With the annual report of Godrej Consumer Products, the parent company of Good Knight, Darling, Cinthol, HIT, Godrej Expert, Godrej Aer, Godrej Ezee, Godrej Expert and many more, seeing the light of day, Sudhir Sitapati, Managing Director and CEO, GCPL, mentioned that the company moved up the ladder from being the 17th largest advertiser in India to the fifth rank in 2023.
“In India, we are now spending over INR 1,000 crore in advertising, from INR 350- 400 crore a few years ago; a significant increase,” he said.
Adding more on the advertising front of the FMCG major company that he helms, Sitapati highlighted that in line with the company’s strategy of category development, GCPL has made significant investments in advertising.
“We were the fifth largest advertiser in India in 2023, from being number 17 in 2021. We are adding to this with investments in distribution. These investments are funded primarily by our keen focus on simplification. We are focusing on four elements of simplification: SKUs, People, Operations and Processes. We have reduced our SKUs overall by roughly 30%. In Raymond Consumer Care, for example, we reduced 550 SKUs to just 100. On people, we also reduced the number of managers overall through creating larger, richer roles, and introducing more modern tools. So, we have actually physically reduced in size despite our growth,” he said.
Moreover, he also opined that since GCPL realised that its categories were being run differently across the world as advertising agencies were different and production was being done differently leading up to both additional cost and not taking the best from one part of the world to another part when everyone was reinventing the wheel, the company moved from multiple categories to a global category structure.
“From multiple briefs, we have a single brief, because consumer tasks are the same. From multiple agencies, we moved to a single agency, which is our own in-house agency, the LightBox. From multiple executions, we are moving to a single execution; shooting differently in the same location with different models for different countries. This is a very efficient process in the context of massive advertising increase and resulted in savings of 40 bps,” he asserted.
Elaborating further, he also went on to add, “The strategic focus on achieving double-digit volume growth in key markets like India and Indonesia is pivotal to driving our aspirations for sustainable growth. Despite challenges such as lower consumption levels in India, we successfully achieved an organic UVG of approximately 7%, aligning with our target of high single-digit growth in this fiscal year.”
In Sitapati’s POV, all of this is a result of the company’s strategy which is focussed on ‘category development’.
“Our strategy is simple: category development. We focus on category development in underdeveloped categories through product innovation, building relevance, creating access and increasing marketing investments; and fund this through a digitally enabled radical simplification of how we work. We don’t do many things, but instead choose a few winning things to double down on. UVG is our most important measure and we have taken calls to really drive UVG versus, for example, sales growth,” he elaborated.
Furthermore, he also pointed out that what GCPL prioritises is spends on brands and less on cost to serve; more automation and less working capital, for the company is guided by a one page Goodness Manifesto on creating value for its various stakeholders, while continuing to live the Godrej values and serve its purpose of bringing the goodness of health and beauty to consumers in emerging markets.
“We remain on track in our journey to reduce wasted cost and deploy it to drive profitable, sustainable volume growth. By setting consistent volume growth targets of 9-10% in the upcoming years for India, we aim to establish a robust trajectory for future expansion and market leadership,” he stated.
Commenting on GCPL’s increasing Total Addressable Market (TAM), he stated that the same has been possible by investing in categories of the future like Fragrance and Sexual Wellness.
“We are expanding our global reach and now serve consumers in over 80 countries globally. Products like Aer Pocket and Godrej Expert Shampoo Hair Colour, which are Indian innovations, are finding acceptance in global markets. We have set up a GCPL International business to take them across the world. We are focused on embedding our Operating Philosophy across GCPL. Our guidance to our teams is that when faced with a decision, go back to the Operating Philosophy,” he stated.
In GCPL’s Annual Report for the fiscal year ended March 31, 2024, he also pointed out that the company is seeing actions showing results and said, “Less is more: Our manufacturing footprint will reduce by 40% by fiscal year 2025-26. Consumer first, business second: Despite the cost inflation in fiscal year 2022-23, we didn’t cut back on media spends. In Indonesia, we increased the dosage of active in Household Insecticides by 5x. There was a loss in gross margins, but we said we would absorb this and save cost elsewhere. It’s the right thing to do for consumers. Much of the success in the category today has been driven by that decision.”
“Tomorrow before today: This shows in the investments we are making in advertising and publicity. We have invested INR 1,000 crore of CapEx in two manufacturing sites in India. These will be world-class manufacturing sites, serving not just India, but hopefully over a period of time, the globe. People and planet, alongside profit: While we are viewed in India as a highly sustainable and responsible company, there is work to be done for us to be seen as a sustainable company globally,” he added.
Sharing his views on how GCPL is leveraging category development as the cornerstone of its strategy globally, Sitapati stated, “We have a four-pillar model for category development. The first is Relevance: Why should I use the category? That’s the most fundamental question. The second is Access: I want to use this category. It’s relevant, but it’s too expensive. Can I try it? The third is Availability: There are many new categories and retailers are hesitant to keep new categories in their stores because they want their old categories. The fourth is Trials: Get consumers to try the category at least once.”
Picking from here, he also mentioned that GCPL is investing significantly in ‘Availability’ after a long time as the company believes that it should invest in distribution only when it gets the basic blocks on the brands right.
