New Brands Will Not Cannibalise Sales Or Buyers, Says Wipro Consumer CEO
The acquisition is part of the FMCG maker's strategy to tap the lower end of the country's Rs 28,000-crore soap market.
Wipro Consumer Care and Lighting Ltd., a subsidiary of Wipro Enterprises Pvt., has acquired three soap brands—Jo, Doy, and Bacter Shield—from Mumbai-based VVF India, marking its third acquisition over the past 12 months.
The acquisition is part of the consumer goods maker's strategy to tap the lower end of the country's Rs 28,000-crore soap market and enter new geographies in a bid to grab the number one crown from Hindustan Unilever Ltd.
Jo toilet soap has a significant role in the country's north, east, and west markets, while Doy operates in the premium soap segment. Bacter Shield has an antibacterial range of soap and handwash. These brands have a combined market share of 11%. Together, they recorded revenue of over Rs 210 crore during the financial year 2023, the company said in a release.
The company didn't disclose the deal value.
"The three new brands complement our existing portfolio and will give us a stronger foothold in key markets," Neeraj Khatri, chief executive officer of Wipro Consumer Care and Lighting, India and SAARC, told BQ Prime.
Wipro already sells brands such as Santoor, Yardley and Chandrika in the country. Santoor is the second-largest soap brand after HUL's Lifebuoy. In FY23, the brand reported sales of over Rs 2,650 crore.
Still, the new brands will not lead to cannibalisation of existing customers or sales, Khatri said.
A sub-popular segment, or products priced below Rs 25, comprises a big chunk of the toilet soap market. But this market has remained untapped by Wipro so far, said Khatri. Jo, he said, "perfectly" fits into the segment as it will help the company attract buyers put off by the price of Santoor.
Jo, for instance, will be priced below Rs 25 for a 100 gm pack as compared with Santoor's 100 gm pack worth Rs 35.
"Santoor caters to the popular price segment and does significantly well in the south and west, while Chandrika is a sub-premium brand and does well in certain markets, while Yardley is a premium play in soaps," he said.
Both Jo and Doy are expected to help Wipro Consumer penetrate deeper into the northern and eastern parts of the country, where Santoor isn't that big.
"North and east comprise 65% of sales for sub-popular brands," he said.
Wipro Consumer Care recorded sales of Rs 10,000 crore in FY23, half of which was generated from its overseas operations. In India, the company grew 17.7% to become the fastest-growing FMCG brand.
This year, however, Khatri expects growth to taper off in line with that of the industry due to an inflation-led consumption slowdown. "Our growth would probably be in high single digits this year, unlike last year, yet we are hoping to grow ahead of the industry," Khatri said. He expects the urban markets to drive sales, while rural demand may take time to recover.
Inorganic expansion has been Wipro's key growth strategy.
The latest deal marks the company's 15th acquisition so far. The other acquisitions by the company over the years include Glucovita, Chandrika, North-West, Unza, Yardley, Bio Essence, and Splash Corp.
In the past 12 months, the company has acquired two Kerala-based brands—Nirapara and Brahmins—as it seeks to consolidate its position in the market and expand beyond its traditional home and personal care offerings.
