Marico has been very aggressive in its D2C acquisition strategy: Harsh Mariwala
Harsh Mariwala, Chairman of Marico, said the consumer space used to be a defensive sector but has undergone several changes in the past few years.
Marico Ltd has been very aggressive in its strategy to acquire direct-to-consumer (D2C) brands, which has helped it grow massively, said the FMCG major's Chairman and Founder Harsh Mariwala.
Mariwala said the consumer space used to be defensive and had many barriers to entry like advertisement costs. Moreover, product launches would cost at least Rs 25 crore and demand strong distribution capabilities given India’s diverse and scattered network of retail stores.
“The first three to four years [of FMCG in India] saw very few new companies springing up. But with the advent of the digital revolution, we started noticing that the entry barriers in terms of distribution and the need to spend money on marketing going down,” Mariwala said during a fireside chat with YourStory Founder Shradha Sharma at TechSparks 2024 in Mumbai.
The digital revolution has bolstered the emergence of various consumer brands, making this sector highly competitive over the last few years, he added.
Marico has looked at buying D2C brands for two main reasons, according to Mariwala. The first is to minimise threats of competition, and the second is to find opportunities for growth and scaling.
Marico currently has two consumer brands and has acquired four brands including men's grooming startup Beardo, health foods company True Elements, beauty brand Just Herbs, and plant-based products brand Plix.
“We have a bouquet of six brands but companies need to know how to manage D2C brands differently as compared to FMCG brands,” Mariwala noted.
Since Day 1, Marico ensured that the D2C portfolio was led by a younger team given that D2C brands require a different mindset from FMCG products. “We are doing well compared to what we started with. For instance, Beardo is averaging around Rs 150 crore turnover and close to breaking even,” the FMCG veteran added.
Marico has also guided its D2C team to ensure the brands turn around in a shorter period and is confident of achieving the same, Mariwala said.
(The copy was updated to make a factual correction.)
Edited by Affirunisa Kankudti
