How India’s Godrej Client Merchandise innovates for rising markets

The Godrej Group’s innovation journey started in 1897, when Ardeshir Godrej patented a high-precision padlock that wouldn’t rust in India’s humid climate. In 1918, Godrej manufactured the world’s first cleaning soap constructed from vegetable oil as an alternative of animal fats. A century later, the corporate launched Magic, a 20-cent powder-to-liquid handwash that helped to democratize sanitation through the pandemic.

Immediately, Magic is bought by Godrej Client Merchandise Restricted (GCPL), the diversified Godrej Group’s main agency centered on rising markets, based mostly in Mumbai. With Nisaba Godrej, a fourth-generation member of the Godrej household, on the helm, GCPL has developed a powerful footprint within the fast-moving shopper items house. Bringing reasonably priced and sustainable dwelling care, hair care, and private care merchandise to rising markets is the mission of 43-year-old Godrej, who earned a bachelor of science from the Wharton College on the College of Pennsylvania and an MBA from Harvard Enterprise College.

Nisaba Godrej has pursued inorganic development by means of acquisitions in Africa and Indonesia. However to buoy natural development in India’s home market of 1.35 billion individuals, she additionally stays centered on natural quantity development, a powerful innovation funnel, investments in scaling new classes, and strengthening the corporate’s administration bandwidth. In 2021, GCPL, a public firm with a workers of greater than 11,000, reported a consolidated web revenue margin of 20{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} and web revenues of roughly US$1.5 billion. Godrej just lately spoke with technique+enterprise in regards to the challenges and alternatives concerned in catering to the evolving wants of her clients, at dwelling and overseas.

S+B: How will the worldwide financial restoration have an effect on your enterprise, each in India and within the different rising markets the place you might be lively?

GODREJ: I believe it’s laborious to anticipate that proper now, as a result of there are such a lot of variables to consider. Though we do see a Ok-shaped restoration, there’s a degree of frothiness out there with valuations. There was quite a lot of liquidity coming into India, and I hope that can encourage a capex cycle, as a result of that’s what is required for sustainable jobs and development. I’m neither pessimistic nor vastly optimistic—maybe considerably impartial, however banking on hopeful realism. In different rising markets, reminiscent of Africa, our enterprise has been doing nicely.

Generally, bigger corporations which were in a position to handle the scenario on the bottom, provide chain points, and inflation are doing comparatively higher [than smaller businesses]. However that’s a sliver of what’s occurring within the financial system, extra of a market share acquire somewhat than an indicator of the general financial system doing nicely.

Within the retail house, shopper merchandise associated to well being and security peaked through the second wave of the pandemic. For instance, everybody has had a masterclass on handwashing, and penetration for handwash has shot up from 19{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} to 34{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} in India. It could average in some unspecified time in the future, however a few of these pandemic-related shopper developments and calls for are right here to remain.

S+B: In the course of the pandemic, your hygiene enterprise grew by 24{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}, and family pesticides—your largest product class—by 15{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}. How has the pandemic modified the best way you consider your numerous product strains and companies, and the operations that help them?

GODREJ: In the course of the pandemic, we centered the place the demand was, which included hygiene and well being merchandise. Discretionary merchandise reminiscent of air fresheners didn’t do nicely. And as we all know, this has actually been the yr of the provision chain, with provide being impacted by unprecedented disruption. There was chaos everywhere in the world, and the one factor we realized was to rethink and concentrate on extra agile provide chains and localization, particularly in international locations that had been importing from China.

To handle the challenges and make the most of the alternatives, we want extra automation and extra capex. And I believe India has a possible benefit if we set ourselves proper by way of attracting extra manufacturing and constructing an ecosystem round it. With its strategic location, massive inside market, and a thriving personal sector, India is nicely poised to be the subsequent manufacturing vacation spot.

S+B: Your revenues are presently break up between India (56{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}) and different rising markets (44{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}). Going ahead, do you intend to focus extra on the home market and natural development?

GODREJ: What we’re searching for is double-digit quantity natural development. That’s our aspiration and our first precedence. We may even proceed to look out for fascinating acquisitions within the dwelling and private care house in India and Indonesia.

Our Indonesia acquisition of 2010 [Megasari Makmur Group, a leading manufacturer and distributor of a wide range of household products, including insecticides and air fresheners] has finished very well for us. The enterprise has grown 4 to 5 instances in worth during the last decade, and it has very sturdy EBITDA margins.

We struggled in Africa for a few years, however we’ve introduced the enterprise again to good development. Our EBITDA margins are transferring up. Nevertheless it’s nonetheless far off from being outlined as a hit. I wouldn’t say setting foot in Africa has been a mistake, as a result of there may be actually an enormous marketplace for high-quality merchandise at low costs. Consider Nigeria and its 200 million shoppers.

However in hindsight, I believe we spent an excessive amount of, and we did too many acquisitions. We must always have centered on three or 4 of the large international locations on the continent and never finished so many small acquisitions. Though it did give us a very good alternative to construct the model in cultural alignment—for instance, within the hair extensions class—we underestimated the affect of Chinese language corporations already working in Africa. Considered one of my blind spots due to my training [in the US] and publicity has been my Western-centric view of the world. However after we look rigorously at what’s occurring geopolitically and economically, having a Chinese language-centric view can be vastly necessary.

S+B: How does all this affect your technique for rising markets?

GODREJ: I believe it’s about innovating to develop accessibly priced merchandise that could possibly be distributed far and broad, with a low price to serve. For instance, family pesticides are crucial, particularly in locations with malaria points. That’s the reason our just lately launched multi-insect answer, Goodknight Energy Photographs aerosol [a concentrated, no-gas spray that costs less than $3], is seeing an encouraging response in Nigeria, and the demand will persist.

It’s a must to give shoppers what they need. Your choices must be differentiated and revolutionary. And in rising markets, making issues accessible, whether or not it’s from a worth level or distribution perspective, turns into extraordinarily necessary, as primary as it might sound. You need shoppers to exclaim, “Wow, the standard of this product is incredible!” After which once they hear the value level, it’s that added delight that they will truly afford to buy that product. That’s elementary.

S+B: With the rise of the omnichannel shopper, how are you assembly these evolving wants and concurrently guaranteeing model differentiation?

GODREJ: For older corporations like ours, quite a lot of the digital revolution isn’t just about gathering consumer-facing information by means of the e-commerce channel, but in addition, and maybe extra necessary, the effectivity that expertise and digital deliver.

Furthermore, the digital ecosystem opens up the flexibility to premiumize and launch digital-native merchandise that may solely be bought through an e-commerce platform. We did that with dishwasher tablets, anti-mosquito mattress nets, and detergent pods. However there are exceptions, too. For instance, for Goodknight [the top-selling household insecticide brand in India], we now have Naturals, a variety of merchandise fabricated from pure lively substances, that we launched on our e-commerce platform, as demand for that product is sort of sturdy. However now native malls are additionally asking for these merchandise, and we have to cater to that demand, as nicely.

The opposite fascinating advertising and marketing technique is direct-to-consumer [D2C]. This allows you to educate the buyer on-line after which use conversion advertising and marketing to get them to purchase merchandise on-line. Influencer advertising and marketing and product promotion through social media are additionally set to alter the sport. For instance, throughout a shopper go to in Delhi, I requested a girl who had purchased Magic, our powder-to-liquid handwash product, if she had seen our advert. She advised me, “No. Somebody despatched me the image on WhatsApp. So I purchased it.” Phrase of mouth has acquired a brand new that means altogether.

S+B: How does your said function, “Bringing the goodness of well being and sweetness to shoppers in rising markets,” tie into sustainability?

GODREJ: I imagine you possibly can rethink how the whole lot is completed—for instance, constructing merchandise and provide chains for rising markets in a sustainable method. As incomes and per capita consumption rise, we should always not construct Western fashions of consumption. As a result of if we devour just like the West, it’s not going to work out nicely for us.

For instance, Magic is geared toward upgrading individuals from bar cleaning soap. In India, the cleaning soap market was valued at $2.6 billion in FY2020. Forty p.c of the nation’s cleaning soap market is within the less-than-13-cent class that’s accessible to shoppers. At its 20-cent worth, Magic handwash [which comes in a sachet and needs to be mixed with water] replaces using two bars of cleaning soap. There’s a particular worth for the buyer. Additionally, as a result of it’s lighter, 4 instances extra handwash refills will be transported per truck, utilizing much less gas for transportation, and reducing carbon emissions.

We have to take a look at such fashions. We’re nonetheless utilizing plastic in Magic’s packaging, however with innovation, that too will be introduced down. And importantly, as a result of we’re in a position to decrease emissions by utilizing much less gas, there isn’t a extra price related to utilizing clear applied sciences to supply it—we don’t have any inexperienced premium on this product—and we make extra margin on it than we do with bar cleaning soap. We have to now concentrate on how we innovate to seek out that circularity, the place it ticks all of the packing containers.

S+B: Godrej goals to change into carbon-neutral and scale back particular power consumption by 30{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}. What steps are you taking to attain these targets—for instance, with regard to manufacturing and provide chain practices?

GODREJ: We’ve taken a number of steps to maneuver towards web zero or carbon neutrality, and that is consistent with our Good and Inexperienced Imaginative and prescient 2025 that we had introduced in 2010. We’re centered on bettering power effectivity to align with our [ethics pronouncements] EP100 dedication, by bettering the useful resource effectivity of all our processes. [EP100 is a global initiative that brings together companies committed to improving their energy productivity by deploying efficient technologies and practices.] Which means we’re utilizing much less power, water, and uncooked supplies, whereas growing productiveness.

We do have some challenges, for instance, our inexperienced manufacturing efficiency remained flat after fluctuating within the first half of 2021 attributable to lockdown measures and intermittent operations, and our water utilization spiked. On the brighter aspect, we now have achieved zero waste to landfill. We’ve got additionally began doing assessments that we weren’t doing 5 years in the past to make sure that the products and providers we offer are protected and contribute to sustainability all through their life cycle. We’ve streamlined our tools and use briquette-fired boilers somewhat than oil-fired boilers throughout the Group.

We additionally supply 29{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} of our power from renewable sources reminiscent of photo voltaic PV set up, and we’re collaborating on power effectivity with our provide chain companions, as a result of we now have a sustainable provide chain program. We’re 100{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} compliant with prolonged producer accountability (EPR), as we take again post-consumer plastic packaging waste equal to the plastic packaging we ship out.

S+B: You usually discuss creating an equitable world alongside a greener world. How do you method range and inclusion inside your group?

GODREJ: I can not emphasize sufficient the significance of getting totally different individuals and totally different views on the desk to affect decision-making. When Parmesh Shahani, who leads our range and inclusion agenda, first spoke about providing gender transition surgical procedure [as a company benefit], my thought was, what if individuals simply be part of our firm to make use of this profit? I quickly realized it was a blind spot triggering these ideas, even in me, with my liberal upbringing. After all, all of us have unconscious biases and blind spots, so we want range on the desk to affect and provoke change. A lot of our insurance policies supporting LGBTQ staff have been in place nicely earlier than the 2018 landmark determination that decriminalized homosexuality in India.

It isn’t nearly being various, but in addition being inclusive, and you will need to design for that. Right here, you will need to distinguish between the concept of your greatest self and your true self. I might offer you all of the numbers that inform you about our greatest self. For instance, 45{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942} of our workforce is feminine, and we now have the best variety of ladies board members of any listed firm in India. However that doesn’t say a lot as a result of I get to determine who’s on the board, and it’s straightforward to push it by means of.

It’s due to this fact critically necessary to speak about our true self—not nearly what we do nicely, however what we’ve realized and the place we’re failing, as a result of that’s the place you get the help to enhance and be higher. For instance, we’re not on the equal illustration [rate] we purpose at for girls. In India and at Godrej, we grapple with already low and lowering participation charges of girls within the workforce. India’s fee of feminine participation within the formal financial system is as little as 24{bce2ac57dae147ae13b811f47f24d80c66c6ab504b39dda4a9b6e8ac93725942}; we’re simply barely increased than Saudi Arabia. Our inside research at Godrej present that girls’s engagement is decrease than that of males, and girls’s attrition is increased. Whereas there isn’t a gender-based disparity in pay, biases—presumably cultural—play out in 360-degree suggestions. [For example,] developments point out that males are likely to fee ladies decrease than they fee different males.

S+B: How does this tie in to your means to construct belief together with your stakeholders?

GODREJ: We’ve got the humility to be taught. I believe in our 125-year historical past, we’ve in all probability made errors many instances, however we come clean with them, and are available again to the desk and say, how will we get higher?

In the course of the pandemic, we’d determined that if there was any time that we’d take the hit in losses, it might be now. Our individuals and communities and their security could be a precedence. This was grounded in one thing my father, Adi Godrej, all the time says, and that we observe: It’s straightforward to dwell your values when the going is nice. What actually issues is the way you stick by these values and dwell them when you’ve got powerful selections to make.