From making toilet soaps, personal care products and lighting solutions, fast-moving consumer goods (FMCG) major Wipro Consumer Care recently announced a foray into the packaged foods business.
Interestingly, Wipro Consumer was founded in 1945 as a vegetable oil company, a category it exited in 2012.
With the latest foray into packaged foods, the maker of Santoor soaps will first launch traditional Indian snacks and spices in the first phase, Vineet Agrawal, CEO of Wipro Consumer Care and Lighting told CNBC-TV18 in an exclusive interview.
“We have been in personal care, homecare & lighting in India and outside of India. And when we were looking at categories to expand, we found food, specifically traditional snacks and spices to be fairly large categories,” Agrawal said.
In fact, In India, toilet soap category, which is the largest personal care category is about Rs 21,000 cr, while traditional stacks would be 3.5x that including unorganized sector and spices too would be about 3.5 times of toilet soaps. So they are fairly large categories,” he added.
Within traditional snacks, the company will first focus on the south Indian market and the traditional snacks available in these markets. The key, Agrawal says, is catering to the local palette of each state, where it sometimes differs within the same state.
“It will be things like murukku, banana chips, masala peanuts, 'tara boondi, snacks that cater to local palate. Tastebuds are very different within a state itself. What sells in South Karnataka, for instance, may not be the same taste and flavour in north Karnataka. The challenge is to adapt to the local palette to get the right product,” he added.
For the packaged foods category, Wipro Consumer will launch an entirely new brand. However, the company is still working on what this brand will be. Wipro Consumer is adopting an organic and inorganic route for this new category foray.
While it will be launching its own products, the company is also looking to acquire local players of tradition Indian snacks and spices to jumpstart the business.
“We are reasonably cash rich, funded most acquisitions through internal accruals & balance sheet is reasonably strong and can pick up a good amount of debt at fairly competitive rates,” Agrawal said.
Wipro Consumer is currently in the process of putting together a team for this new category, while it already appointed Anil Chugh to lead this business. The company is likely to take 9-12 months to launch its first product. However, there could be launches earlier through acquisitions, the company said.
Through this new business segment, Agrawal says, being able to reach Rs 500 crore in 3-5 years should be a reasonable goal. While this is through purely an organic route, it could hit this goal faster through acquisitions.
The company plans to position its products in the mass category. The idea, Agrawal says is to provide a healthier mass snack product, but should cater to the taste palette.
“How can people buying from unorganized sector be moved to a packaged organized sector is what we’ll look at. So products will be higher priced than what is sold in lose today, but it is not going to be premium price. We are relatively strong in rural, in tier 2, 3, 4 cities, and not so strong in metros and therefore that would be our focus from a consumer perspective,” he added.
After the launch of traditional Indian snacks, the next phase of launches for Wipro Consumer in the packaged foods space will be ready-to-cook products. Here too, Wipro will look at RTC products catering to the Indian palette like upma, poha, sevai, etc. However, the immediate focus will be on Indian snacks and spices.
Wipro Consumer’s foray comes at a time when there are a whole host of branded players at a national and regional level that offer similar products. However, Agrawal says that he doesn’t see competition from an established multinational player in the space they are looking at.
“For local snacks there are no established player, only local players exist. The biggest advantage we have is that we decide our own fate, not governed by what somebody in the US or London is doing and therefore we can decide what categories we want to enter and chosen the categories of traditional Indian snacks, not classically potato chips, etc,” he said.
For more, watch the accompanying video