Marico Ltd
NSE:MARICO
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Marico Ltd
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Ladies and gentlemen, good day, and welcome to Marico Limited's Q1 FY '23 Earnings Conference Call. We have with us from the senior management of Marico represented by Mr. Saugata Gupta, MD and CEO; and Mr. Pawan Agrawal, CFO. [Operator Instructions] Please note that this conference is being recorded.
Before we get started, I would like to remind you that the Q&A session is only for institutional investors and analysts, and therefore, if there is anybody else who would like to -- who is not an institutional investor or analyst, but would like to ask questions, please directly reach out to Marico's Investor Relations team.
I would now like to hand the conference over to Mr. Saugata Gupta. Thank you, and over to you, sir.
Hi. Good afternoon to all those of you who have joined the call. FY '23 has started on a soft note for the FMCG sector in India, which continued to face some macro headwinds. Retail inflation has stayed above RBI's target limit for 6 consecutive months now, thereby draining consumer wallets. With companies passing on the impact of rising input costs and currency depreciation, consumers were seen downgrading and downtrading across various FMCG categories.
In this challenging context, domestic volume growth -- volumes in Q1 were certainly well below our expectations. The performance is particularly dragged by Saffola Oil, which posted a volume decline in the 20s giving -- given the high in-home consumption in the base and severe downtrading headwinds in the category because of the absolute pricing of around INR 230 a liter. Ex Saffola Oil, our domestic volumes were up marginally. One should appreciate that this quarter's performance of various companies should also be looked in, in view of the portfolio and the inflation faced in the raw material basket.
For example, we had a high base because 30% of our portfolio is in-home consumption which is Saffola and Saffola food and only 5% is out-of-home and discretionary mainly [indiscernible]. So therefore, we are disadvantaged this quarter. While the optical 3-year volume CAGR does not measure up to expectations either, we must acknowledge the material impact of Q normalization between Q4 and Q1 since the onset of pandemic. We had earlier mentioned this in the calls of FY '21, and FY '22 quarter 1 that quarter 1 FY '20, which is the base year accounted for 30% plus of the FY '20 annual revenue and compared to our 26% to 27%, which normally happens in Q1.
Therefore, if you take cuts CAGR versus the average monthly run rate for the full year FY '20 and this is the way we are internally tracking our performance, the growth here CAGR comes to around 6%, which has certainly provided a much better perspective on our performance over a 3-year period. Delving into India business, let me give you a flavor of the key trends in our categories and what is the strategy and outlook for the year ahead. In Parachute Coconut Oil, while loose to branded conversion float because of the inflation, we have continued to lead the sector with market share gains. Other organized players have gained marginal market share or lost market share, and the Parachute market share gain in both volume and value is the highest amongst all organized players in the CLO market.
As far as deep discounting is concerned, we plan to counter it tactically as we always operate within a premium pricing bank. We've delivered consistent volume growth and healthy margins and are not deterred by players operating at negative gross margins. In addition to the 6% price cut taken last year, we have passed the incremental value to the extent of 2% towards the end of Q1. Due to channel inventory, as well as in the depots and everywhere, there is a lag of around 60 days for price correction before we can expect the price discovery all India by the consumers which will lead to better traction. So we are back -- we are confident of delivering healthy volume growth in line with our medium-term aspirations thereafter as we go into Q2, going into Q3 and Q4.
In Saffola Edible Oil in addition to the high base and the number of trade and supply chain issues downtrading was most [indiscernible] the evident in the super premium segment. While the overall ROCP category declined in volumes around 9% to 10%, there was a sharp skew within the sub-segment as the base oil which is the marked segment actually grew in the 30s and the premium and the super premium oil declined in high double digits. This clearly indicated the impact of the sharp increase in absolute outlays, affecting purchasing behavior in the category and stalling any potential upgradation to the super premium segment.
We could have chosen to recoup volume by sacrificing margin, but we consciously did not chase growth at sub-optimal growth margin. We will go for volume once market conditions are less volatile and price stability is restored. That being said, in the near-term, we expect volume trend to improve from quarter 2 and aim to deliver growth in H2 as the base normalizes. We have a slow quarter due to do sharp base effect given that our portfolio is highly skewed to in-home health and immunity category as opposed to discretionary out-of-home category. We expect growth to pick up gradually from Q2 and continue to loss share gain in oats and soya.
While the Honey category has moderated visibly, we expect to grow as the base normalizes. In light of certain -- we'd like to clarify that we have largely carried our market shares in Honey across channels, which stands at 22% to 23% in e-com and close to double-digit in MT and a mid-single digit in GT. The overall share loss versus the last 2 quarters has been only 1%. We continue to maintain the superior proposition on the back of NMR tested purity. Just like pure coconut oil prevailed during the winter, research proves that raw, pure honey that undergoes crystallization in winter.
And therefore, we have acted to run campaigns to educate the consumer that pure, honey crystallizes. Further, we are excited about the medium-term prospects of 2 elements, which has tremendous runway for growth as a clean level brand in the rapidly growing breakfast and snacking categories. We continue to hold our INR 850 crore to INR 1,000 crore revenue aspiration in foods over the next couple of years. In value-added hair oils, we have delivered 5% pricing-led growth while the volume was flat. We'll continue to take calibrated price action to pack size reductions as well as MRPs, increasing going forward as well.
So just to again reinforce the content, we have actually taken a 5% price increase in the last quarter and we intend to take more. We have not let up on our upward market share and strongly believe that category growth potential in line with the overall HPC demand. If you look at segments within the VAHO category based on RPI, we are witnessing improving trends in the mid-tier of the category as there is downgrading from premium. We are also focused on expanding our presence in the premium and super premium segment, which is mainly represented by D2C player. While there is heightened competitive intensity at the bottom of the pyramid, we are depending on the leadership position, but not focusing on growing that segment disproportionately at the cost of margin.
As we hope for a marked revival in consumption sentiment in H2, we'll maintain our focus on premiumizing the renovation to drive double-digit value growth in the rest of the year. Just like CLO, our gains in VAHO was the highest compared to other organized players. Given that inflation does affect consumption patterns of upper income segments, Premium Personal Care has been growing smartly post COVID-led disruption, [indiscernible] are growing ahead of pre-COVID levels and male grooming is steadily getting there. [indiscernible] also meeting internal targets. Our digital brand portfolio is now around circa INR 200 crores in annualized run rate. We are confident of crossing INR 250 crores ARR in Q2. And thereafter, adding INR 50 crores to INR 75 crores ARR every quarter till we reach a INR 450 crores to INR 500 crore mark in FY '24.
Moving to International business, which has been a symbol of tremendous positivity and consistency especially when we look at peers in the sector, having delivered constant currency growth for the 6th quarter in a row, we continue to channelize all our energies towards strengthening the underlying fundamentals of each of the businesses. Bangladesh extended a good run with a healthy growth in the core, and accelerated ramp-up in hair care and medicare portfolio despite recent macro development, we expect to be able to sustain the momentum and cope with it as we believe during such times stronger and stronger and we get weaker, depending on the position in each country and Bangladesh, we have a very, very strong position.
Vietnam also delivered [indiscernible] HPC category growth picked up, and there are no visible signs of any inflation or economic risk, which is currently robust, we're also making visible and exciting games, exciting attempts to broaden our play in the region. In MENA, there is a sizable profit pool which presents an attractive opportunity when we're investing to grow in the region. South Africa and [indiscernible] are also seeing healthy momentum building up as well. Looking ahead, while the overall demand sentiment in India is yet to turn cheerful, we are enthused by the robust market share and penetration wins across our domestic portfolio, which assures us of steady recovery once the macro headwinds subside.
With 50% of our raw material basket witnessing deflation, we are relatively less impacted by inflation. We'll continue to have reasonable comfort on the profitability front without cutting A&P spend. We have delivered healthy margins even though the quantum of inflation on edible oil was 270% as compared to 20% to 30% in other raw materials. We've seen a visible recovery in gross margin over the last 4 quarters. But quarter 2 will be tricky as the benefits of falling edible oil prices will not flow through as we are carrying higher cost inventory on vegetable oil while we pass on value to the consumers through pricing immediately ahead of our cost structure.
While we delivered a strong EBITDA margin of 20.6% in the quarter, EBITDA margins will moderate in the following quarters should we want to invest for growth and especially at a time in the quarter 3 and quarter 4 where we have a very softer volume base. However, after factoring in the quarterly generation and the sale mix in each of the cost line items, we are extremely confident of delivering 18% to 19% operating margin in FY '23. While we draw reasonable comfort on margins, we'll pull out all stops to deliver healthy volume growth in the rest of the year, especially in H2 given the base and given the fact that we also will accelerate some of the innovations in food and digital.
We'll continue to build fundamentally sound franchises in the domestic and international markets even in the face of transient external headwinds and pushed the fourth strategic levers of diversification and distribution, digital and diversity, which we believe will keep us on the path of sustainable double-digit revenue growth as in profit growth over the medium term. We also continue to make visible progress in our ESG program. Creating shared value for all remains an [indiscernible] purpose for our business and will allow us to drive superior long-term performance.
We are committed to achieving net 0 emissions in our domestic operation by 2030 and global operations by 2040. We have recently released our focus areas and goals for the next decade of action, which are detailed in the FY '22 report. With that, I'll now close my comments. Thank you for your patience listening, and happy to [Audio Gap]. Thank you.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss Financial Service.
My first question is on True Elements and the digital-first brand. So in Western breakfast, specifically oats, you have both Saffola and True Elements. If you could tell us how the positioning will be. Second is because liquidity has dried up in general for competition, rate hikes, IPOs not happening, will it be fair to say that for your digital-first brands, Beardo, Just Herbs, et cetera, the competitive intensity now will be much lower. So you will be much more confident of your 3-year fire ambition plans here?
Okay. First, let me talk about True Elements. I think, yes, there is slight overlap, but it's that their entire portfolio, we're also going to focus on 2 different price points. So if you are selling plain oats and masala oats, they'll be focusing on steel-cut oats and rolled oats, which is a premium variety of oats and a higher RPI. However, going forward, there is a huge journey to be held for True Elements. And we have carved out the spaces in which True Elements will operate and Saffola Foods will operate. And obviously, as we scale up, obviously I mean, currently, it is in slightly premium niche things that we will obviously try to expand the offering as far as True Elements is concerned.
Regarding your second question, you're absolutely right. What has happened in the last 18 months was especially in the last 12, actually 12 to 18 months and post-COVID is around, when COVID started, all the money being in the [indiscernible] or the ASP that was pumped in to the digital business were actually unsustainable. And therefore, that hit…
Sir, sorry to interrupt.
Yes.
Sir, there is a slight audio break while you're talking. May I rejoin your line, please?
Okay.
[Operator Instructions] Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.
Yes. Sorry, I think I was responding to the CAC question on cost. Yes, absolutely right, Abneesh, that last year, I mean, there was a lot of cash burn happening and therefore, the customer acquisition costs and the [indiscernible] costs in the digital world had shot up. Having said that, the money will now chase only quality brands or the quality businesses. Obviously, there will be a huge amount. And I think the cash burn, which was witnessed in the last 12 months will certainly slow down. For a strategic acquisition and a brand which is supported by a strategic like Marico, it's a completely -- you are absolutely right.
It's a source of competitive advantage. And therefore, we expect that the unit economics for leader brands in each of the categories which has substantially improved, and the competitive intensity will go down. Having said that, as I said, the money will still chase the quality businesses in each of the category. So to answer your question, are we advantaged, yes. I think the other thing that has happened is given that we have now a bouquet of digital brand, the cross learning that is happening, that has also helped us.
And also one thing you must realize that while each brand, the biggest might be Beardo, there are a lot of shared opportunities, not only of learning, but also shared costs. You should look at a business like a INR 200 crore and INR 250 crore business. So that also has an impact -- positive impact in managing costs. So yes. So the fact that we want to add INR 50 crores every quarter to the annualized run rate is something we are far more confident of today and able to do it in a correct way, not by growing money.
Saugata, that was quite helpful. My last question is on Slide 7. So 96% market share gain, 93% portfolio penetration gains. Are you referring to Nielsen in both the cases? And is the penetration number -- product is subset of the 96%? And it's a commendable achievement. What you have not gained, for example, will it be largely secret?
Yes. So market share, yes, it is secret and in [indiscernible] in market share. And in penetration, one particular brand of [indiscernible]. So it's a lot of subset. It's a 100% one brand, which contributes to 7% kind of a thing 6%, 7%, we are going to gain share. We haven't gained penetration.
And both are Nielsen number only, right?
[indiscernible] and one is a retail audit.
Sure, sure. That's all from my side.
The next question is from the line of Percy Panthaki from IIFL.
Sir, first question is on the Foods portfolio. While your 3-year CAGR is quite healthy, the Y-o-Y growth of single digit is rather surprising, especially given that the business is rather small in nature, larger companies like Nestle have grown 15% Y-o-Y. So can you just give some kind of flavor as to why this is happening and how quickly this can turn around going back to that 25%, 30% Y-o-Y growth that we would need to clock for us to achieve our targets?
I think, first, I've alluded to see our Foods portfolio, our portfolio is completely skewed towards in-home and health and immunity. So therefore, we obviously had a significant advantage when you had the quarter 1 last year, which was the Delta peak where people stayed at home and significant consumption. So that is the -- if you look at -- I don't know while -- I don't want to get into specific companies. All other food companies have Horeca sales, institutional sales, they have out-of-home sales. So therefore, in our case, out-of-home sale is 0.
So therefore, if you have an out-of-home or a Horeca and other sale, it balances -- this one balances out. In our case, it was both extremely skewed 100% towards health and immunity. So if you look at the run rate, I don't think there is anything much to be concerned about. And therefore, it will see -- it will start picking up in Q2. And in Q3 and Q4, we have an aggressive innovation plan, and therefore, we should be over the next 2 years, as I said, we are extremely confident of getting the INR 850 crore, INR 2,000 crore mark. So you will see the improvement gradually happening as we go to Q2, Q3 and Q4. And in Q3 and Q4, we have another round of aggressive innovation program ahead.
Right. And a related question to this, in Honey, you said there's 100 basis points market share loss. So this is on what base? I mean, your overall honey market share would be, what, 5%, 6%? So on that 100 basis points is the requisite number?
Slightly higher. Slightly higher. No, no, no. Slightly higher. So just to give you a perspective, we have a 20% plus in e-com and double digit in Modern Trade and a mid-single to high single digit in GT. As you know that the return doesn't capture e-com separately, but I would think the weighted average number will be -- so we have lost some share in Modern Trade. And as I said, the weighted -- the actual loss versus last quarter is 1%. So EBIT was -- suppose hypothetically 8%, it would be 7%.
Understood. Coming to the overall gross margins for your company, would you say that in the coming quarters, we should see better gross margins compared to what we have done this quarter because there would be some amount of deflation that -- which is already visible, but which has not been fully captured in the Q1 results? Would that be a fair assessment?
So if you ask me, as I think, alluded to in the -- in my opening commentary that Q2 will be not because simply because of the fact that as the vegetable oil table is going down rapidly, we have been targeting to take consecutive price cuts. In order to accelerate the volume recovery of Saffola, obviously, we are giving that price discovery to the consumer immediately while we are holding some old high-cost RM stock either in the form of raw material or in the form of finished goods.
So therefore, quarter 2 will be not. But quarter 3 quarter, quarter 4, the fact that if the vegetable oil stabilizes copra plays sideways and crude starts softening, you might see it, but quarter 2 certainly not. But the way we are playing it is very simple. I mean, as far as operating margin with the 20.6% operating margin, we are banking it. And therefore, in the second half where we believe the consumption conditions will be far more favorable than compared to Q1, we will actually invest to grow in second half.
Understood. Understood. So basically, you would still stick with your 18%, 19% EBITDA margin guidance, although Q1 has been higher because the ad spend will go up in the coming quarters. Is that the right way to --?
Yes. Also crude and in comparison to the past, we don't know what will happen for the inflation. Still at the end of the day, we -- obviously, we have -- we are clear that second half is the time to actually maximize volume growth.
Right. And just one data point. You mentioned that because of the Q4, Q1 seasonality change, the 3-year CAGR comes to 6%, that is on value, right? If you can give us the domestic volume growth CAGR also on 3-year, please?
So it is -- on the same. So this is on index volume growth and not only value. So what we've done is as our volume level, you do a SKU normalization for FY '20. And then you work out a CAGR and the volume level will be somewhere between 5% to 6%.
Okay. Volume CAGR is 5% to 6%? And would that be something that you would sort of aim to achieve for the remaining 3 quarters as well? The same kind of underlying trajectory?
That's right.
And just to add [indiscernible] what you also do is our internal targets also we have moved at a run rate level. And that is why we sort of compare this number and this number becomes relevant for us.
Okay.
Can I clarify that? That particular year, Q1 was 30%. But normally, Q1 is 26% to 27%.
Right, right. Got it. Okay. That's all for me.
The next question is from the line of Tejash Shah from Spark Capital.
Sir, a couple of questions on international business. First, on Bangladesh, we are picking up news of going through economic turmoil. So any read-through and how are we insulated, if at all, from the current slowdown there?
Okay. So 2 things. First, I think I must commend the Bangladesh government for actually taking proactive steps in managing the economy. Yes, there is a slight issue on inflation. There is a slight issue on depreciation. But given the fact that we have taken proactive steps, I think things will be very much in control. Secondly, I think our competitive position in Bangladesh is extremely good. And therefore, 2 things we are doing. We are ensuring that we are doubling up on things which are focus areas whether opportunity to gain market share even if there is a little bit of a category slowdown, and therefore, ensuring that we focus on only some of these things, just like -- and we are actually replicating the strategy we did in COVID here where we ensure that we double up on the core.
There are 2, 3 innovations which are continuing to do well, how do we focus on agility and drive costs to actually ensure that we don't pass on this inflation to the consumer but manage this and be much more strong competitively. So what I would say that we continue to be reasonably confident of delivering double-digit growth in Bangladesh irrespective of the situation. And let me tell you, we are also confident that given the proactive steps the Bangladesh government is taking, they are extreme, they'll be still resilient in coping up with the situation.
Sure. And any pricing action aggressive one which we'll have to take in Bangladesh to protect margins and pass on the inflation?
We are taking some pricing action. But as I said, we are okay with it. Having said that, yes, I mean, because of the depreciation, there will be some translation losses when we aggregate the P&L and the balance sheet as well, that we have to absorb.
Sure. And second part of our international strategy, which you had highlighted on earlier calls was to replicate Bangladesh success in Vietnam. So any update on that?
I think 2 things we have done. As I said, we continue to -- there are 4 things which make business go on a flywheel or a virtuous cycle, which is getting the portfolio right, getting in the go-to-market right, and getting the cost structure, people and processes, right? I think in Vietnam, we have got all the 4, right? It's going on the right tandem. We are also learning to female grooming. We are just stepping into female grooming and expanding the total addressable market there. We started gaining share. So all the signs of Bangladesh in terms of replicating there, having said that, obviously, it will happen in a certainly different pace because you must say that Bangladesh are in a dominant position and the competitive situation is slightly different. We are extremely confident but continuously now driving double-digit growth in Vietnam, in both top line and bottom line over the next subsequent quarters.
Sure. And then last one, if I may squeeze in on VAHO. Despite the popular expectation of opening up and people stepping out and mobility going back to normal, VAHO as a category has not responded well. Any read-through that despite all the other tailwinds being there for opening up as a driver, the category did not actually live up to the expectation that we had before COVID or around COVID.
I would -- this is my take on [indiscernible] to really look at it that part of the portfolio was at non-sticky hair oil and the premium part of the portfolio. So now that has got impacted actually by inflation this year. But where we are operating, we are fairly okay, actually I would say. If you look at VAHO and compare to other HPC categories, if you look at HPC, there's actually minus 1%, I think, this quarter [indiscernible] broadly and VAHO probably in line in that. So I think there is no difference in the other HPC categories and VAHO in terms of the recent growth rates.
Sure. But versus other HPC categories, Saugata, we expected that some of these categories, which are skin care, hair care, they will have some tailwind of opening up offices, schools opening up. So that did not surface. Though we witnessed in some of the discretionary categories, staples categories has not -- have not shown that kind of bounce-back. That was the point actually.
Yes, that is because I think you are right, but that is also because downgradation is happening now because of inflation. So here, please VAHO are significant, downgradation from premium to -- and also a lot of action is happening on the bottom of pyramid, competitive intensity, bottom of pyramid. So the average this one is going down a bit. But having said that, I think we have a different take on it, just to give you a reference. We want to focus on value share because we are underindexed in the premium.
And if you look at already the kind of -- we are starting to see market share gains in e-com and Modern Trade on the super premium, which is where honey and oil and others operate. And we have actually launched another offering, in fact, last week called [indiscernible] there. I think we believe and Jataa, all the 3. We believe there is opportunity there. And that market is, I think, insulated from all the inflation. Now that market is not picked up by Nielsen, the way.
Okay. Okay. And these 2 markets will be what percentage of premium hair oil, DT and -- sorry, MT and online?
In the super premium, significant amount, Tejash, and are mostly -- yes. See, again, if you -- I mean, I'm talking of beyond almond and other categories, this is price index of 2, 3 and all, which is well, [indiscernible] run rate. So they are significantly mostly Modern Trade comments on beauty outlets. That's it.
Okay. Okay. That's all from my side and all the best.
[Operator Instructions] The next question is from the line of Jaykumar Doshi from Kotak Securities.
I want to understand INR 200 crore of digital-first brands in the D2C side and you indicated INR 250 crore next quarter and INR 50 crore to INR 75 crore incremental on a sequential basis thereafter, which means you are expecting that to be INR 400 crore plus next year this time for 1Q. So which brand, in particular, gives you confidence at this point of time? If I understand correctly, it's primarily Beardo and maybe Just Herbs and Pure Sense and Coco Soul. So is there any addition there? Or if you can…
Yes. So we will continue to look at organic and inorganic opportunity. You're right. At this point in time, it is led by Beardo and Just Herbs as the #2.
Right. And just…
[indiscernible] yes.
Guidance of doubling -- roughly doubling by 1Q FY '24, it is also largely dependent on Beardo doing…
Everybody is exactly -- as a said, it has to be, I think, all the brands are to fire and go at a certain accelerated trajectory. And as I said that we are -- we will continue to look at inorganic opportunities in this space.
Understood. That's helpful. Second is, could you give us some color on how -- what has been the response to your launch in onion hair oil category as a market leader Parachute is able to capitalize or giving market share from some of these D2C brands?
Yes. So I think it is going as per our action standards and other [indiscernible] also perhaps for the market take a 40% price cut.
Understood. That's it from my side.
The next question is from the line of Kunal Vora from BNP Paribas.
In Saffola, how large will this hit be because of the high cost inventory in the second quarter? And typically, how many weeks or months inventory do you carry? And will all the high cost inventory be used up in the second quarter?
Okay. Let me just explain to you this. You are having a sliding raw material table where you are used to take multiple price increases almost -- in fact, we have taken 3 price increases in less than 2 months. Drop -- price drop, my apology, the price drops. As a result, what happens is that you have to take a price drop in line with the market condition because that is how you can -- and this time, we have chosen that to get the volumes back. So as long as this settled, obviously, any time there will be an [indiscernible] into weeks, a couple of weeks we will have inventory of RM, we will have a couple of weeks, although that's much more thinner than other brands.
But this -- and what happens usually in Modern Trade and e-com is, you immediately discounted to give the privy to drive uptake. So as a result, what happens is that even like high-cost MG or high cost RM, you deliver -- you give the consumer that price is coming. So that's the reason I said that rapidly in a volatile decline with these multiple response, whereas it takes time for the margin to settle down. And so that at this time, we are ensuring that we get the volume recovery at an accelerated level quickly.
Sure. So it will all get settled in the second quarter. Third quarter onwards, it should be back to normal.
Third quarter you should get set. That is in the way we see it and it's a very difficult time. So I think I'm not an expert in raw material pricing, but we expect this is -- whatever is the -- when we take kind of an average of all the international [indiscernible] and not the expert we have to get it from. But what we see is things stabilizing. And we are taking price drop. And this time what we are doing is that, as I said, that I have already banked a 20.7% EBITDA. During a headwind time, we chose not to do some optimal margins and play. This is a good time to get the right pricing and start the volume acceleration, which we believe should happen in the second half. And this too is the time to get the price settled and the entire structure settled and also get rid of all the high-priced stocks in the market.
Sure. Second and last question, we seem pretty confident about second half recovery. So I'm just wanting to vet -- try to get some sense on what's driving the confidence. Is it largely the base effect or you're picking up recovery in consumption trends in the last few weeks?
So 2 things. One, if you look at -- this will k knock off Saffola even from this quarter 1, we grew by 1.4%, okay? Now that growth will -- and if a -- so therefore, if hypothetically Saffola had been flat, then the growth would have been 2%, 3%. And then what we are seeing, 2 things. One is, of course, base. Number 2, I think, as I said, that food growth will get accelerated. Some of the other Parachute once we are getting the pricing right, I think the new prices, reduced prices will settle down in the market by August and September first week, because as I said, it takes around 60 days to settle down. A combination and base, base is one of the factors, it just not the only factor. And as I said that we measure through run rate, for run rate it indicates that we should be able to get the higher growth in the second half.
Understood. That explains our -- that's it from my side.
[Operator Instructions] The next question is from the line of Vishal from Nirmal Bang.
My question is on the Edible Oils portfolio. So we have mentioned that there is a visible downgrading from super premium to mass segment during the quarter. Personally, I thought the demand by the consumers of super premium edible oil would be rather inelastic. And this premium consumer should be more loyal to the particular edible oil they consume based on the kind of benefits that [ ERC ] derives. So how do we look at this moment? Is it near-term? Or is there any other factor playing out apart from the high prices or inflation?
Sorry. So if you look at the average assumption of oil -- edible oil is -- and see, when I define super premium, super premium is -- it's not niche. It is still reasonably marked because Saffola is a 2012 plan -- edible oil plan. So that is not niche, like any -- so therefore, first of all, when I define super premium, it's a relative term. But if you look at what exactly happened, 1 year ago or I think 14 to 16 months ago, I would say, between that as a peak price of Saffola INR 230 a liter, we have taken a 67% to [ 70% ] pricing, which means actually average household consuming Saffola which is 4-liter, 5-liter, there are, of course, health conscious, households, which [indiscernible] it's a INR 325 outlook.
So 2 things happen. One, the upgradation stopped; number 2, is household [indiscernible] was one of the oils, like Saffola has a share of requirement on SOR, but SOR reduced. The third thing, as I said, is you must realize the third thing [indiscernible] 27% volume drop is not just a drop in offtake. If you were to break up the drop in offtake, it's a combination of 3, 4 things. There's a drop in offtake. There is a drop in STR. We chose not to do certain business in this quarter where we were making some optimal margins. So if I were to give you roughly a number of offtake, the number will be more in the teens. So offtake is not 27 [indiscernible] 20s.
So basically, beyond near-term, with now prices kind of stable coming down across your portfolio. So we do expect those consumers to revert back to their original brand of consumption, right?
So I tell you what -- how the growth of Saffola happened, the growth of Saffola happens of people upgrading to Saffola using more Saffola, okay? Because at the end of the day, you must realize that the average Saffola user is a health conscious user. So the average consumption of Saffola household is lower than other households, okay? Now what has completely stopped was that upgradation to Saffola. And what I think got accelerated is both SOR and people downgrading for Saffola. Now if you look at historically, the price rise of Saffola over the last 18 months, it rose from INR 139 a liter to INR 230. And if -- I'm happy to -- I think one of our analysts team will be happy to share with you.
If you look at price points and growth, I think [Technical Difficulty] actually, when we hit, say, INR 170, INR 180 level, I think it was a price point. Also, you must realize the other thing that has happened [indiscernible] volume is traders stopped stocking when the price keeps on coming down because they also don't want high-price stocks in the system. So there has been a significant loss also STR of Saffola that has happened in the last 6 months. Ever since the first time in the past 3 months where there was this accelerated decline in the raw material prices happening and people have been dropping prices. So that's why I said that don't see as a mid-20 decline as everything is an offtake-driven thing. And I hope one of the things stabilizes sometime towards Q3, we'll be able to recover some of the STR [indiscernible].
Understood and best of luck for the future.
[Operator Instructions] The next question is from the line of Trilok from Dymon Asia.
In the earlier question that you answered with regards to the food business, how should we think from a full year perspective, what's the kind of growth rate are you thinking on the food business this quarter -- leaving aside this quarter performance?
So I think it will get into double-digit growth. And then either in the second half, it will accelerate because as I said that there is an innovation program and the results. So as I said, that if you have to look at the INR 850 to INR 1,000 over the 2024, we should be in sighting distance of that.
Sure. Understood. But just from when you say the new innovation will drive from H2, are those kind of extension in the categories that you already have? Or you completely new categories that you intend to enter which will probably drive growth further?
It could be a combination of both. And also, as you know that we have launched things like peanut, butter, [ myo ] and all, which we have -- currently have limited launch, that will scale up. The other growth will be that we have now started a good GTM, which we started in 2, 3 cities. We are now extending it to more than 10 cities, the specialized food GTM to drive the food business.
[Operator Instructions] The next question is from the line of Ajay Thakur from Anand Rathi Securities.
Just one thing I wanted to check on. We have come across that market, the oil market actually is kind of declining, and we are seeing a lot of intensity in terms of the competition going up with major players actually embarking on cross-selling within the sub-segment. So if I were to look at it, Bajaj is expanding its portfolio -- Bajaj Consumer Care is expanding its portfolio into -- from the almond oil to more like the coconut oil and other segments.
Similarly, [indiscernible] is also talking of expanding from amla to maybe the other sub-segments. So now overall, we are seeing the competitive intensity within the hair oil sub-segment is rising in a market, which is kind of declining. So in that context, I wanted to check on your view, given the fact that we are the market leader, how do you see this competition impacting us and our growth trajectory within the hair oil impact then?
So I'll tell you 2 things, I think 2 or 3 things. First, I reinforce this and time again and we believe that in VAHO, we are -- our market share gains was the highest amongst all other players. Just to give a perspective, I have to correct one -- this one. If you look at HPC, well, the FMCG [indiscernible] was around 2%, 3% [indiscernible] HPC volume decline is 6.4%. And actually, VAHO declined and it's not so high. So VAHO is actually flat. So that will tell you the story that [indiscernible] that can be built by -- we know that, that is getting built at that very high competitive intensity and they are declining category. I think it may not be always the right perception. It would take a 5-year period and plot the VAHO category versus HPC categories, you will see a different picture. Coming to the competitive intensity, show me which year Marico has lost market share drastically.
I take a point on that front.
What happens and I tell you why, because sometimes what happens is with some players who are operating at a bottom of pyramid may take market share from small players. That's fine. Our observer is to concentrate on value share because we are under-indexed in the slightly [indiscernible] and we'll continue to focus on that while we will defend, but we will not -- our strategy is not to put all our eggs in the BOP basket.
Okay. Understand. Sir, another point that I wanted to just check on is, are we seeing a higher growth within the premium edible oil segment -- sorry, premium oil segment, hair oil segment, given the fact that most of the players are trying to kind of enter the premium side. So is there some kind of a higher growth that we are witnessing right now in the last year or so in the premium hair oil segment?
Actually, most players are the competitive intensity or so-called activity is in the bottom of pyramid. I don't see any player. Yes, there has been activity in the digital side of the business, but that is through in detergent brands like -- which are not the organized players. And that side of the market is growing. But if you look at people who pay in the premium side among the organized players, most of the brands are declining actually.
Okay. Quite helpful.
[Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments.
Thanks a lot for listening in on the call. To conclude, the start of the year has not kicked off on an exciting note in the India business amid a tough external environment. However, given the strong competitive positioning of our brands in respective categories, we are confident that we will be delivering better than FMCG market growth in the quarters ahead. We are confident that international business will continue to stay ahead of the pack. While there is uncertainty around crude net inflation, we draw comfort from the deflationary trend in other key raw materials that will allow us to invest behind brand building and drive consumer advantage prices, while maintaining threshold margins for the year. If you have any further queries, please feel free to reach out to our IR team, and they will be happy to address the same. That is it from our side. Please stay safe and take care.
On behalf of Marico Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.