Nisaba Godrej Is Betting On Product Innovation To Drive Growth
New product development will contribute 20% to Godrej Consumer’s revenue in medium term.
Generation X at Godrej Consumer Products Ltd. is looking to drive growth through product innovation. The company is banking on the household insecticides segment – which contributes nearly half of its India revenue – to expand volume growth going forward, executive director Nisaba Godrej told BloombergQuint.
Countering Seasonality
The 11 percent degrowth seen in the household insecticides segment in the first quarter of financial year 2017-18 was largely due to the delay in the onset of monsoons. But the momentum picked up with the progress of the monsoon season, Nisaba Godrej said.
The company is on track to grow at double digits despite a slow first quarter, according to Sunil Kataria, business head for India and SAARC region at Godrej Consumer Products. The growth in the household insecticides segment should however, be looked at from a yearly perspective, he pointed out.
R&D Spend
The company has also increased its emphasis on research and development as well as product innovation in the last few years, and is working to launch new products in key segments like household insecticides and hair and fabric care, Nisaba said.
The company is focusing on newer consumer relevant product experiences within all categories such as skin care, household insecticides, hair care, air care, and fabric care.Godrej Consumer Product Annual Report 2015-16
In the financial year 2015-16, Godrej Consumer spent 0.37 percent of its total sales turnover. Of this, it spent Rs 17.34 crore for research and development, the company said in its annual report 2015-16.
New Product Development
Godrej gets nearly 17-18 percent of its revenue from the new product development segment which includes products which have been in the market for under 36 months. The challenge is to ensure continuous flow of innovative products in order to sustain revenue contribution from the segment at that level, Kataria said.
The company aims to increase revenue contribution from this segment to 20 percent in the medium term.
Expanding The Market
The leader in the household insecticides (HI) market, Godrej earns a revenue of over Rs 1,500 crore from this category. The indoor HI market is over Rs 4,000 crore, while the outdoor market is just Rs 126 crore. The challenge is to expand the outdoor market to the same size as the indoor HI market, Nisaba said.
To achieve that, Godrej is banking on product innovation. It recently launched a slew of new products including a fabric roll-on mosquito repellent, targeting mothers and children. Nisaba said she’s even used it on her two-year son.
Though the past eight quarters have been slow for the industry, Godrej has been able to counter some of that slowdown, thanks to product innovation, Nisaba added.