Marico SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Increased demand in the economy to drive consumption: Increased demand in the rural economy, buoyed by better agriculture and non-farming activities will lead to drive in consumption. Further factors such as rising income, rising urbanization, rise of nuclear households, as well as a growing workforce will drive growth in FMCG sector in India which will increase the market potential for Marico. India as an economy is no longer fragile, with strong capital inflows which boosted the foreign exchange reserve to USD 350 billion. India's nominal GDP is expected to increase significantly from FY 2021, when it was valued at INR 198.01 trillion (US$2.55), to FY 2022, when it is projected to reach a level of INR 236.65 trillion (US$3.05 trillion) at current prices. Retail inflation has come down significantly to 7.01% in June 2022. In addition, the FMCG sector valued at USD 110 billion is one of the largest in India. The sector will grow by a CAGR of 14.9% over the next 5 years (2022-2027). With researchers forecasting a normal monsoon, Marico can continue focusing on its strategy of “fewer products, higher volumes” strategy to drive sales growth.

2. Promising growth in rural markets: As the Indian government plans significant investments in developing rural infrastructure, it presents a positive growth area for Marico with rural consumption heavily dependent on nourishment (approx. 50%), Marico can leverage its already robust distribution network to establish strong presence in rural markets. This applies to markets with similar demographics in Bangladesh, Egypt, Vietnam and South Africa. They invested in improving the rural GTM network as well as driving relevant pack and portfolio mix to capitalise on this increase in rural consumption. Marico increased its rural stockist network by 25% in FY20. While they took a break in FY21 due to COVID-19 disruptions, they re-started the task of expanding its rural network by another 25% over the next two years in Q4FY21. They also made significant progress in digitizing the rural network, increasing the efficiency of rural spending.

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Environmental protection and sustainability initiatives: As far as the contribution of Marico towards reducing environment footprint is concerned, the FMCG major had set multiple targets to fulfil including reduction in energy, greenhouse gas, paper consumption, waste recycled, etc. 80% of Marico’s in-house water consumption is conserved from the capacity created by farm ponds and other conservation projects. Marico has achieved an 80% reduction in GHG emissions intensity (Scope 1 and 2) compared to the base year FY13 and a 38% reduction in intensity compared to FY20. Marico aims to reduce GHG emission intensity (Scope 1 and 2) tCO2e per unit crore revenue by 75 percent by 2022, using FY13 as the base year. Marico has created a cumulative water storage potential of approximately 215.05 billion litres through desilting of water bodies in Maharashtra, UP, MP Karnataka, and Rajasthan, as well as the construction of farm ponds in Maharashtra, Karnataka, Tamil Nadu, and Puducherry.

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