Marico expects food business to reach Rs 850 Cr in FY24

Home-grown fast moving consumer goods (FMCG) firm Marico expects its food business to scale up to Rs 850 crore in FY24 in the domestic market, according to the company's latest annual report.

Saffola, the master brand under which Marico offers healthier foods, has expanded the total addressable market to over Rs 10,000 crore, through a portfolio of healthy value-added offerings, it said.

"The company aims to ramp up its revenue from the foods portfolio to Rs 850 crores by fiscal 2024, after closing near the Rs 600 crore-mark in fiscal 2023," said Marico, which also owns popular brands such as Parachute and Hair & Care.

In the last two-three years, Marico has expanded its play in the food segment with multiple products, including oats, honey, noodles, peanut butter, mayonnaise, and ready-to-eat healthy snacking under the aegis of Saffola Munchie.

The company said it maintains a steadfast focus on market development, brand building, supply-chain excellence, distribution expansion, and sustained innovation to scale its foods business.

In the domestic business, its newer portfolios of foods, premium personal care, and digital-first segment have led to a shift in the share of domestic revenue from 8% in FY20 to 15% in FY23.

"We expect the share of these portfolios to move to 20% of domestic revenues in FY24," said the company.

In premium personal care, Marico will focus on growing the portfolio at a compound annual growth rate of over 20%, aided by innovation, market insights, and strong brand equity.

"The current portfolio of digital-first brands continues to scale up healthily and is poised to reach an exit run-rate of Rs 400 crore in FY24," it said.

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

"Volume growth was modest at 1%, owing to persistent retail inflation weakening consumption trends, especially in the rural sector," Marico said, adding that the operating margin of the India business was at 19.8%, higher than the previous year.

"The improved profitability was a result of moderation in the prices of key commodities such as copra and vegetable oils as well as a more favourable portfolio mix," the company said.

Marico's coconut oil, under the Parachute brand, contributed 37% of its domestic business. The Saffola franchise, comprising super premium refined edible oils, contributed 23%.

"Foods delivered 20% growth in FY23 to close near Rs 600-crore revenue mark, led by strong growth in core oats franchises and traction building up in some of the newer launches during the year," said Marico.

Marico reaches 5.6 million outlets, serviced through its expansive network of 900 distributors and 7,500 stockists.

Addressing its shareholders, Marico CEO and MD Saugata Gupta said, "Over the past year, we have witnessed a slowdown in general trade, dragged by consumption stress in rural India and the lower and middle-income strata in urban areas."

Correspondingly, consumers, especially in the urban segment, are increasingly veering towards the alternative channels of modern trade and e-commerce.

Marico is investing on building an omni-channel, agile and data-driven distribution strategy.

"We continue to strengthen our presence on alternate channels through trusted partnerships, channel-focused product strategy and customer engagement," said Gupta.

"Given the depth of the Indian market, we believe there is significant headroom for traditional and alternate channels to co-exist and grow harmoniously," he added.

Marico will continue to widen the stockist network as it expands rural direct reach. It is also enhancing the presence of chemists, cosmetics, and speciality foods outlets in urban regions.

"A dedicated foods go-to-market (GTM) is one of our strategic priorities, which focuses on top speciality foods stores and aims to deliver accelerated growth in our foods business through wider range availability, in-store execution, and effective shopper engagement," said Gupta.

The foods GTM has already expanded to over 20 cities and aims to strengthen the company's network and distribution reach, he said.