Chief financial officer Pawan Agarwal of Marico, a consumer goods firm, stated in an interview with FE on Tuesday that the company will invest between Rs 80 and Rs 100 crore over the next three years to expand its direct distribution throughout the nation.
The corporation will increase its direct outlet reach from 1 million to 1.5 million by FY27 as a result of the “Project Setu” campaign. Marico currently uses direct and indirect distribution methods to reach 5.8 million locations nationwide.
Amidst a revival in the fast-moving consumer goods (FMCG) sector, Marico has launched an initiative to expand its distribution network. This is in line with the overall strategy of organized FMCG companies to aggressively pursue direct reach. According to market research firm NielsenIQ, on Tuesday, growth in rural areas surpassed that in metropolitan areas for the first time in five quarters, and this trend should continue in the upcoming months.
According to Agarwal, Marico will benefit from “Project Setu” in two ways. One of the ways that Project Setu will benefit the business is by improving the product selection in stores, which will aid in premiumization and diversification. The viability of general trade, which has been under strain, will also be improved, he added in the second place.
Producing brands including Parachute and Saffola, this company was among the first to identify issues with general trade (GT), which accounts for 70–80% of sales for fast-moving consumer goods (FMCG). As part of its efforts to revitalize general trade, Agarwal stated that the company has reduced primary stock and selectively extended loan terms to increase the profitability of GT partners, among other measures, over the past few months.
“Project Setu,” according to the Mumbai-based company, will be financed by reallocating resources, i.e., by optimizing promotional expenditures and indirect distribution costs in the wholesale channel, lowering promotional expenditures for organized trade, and reallocating savings from enhancing process efficiency and cutting waste.
According to Agarwal, Marico is seeing an increase in market share as a result of programs like “Project Setu.”
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