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What changes have you made to the erstwhile Paras products (bought from Reckitt Benckiser)?
We are launching some cutting-edge hair-styling products under Set Wet in the next few days. These belong to our Code 10 range in Malaysia, and we are launching them under a brand that has a wide base in India. These will be the first in the series of our cross-pollination.
We are focussing on Set Wet, Livon and Zatak from the (Paras) brands that we had bought from Reckitt Benckiser, as they make up for 99 per cent of the sales of the acquired portfolio.
So, your international product portfolio will be launched under the brand names you have recently acquired?
Yes, we had a lot of product platforms in our international acquisitions such as Code 10, X-Men, Hair Code. To cross-pollinate, we needed brands with a popular base to bring those categories to India.
This acquisition also filled another gap in our portfolio — the youth, which will be the largest demographic segment in India’s future.
We had to participate in the youth market and these products played in men’s grooming categories used by the youth — under-penetrated but growing at a fast rate.
Will they be the same products under different brands across markets, then?
The same category, say, a gel, can be branded under SetWet or X-Men. Ultimately, what matters is our access to R&D of a product platform. The single biggest platform that we can lay claim to across multiple markets (West Asia, SouthEast Asia, Vietnam, Malaysia) is male-grooming.
There will be brands specific to countries for the same products. But the lead categories could differ across markets — hair gel leads in Southeast Asia such as Malaysia; in West Asia, hair gel and creme sell more, while in Vietnam it is shampoo. In India, gel and deos sell the most. The lead categories may vary but we can always introduce more categories in these markets under brand names they know. But we will tweak these to cater to ethnic needs. We had the innovation and marketing capabilities, and now we have the brands too.
Now that you are heading the international business, which has become a part of the consumer business, what is on your plate?
Our international business, focussing on emerging markets, is now a Rs 1,000-crore business.
As an emerging-market MNC, we have a few hubs in West Asia, north Africa, Bangladesh and Southeast Asia. We have struck common grounds in media for consumers across three to four regions and economies in scale in IT and distribution.
It is more important than ever to focus on the big bets in the various portfolios, talent, and processes. We can decide on doing 30 things, sitting in the headquarters, but the guy on the ground can chase only four to five things, since the management bandwidth is limited. The time has come to search for the best portfolio-country-region mix.
What stage is the integration of the erstwhile Paras brands in?
The integration is complete. Some of our distribution channels are new, as we revamp to prepare for the future. Our portfolio of tomorrow will have a certain component of foods and of top-end personal care. These will necessitate growth in chemists, cosmetics, apart from a greater focus on modern trade and rural. Twenty per cent of the outlets that Paras’ products reached were unique to it, the rest were common to our network. The unique ones were mostly chemists and cosmetics stores which we have tapped into since.
FMCG heavy-weights such as HUL have been fortifying their rural distribution. What changes to your rural distribution have you made?
For a good distributed company, rural distribution will be a source of competitive advantage. You can buy distribution in urban areas but you can’t in rural because of the legwork. Initially, the ratio of your incremental revenue to incremental cost of distribution does not pay. But the pay-off, when it comes, creates a deeper source of income. Companies used to have a different portfolio for this audience, but now the brands are the same, albeit at different price points. Soon, 80 - 90 per cent of our salesforce will be armed with PDAs to track sales real-time. Our rural contribution to sales have increased from 25 per cent to 30 per cent in the last three years through direct distribution.
When it comes to new launches in foods, have you changed your strategy after withdrawing from your Saffola snacks foray?
We would not have entered snacks had we put our current framework in place, six years ago. We had a prototype in snacks and we failed. We understood it was something that Saffola as a brand was not cut out for. Snacks is driven by taste and bought on impulse — very different from our strengths in planned purchases driven by health concerns.
The further we move away from the core, the probability of success decreases. Our current framework will leverage shared consumers, shared channels, shared costs and shared supply chain.
Saffola can fare well in the breakfast segment. Breakfast is a meal in which people experiment with healthy choices, driven by lifestyle and convenience. And, we found out that a significant portion of Saffola consumers consume packaged breakfast. So, they already are inclined towards a cross-selling.
