FMCG: THE CULTURE OF SUCCESS

An FMCG success is a symphony of perfection, a perfect product at the perfect price, available at the perfect store, at the perfect time in perfectly attractive packaging. Oh! Don’t forget, communicated perfectly with a brand name that sounds well, perfect. The need for such perfection only increases manifold if this success has to be achieved in India.

With its diverse geography, languages, culture, climate, income groups and tough terrain, India, is the most challenging yet exciting market in the world. From “I’m not like those people!” to “We are like this only!” the Indian consumer switches individuality and homogeneity with the same ease as Sachin Tendulkar shuffles a ball from the Off-stump towards Square Leg.

So, a few years ago, when I was given the opportunity to analyze the FMCG sector as a profession, I was both, salivating in excitement and palpitating with nervousness. “Watch for changes, small & big, just watch the changes like a hawk!” is the mantra I started with, and still follow with extreme radicalism.

As time went by, I realized, change of Top Management, is among the bigger changes that happen to an FMCG company’s future discourse. An even bigger change, however, is when an external entity joins at the helm. 

While, each individual has a different outlook & goals toward a company’s growth, some have made a bigger impact than others. On further analysis, the similarities between these leaders who made all the difference were stark. The revelation was – Great FMCG Leaders in India come from “UniPepCad.”

Now, before you start Googling this University for your progeny or your next MD, let me tell you, it’s not one university, but 3 companies from where great FMCG leaders have emerged. Unilever, Pepsi & Cadbury’s. I’ll talk about all these leaders soon, but, come to think of it, these 3 FMCG giants in India have succeeded in all the aforementioned perfections. Some of the deepest & the widest distribution chains, with the most popular & broad array of products, iconic brands at attractive prices, communicated most effectively in ads that would make any of those World’s Best Ads listicles.

HUL is a case study in supply chain management, with so many SKUs and the widest array of products ranging from Ice Creams that won’t last beyond 20 minutes to Soaps, shampoos and detergents that have months of shelf life. Cadbury’s is a Rule Book on how to create a cultural change in a country that is divided by Motichoors, Gulab Jamuns, Sandeshes & Payassams and unite it with “Kuchh Meetha Ho Jaye.” 

The reason I chose Pepsi over Coke is because I believe, during the peak of Cola wars, Pepsi created a strong niche for itself and had a bigger mind share than Coke. Pepsi had some phenomenal Ad Campaigns before Coke came up with the “Thanda Matlab” series. I vividly remember most of their Cricket & Bollywood ads. While, I don’t have the data to prove Pepsi’s supremacy over Coke during those days, I reckon they did very well, and there’s “Nothing Official About It!”

So, Here’s presenting to you, the hall of fame, from the hallowed precincts of UniPepCad: **Drum Rolls**

VARUN BERRY, MD of Britannia Industries

An anecdote before Varun’s story – the city of Mumbai is home to an iconic 95 Year Old Café called Britannia which saw its fortunes improve further due to their iconic selling dish – Berry Pulao. Now that you know that the combination of Parsi, Britannia & Berry is quite lethal, Varun Berry’s exploits at the Wadia-owned Britannia shouldn’t surprise you one bit. Add to that, he’s an illustrious alumnus of the UniPepCad, having worked at both Unilever & Pepsi before embarking upon the cookie journey.

Prior to joining Britannia as COO in 2013, Varun served as the Chief Executive Officer of Food Business at PepsiCo India Holdings until February 2012 from 1993. He also served at Hindustan Unilever in various marketing and sales roles. Under his watch as MD, the revenue of Britannia increased from 6185 Cr in FY15 to 9054 Cr in FY17. The biggest impact he made was on reduction of costs, and improvement in margins which surged from 9.1% in FY15 to 14.1% in FY17.

As a result, the profitability of Britannia increased 2.2X under his watch and the shareholders celebrated this stint as the company’s stock price surged 6X from the date of his commencement to now.

BHARAT PURI, MD of Pidilite Industries

Bharat Puri has distinguished pedigree. His initial learning came from the famous cousin, Aditya Puri (MD of HDFC Bank), thereafter he learnt at the IIM-A and joined Asian Paints in 1982. The UniPepCad leg of his life came in 1998 when he joined Cadbury India Limited.

Since 2002 he served as the MD of Cadbury’s and was at the helm of affairs in the Global Chocolate Category in 2008. During this time, the company faced its biggest challenge ever, the worms-fiasco, which Bharat & team handled in a manner that is stuff of B School Case Study Legends.

Bharat has been an Executive Director at Pidilite since 2008 and was anointed as the MD in 2015. With Bharat as MD, Pidilite saw its earnings improve from 508 Cr in FY15 to 863 Cr in FY17. Dalal Street has rewarded the performance with a stock price jump of nearly 50% during his tenure so far.

SAUGATA GUPTA, MD & CEO of Marico

The ever-smiling, shy, engineer from IIT Kharagpur & Management Graduate from IIM-B is responsible for the healthy hair & healthy heart of millions of Indians. Most importantly, he’s responsible for the healthy financials & market position of Marico, the company with stellar brands like Parachute, Saffola and Nihar.

His stint at UniPepCad came in at the start of his career at Cadbury's where he spent 9 years in various roles in Sales and Marketing. Saugata’s been the CEO of Marico since April 2013 & Managing Director since March 31, 2014. Under his watch, the company’s revenues jumped from 4596 Cr in FY13 to 5936 Cr in FY17.

He ensured, higher cost cutting and better performance of premium products led to margin expansion of ~600 bps and Profit growth of 100% in 5 Yrs since FY13. With the company’s bottom line increasing, shareholders have tripled their bounty on Marico from 106 to 320 as I write this.   

ANAND KRIPALU, MD & CEO of United Spirits

Anand has been the MD & CEO of United Spirits since September 1, 2014. Prior to joining USL in 2014, Anand as worked at Cadbury’s in various capacities that include, the President of Asian Ops, President of South Asia and Indo-China, MD of Cadbury Schweppes Asia-Pacific and MD of Mondelez India Foods Private Limited.

He’s got a double degree from UniPepCad as he’s not only worked with Cadbury’s but also Unilever. He joined Unilever in 1983 as a management trainee. He has been with Unilever for over two decades. Anand, like Saugata too, is an IIT, IIM graduate. 

Working in a sector as heavily regulated as alcohol in India, Anand’s biggest contribution can be witnessed in the company’s steady operational performance. The EBITDA of United Spirits has grown to 1429 Cr in FY17 from a loss of 138 Cr just the year before Anand joined. USL has seen a volatile run on Dalal Street, but shareholders under Kripalu’s watch are richer by 52% already.

PRATIK POTA, CEO of Jubilant Foodworks

This, to my mind, is the most phenomenal of all turn-arounds we’ve seen in recent history. When Pratik joined Jubilant Foodworks, the company had just reported it’s weakest ever financial performance, lost market share and the customers and shareholders alike were Dumpin’ Dominos rather than Dunkin’ Donuts. The stock price was at a near record low of 761 a piece, down 60% from its previous peak when the man from Pepsi entered the pizza parlor.

Prior to joining Jubilant Foodworks in April 2017, Mr. Pota He joined PepsiCo India Beverages in September 2005 and later, went on to become the CEO of Nourishco beverages, the JV between Pepsi and Tatas. He too, like Varun Berry served at Hindustan Lever as a Manager of Marketing. Before joining PepsiCo, and after working at Unilever, he also served in Airtel for four years where he played a key role in launching Airtel Mobile operations in Western India.

This electrical engineer from BITS Pilani and Management Student of IIM-C has managed to electrify the floundering Pizza outfit with an improvement in Products, Reduction in Costs and a new found focus towards bringing Dominos’ Glory days back.

In the 9 months that Pratik has been at the helm, Jubilant Foodworks has reported the best financial performance in recent times, improved Same Store Sales growth to multi year highs and the stock price has surged from lows of 761 to above 2350 as you read this. His is the most recent entry into this list of UniPepCad graduates and his journey needs to be watched closely.

As I wind this list down and look back up on the amazing feat these greats from UniPepCad have achieved, I only thank my stars for this wonderful opportunity to have seen a few of these stories play out right in front of my eyes and the honour of having spoken to most of them.

By the way, I’m also watching out for any signs of a new induction in this phenomenal UniPepCad List. The Hawk-Eye has spotted a certain Mr. Navneet Saluja, who’s been appointed the MD of Glaxo Smithlike Consumer effective Jan 2018. This is a company that makes Horlicks, Boost, Crocin, Iodex and Sensodyne. It has strong brands, which have underperformed for a while. Mr. Saluja’s official profile says - He has over 30-year experience and worked with several organisations including Cadbury, Gillette, Kellogg's, Infocom and Reliance Retail, among others. So far, the analyst community is excited about the prospects of the company and they’ve also launched a new campaign to assert Horlicks’ place in the market of good nourishment.

Whether this culture of success from UniPepCad continues or not, only time will tell. But for FMCG hawks, it’s a chapter that’s being widely read.

Keep The feedback Coming.

Much Love.

M

PS: Don't treat that as investment ideas; I personally Don't Invest/Trade.