Banking on good monsoon for a better 2nd half in smaller towns: Wipro

Demand perspective for consumer products in the market has improved a little bit but challenges still persist and a good monsoon can help see a better second half of the year in smaller towns and rural areas, said Wipro Consumer Care and Lighting CEO Vineet Agrawal.

The company is also not unduly perturbed by the entry of Reliance in the FMCG segment as consumer preferences are very strong in the segment with very strong brand loyalty, said Agrawal who is also the Managing Director of Wipro Enterprises.

Growth from smaller towns and rural areas continues to be a challenge for FMCG players, though the situation is improving, he said.

 

From the demand perspective, the market has improved a "little bit but it is still a challenge", Agrawal told PTI.

"It's not like the good old pre-Covid era and I think smaller towns and rural areas are still a bit of a challenge but things are improving. Hopefully, if the monsoon is good, we will see a better second half. Fortunately, the cost prices have come down, initially, they jumped last year due to the Ukraine war. We are seeing positive things as far as the market is concerned," he said.

Wipro Consumer Care and Lighting, which owns brands such as sandalwood soap brand Santoor and female toiletries brand Enchanteur, has already extended the benefits to customers in some segments.

"We already dropped the prices in soap, for example, we were selling at (Rs) 38 for 100 gm, reduced to (Rs) 36. We have done price corrections," he said.

When asked about the entry of billionaire Mukesh Ambani-led Reliance into the FMCG segment with aggressive pricing, Agrawal said price is not only the only weapon.

However, he also added:" Reliance is a tough competitor in any category that they are in. They are not only tough but relentless. They think big, disruptively."

Agrawal also added: "We are yet to see them in the personal care products because in the segment consumer preferences are very strong. People do not switch from one product to another product easily. If a consumer uses a brand name, he does not change easily. Similarly, in food, he does not change easily."

RIL through its step-down unit Reliance Retail has entered into the FMCG segment. It articulates ambitions to be a relevant player in the USD 110-billion FMCG (Fast Moving Consumer Goods) segment.

Though products of RCPL, the FMCG arm and wholly-owned subsidiary of Reliance Retail Ventures Limited (RRVL), are available only in selected markets. It has priced them 30-35 per cent cheaper.

However, Agarwal said in consumer goods, price is not only the only weapon, there are other elements which consumers look at.

"But yes, we are aware of the fact that Reliance is a strong competition and disruptor and is relentless. One has to be cognizant of that fact and give value to the consumer," he said.

Wipro Consumer Care and Lighting, which is a part of Azim Premji-led Wipro Enterprises, has crossed the milestone of Rs 10,000 crore in overall sales in FY23, helped by a significant growth across its geographies, brands, and categories.

Its domestic FMCG business grew 17 per cent in FY23. Wipro's sandalwood soap brand Santoor has now become the second largest player in the segment in India with sales of over Rs 2,650 crore. While female toiletries brand Enchanteur of Wipro Consumer Care and Lighting has also crossed Rs 1,000 crore.

When asked about the outlook Agrawal said: "Last year was exceptionally good for us. Whether this will be as good, would be difficult to answer as we are at the beginning of the new year (financial)."

Wipro Consumer Care and Lighting, which started in 1945 as a vanaspati brand, with its factory in Amalner, Maharashtra now has a presence in 60 countries.

It operates 18 factories with more than 10,000 employees and 51 per cent of its revenue comes from international businesses. The company has focused on developing markets, mainly in South East Asia.