The weekly FMCG round up from WhatPackaging?

FMCG sales in villages to grow at twice the pace of urban markets
The Kolkata-based conglomerate's FMCG sales in smaller towns and villages is growing at twice the pace of urban markets.  When the WhatPackaging? team looked at the company's portfolio, it spotted 25 world-class Indian brands. Today, the group is the largest incubator of FMCG brands in India, anchoring competitive and inclusive value chains in wheat, potato, fruits and vegetables, dairy, aqua, forestry among others, that empower millions of farmers.

During his AGM address in July 2022, the chairman & managing director, Sanjiv Puri, said the FMCG businesses have garnered an annual consumer spend of Rs 24,000 crore. Puri added, there is substantial headroom to grow, with "a total addressable market potential of Rs 5,00,000 crores by 2030, which is amongst the highest in the Indian FMCG space."

Marico collects 6,300 MT of plastic waste this year
Marico has collected and co-processed 6,300 MT of plastic waste in FY22. Harsh Mariwala, the chairman of Marico said, "FY22 has been a milestone year in our sustainable value creation journey as we also stepped up our overall climate resilience and ESG leadership agenda." In February 2022, Marico announced its commitment to achieve net zero emissions in its global operations by 2040. This will entail transitioning to 100% certified carbon neutral operations across Marico's global operations (India, Bangladesh, Vietnam and Egypt) and utilising 100% renewable energy while reducing direct GHG emissions across its global footprint.

Mariwala stated, "Towards plastic waste management, Marico has achieved 96% recyclable packaging through the ‘Upcycle' programme." Additionally in-line with the Extended Producer Responsibility (EPR) towards collection and environmentally safe disposal of post-consumer plastic waste, the Marico group has collected co-processed and recycled 6300 MT of plastic waste in FY22. Marico has joined the India Plastics Pact (IPP), a global leadership platform to propel India's future towards integration of circularity principles in the plastics' ecosystem.

Parag revenue stands at Rs 20,718 million  
Parag Milks Foods Limited (PMFL) ensures the freshness and regularity of its dairy products. Also despite the hurdles, the group's consolidated revenue from operations recorded a growth of 12.5% and stood at INR 20,718 Million in FY22 compared to INR 18,418 Million in FY21. This increase was mainly driven by a ~20% Y-o-Y growth in core categories. Today, PMFL is a leader and pioneer in the cow ghee category with Gowardhan ghee leading the pack with a 20% market share. Also, PMFL has pioneered the concept of fresh paneer with 75 days shelf life.

PMF relies on three factories. These are Manchar in Pune which was established in 1992. This facility collects fresh milk from farmers to manufacture ghee, paneer, curd, cheese etc. Then there is Palamaner in Chittoor which was set up in 2010 in Andhra Pradesh with UHT facilities. It manufactures Tetra Pak milk, beverages, curd, ghee, etc. And finally there is Sonipat in Haryana which was acquired from Danone. This plant commenced operation in 2018 to expand its product offerings and distribution in the North and Eastern parts of India. It specialises in fresh product categories including curd, paneer and milk. Commissioned in 2020, the Manchar plant produces 40 MT of lactose/day from whey permeates, a by-product of the cheese manufacturing process. The addition of lactose products expands our health and nutrition portfolio, enabling us to cater to segments such as food applications, infant nutrition and clinical nutrition.

In 2021, International Finance Corporation (IFC) and prominent consumer fund Sixth Sense Venture Advisors LLP invested in PMFL.  

Green shoots visible
Which company has had seven quarters of double-digit. Which company added an incremental turnover of over Rs 4,000 crore.

The company is HUL and the green shoots in September are better than July and August.

Sanjiv Mehta, the managing director and chairman of HUL is a big advocate of plastic usage and reduction. During the company's AGM in mid-2022 he had informed the shareholders that HUL has become plastic neutral and mentioned that "the company is committed to make 100% of its plastic packaging reusable, recyclable or compostable by 2025." He further mentioned that HUL is working on innovative solutions for accelerated development of alternative packaging and associated supply chain capability to reduce usage.

HUL has reduced virgin plastic usage by replacing them with Post-Consumer Recycled (PCR) plastic for a lot of its  products. HUL has committed to use recycled plastic in 15% of its plastic packaging by 2025.

HUL was working with leading organisations such as UNDP and Xynteo to change consumer behaviour of plastic segregation at source to build a better ecosystem for post-consumer recycled uses and its circularity. As per the last reports, the project has reached out to more than 75,000 households.

Price point packs vs large-value packs
WhatPackaging? magazine's big learning from a FMCG confabulation was: India is a sachet market. Britannia and Parle say that nearly 80% of their revenue comes from the humble Rs.5/- products. Hindustan Lever says 30% of the products they sell are priced between Rs 5-10.

A marketing strategist said, there is a higher frequency of purchase for these products and it ensures a better CLV. In addition, the net weight is much more for small priced products.
 

Most people in India require Rs 5-10 sachets, and brands that can provide them with products in that range win the game. Thereby concurring with the theory of CK Prahlad's the fortune at the bottom of the pyramid. Not everyone in India can afford the big bang purchase. And so, small is beautiful.