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Godrej Looks to Gluten-Free Pastas to Boost Profit Margins

  • Nature’s Basket unit unveils new Healthy Alternatives’ brand
  • Indian company plans premium products across businesses

Godrej Group, the 119-year-old Indian conglomerate which operates retail stores is looking to introduce higher-priced products across its businesses such as organic foods and specialty hair dye to boost profit margins.

Godrej Industries Ltd.’s Nature’s Basket unit on Tuesday unveiled a new Healthy Alternatives’ brand that includes products such as organic grains and gluten-free pastas. These will be marketed as its high-end food offering and the group plans to add premium products across other businesses, Tanya Dubash, executive director and chief brand officer of the group, said in an interview.

Dubash aims to lure consumers in India, where per capita incomes have doubled in the past decade, making shoppers more willing to pay for health food, personal-care products and home appliances. The group seeks to add more expensive products at its companies to stave off competition that’s intensifying and putting pressure on profit margins. 

“As a group, we are in sectors where we have an opportunity to premiumize,” Dubash said on Tuesday in Mumbai. “It doesn’t mean that we are moving away from the masses, we are premiumizing products with innovation and design thinking.”

The profit margins are better for high-end products as the group is able to charge more, she said. Godrej Industries, which gets about 25 percent of its revenue from vegetable oils, posted an operating profit margin that widened to 4.67 percent in the year through March, according to data compiled by Bloomberg. Margin at Godrej Consumer Products Ltd., which sells soaps, shampoos and shaving creams, widened to 17.1 percent from a year earlier.

Godrej is following in the footsteps of multinational competitors such as Nestle SA and Unilever Plc, whose local units are also betting higher-priced products will take off. Nestle India Ltd. will introduce premium chocolates to the country, it said in August, while Hindustan Unilever Ltd. plans to boost its margins with new categories of detergents and other household products, according to a July report by PhilipCapital India Pvt Ltd.

Shares of Godrej Industries rose as much as 0.9 percent in Mumbai trading, while Godrej Consumer gained 0.4 percent. The benchmark S&P BSE Sensex increased 0.2 percent.

Godrej Consumer last year introduced its Bblunt range of premium hair care styling products. This month it added Salon Secret hair color to its offering.

Nature’s Basket sees a “big business opportunity in India” for wellness food products, according to Dubash, who is a director on the board of the group’s various companies. The market for health and wellness foods is estimated at 103.5 billion rupees ($1.6 billion) and growing at about 10 percent annually, according to an August report by consulting firm Nielsen Holdings Plc. 

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