Strategic Pillars and Enablers
Calibrating to a dynamic environment
The last year has forced several changes in consumer behaviour, challenged traditional ways of working and reset many norms and structures. For Marico, even during these transitional times, consumer and community-centricity continues to be the guiding light for all actions.
As the market leader in more than 90% of our portfolio, we continue to drive value creation for our consumers by bringing offerings in line with their changing needs at the right price points. We are continuously expanding and leveraging our distribution reach to ramp up the availability of our products while also reaching our consumers through new-age channels. Our continual focus is to expand the total addressable market for our power brands through diversification in carefully selected categories.
As the world goes through unprecedented times, Marico remains deeply committed towards helping the community deal with the health crisis while also driving its long-term sustainability agenda.
Building upon our core strengths and our strategic pillars, we are focusing on targeted areas of transformation that enable us to deal with emerging realities and changing consumer needs.
Here’s what is helping us confront new realities and respond to changing consumer needs:
Strategic Pillars
GROW AND PREMIUMISE THE CORE
NEW GROWTH ENGINES
CREATE SHARED VALUE
Strategic Enablers
Business and Go-to-Market Models
Product
Innovations
Digital and
Technology
Cost
Management
Talent and
Culture
Mainstreaming
Sustainability
Strategic Pillars
GROW AND PREMIUMISE THE CORE
Marico has witnessed strong momentum and continued to log market share gains in each of the core portfolios: coconut oil (CNO), value added hair oils (VAHO), and super premium refined edible oils.
Domestic Market
In CNO, we continue to drive penetration through unbranded to branded conversion, increase our distribution reach and maintain judicious pricing to enable sustained volume growth and market share gains.
In VAHO, we are aggressively participating at the bottom of the pyramid on the back of our leadership position, as consumers are increasingly becoming value conscious in their purchasing behaviour and are exhibiting a heightened preference for trusted brands. At the same time, we are continuing to drive higher value share expansion with premium offerings in select segments through format innovations, value-added offerings with higher order beauty benefits and ramping up in the problem solution space.
Saffola Oils continued its strong growth trajectory on back of increase in overall penetration and the in-home cooking tailwind. We will continue to invest in new markets and drive household penetration by leveraging the growing relevance of healthy living and Saffola’s trusted health equity.
International Markets
Marico continues to systematically invest in the core international markets. We are confident that the key markets are well-poised to capitalise on the present opportunities.
In FY21, Bangladesh continued a strong growth trajectory with double-digit constant currency growth. We will leverage our distribution and brand strength to further consolidate our market share in the core portfolios and quickly scale up future growth engines.
A market leader in Vietnam, we will continue to invest in the male grooming category while also accelerating our presence in foods. Based on a series of turnaround measures taken in Vietnam, we expect the business to build a sustained growth trajectory going ahead. Myanmar and the rest of Southeast Asia are growth engines of the future.
In the Middle East and North Africa (MENA) region, we will focus on judiciously investing in brands and Go-to-Market initiatives. In the Middle East, we are strengthening the CNO and Hair Oils play. In Egypt, cost management initiatives will enable the business to weather the persistent macro headwinds.
The South Africa business will continue to focus on protecting the core franchise of ethnic hair care and healthcare over the medium term.
The New Country Development and exports segment has been growing healthily over the years. The Company will continue to invest in extending its footprint to new countries and scale the business profitably in the existing markets.
NEW GROWTH ENGINES
In FY21, we significantly strengthened our position in the Foods segment, crossing the `300 Crores revenue mark. The Oats portfolio continues to see speedy growth on the back of increasing penetration and heightened focus on healthy snacking. Recognising the strong consumer trend towards health and immunity, we launched several new products leveraging Saffola’s strong equity – Saffola Honey, Saffola Chyawanamrut, Saffola Immuniveda, Saffola Mealmaker Soya Chunks and Saffola Oodles. We will continue to innovate and broaden our play in this category with the aim of reaching the `450-500 Crores mark in FY22.
Within Premium Personal Care, we observed a gradual revival in demand in the Livon Serums portfolio, while the male grooming and skin care portfolios continued a subdued run due to a pullback in discretionary spends. The Beardo franchise has been gradually regaining traction. We expect discretionary categories to remain muted in the current context, but intend to build these portfolios into growth engines once the macros stabilise. For now, we are indexing towards digital channels to reach consumers and drive brand engagement.
We continue to make investments towards enhancing our digital capabilities to stay ahead of the curve. We also aim to accelerate our digital transformation journey through building a portfolio of at least three `100 Crores-plus digital-first brands, either organically or inorganically, within the next three years.
`300 Crores
Revenue mark crossed in the Foods segment in FY21
CREATE SHARED VALUE
As an organisation, Marico strives to create shared value for all stakeholders. We believe that this is not just our primary business driver but also a value differentiator and social responsibility, especially in these unprecedented times. At a time when businesses are being pushed to reimagine and recalibrate their value creation paradigms, Marico is pivoting to accelerate the impact within and beyond its stakeholder ecosystem. Fulfillment of our environment management goals, optimised consumption of natural resources and propelling our social value creation efforts while pursuing responsible growth will continue to be our key focus area.
As part of our business imperatives, we will retain keen focus on the Environmental, Social and Governance (ESG) material issues across the value chain, namely Climate Action, Water Stewardship, Circular Economy, Responsible Sourcing, Product Responsibility, Sustainable Coconut, Community Sustenance through digitalised knowledge enhancement programmes, healthcare initiatives and a structured corporate governance framework that leads with ethics, integrity and ownership.
Strategic Enablers
Business and Go-to-Market Models
Our Go-to-Market (GTM) strategy will focus on improving the width and depth of our distribution in line with the following ongoing measures:
- Upgrading our distribution infrastructure in urban general trade to ensure profitability of channel partners
- Focusing on expanding rural penetration by improving direct reach as well as driving in relevant pack and portfolio mix. In FY20, we expanded our rural stockist network by 25%. While we took a pause in FY21 due to COVID-19 disruptions, we have re-started with the target of expanding our rural network by another 25% over the next two years.
- Tapping the increased opportunity in pharma/chemist channels in the top 10 cities across the country by appointing specialist distributors. Consequent to this initiative, our reach in pharma/chemist channels has increased 5-6x so far, albeit on a low base.
- Focusing on specific price and SKU management measures to ensure sustainable, harmonious and incremental growth in General Trade, Modern Trade and E-Commerce
Product Innovations
We are continuously upgrading our innovation process and capabilities to enable agile innovations in a fast-changing and uncertain environment. We have significantly scaled up product development capabilities within Foods, with specific focus on creating appetising offerings using ingredients and processes that are good for health. We are also leveraging technology and digital in consumer research to minimise disruptions in the uncertain environment and improve speed-to-market.
Digital and Technology
We are focusing on digital in a big way to improve consumer engagement, drive sales through E-Commerce for internet-savvy consumers and build data analytics capabilities. During FY21, we saw a visible jump in the digital quotient of our brands and we will continue to work towards improving it. Technology will continue to play a huge role in our ways of working, as we strive to carry the learnings from the lockdown period into the future workplace. We are using technology to redefine our business model for enhanced reach and continued engagement with our partners, even in the absence of in-person access. We also continue to focus on building cutting-edge analytics and Artificial Intelligence (AI) capabilities to enable data-driven prioritisation, resource allocation and decision support.
Cost Management
The pervasive disruption in the business environment, consumption patterns and working lifestyles necessitated an aggressive and structural cost management exercise this year. The Marico Value Enhancement (MarVal) Program exceeded the cost savings target of `200 Crores in FY21. We will continue its focus on driving cost efficiencies and avoiding wastages in the coming year to enable management of inflationary cost pressures and passing on value to our customers and shareholders. In this direction, we have reduced our working capital requirements and write-off risks by lowering inventory norms across categories and optimised the number of SKUs we are operating with through a comprehensive SKU rationalisation exercise.
Talent and Culture
Our members are the backbone of our organisation and our businesses are built on their commitment and talent. In keeping with our ‘People First’ philosophy, our primary focus this year was to ensure safety and holistic well-being of our members, their families, and our extended workforce. We will continue to empower our members through agile people policies and simplification and digitalisation of HR processes. To enable our accelerated growth journey, we are continuously building critical organisation capabilities, future-ready leadership skills, and a high-performing sales force. Structured leadership development programs and the rigour in our talent processes have enabled a significant increase in the number of internally groomed leaders at Marico, who are anchoring critical leadership roles in the organisation. This, along with a fine balance of lateral leadership talent with diverse skill sets, is enabling us to create a future ready workplace inspired by the strong ethos and culture of the organisation. We are also committed to building a more socially represented and inclusive organisation and are working towards creating a workforce with enhanced ‘Gender’, ‘Differently Abled’ and ‘Thought’ diversity. We are making efforts towards fostering a culture of inclusion through focused interventions such as ensuring accessibility of infrastructure, policies, and processes for diverse groups, sensitisation and awareness on the right actions, behaviours and practices for an inclusive workplace and monitoring transparency of talent processes to create a sense of ‘equality’, ‘openness’ and ‘belongingness’ within the organisation.
Mainstreaming Sustainability
Growth and sustainability are intertwined in our corporate strategy, both linked to the creation of shared value. Sustainability is embedded in almost every business decision at Marico – right from the architecture of our offices to the choice of vendors. Mainstreaming sustainability ensures that it becomes a part of the ethos of every single member, thereby strengthening our goal of creating shared value.
As a value differentiator, Marico’s sustainability efforts seek comprehensive, integrated solutions to complex problems and reprioritises material ESG issues that propel responsible growth and stakeholder capitalism.
Integration of sustainability-related outlook, values and strategies is a leadership-driven approach at Marico. We have instituted a robust and transparent sustainability governance structure to ensure achievement of goals and targets by effectively implementing action plans. Our Board of Directors has visibility on all sustainability initiatives and ESG risk mitigation strategies. The Chief Operating Officer – Supply Chain & IT, supported by a Sustainability/Business Responsibility Reporting (BRR) Committee, is responsible for the on-going sustainability activities.
