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Coffee chat with Saurabh Bajaj

Updated: Oct 17, 2020

Que-1- What is your story and what has been your biggest takeaway or learning in these 16+ years of work experience?


Starting my story from my engineering days which I did from Delhi college of engineering and then going for an MBA from IIM Indore, I was always more of a science grad and enjoyed my learning in pure sciences involving research in physics, etc.


During the time of my engineering, I realized I did not want to do that and how did I get stuck here. Although even in my engineering days I gave my best, I was always on the lookout for the answer to what is the big thing that can make life exciting. It can be preparing for IAS, IFS, and other civil jobs, all these options that I thought through.


When I was traveling from Delhi to Mumbai as my parents lived in Mumbai and I was doing my engineering in Delhi, I met a bunch of MBAs on the train and they were all graduates from NITIE. When I saw them, I thought that these are the kind of people that I look up to, they are well-spoken and well-read and then that made me decide to pursue an MBA as a stream.


Most people do an MBA because they want to earn more money, but that’s not the path that I wanted to choose. So, to make my head clearer I spoke to my dad who was retired in the Navy, and had done an MBA from IGNOU. So, he still kept a bunch of Books from IGNOU. From that marketing was one thing that I discovered that I can do, and also during the time of IIM, I participated in clubs and it became clearer that I had to pursue marketing as a major or as a career.


During the time of placements, joining Wipro was the only option as it was the only FMCG that I cleared and I got the opportunity to join consumer care- the soaps division.

Santoor, Shikakai were some products that I was given to work for. I had multiple choices to choose in terms of the sector but finally decided to go for FMCG as I wished to work there.


After the 15 months journey with Wipro, I interviewed with Cadbury’s, because of a better salary, and also it was a far more prestigious company to work with and I ended up giving them my 10 years.


The initial 2.5 years were in sales. Then the next 5 years were of marketing in gifting, celebrations and kids’ department handling. I then moved to become a category head in the kid’s category from a Brand manager. Then I moved to sales as it was becoming monotonous and decided that it’s time to upskill. So, then I took the Branch sales manager role. So, from 2005 to 2015, I worked with Mondelez and then exited Cadbury’s.


This was also because Cadbury’s was taken over by Kraft’s which was morphed into Mondelez and it became a different company from what they had started with. So, I decided to follow my boss to Diageo.


I started reporting to him as an innovation head for premium luxury spirits to retain the leadership that I had worked with. As it was a proactive alcohol brand, although I did really well but then realized that I am not enjoying this side of the business.


Alcohol was a sector that was not giving me the creation thing and I wanted to ask the question of what value am I providing through the product beyond a consumer’s point. The answer was food division. Foods is what I know and so I decided to move back to the food division.


Now, there are broadly 2 kinds of foods, bad foods, and good foods, and I wanted to work with the good food division like biscuits, etc, so then it became a proactive call to move to Britannia.


I wanted to learn and also leverage the option of becoming a CMO and as Britannia was giving me a huge depth of analysis of all kinds of categories, I was clear about the skills that I wanted to pick up.


Sales, innovation, and international business was something that I wanted to do as I was nearing my 40’s and also I was in the midst of analyzing the gap that I wanted to fill in order to become a CMO.


I was also getting to know what it took to move from 1 brand from one market to another. What equities do you want to hold onto, what can you change, what you can’t and why?

Realizing the core of a brand, to spend time with the consumer was international business, so I did it for 2 years and then decided to move back into the domestic market. So currently I am the marketing head for dairies which is really interesting and it turned out to be the most exciting role of my career yet.


Although I have already handled 400 to 500 crores business the difference is where the company has invested 550 crores for an industry and a CAPEX.


This is a very large vision and to build an identity for a portfolio, one of my main tasks is to figure what should be the branding for cheese since it currently doesn’t have any branding in the Indian market.


There are lots of interesting stuff in architecture and one challenge is to create a fresh proposition for cheese. The cheese was losing market share to Amul, so I had to come up with ideas of how to turn it around and bring it into Britannia’s pocket.


Winking Cow is a brand that was launched a year half back and turned out to be the most successful innovation for Britannia in the last decade where they have delivered 65 crores in 12 months. This was our first step following up with scaling up Winking cow through investments but serve it as a house serve brand lassi, milkshakes and now we are planning to launch Greek yogurt in September- October.


Que-2- With so many experiences and ups and downs in your career, how did you decide that FMCG was your calling?


So, when I joined IIM Indore, within 3 months you have to appear for summer internship interviews, and I was waitlisted for GE, so in the meanwhile I was selected to summers in Coca Cola. From there the journey started.


I am a sciences kind of guy, logic is very important to me and I like to understand what is really going on both with the consumer’s point of view and everybody’s head, so, marketing in FMCG sounded like an interesting thing, figuring what is happening with the society and also in terms of innovation.


My interview with GE was memorable and my mentor told me something that ‘Life is a ride and how fast the vehicle that you’re on moves, eventually decides how fast do you move.’ So, if you work with the Levers you can see much bigger things happening around you.


Start-up is autonomous, you don’t get to see various things and not in a structured manner. It directly cuts to the picture to understand why is everything happening. I was very hungry for knowledge and information and also hungry to figure things out. For me Coca-Cola was dynamic and it made me warm up to the FMCG background. Also, during IIM times, when the case study-based methodology assignments were discussed and there were cross-functional teams, the marketing part would always come to me.


Apparel is interesting, but it’s uni-dimensional to work with and so is telecom or automotive. FMCG, I figured is a bedrock for most of the functions, how much data do you have? how fast things move? And it tells a perfect balance of product and proposition.


Functional and emotional balance, proposition building, and the most important thing in the consumer’s life are all related to FMCG and therefore it becomes more interesting.

So be it Reckitt Benkiser, or L’Oréal as long as it is FMCG, I was not too choosy with the domain but my main motive was to enter the world of FMCG, so I picked up Wipro.


Que-3- Although the products match but the Indian consumer experiences are different from that of the International one. Where according to you does India lie in terms of providing the best experience to its consumers?


Here the terminology of difference between a developed and the emerging market comes. The key difference is the amount of consumption. In terms of chocolate we as Indians are very underpenetrated. Average Indian has about 100gm of chocolate over a year and an average British will have 15kgs of chocolate over a year.


We will have more of mithai which is around 10–12 kgs because we are more comfortable with mithai and not chocolate.


We as consumers when it comes to fast food would eat burgers every 2 weeks whereas an American might have it every day.

The degree of saturation outside is really massive. During the pandemic India will not degrow. As what happens is there’s a little bit of category building and the country closes.


While the categories outside is so mature that if you want the consumers to buy an X Box every month and throw away the previous one, the category won’t grow so it’s the sheer degree of consumption that makes the difference between a developed and emerging market.


Because of the basic difference the way category is consumed so the marketing way also becomes different. So, in a developed market, you have to give more focus on innovation, and the overall growth is capped they will grow at 2%. Whereas when it comes to, 5 to 6 % of growth in India, we will say that we are letting the country down.


The 5 to 7% growth also comes from organic consumption. In the foreign markets this 2% will also have a struggle, it will have 1% of innovation and 1% of degrowth of core brands.

In India you make meltier chocolate like Silk, you grow the category, you make it wafery like a Perk, you’ll grow the category. There are so many need states that keep growing and gives a long degree of saturation but in the West everything is so saturated that first, you have to work in innovation and then you have to hold the base.


Then there are 2 issues. 1st the big issue is that the power has moved from manufacturer to the store. This happens when you have modern trade growing. In India, we have modern trade as 10 to 15% where modern trade in the West is 50% above so the outlets have a lot of power.


So, all the budgets are going to the store. Stores don’t do fundamental work of driving more behaviors. They are doing 1+1, price offs, or discounting. Marketing becomes different as you have to do it through modern trade promotion rather than pure-play advertising and so the cost of media becomes prohibitive. In India any subscale brand, any 100 to 150 crore brands will also have an ad but because the media cost is so saturated in the West, you have to be really careful before doing an ad for your brand.


Many brands can survive only through instore fixtures and minimal advertising.

The tools of the consumer remain the same fundamentally, drivers with which you impact them change.


Store and packaging and innovation become more important, the pure-play ad becomes less important, so, driving consumer behavior change becomes less important. Social media trending becomes more important. There is a complete mix of things that you focus which completely changes.


You work on different things as compared to India. Here you will work on new product fundamental and new changes and pure-play advertising and simple behavior change. There you can’t work on these groundbreaking works as they are already filled up which is flavor, innovation, and stuff like that.



Que-4- What do you think about D2C brands and their penetration in the Indian market. Do you think they have a positive future?


Indians tend to jump over the regular change. West started from fixed-line phones to mobile phones whereas India directly jumped to mobile phones or smartphones.

India seems to have bypassed the modern trade revolution. Modern trade will never be as large as in India as it is in the West.


E-commerce brands like Big Basket and Grofers have become really big brands. Indian consumers are fundamentally lazy people and with the presence of E-commerce, what better way is to get served in house rather than going to the market. So, E-commerce is here to stay and it will leap from modern trade and it will grow much bigger very fast. Also, COVID is going to help it.


E-commerce will be largest for apparel, fashion, and for cosmetics. It won’t be that large for biscuits and confectionery as share ticket size for delivery will be difficult to catch up. As everyone has to earn the ROI, so if the brand is expensive enough and can manage the supply chain and logistics on its own then it is in a good place.


But when it comes to pure-play FMCG such as biscuits and confectionaries you’ll only get advantage when it is a basket of companies. So, all these aggregators such as Dunzo & Big Basket will thrive to solve the problems. They don’t see Britannia going down the path of D2C anytime soon.


Some start-ups that are coming up are really exciting. Personally, I am a fan of the meat market D2C being delivered to you as compared to you going to buy it. The problem of convenience and consumption is being solved so you don’t have to go to an unhygienic place to go and get the meat.



Que-5 When we discuss Brand management, we also cover the role of P&L in marketing. Could you provide some clarity on how does one attempt it?


If I discuss Cadbury’s celebration P&L, shifting my brand from gems to gifting there were some problems that we were facing with the gifting category. So, our senior asked us why shouldn’t we shut down this brand?


It’s not doing good for the last 3 years and P&L has been -2% of the last operating income. Also, it has been this since the last 15 years which helped me to understand the business model as compared to the P&L very well.


A marketer is not someone who does glamorous ad campaigns but we are fundamentally entrepreneurs who have been hired by the companies to manage their businesses.


How good brand we can make, do we know how to make money or deliver the profitable business from a top-line and bottom-line manner? A mix of marketing which varies fundamentally across various categories, how much do you predict that a commodity gives functional benefit and how much of it is a brand that gives both the emotional and functional benefit. For functional benefit you can’t charge a premium for the emotional benefit you can charge a premium.


A coke glass which is 25cents can be sold at 10 bucks or also can be sold at 1000 bucks if it’s a premium bar. It is pure branding and brand value and the experience with it. When you’re in a commodity space at that point in time you consider gross margins, which are likely to be 25 to 30%.


The moment you go more to a branded product your gross margin shifts to 50, 60 or 80%. The gross margin for L’Oréal could be 80%, for Cadbury silk could be 50 to 60%. It depends on how core the fundamental product is and what is the layer of branding on top of that.


This determines the overheads your company can carry which is how much you can spend in people’s salaries and how much manpower you can have and how much of advertising and sales promotion budget you have.


If you have a brand that has 30% of gross margin you can do 3% of overheads. That is people cost and salaries. And you can do 4 to 6% in ASP which takes around 10 to 15%. All companies would want 12% of the bottom line that is 12% of NOI company requires. So, if you’re a biscuit or alcohol or perfume company you have to deliver 12% bottom-line. Only the mix of salaries and ASP changes and ASP becomes the biggest one. The more commodity-based category you’re, the more you have 1 to 4% of advertising and marketing spends.


The more discretionary products that you have like perfumes you can have 20% of ASP. Why does this happen? If the product is itself a commodity and is undifferentiated you have to give the highest value to the consumer in physical terms. When the product is differentiated the extra value that you need to give is more emotional terms and if you have to give the emotional value then you have to bid money on advertising.


It depends on the nature of your business. The nature of the category you play in the mix of functional and emotional, the more the emotional the more price premium and the more advertising and the more they spend you need to shell out.



Que-6- Coming to the latest topic, how is Britannia coping with COVID?


A study by Kantar when they did the study on how the brands will behave, did the research on how the brands responded during Wuhan and they categorized into 4 different groups of categories.


First is Grow categories which will benefit from COVID, Essentials which will be no profit no loss, no change much and they will have a U shaped or V-shaped recovery or steep recovery. And gradual recovery, products like cheese are benefiting from COVID. Because it is a 2000 crore category out of which 1200 is an institutional category an 800 is retail cheese.


1200 which is institutional is the one when you order from a dominoes or a pizza hut. Retail cheese is the blocker cheese that you find on shelf and consumers eating habit for this is not changing. They are eating 4 pizzas in a month in the past as well, these 4 pizzas used to be ordered from outside. Now all 4 of them are being made at home. So retail is benefiting and has increased.


Grow categories, in-home cooking and in-home consumption categories will benefit. Then there will be a lot of movement from unbranded to branded stuff as we do not want to buy the loose Maida or curd or paneer, etc. As there is more focus on hygiene, brands like Reckitt is benefiting, these are all pro categories that will benefit from COVID and after that as well.


Essential categories like soaps or Atta or rice, Maida, etc saw a spike at the start of COVID as people were hoarding it. Because of filling up that stock, the demand will fall for a couple of months, and then it will stabilize as people can’t live without it. These items fall in the categories which will neither win nor lose. Then there are categories that will have a gradual recovery and a steep recovery. A gradual recovery is the milkshakes and curd and the reason is when people were stocking up all the Daal they did not feel the need for milkshakes then, but as they feel safe they will start consuming milkshakes a month if they used to have it earlier.


These all will have a V-shaped or sharp recovery so in 2 to 3 months’ time most of these brands will come back. Then we have the U-shaped recovery which will be the worst hit categories they are pure discretionary space like the iPhones, chocolates, candies, etc. when we use them only to treat ourselves. These are the categories that are going to struggle as I don’t need the feel to go out and eat an Rs2000 popcorn.



Que-7 Any advice you would want to give to new graduates or people early in their careers who would want to move to FMCG, what should they prepare for?


If you understand the fundamentals of consumer behavior then it is a great place for a marketer to be in. It’s like matching the money in your bank. FMCG is the bedrock for most marketers. And as you invest 15 to 20 years, you can withdraw the fixed deposit later on in life.


Then you can choose to be in your own field be it alcohol or apparel or mobile phones. The experience will make you really sound in your consumer thinking. An then you can apply that in whichever category that you’re working. 5 to 7 years down the line you can even go for Google, as 5 to 7 years in FMCG, you get to understand the crux of consumer behavior.


It is a great place to look forward to. All you have to understand is what you really like to do, if you like to understand consumers culture then FMCG is a great place to be.

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