The “aspirational” rural market is at an “inflexion point”, which offers significant opportunities and long-term potential to the FMCG companies with price point packs, said Marico MD & CEO Saugata Gupta.
The hinterland, with its large population base and rising disposable income offers ‘headroom for growth’ for FMCG as people there now aspire for the same brands of products as other markets, Gupta said.
Per capita income is on the rise, helped by the government’s spending on infrastructure, and an increase in the minimum support price of crops, which has helped in a significant uplift in terms of quality of life for the rural class, he said.
“So, I believe that this is an inflexion point,” said Gupta adding “for the large FMCG players this is an opportunity to continue to invest in rural because if you really look at it, everybody is chasing that same urban consumer whether it’s D2C brands or international brands.”
Marico is present in the rural markets with price point packs and Gupta believes “if you invest ahead of the curve, it has far more long-term potential and headroom for growth”.
However, he also added that “affordability and availability” will always remain an important aspect for those markets. The company expects to deliver a double-digit revenue growth in FY25 helped by sequential improvement with price hike and better volume, Gupta said.
However, he also mentioned that as far as profitability is concerned there is inflationary pressure on the material inputs in the second half of the fiscal and the operating margin should be in the “broad region of 20 per cent” helped by a strong and institutionalised cost management system.
“If you look at the volume growth trajectory every quarter, we have sequentially improved. I think the way we look at it is that we should be able to deliver double-digit revenue growth. Our aspiration is to deliver top quartile volume growth,” Gupta said.
The “diversification journey” of Marico, where it is increasing its play in the food segment, continues to gather momentum PTI, he added.
Marico's international business continues to be robust, reporting double-digit constant currency growth.
"And in spite of the fact that there have been some headwinds, we have been able to be resilient in some of the markets like Bangladesh."
PTI