Services business a hard sell for FMCG companies focused on products
Hindustan Unilever's decision to sell its Pureit water filter business yet again demonstrates how fast-moving consumer goods companies fail to undertake services.
Pureit is a consumer durable product requiring after-sales service. HUL entered the water purifier business in 2004 and launched Pureit nationwide in 2008, but ended up classifying the business to be non-core.
There are several instances of FMCG companies entering service business that didn't work for them on expected lines. In 2009, Jyothy Labs launched a laundry business through a chain called Fabricspa, with an investment of Rs 40 crore. Over the years, the business grew at a slower pace compared to the rest of the business. It contributed 2% of the total revenue of Jyothy Labs in FY24.
In 2002, Parachute maker Marico ventured into skincare clinics under the brand name Kaya. In 2013, Kaya skincare business was demerged from Marico and listed separately. Since its listing in August 2015, the Kaya stock has depreciated 57%.
Godrej Consumer Products acquired a stake in the salon business BBlunt in 2013. A year later it also launched hair care products under the BBlunt brand. In 2022, the company sold the BBlunt business to Honasa Consumer, the parent company of Mamaearth.
FMCG companies typically focus on products with their distribution built on a high-volume, low-margin model. In contrast, services are low-volume, high-margin businesses that involve higher customer engagement. Service business becomes a different ballgame requiring its own set of
