In a fireside chat at the Penn India Technology Innovation Forum 2025 held in January in Mumbai, Nisaba Godrej, Executive Chairperson of Godrej Consumer Products, discussed the future of the FMCG sector, the rise of Direct-to-Consumer (D2C) brands and ecommerce, the central role of design in product innovation, sustainability and diversity, equity, and inclusion (DEI).
Sandeep Murthy 00:09
A bit of a different direction from pure engineering and I was very happy you agreed to do this because I know when I said it's the Penn Engineering thing, you thought that's exactly where I belong!
Nisaba Godrej 00:20
I thought I'd have to be smart. But you said we didn't have to talk about engineering or technology.
SM 00:26
We're getting all into that, actually. So I think, and the reason why I felt it was a good conversation to have is because a fair amount of engineering focuses, I think, on theory. And actually, I was very happy today to hear a lot of application in a lot of this. And I think that the the objective I had today was to bring the other side of the lens, and hopefully between the two things, some interesting thoughts come out. So with that backdrop...
NG 00:53
He's just making it very intellectual. I'm a very close friend of his. He just sent me a message and said, please, can you come... that was it. But we'll try to impress.
SM 01:03
So, let's actually stick with tech and data for a second. And we've seen a lot of new age companies in India. And you and I have had this conversation many times. D2C brands coming about, saying we're going to change the world. And it's kind of two angles this I want to talk about. One is a lot of them are distributing in digital channels, so that's one. And the other is even for their thoughts on where to go with the product, they're using data. Now, if I look back at how people think about data to create products, it's not always the best answer, right? A lot of it comes from some inspiration, some insight, some individual. How do you balance that? How do you think about that? How has data perhaps impacted the way you see things in the business?
NG 01:54
I'm just to I'm gonna talk... I work in a consumer goods, fast moving consumer goods company. We make soap and things like mosquito repellents. So I'm going to stay pretty much in that area when we're talking about D2C and products. I think data is something that we've always used. It's not something that's new. Obviously, there's a lot more data. It's a lot quicker, and you have computers doing things that were at some point done manually. That being said, at least in our industry, you know, and I can't speak for the D2C companies, because I've never worked in one of them.
But if you look at data, I think data is one piece of your business. What the consumer wants is one piece of the business. For example, I know that consumers want a natural mosquito repellent that is better than what we do with our chemical products. My problem isn't not knowing that about consumers. It's actually solving that problem technically. So, obviously there's lots of data that we have to look at. But I think the way the D2C companies say that we're seeing what people are buying, we're seeing what they're shopping. They like an onion oil today. They like avocado tomorrow. I think that's a small piece of it.
Also, I think the second piece is, if you say, think of consumer goods companies like ours and and the D2C brands, the biggest part of our investments are on media. So we spend, you know, we're one of the top five advertisers in the country. We spend about Rs 1,000 crores a year. You can imagine the amount of... that is very important data for us. Are we getting our ROI? What are the algorithms that we're running? I think data is being used everywhere, but there's more than the data to running a successful company, and I think whether it's older companies or D2C, they have to get everything right? It's not just data, actually.
SM 04:23
When you think about the media spend, it's often been said that performance marketing is like a drug...
NG 04:38
If you had that natural mosquito repellent that really worked and you're obviously, you know, being able to really find the consumers that would pay that extra money, I can do performance marketing. Then it works. If you have something differentiated in your product, or you're creating network effects, of course. It's just that if you're selling a me too, and you're discounting it and you're selling it, that game is going to run out at some point.
SM 05:07
Agreed. But even the idea of building the brand, how much can you use? How helpful is this? Brands are normally built, let's say in more offline channels or in different ways, maybe more product driven from a consumer word of mouth perspective even. How much does that factor into it? Or is it more?
NG 05:37
Listen, we know that we spent Rs 1,000 crores over the last years. We know that we're going to have to spend 800 on television, 200 on online. This is how it goes. I don't need data beyond that to tell me... What I was actually saying is that is an area where you would be looking at a huge amount of data, a huge amount, and I think this cost to serve consumers, whether it's in your manufacturing unit, in your media spends, in anything to do with productivity, if you are not using technology, you're going to be left. So I think data is very important. But I don't think the difference between a D2C company and me is just data. I think that's just simplifying it too much.
SM 06:22
So let's maybe talk about distribution then, and I think one of the moats that's existed for many years for a lot of the traditional businesses has been distribution... We were, let's say, 12% organized as a as a distribution framework in India. Half of that is now online. The offline organization is taking time. Modern trade is taking time. As online grows as a distribution channel, does that change how you also think about distributing products going forward?
NG 06:59
The way we've looked at channels... and obviously online gives you, you know, it gives you, you can very carefully target consumers. It gives you a premium consumer base. But let me just talk about and the way we look at online. Online is really, you know, how do we get higher market share than we have in general trade or modern trade. And how do we keep our margins higher? So we do have a slightly different portfolio products that we would look at for ecommerce than we would for general trade. We have about about 300 SKUs that we sell across our categories. We put about 60% on ecommerce at any given time. But in general trade, only 10 on an average at a general trade store. There are only 10 SKUs. The way offline works, it works by this very high throughput. The retailer, the distributors, they only have that much working capital, and if you're not giving them that ROI, they're not going to keep your your product. So I think that is the difference. A lot of the D2C, at least, that we've seen in consumer have gone very wide across. They've had to go to many products, versus saying, I can take a couple of products and really, really scale them.
SM 08:43
Let's talk a little bit about design. You made a comment recently that you felt that the there should be a chief designer sitting next to the CEO... I know you've been big on design throughout and that's, again, why I thought this was an interesting venue to have this conversation. You have tech, data, you have business, you have design. Let's just start with design and business. Let's start with just that interaction. What prompted you to make that comment that the designer and the CEO need to sit together? Why is that such an important part of the future for the business?
NG 09:23
I've always felt, in terms of product or, and just as a side story... Godrej's first product... you wouldn't think of a lock having much technology. But originally, the first lock that was made, it had a patent. We started just before India's freedom movement in 1897 and the special thing about the lock was that it was leverless. In our humid environment, it did not get stuck. All the British locks that were coming in did not have this feature and that's how the brand got built. And there are other stories like that on innovation for India. And again, data is very important, but eventually you're selling a product. The data has to translate into that R&D, into the technology, into the product. In consumer products, a lot of the creativity... you have your advertising agency, you have your packaging design, a lot of it gets outsourced. D2C actually outsources all the R&D and product development.
My thinking is, if you look at industries like fashion or auto or there are other industries where this is much more internal to a business, they build the teams within. Our brand will be 128 years this year. When you have older brands and you want to keep them relevant, you need to keep innovating very quickly, I think these tighter teams, which are both left and right brain and have a lot of pride and love for the brand, need to be co-located and sitting together, versus like an engineering MBA just briefing these creative teams outside.
SM 11:29
So has that translated into a different org structure now, with creative actually sitting with the CEO?
NG 11:36
Yes. So we've done that for about a decade with design and R&D. We also said we don't want to work with advertising agencies anymore. We're just going to build it all. We're going to build it all in-house. So that happened about a couple of years ago.
SM 12:00
So with all the creatives is in-house, are you're able to attract the talent?
NG 12:06
Yes. I think people like this idea of being co-located, you know, being there rom start to finish.
SM 12:13
It comes back to, I guess, what I would argue Penn is trying to accomplish with the integration of different programs.
NG 12:22
And I think that's very valuable, because, you know, it's almost like you're told you're left brained or you're right brained, and then you're educated that way. Versus what I've seen actually is when you mix these teams up, you suddenly start seeing people being ambidextrous across both.
SM 12:42
You talked about 128 years, and I think that as a country, and we had in the previous discussion a fair amount of conversation about what the country needs going forward, and what the country needs in terms of education systems, the roles AI might play, the role technology might play. I saw somewhere that you guys built ballot boxes for the first free general election in the country, right? So I guess when we have new brands coming in, and you have people like us investing in all these things, no one's really thinking about nation building, right? However, I think as a group, you probably integrated that into your DNA from the beginning. Do you find that's a responsibility you have to carry going forward? Is it a big part of how you think about the business? Is it a value system that stays in place?
NG 13:34
I think it's a privilege. We started during India's freedom movement. Most of our profits actually went back to the freedom movement in the earlier years. So I think we've benefited so much from being Indian, from being in a democratic country. I do feel that, you know, and people have different views onwho is a business accountable to... I definitely feel that this idea of people planet, profits must go hand in hand. Well, if you don't have profits, we're not a non-profit, I always remind. So if you don't have profits, you're not going to have much impact on anyone or anything. So I think actually, the more successful you are, the more impact you can have. But yes, I think you know, we get to be, you know, whether it's entrepreneurs or people like me in family businesses or people working as professionals, we have a platform. You have an ability to impact and you should use it in the best way possible. Nation building sounds very nationalistic, so I couldn't go there, but I do think we have a responsiblity to leave the world a bit better than we found it.
SM 15:03
Do you find that, again, as the company has grown and expanded, retaining that value system within the organization... have you found effective ways, as businesses scale, to ensure that these ideas continue to be a part of it? Like you said, there's many ways you can attack the insecticide market. There are ways you can cut corners. A ot of D2C companies probably aren't as straight up on what their products are. How do you not get caught up in that? How do you make sure the people that work in the organization understand?
NG 15:38
We have to understand that when we're a founder, it's a small company. We learn from the founder through osmosis because we're all in the same room or we're all in the same office. But as you scale, it's very important to codify what these values are. What do they mean? And then people need to see leaders really live them during difficult times. My father used to always say values only really matter when it's difficult to live them, like when you have to make a hard choice. So I think people need to see you living them and they need to see consequences of when we're off values. And you need to codify. You need to keep talking about them. You need to keep giving examples. What I've learned in an old organization also is that it's very important to make sure that your principles are very, very clear... your values have to stay the same, but your businesses and your strategies do have to keep changing.
SM 16:55
Let's talk for a second about sustainability. DEI. I know a large part of what you've done over the past years has been to create the Culture Lab, which then evolved to the DEI Lab. What's that journey been like? Why is that important? And maybe they're two different things. Maybe sustainability is one, and culture and DEI is another. So can you just chat a little bit about how those have played a role?
NG 17:24
We had actually someone you introduced to me called Parmesh Sahni, and he came to us over a decade ago with an idea to run a lab. A few months into his joining us... he said, you know, your your policy says spouse, why does it not say partner? So I think our LGBTQ journey really sort of started from there and he really sort of pushed us in the right direction to make sure that internally we were really being sort of world class on some of these pieces.
Transcript has been edited for readbility.
