‘We Are Developing India As A Manufacturing Hub For Other Countries’
For Amway India, and its India CEO Anshu Budhraja, the last 20 years have been eventful. Starting with only six products, the company’s portfolio now boasts of 140 products of different pack sizes. The ride initially was bumpy due to lack of clear ‘direct selling’ guidelines. But with the guidelines now in place, the next logical step is an Act, and its further enactment by various states. In an interview with Suman K. Jha, Budhraja shares the highs of the last two decades along with the challenges being faced. Edited excerpts:
How do you describe Amway’s journey here, over the years?
The direct selling industry globally is $180 billion, and Amway is $10 billion in that industry. Globally, it employs more than 100 million people. In India, though we were not the first to start this industry as there were multinationals too, we have been posting 20 per cent CAGR over the last 20 years. We will be closing our 20th year next year with Rs 2,000 crore. Starting with only six products with one-litre bottle size, we are now much more global in strategy with 140 products in different pack sizes.
Infrastructure-wise, we started with four offices and one warehouse. We now have more than 150 offices and 26 warehouses across the country.
We started with contract manufacturing and operated through multiple partners. Today, we have a state-of-the-art manufacturing facility at Madurai with Rs 600 crore of investment with channel partners. We also have an R&D centre. From 70-odd employees, we are now nurturing close to 1,000 directly and 5,000 indirectly in the ecosystem.
From zero presence, to now over 35 per cent of the business is transacted online. The entire evolution of the company is a story about growth. It is also about, on a higher level, fostering the spirit of entrepreneurship in India. That aligns well with the government’s Startup initiative. We have got close to 500,000 distributors, and big drivers among them are women entrepreneurs. Sixty per cent of our micro-entrepreneurs are women. It is not just about economic and financial inclusion, it is also about workforce participation. On the product side, a lot of evolution has taken place; we had entered the market with healthcare and personal care, and have now morphed ourselves into a nutritional and beauty company. Sixty per cent of our business is actually nutrition; 10-12 per cent is beauty. So 75 per cent of our business is health, wellness and beauty. The space where we are in right now, the nutreuceutical industry, is worth $2 billion and is poised to grow to $8 billion in the next 10-15 years. So by participating in the healthcare story in the country, we are building a very active nutrition portfolio here.
How do you describe the journey of direct selling’ in India? Has it been a bumpy ride?
Each industry takes time to mature; and there is a lot of education involved in it for key stakeholders to understand the industry. The industry needs to take a lot of accountability. There has to be a lot of self-governance and credibility. The other way to look at it is that the government needs to own up sunrise industries. There were laws that existed dating back to 1970s, but were not rightly applied to the new emerging business models such as direct selling, which is performed globally, but needs time in the minds of key government agencies to comprehend and understand. But now with the direct selling guidelines coming into place, they clearly distinguish between legitimate direct selling players and fly-by-night operators. And the two anchors of the guidelines are: consumer protection and self-governance for the entire industry.
The guidelines have clearly defined roles and responsibilities for three key stakeholders in the direct selling industry: direct selling entities such as Amway, distributors who are channel partners, and consumers. Working with the Ministry of Consumer Affairs, Ministry of Finance, and the FSSAI, we now at least have a level-playing field for the industry. Our industry wanted to be regulated. The new Consumer Protection Act also formalises the guidelines into enactment of law. It will be good if we have consistency across the country on how the rules and regulations are put in place and implemented.
How do you see the future of the direct selling (DS) industry in the country?
Globally, the penetration of DS industry in some SE Asian markets such as Thailand, Vietnam, Indonesia, Malaysia, etc, has gone up by three to four per cent in organised retail trade. In India, it is 0.4 per cent, which can go up to that level. I see nutritional wellness market, where we have a 33 per cent share, growing atleast by four to five times in India. Direct selling is expected to be worth Rs 64,000 crore by 2025. The potential is huge. If the industry can catapult itself by seven to eight times and we can retain a market share of 30 per cent, we are talking about a billion dollars in the next 10 years for Amway.
What are your future plans for India vis-à-vis other countries?
We have very aggressive future plans for India. Looking at the market space, we believe the entrepreneurship story in India needs direct selling. It is a good fit for all emerging markets, especially India. It is a people-to-people business. We as consumers prefer personal demonstrations, endorsements, recommendations, and this channel naturally fits with how we tend to consume a product. We are into this ‘click and brick’ model, but it is delivered through people. That is the key differentiation for us in the marketplace.
We will be launching 20-25 new nutritional and beauty products from our global portfolio. We are also enhancing our beauty business in India as that is a key growth driver for us. We have got into the consumer connect strategy, and set up experience stores across the country. We are developing India as a manufacturing hub for other countries. We are also trying to incubate new ideas on product development. Ayurveda is definitely something we are working on.
Would you be getting into Ayurveda as well?
Yes, we are working to come up with a new portfolio that enhances our Nutrilite brand. Whether Ayurveda medicines or nutraceuticals, are choices we are deliberating on. The other part of the piece is organic farming. India has the largest organic farm producers in the world. With a global 6,000 acres of owned and operated organic farms, we need to invest in organic farms in India. That enhances our sourcing strategy in the country. We have already partnered with six to seven states and are conducting feasibility studies on organic farming and sources of key raw materials.
What kind of difference are you making to the Indian economy?
One is, like I said, creating jobs. Increasingly, people are looking to own a business. So by getting more people in the entrepreneurship space, we are making the biggest difference to the society. The second aspect is employability, where we play a role in training or skill development interventions. We address the gap between those seeking employment and who finally get it. We conduct close to 30,000 free training sessions here for young entrepreneurs. With a population of 1.3 billion, we really want this country to move towards a progressive job environment.
suman@businessworld.in
@skjsumankjha
