FMCG firm Marico expects food business to reach Rs 850 cr in FY24

Local fast-moving consumer goods (FMCG) Marico expects its food business to reach Rs. 850 crore in FY24 in the domestic market, as per the company’s latest annual report.

Savola, the flagship brand under which Marico offers healthy foods, has expanded the total addressable market to over Rs 10,000 crore, through a range of value-added healthy offerings.

“The company aims to increase its revenue from the food portfolio to Rs 850 crore by FY2024, after closing near Rs600 crore in FY2023,” said Mariko, who also owns well-known brands such as Parachute and Hair & Care.

In the past two or three years, Marico has expanded its role in the food sector with multiple products, including oats, honey, pasta, peanut butter, mayonnaise and a healthy, ready-to-eat snack category under the auspices of Saffola Munchie.

The company maintains an “unwavering focus” on market development, brand building, supply chain excellence, distribution expansion and sustainable innovation to expand its food business.

In the domestic business, its new portfolios of premium foods, personal care and digital-first segments have shifted its share of domestic revenue from 8 percent in fiscal 2020 to 15 percent in fiscal 2023.

“We expect the share of these portfolios to move to 20 percent of domestic revenues in FY24,” she said.

In premium personal care, you will focus on growing the portfolio at a compound annual growth rate (CAGR) of over 20 per cent, supported by innovation, market insights and strong brand equity.

“The existing portfolio of digital-first brands continues to expand healthily and is poised to reach an exit run rate of Rs 400 crore in FY24.”

For the financial year ended 31st March 2023, Marico’s consolidated turnover was Rs.9,764 crore. In this, its domestic business recorded a turnover of Rs. 7,351 crore, which is marginally higher than last year.

“Volume growth was modest at 1 percent, due to continued retail inflation dampening consumption trends, particularly in the rural sector,” it added, adding that the operating margin for the India business was 19.8 percent higher than a year earlier.

“The improved profitability was a result of moderation in the prices of commodities such as copra and vegetable oils as well as a more favorable mix of the portfolio,” it added.

Marico’s coconut oil, under its Parachute brand, contributed 37 percent of its domestic business. The Savola franchise, which consists of refined, ultra-premium edible oils, contributed 23 percent.

“Foods delivered 20 per cent growth in FY23 to close near the Rs 600 crore revenue mark, driven by strong growth in core oat franchises and increased traction on some new launches during the year,” the company said.

Marico reaches 5.6 million outlets, served through its extensive network of 900 distributors and 7,500 resellers.

“Over the past year, we have witnessed a slowdown in general trade dragged down by consumption pressures in rural India and low- and middle-income segments in urban areas,” CEO Marico and MD Saugata Gupta said while addressing shareholders.

In contrast, consumers, especially in the urban segment, are increasingly turning towards alternative channels of modern commerce and e-commerce.

Marico is investing in building an agile, data-driven omnichannel distribution strategy.

“We continue to strengthen our presence on alternative channels through trusted partnerships, channel-centric product strategy and customer engagement,” he said, adding, “Given the depth of the Indian market, we believe there is plenty of room for traditional and alternative channels to co-exist and grow harmoniously.”

Marico will continue to expand the El Khazen network as it expands direct access to the countryside. It also promotes the presence of chemists, cosmetics and specialty food outlets in urban areas.

“Go-To-Market for food is one of our strategic priorities, which is focused on best-in-class specialty food stores and aims to achieve exponential growth in our food business through broader availability, in-store execution and active shopper engagement,” added Gupta.

He said that GTM Foods has already expanded to more than 20 cities and aims to enhance our network and distribution reach.