The Other Wipro: How Azim Premji's FMCG firm entered the Rs 10,000-crore revenue club

Getting into the Rs 10‚000-crore revenue club is a breakthrough for Wipro Consumer Care & Lighting. Now the FMCG major has made it big in the international market and is betting on foods at home

Getting off the flight at Changsha Huanghua International Airport in early 2007 was an experience for Vineet Agrawal. The CEO of Wipro Consumer Care & Lighting had gone to China with his A-team to close the buyout of Unza Holdings, a manufacturer of personal care products with plants across China and Southeast Asia. It was Agrawal’s first touchdown at Changsha, one of the world’s busiest airports, and he remembers it vividly: clad in a business suit, he felt out of place among the locals wearing Bermuda shorts.

Agrawal could not locate anyone who spoke English. No interpreter either. Hailing a taxi, he showed the driver a slip of paper with his destination’s address in Chinese. The driver stared at it blankly. Things looked ominous. “Unza,” Agrawal said. The cabbie’s face lit up, and he gestured to Agrawal’s party to hop in. “We figured it was a good company since the driver knew it. That was a small thing, but it mattered,” he recalls.

Wipro Consumer Care & Lighting, a division of Wipro Enterprises, was new to the foreign buyouts game. But the noughties was when Wipro’s competitors, such as Godrej and Marico, were picking up companies abroad. For Wipro Consumer, then a Rs 600-crore entity, Unza would be the first. By early June that year, Unza was in the bag for $246 million (then Rs 1,010 crore). 

We are looking to expand into categories from an India point of view. The size and scale in foods is very different from, say, soaps, which is a Rs 27,000-crore market. The spices [business] alone is Rs 70,000 crore, and snacks is another Rs 75,000 crore

Vineet Agrawal
CEO, Wipro Consumer Care & Lighting; and 
MD, Wipro Enterprises

Wipro Consumer Care & Lighting was born in 2013, when parent Wipro Ltd, the infotech giant, spun it off into an unlisted company called Wipro Enterprises, along with infrastructure engineering and medical diagnostic products and services. Fast-forward 10 years: For 2022-23, Wipro Consumer reported revenues of Rs 10,014 crore, popping up in India’s big-league of fast-moving consumer goods companies such as market leader Hindustan Unilever (Rs 61,092 crore), Adani Wilmar, ITC (non-cigarette FMCG), Nestlé India, Britannia, Dabur, and Marico (which Wipro has just overtaken). Wipro Consumer’s FMCG business is almost evenly split between domestic and international markets, with Unza giving it a strong presence in Southeast Asia. 

So what’s the secret sauce? 

Wipro Founding Chairman Azim Premji tells Business Today, “What makes us stand apart is our hunger for growth and the strategic growth steps that we have taken. We have built strong brands… and our teams have also completed some successful acquisitions, but more than just acquiring the brands, we have significantly grown most of them.”

Wipro’s next big bet: the spices business and snacks.

“This confidence in ensuring the success of our brands acquired demonstrates our adaptability and readiness to pursue new avenues for sustainable growth,” says Premji.

Let’s get back to Agrawal. He joined Wipro Ltd in 1985 as a trainee and has grown with it, from its entry into information technology to building the FMCG portfolio. Even when he became CEO of the consumer business in 2003, the product portfolio was remarkably different: vanaspati, a leather exports business, Milk and Roses toilet soap, baby products, and Shikakai soap. Lighting was a small component, and Santoor, with revenues of Rs 150 crore, accounted for half of Wipro Consumer’s top line of Rs 300 crore. Since then, Wipro Consumer’s revenues have grown over 30 times, but only Santoor and lighting survive from the 2003 list.

Santoor fetches revenues of Rs 2,650 crore, or over a quarter of total revenues, though it had a rocky start. Santoor was test-marketed in Bengaluru (then Bangalore) in 1984-85 but flopped. Wipro then decided to take it national. By 1989, after a lot of effort, the brand was selling just 3,000 tonnes annually in a total market of 240,000 tonnes. Hindustan Lever Ltd (HLL) dominated the landscape with its Lifebuoy, Hamam, Rexona and Lux brands. 

Wipro decided to do some consumer research afresh. It turned out to be a smart idea: the research showed that Wipro could work up some extra lather by selling the sandalwood soap as something that gives women “younger-looking skin”. That proposition made history with the “Mummy?” television campaign in which a Santoor-using woman looks too young to be the mother of a child running around. The TV commercial is still around (the mothers have changed; the brand’s growth hasn’t).

Ambi Parameswaran, then at FCB Ulka heading the account and now the Founder of brand-building.com, says soap advertising historically showed young women. “Santoor was a clear disruption and focussed on the mom. It was not just about the skin but making a woman feel young,” he says. Though Santoor’s sales took off to hit 10,000 tonnes, it had plateaued in 1992-93. Two ads were shot, with a woman in leotards for north India and salwar attire for the South. Launched in November 1994, it hardly made a difference to the numbers. The eureka moment was when the leotard campaign was aired in the (more conservative) South, and there was no looking back.

“Research could not have thrown up something like that. In many ways, Santoor has been a story of accidents,” says Agrawal, who is clear that the brand’s eventual success was the first tipping point for Wipro Consumer.

Santoor was a clear disruption and focussed on the mom. It was not just about the skin but making a woman feel young... Besides, Santoor has stuck to the Mummy theme to make it more relevant to today’s woman

Ambi Parameswaran
Founder
brand-building.com

Cut to mid-1995 when Santoor was doing well but without big advertising money. Agrawal, then head of marketing, took a chance by throwing all his media spend on just five states—Andhra Pradesh (it was then unified), Maharashtra, Odisha, Kerala, and Karnataka. His sales force in the North was miffed. “They said the entire system would collapse, but I stuck to my decision. AP and Maharashtra took off while North fell only by 10 per cent.”

What made him put all his money into the South? A big reason was that Wipro Consumer had a strong distribution network in south India, where its Sunflower vanaspati brand sold a lot. FMCG majors can use the same distribution network to reach every corner with any product. Says Parameswaran, “During that period, they understood the power of the regional media. Besides, Santoor has stuck to the Mummy theme to make it more relevant to today’s woman.” 

Santoor got unexpected traction from HLL’s 2001 “power-brand strategy”. When HLL (renamed Hindustan Unilever Ltd or HUL in 2007) decided to focus on 30 brands out of its portfolio of over 100, its sandalwood soap Moti was not on the list. Santoor now had no rival nationally or regionally (Mysore Sandal Soap, a premium brand, was restricted to Karnataka).

Ranju Mohan, FMCG veteran and Founder of Ikigrow, a start-up specialising in personal care, says the Santoor strategy was executed well. “Consolidating in the South was a smart thing to do since the region has high brand loyalty. The brand got it right on its focus, built a hypothesis, and rolled it out well,” he says. The extension into premium areas like handwash will always be a challenge. “Selling premium brands needs better storytelling, a lot of patience and a new approach. Besides, the consumer has not outgrown the usage of soap.” In 2019, Santoor became the first Indian soap to cross Rs 2,000 crore in revenues, overtaking HUL’s Lux. Only Lifebuoy is larger.  

Wipro Consumer has not had it easy with other brands, such as Softouch, a fabric conditioner brand pitted against HUL’s Comfort. Rohit Srivastava, Chief Strategy Officer of Contract Advertising, the agency that handles the brand, says it is important to play the disruptor and try to persuade the consumer. “Our research showed how the competition was functioning, and we saw an opportunity in the emotional route,” he says, adding that led Wipro to use fragrance in its 2X French Perfume variant of the conditioner. And fragrance “became the brand’s core message”. 

Agrawal says Wipro Consumer’s product portfolio (there is also a homecare business apart from hygiene, male grooming, lighting and office solutions) is much smaller than those of multinationals. “We are still building it, and the process will take time,” he says.

But how do light bulbs (which Wipro entered in 1991) sit next to soaps? Agrawal retorts that light bulbs sit very well next to soaps in grocery shops, explaining how Wipro Consumer has a significant competitive advantage over rival lighting brands. “I sell my products in grocery stores, which is 25 per cent of my business, but the competition sells only in electrical outlets.” India has 10 million grocery stores and 50,000-odd electrical outlets. Agrawal says Wipro sells bulbs in the grocery stores it reaches because the typical housewife buys bulbs. For compact fluorescent lamps or CFLs, Wipro sells to the shopkeeper and “not through him”. The shopkeeper is the “influencer”. Ditto for LED bulbs.   

Electrical stores are only about undercutting. Also, a grocer does not ask for credit, but electrical outlets get 21 days. “It just makes our model a lot more sustainable, and that’s why we got into lighting,” says Agrawal.

Consolidating in the South was a smart thing to do since the region has high brand loyalty. The brand got it [the Santoor strategy] right on its focus, built a hypothesis, and rolled it out well'

Ranju Mohan
Executive Director & Founder
Ikigro

Gaurav Dua, Head-Capital Market Strategy at Sharekhan by BNP Paribas, a retail equity brokerage, says Wipro Enterprises could demerge the lighting business into a separate entity just as parent Wipro Ltd had spun off the consumer business.

While drawing up the strategy in November 2006, Wipro Consumer had already made a couple of buyouts (all in the domestic market), though they were small. The first was Glucovita from HLL in 2003, followed by Chandrika soaps a year later. Azim Premji told the sellers he “wanted to buy Chandrika because he liked the soap”. During the bidding game, Agrawal recalls writing to Premji to tell him the outgo could be marginally higher. Premji told him: “Don’t waste my time. Just get the deal.”

“At that point, FMCG companies were looking outside India at smaller markets such as Bangladesh,” says Agrawal. Then Unza happened. In terms of revenue, Unza was as large as Wipro Consumer, but that’s where the similarity ended. “They operated in countries we did not understand and in categories not in India. Besides, everything they sold was through modern trade,” he says. He confesses that the buyout initially “looked like a stupid decision”. Plus, Wipro had to compete with Godrej Consumer and Dabur for Unza. Standard Chartered and private equity investor Actis held 58 per cent, while Unza’s staff held the rest. Wipro Consumer wanted a complete buyout. Unza’s business (which includes Enchanteur, today a Rs 1,000-crore brand selling fragrances, bath and body products) has grown five times. Agrawal calls the Unza deal the second tipping point for Wipro after Santoor.    

It was Santoor’s success that prompted Wipro to go for Unza. Wipro was clear that it would not lay off people. “We understood quite early that no attrition was possible in the case of Unza,” says Agrawal.

Wipro Consumer has made 14 buyouts in India and abroad so far. Dua of Sharekhan says Indian FMCG brands have the critical scale and recognition to explore opportunities in other developing markets. “Some of the ventures have been successful while it has been a learning experience for a few companies in certain markets,” he says.

Foods is not uncharted territory for Wipro Consumer: Wipro Ltd was born in 1945 as Western India Vegetable Products, a manufacturer of vanaspati or hydrogenated vegetable oil, the poor man’s ghee, and refined oil, both sold under the Sunflower brand. As Wipro got into new businesses, Sunflower was pushed into the background. In late 2012, Cargill, the US commodities and foods giant, bought Sunflower, which accounted for only one per cent of Wipro’s business then. Agrawal reels off the numbers behind Wipro’s decision to get into foods. “We are looking to expand into categories from an India point of view. The size and scale in foods is very different from, say, soaps, which is a Rs 27,000-crore market. The spices [business] alone is Rs 70,000 crore, and snacks is another Rs 75,000 crore.” Just about 25 per cent of the spices business is organised. In snacks, this share is 55 per cent. 

V.S. Kannan Sitaram, Co-founder and Partner at Fireside Ventures, explains that snacking is a highly fragmented business in south India. “Those like A2B, Grand Sweets and Sri Krishna have their stores and sell the products there. It is similar to a kiosk model,” he says.   

Multinationals are unlikely to have a play in snacks. “The interesting part in foods, unlike personal products, is [that there is] very little advertising. You have to get it right on consistency and be local when it comes to your thinking,” he says. In August, the company opened its new research and innovation centre in Bengaluru for food products, starting with snacks. “We think we have got it right on the product and will be test marketing by the end of this year,” says Agrawal.

Snacking is a highly fragmented business in south India. Those like A2B, Grand Sweets and Sri Krishna have their stores and sell the products there. It is similar to a kiosk model

V.S. Kannan Sitaram
Co-founder and Partner
Fireside Ventures

The brand name is still under wraps, but Wipro plans to start with a product portfolio. “It will be contract manufacturing initially, but the formulation is ours. Besides, our people will be sitting in the factories and monitoring quality,” says Agrawal, adding, south India’s snacks business alone will be Rs 25,000 crore. “That’s almost as large as the toilet soap market in India.” 

In spices, the approach is different. Agrawal says Wipro’s strategy will be inorganic. The purchase of Kerala-headquartered Nirapara and Brahmins has given it a foothold in the state. Its rivals had done the same thing. ITC bought Sunrise Foods, while Dabur picked a majority stake in Badshah Masala. “Tastes vary significantly across India, and it is a state-wise phenomenon.” 

Sanjeev Shah, CMD of Everest Food Products, a market leader with an eponymous brand, says India’s diverse tastes make it an interesting place. “The moment you play in the ethnic area, it is a challenge but also a huge opportunity. When you get it right here, the upside is significant,” he explains. 

So how regional will Wipro get? Well, regional does not just mean south India versus north India. Think Southeast Asia. Think developed versus developing.

Premji gives the big picture: Wipro Consumer gets its strength from the developing economies, which are poised to grow faster than the developed world. 

“FMCG will especially grow well in developing markets as per capita consumption is currently low.  We can see this happening in India, Indonesia, Vietnam, and Philippines. India in particular is growing fast as the economy is also getting formalised. This scenario offers us a tremendous opportunity to establish ourselves as a significant player in the FMCG sector, both domestically and at the global stage,” Premji says.