Think Outside the Bottle: The Story of Parachute Oil
Marico’s Harsh Mariwala shares the journey and innovations that built up Parachute Hair Oil into a household word in India.
 
 

One in three Indians uses a Marico industries product today. Harsh Mariwala, Chairman of Marico, left the cozy cocoon of his oil trading family business at the age of forty to go on and start Marico in 1990. It is one of the largest, most successful players in the consumer products business. One out of every three Indians today uses a Marico product such asParachute, Saffola, Nihar,Kaya and Mediker.

Below is a first-hand account from Mr. Mariwala during INSIGHT 2013. He talks about identifying your product and how innovative ideas and execution helped the Parachute brand leapfrog from a small entity to market leader.

Harsh Mariwala: FMCG stands for Fast Moving Consumer Goods. The biggest asset for an FMCG company is the brand and distribution network. I would prefer not to own a single factory, but would like to sub-contract everything, because that’s not where we add value. We add value in the area of brand building and distribution which is done fundamentally through good talent and innovation. Product identification and product portfolio play a very important role in the success of FMCG companies. It is also known as the defensive sector because even in a recession, the sector does well and it commands very high premiums. In an upturn, we don’t do as well as many other sectors. So, there is high demand for talent within FMCG companies. The penetration is low in many categories so there is huge opportunity for us to increase sales by increasing penetration. And most importantly, we don’t need any permits.

I think the biggest success of parachute is through innovations, and that happened in a category like coconut oil, where there are very limited opportunities for innovation.

We decided to look into categories where MNCs (multi-national corporations) are not present. One category which we identified was hair oiling. Hair oiling only exists in limited parts, mainly India, neighboring countries and the Middle East. When I meet analysts and those who want to invest in our company, the first thing they ask is, “What is hair oiling?” and then they tell us that this is a dying sector – which is true. But I was very clear that this habit will not die down in India, and we decided to take a big bet on hair oiling. The overall competitive environment was less and our chances of success were much higher. That bet on hair oiling has really paid off. The hair oiling market still grows and we have done a lot of work on the benefits of hair oiling, and our findings are going to be leveraged in future.

We still continue to be excited on hair oils. We entered the Bangladesh market about 10-15 years ago and today we have 80% market share there. We are the largest Indian company in Bangladesh. We get quoted on the Bangladesh stock exchange.

The whole journey of building this brand has been primarily because of innovation and through packaging. For example, when I started working, I’m talking about early ‘80s, coconut oil was sold 100% in tins. We decided to convert the market from tin to plastics. Plastics are cheaper than tins. It is more convenient to pour and more attractive to keep on the shelf, and so we thought it will be very easy for us to succeed. But normally for FMCG, you do a lot of market research before launching a product. The research team came back saying that plastics will not succeed with coconut oil. We got a shock. It seems about 10 years before us, someone else had come in with coconut oil in plastics and they had packed them into square-shaped bottles. They didn’t do a good job in terms of packaging so the oil would ooze out. Then the rats would attack the coconut oil in plastics because they love the plastics and coconut oil combination, and the whole retailer shop would get spoilt.

So, we developed a round-shaped bottle where the rat would find it difficult to get a grip, and packed it in such a manner that not a single drop of oil was oozing out. We took about eight to ten bottles and some rats, and put them in a cage for a few days – no problem!

That really increased our confidence. We took pictures of the cage and gave them to our field force saying “You take these pictures, explain to the traders, ask them to keep three to six bottles first and test it out.” And slowly we were able to break resistance over a period of time. It took almost ten years for us to convert the market from tin to plastics. Plastics cost half the tin cost and we put all that money back into advertising, talking about the benefits of plastics. That pioneering moment from tin to plastic gave us a huge increase in market share. Virtually from 0% market share we became market leaders. Innovation and execution goes hand in hand, it’s not just ideation.

Another example is, at one stage, we had 100 copycats of Parachute and were losing about 20% of our sales to them. So, we designed a certain mold with a foreign mold maker at a very high cost, and the copycats were not able to copy it. Even in the sachet segment, we have one-rupee mini-bottles. We had a low market share in this segment and we thought, “Can we do something in the sachet segment, wherein it looks like a bottle.” So we imported certain machines and packaged it in mini-bottles, and our market share just jumped up. Similarly, in winter, coconut oil freezes, so people would again go back to tins. So we had to design a container with a wide mouth and a spout.

I think the biggest success of parachute is through innovations, and that happened in a category like coconut oil, where there are very limited opportunities for innovation.

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  12 Comments
 
 
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3 years 6 months ago

In such a scenario we need to choose lesser of the two evils as Sadhguru says. If same amount of energy goes into producing the two products, it always makes sense to choose a biodegradable material.

3 years 6 months ago

I have been loyal customer of parachute, even when I was outside of India I used to bring this one. Jatadharaya Namaha Shiva, I am unable to maintain like you, I bow down

3 years 6 months ago

Sullivan,
I am not from a younger generation, much older than you guessed. it does not take considerable research to realize the harmful effects of plastic, you just need to have a little awareness to see this.....years before, farmers used to pay money for garbage and collect it....that was their manure, now the garbage is all mixed with plastic and you can't even dispose it anywhere......man has not paid simple attention to things in his hurry for inventing things.......this is the case with almost every other invention......
Also, quoting Sadhguru out of context does not take us too far.....what sadhguru probably meant was that humans are causing destruction to earth...which is true isin it. we are the ones burdening the mother earth with needless inventions like plastics, chemicals, pesticides, etc etc....If we as humans knew how to live life in tune with nature, just like our Rishis did once upon a time, Sadhguru would mostly likely never had said such a thing.....
I am not here to make a point.....I am just sharing what I felt from my core....sometimes, personal experiences are the only way

3 years 6 months ago

Everyone is aware about plastic pollution and its multitudinous adverse impacts on the environment and almost all plant and animal life, including human beings. But any capitalist will do anything for cost-cutting and higher profits - a businessman, will be a businessman, will be a businessman and will only be a businessman. If the State have the power to play a greater role, it would have been more accountable, especially in a democratic setup like ours.

3 years 6 months ago

I am in second year pursuing my MBA from IIM, This session is extremely useful, Namaskaram Sadhguru !!!

3 years 6 months ago

yes, I agree with Ashish....the article is set such that making transition from tin to plastic was an achievement.....its so self centered, any man, with some awareness would not vouch for plastic....it created business, but has ranscacked our mother earth......
that said, the whole of humanity is going in that direction......it would not be a surprise if we see plastic homes in future......and as interstellar movie shows, in the end, humanity just gives up on our mother earth.....that would be the biggest tragedy......
a true innovation is that which is a full circle....human body is a true innovation, everything about it merges with nature.....cocunut tree, we call kalpavriksha as all of the tree has uses and merges again with nature.......
plastic cocunut oil certainly is no innovation.....

3 years 6 months ago

Next attempt and experimentation would be for biodegradable organic bottles once in successful production the very bottle could have a special market !!!

3 years 6 months ago

there's no free lunch in life...you spend all your time , effort, energy to bring about this technology, its bound to have some other effects which would be against nature.....this is true most of the times...take the example of the electic bulb invention.........its like opening a pandoras box....all such things will lead to more such things, no end actually......I think we have crossed the middle point of human civilisation long back....now, we really don't know where we are heading to

3 years 6 months ago

Sorry, I disagree. True that bad has happened and happening in leaps and bounds, doesnt mean good wont happen.
Say for Ex:- In Mahabharath, Arjun is confused when Krishna says "Duryodhana, Arjun its all me", Good and bad is all about how we tune things. As far as business is concerned its all about money, the day when they think 'society' there is a opening for tuning from bad to good, lets attempt hopefully. When we strongly decide we are doomed already, lets slightly believe there is a opening also...!!!

3 years 6 months ago

Kumaran,
I never meant that good will not happen, but it will happen in pairs...we try to invent something good.....and a bad follows it...as I said before, take any invention, any example and look through it.....car e.g., has provided the good of connectivily, but the bad is it adding to pollution (now road needs to be built, asaphalt, concrete are solid examples of screwing nature) .....and as human beings we rely more on this and become weaker physically....look at how our ancestors were strong physically compared to us.....
this will be the case of endless cycles of innovation and to circumvent something bad, we invent something good....like you pointed out, they may indeed suceed in creating bio degradable bottles, but now for producing it you need energy and then you will build dams ruining the rivers......
I hope you see the point here....how long as humanity we keep doing this, it does not make any sense, but yes, the world projects it as though it makes a lot of sense.....look all the knowledgable fellas driking pepsi , colas thinnkng it is amrita.....

the answer to these is to become aware.....tread the middle path as buddha pointed out.....if business exists, there would be no love.....

Prasad

3 years 6 months ago

Kumar, and as regards to krishha, look what was the end of mahabharata....total destruction...everything that they invented went down.....god was left with no other option.....if we realize and tread the path of dharma, like in case kauravas had done so, it would have been so beautiful....

3 years 6 months ago

Buddy, You seem to from younger generation. Once upon a time plastic was a great innovation. Like any other innovation until considerable research are done, harmful effects are not very evident. Please give due credits to the thinking and innovation that has gone behind it.

The true innovation that you have mentioned for that matter "Human body" is what is causing the destruction of this plant earth isnt'it. As Sadhguru says the planet is lot better without us humans. We are the ones who are causing all the trouble. God actually made a mistake creating us. :)