Banking On A Favorable Monsoon For A Stronger Second Half, Unfazed By Reliance's Entry Into FMCG: Wipro Consum

A Favorable monsoon can help see a better second half of the year in smaller towns and rural areas, according to Wipro Consumer Care and Lighting CEO Vineet Agrawal. The demand perspective for consumer items in the market has improved slightly, but obstacles still remain. According to Agrawal, who is also the Managing Director of Wipro Enterprises, the business is also not overly alarmed by Reliance's foray into the FMCG market because customer preferences in the sector are quite strong and there is a high level of brand loyalty.
For FMCG companies, expanding into smaller towns and rural areas remains difficult, albeit things are getting better, he said.

From the demand perspective, the market has improved a "little bit but it is still a challenge", Agrawal told PTI.

"It's not like the good old pre-Covid era and I think smaller towns and rural areas are still a bit of a challenge but things are improving. Hopefully, if the monsoon is good, we will see a better second half. Fortunately, the cost prices have come down, initially, they jumped last year due to the Ukraine war. We are seeing positive things as far as the market is concerned," he said.

Customers in various segments have already received the benefits from Wipro Consumer Care and Lighting, which owns brands including feminine toiletries brand Enchanteur and sandalwood soap brand Santoor.

"We already dropped the prices in soap, for example, we were selling at (Rs) 38 for 100 gm, reduced to (Rs) 36. We have done price corrections," he said.

Agrawal said that price is not the sole weapon when discussing how billionaire Mukesh Ambani-led Reliance entered the FMCG market with aggressive pricing.
However, he also added:" Reliance is a tough competitor in any category that they are in. They are not only tough but relentless. They think big, disruptively."

Agrawal also added: "We are yet to see them in the personal care products because in the segment consumer preferences are very strong. People do not switch from one product to another product easily. If a consumer uses a brand name, he does not change easily. Similarly, in food, he does not change easily."

Reliance Retail, a step-down division of RIL, has entered the FMCG market. It expresses aspirations to be a significant player in the FMCG (Fast Moving Consumer Goods) market, which is worth USD 110 billion.

Although just a few markets carry the items of RCPL, the FMCG division and wholly-owned subsidiary of Reliance Retail Ventures Limited (RRVL). They now cost between 30 and 35 percent less.

Agarwal noted that there are other factors that people consider in addition to price while purchasing consumer items.

"But yes, we are aware of the fact that Reliance is a strong competition and disruptor and is relentless. One has to be cognizant of that fact and give value to the consumer," he said.

A tremendous increase across all countries, brands, and categories has enabled Wipro Consumer Care and Lighting, a division of Azim Premji-led Wipro Enterprises, to surpass the milestone of Rs 10,000 crore in overall sales in FY23.

In FY23, its domestic FMCG business expanded by 17%. With sales of more than Rs 2,650 crore, Wipro's sandalwood soap brand Santoor is now the second-largest competitor in the Indian market. While Wipro Consumer Care and Lighting's Enchanteur brand of feminine hygiene products has also surpassed Rs 1 billion in sales.

When asked about the outlook Agrawal said: "Last year was exceptionally good for us. Whether this will be as good, would be difficult to answer as we are at the beginning of the new year (financial)."

From its humble beginnings as a vanaspati brand in 1945 with a factory in Amalner, Maharashtra, Wipro Consumer Care and Lighting has come a long way. Today, it boasts a global presence in 60 countries, with 18 factories and over 10,000 employees. Impressively, over half of its revenue, 51 percent to be exact, comes from international businesses. The company has strategically focused on expanding in developing markets, particularly in South East Asia.