Marico to focus on healthy foods, expand Saffola brand as part of three-year strategy
Marico CEO and MD Saugata Gupta says he is clear he is not looking to build a mass foods business driven by volume growth
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Marico Ltd, maker of the iconic Parachute hair oil, is going to focus on “in-between healthy foods” as part of its three-year growth strategy that also includes super premium edible oils and male grooming, a top company executive said.
“I want to concentrate on food today which is planned food, which is aligned with our distribution,” said Saugata Gupta, managing director and chief executive officer of Marico, in an interview.
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“The reason I am saying in-between healthy foods is because that is still a modern trade, metro distribution business, in line with Saffola,” Gupta said, adding that consumers often indulge in these healthy planned meals around 11am and 6pm.
Gupta said he would like Marico to focus on expanding the Saffola brand of premium edible oils and oats to extend the food business. “Ultimately, Saffola is a brand that has a huge health connotation,” he said. In May this year, Gupta identified super premium edible oils (Saffola Aura), male grooming (Set Wet, Beardo), and food (Saffola) as the segments that will drive the company’s growth in the next three years.
“What are the kinds of food a Saffola consumer eats? You will have breakfast cereals, you will have healthy snacking. If I had gone into Saffola juices, hypothetically, it would have been a very good opportunity. But the moment five players get into a business, you can’t make money in it,” he said.
Gupta is clear he is not looking to build a mass foods business driven by volume growth.
“I don’t see myself getting into either impulse food or commodities, say staples, because they need a different business model,” he said, adding that the biggest (sales) channels for snacking and impulse items are small local shops where Marico does not reach at the moment.
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“Several companies have been trying to crack the packaged foods market but no one has been able to become very big,” said Sachin Bobade, senior analyst at Dolat Capital. “It all comes down to the category you pick in the food business.”
Marico is cognizant of the challenges. “It is not easy to run a personal care and large scale food business because they are two different business models,” Gupta said. “I don’t have an ambition of having a Rs5,000 crore food business. Our first destination is to do Rs200 crore, because Rs200 crore is break-even.”