothy Labs’ business accrues from the urban market, and the rest 40 per cent from the rural market. As for its efforts towards premiumisation in the urban market, the company’s brands have come up with various premium variants.
Pril has come out with the Pril tamarind variant, Exo with the ginger variant, and Margo with glycerine, Henko with Stain Care, among other examples, he pointed out. “The only way you can improve the margin profile is by putting more products in the premium segment,” he said.
Jyothy Labs has also increased its advertising budget by 2-3 per cent when compared to the previous year in a bid to create more demand. With all these efforts in place, the company has a target of growing 3-4 percentage points higher than the industry in the last quarter of the current fiscal year, said Kamath.