Open for acquisitions in domestic and international markets; keen on digital-first brands: Marico

Fast-Moving Consumer Goods (FMCG) major Marico s expecting a return in consumer demand in FY26. Pawan Agrawal, Group CFO and CEO of International Business (Rest of South Asia and South-East Asia), spoke to businessline on the company’s growth, acquisitions, expansion in the food business and international market expansion.

The consumer demand in FMCG segment was slow in FY25. What is your anticipating in FY25?

We are observing that consumer sentiment is largely stable, supported by good rural demand and improving trends on the urban side. The benefit of income tax relief will also play out in FY26 to support the overall consumption for the sector. Also, consumption in the upper middle-class and affluent has always been strong and we also expect that gradual recovery in middle-class consumption in the coming quarters.

For FY26, at Marico, we are fairly confident that we will deliver performance that exceeds FY25 across all key strategic imperatives, including volume growth, revenue growth and international business growth. We remain confident that we will achieve double-digit revenue growth. While there could be some pressure on the margins in the first half, given the kind of inflation that we have seen in some of our raw material prices, we believe that margins will pick up in the second half and at a full-year level, we aspire to deliver double-digit profit growth.

Do you see the urban demand picking up?

From a sectoral standpoint, rural areas have been doing much better than urban areas for the last few quarters. As far as urban is concerned, we do not expect a hockey stick recovery. There will be a gradual recovery as we move along. If you look at the lower middle class on the urban side, the biggest issue was inflation. Now that has come under control, and also monsoon plays an important role. So, if you look at the forecast for monsoon, it is also stable. And therefore, with all this, we believe there will be a gradual recovery that the sector will witness as we move ahead. As far as Marico is concerned, we are seeing very steady improving trends in some of our core categories.

Marico’s food business crossed ₹900 crore revenue in FY26. What will be the strategy for the food business in FY26?

We started accelerating the Food’s growth from FY21. In FY20, this portfolio was less than ₹200 crore, around ₹170-180 crore. And in the last five years, we have grown the portfolio to about 5x, to ₹900 crore. And we have expanded into a lot of newer categories. We have expanded the total addressable market of Saffola.

Saffola, earlier, used to participate only in edible oil and masala oats. We have now forayed into honey, soya chunks, snacking and Muesli. Hence, we have expanded the total addressable market and brought a lot of new consumers into Saffola’s fold. At the same time, we also acquired True Elements. Therefore, we believe there are opportunities. We expect 25 per cent growth in the food portfolio, which is achievable and we will continue to pursue that. We believe that over the next three years, the food portfolio can become 2x from the current scale.

Will Marico continue mergers & acquisitions (M&As)? Are there any categories that the company is looking to tap into with acquisitions

We are opportunistic as far as M&A is concerned. If we believe that for any particular category, we can have an entry strategy through Saffola, where we believe that Saffola has the right to win, we would leverage the Saffola equity, because Saffola has a very strong equity in the space of health and wellness. Wherever we believe that the particular category may not have a right to win through Saffola, we will consider pursuing inorganic opportunities.

Our approach to M&A has been that it is not a substitute for organic growth. There could be opportunities in personal care and food. We identify the categories of interest, we look at our portfolio and the gaps. Then we look at it in terms of our portfolio, whether we have the right to win. We would be more keen on digital-first brands because we have created a successful model of scaling up digital-first brands. That is an area where we will be more interested, as opposed to taking large mass-market brands.

How is the raw material situation right now?

We are seeing some margin pressure, which is slightly more than we had expected for Copra prices. Unseasonal rains have also impacted the drying of coconut, so there has been some immediate short-term impact, but we believe that the prices will start cooling off from Q2. And therefore, from a margin standpoint, we are confident that in H2 we will deliver very healthy growth. And at a full year, we continue to maintain the stance that we will strive to deliver double-digit profit growth.

In FY25, the company took upto 30 per cent price increase on Parachute Oil. With raw material prices still being high, will the company consider taking another round of price increases?

If the prices decrease as we are expecting, there is no further need to take price increases. If the prices are correct, we could lower the prices as well and pass on the benefit to the consumers. It all depends on how the raw material prices behave, which we are expecting to cool off, and therefore, we do not foresee any further pricing action in Q2.

Any green shoots in the consumption of mass-market products? Or are only premium products growing?

The mid-to-premium segments have done well. Yes, there has been some stress in consumption at the bottom of the pyramid. With inflation going down, we also expect that part of the portfolio to start participating in the growth. For example, if I talk about one of the core portfolios, which is value-added hair oils, the mid and premium segments have done well. It is the bottom of the pyramid that is the price-point packs, which have not done well. 

How do you see growth of your digital-first brands in FY26?

With a digital portfolio, there are two models of growth. One, brands that become 2-3x in a short time, but which entail a huge amount of cash burn. The other is the one where you grow sustainably, profitably and that is the model that we are comfortable with. We are happy growing above 25-30 per cent, but at the same time, also mindful of the profitability. 

Two of our digital-first brands — Beardo and Plix, are profitable at the EBITDA level. Beardo has almost delivered double digit EBITDA margins. The task in the next 12-24 months is to make the other two digital-first brands, which are Just Herbs and True Elements to break even, and then from there on, significant scale benefits will also come in, which will help in improving the operating margin.

What is the growth for Marico in quick commerce?

Quick commerce has been growing rapidly, and it has grown ahead than 60 per cent. The overall contribution from quick commerce has now become 3 per cent. In Q4, the contribution of quick commerce was as high as 4 per cent, and we believe that the channel will continue to record significantly higher growth rates. 

Do you plan to tap into new international markets?

We have been consistently growing in double-digits in constant-currency (CC) terms. Last year, we did 14 per cent CC growth in the international business for the full year. We have a country-choice framework that we deploy, which is basically, in 90 per cent of the countries where we are present, their GDP is expected to grow 6-8 per cent, they have a young demographic and high-density population. Whether it is in Bangladesh, West Asia or Egypt, we have expanded into newer categories, and there’s a significant market share that can be garnered in those markets. In West Asia, North Africa, we have been growing at 30 per cent plus, and in fact, we have entered into a lot of new premium categories. Our share of the premium category has also improved from 20 per cent to about 30 per cent in the last four years. We do not intend to enter into new markets. But selectively, if there is an opportunity inorganically, we could be open to that as well.

Will you be open for acquisitions in the international market?

We remain open to any bolt-on or tuck-in acquisitions. What we did in Vietnam was that we were present in the male grooming category. There is a good opportunity that we found in female grooming, which expanded our portfolio, but at the same time, we could leverage our existing systems, processes, management, bandwidth, etc. As long as we find synergistic bolt-on or tuck-in acquisitions, we would be open to that. It could be in Vietnam or some other markets that we are present in, it could be in South Africa, for that matter. However, we would be more cautious about entering new markets and establishing business there, as it demands more bandwidth. In the existing markets, we will be open.

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