Marico - Managing 'Saffola'

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Case Details:

Case Code : MKTA005
Case Length : 14 Pages
Period : 1990-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Marico Industries
Industry : FMCG, Fast Moving Consumer Goods
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Saffola provides us with an ideal platform to capitalize on the trend of increasing health consciousness by offering a number of new food products that are able to cater to needs in this area.

- Arvind Mediratta, Erstwhile Head-Marketing, Marico Industries Ltd.¹

Introduction

Marico Industries, a well-known Indian Fast Moving Consumer Goods (FMCG) company, offered unique and ethnic Indian products. Marico was famous for its 'Parachute' and 'Saffola' brands. In a survey carried out by 'Brand Equity' of The Economic Times in early 2003, for India's 100 most trusted brands, Saffola ranked 75^th and Parachute ranked 29^th. Marico's brands had shown resilience against competition and maintained their market shares over the years. Marico had maintained a steady sales and profit growth over the years with a consistent Return On Capital Employed (ROCE) of over 30%.

In a survey of 500 companies conducted by 'Businessworld' in 2003, Marico ranked 16^th in terms of ROCE while it ranked fourth among FMCG companies. Marico's products reached around 100 million Indians every month through 17 lakh retail outlets, which were serviced by its nation-wide distribution network comprising six regional offices, 32 Carrying and Forwarding Agents (CFAs) and 3600 distributors and stockists². Marico entered two new lines of business in the year 2002-03 - Skin Care services through its 'Kaya Skin Clinics', and Ayurvedic Skin Care Products business in the US by its acquisition of a controlling stake in 'Sundari LLC', which owned the Sundari line of skin care products.

Background Note

Marico's origin went back to 1862, when Kanji Morarji, set up a small trading business for spices sourced from Kerala, in Bombay. In the early 20^th century, he inducted his cousin Vallabhdas Vasanji into the business. Together they exported pepper and ginger to Europe. The title of 'Mariwala' ('mari' meant pepper in Gujarati, an Indian language) was attached to Vallabhdas Vasanji, owing to his expertise in pepper trade.

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1] In his interview with exchange4media's Nikhil Gupta, www.exchange4media.com, 2003.
2] "CEO Interview," Global CEO, October 2003.


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