Dabur India Ltd, a leading player in the Indian packaged consumer goods industry, is set to expand its horizons by entering the realms of therapeutics, baby care, and tea, according to insights shared by analysts during interactions with the company’s management at a recent event.
Dabur’s CEO, Mohit Malhotra, emphasized the company’s strategic focus on not only consolidating its presence in existing segments but also venturing into new domains to expand its total addressable market.
Dabur India, a prominent player in the fast-moving consumer goods (FMCG) sector, operates primarily across four key segments: consumer care, international business, foods, and retail.
One of the significant moves in Dabur’s expansion strategy is its entry into the lucrative Rs 11.4 billion Baby Care market, which will feature products under the newly introduced label ‘Dabur Baby.’ Analysts at IIFL Securities noted, “As a result, the new product development contribution has gone up from 1.4% in FY19 to 4% in FY23.”
Analysts from Motilal Oswal expressed confidence in Dabur’s potential for double-digit growth, citing the increasing acceptance of medicines from diverse systems by both allopathic and Ayurvedic doctors.
In addition to its baby care endeavors, Dabur has set an ambitious revenue target of Rs 5,000 crores for its therapeutics division in the mid to long term. Analysts at IIFL Securities highlighted the division’s opportunities in newer therapy and nutraceuticals segments, beyond addressing lifestyle diseases.
Dabur India’s financial performance in the April-June quarter of FY24 exhibited strong growth, with consolidated revenue rising by 11% to reach Rs 3,100 crores, compared to Rs 2,800 crores in the previous year. This growth was propelled by robust double-digit expansion in both home and personal care, as well as healthcare segments.
As part of its strategy, Dabur aims to elevate its portfolio into premium segments to align with evolving consumer preferences. Currently, 75% of the company’s revenue is generated from its domestic business, primarily driven by eight prominent brands, including Chyawanprash, Honey, Pudin Hara, Lal Tail, Honitus, Amla, Red Paste, and Real.
Dabur is in the process of revamping its portfolio, making its power brands more appealing to younger consumers by introducing new-age formats and aspirational packaging. Dabur Chyawanprash Sugarfree, Dabur Kesarprash, Khajurprash, and others are some of the innovative products aimed at premiumization.
The company’s healthcare business, contributing 31.2% of its revenue, achieved a three-year revenue growth of 9.3% through product extensions within power brands and new product developments. By targeting a younger demographic, Dabur has expanded its total addressable market to 1.2 trillion and rebranded its strategy as ‘Dabur 2.0,’ shifting the focus from power brands to power platforms with a stronger emphasis on scientific claims, as outlined by analysts at Centrum.
Dabur’s journey toward premiumization extends into existing categories, with the introduction of new adjacencies such as ‘Cool King’ in oils, ‘Bae Fresh Gel’ in toothpaste, and ‘Mustard Oil’ in Foods. While premium products currently contribute nearly 8-9% of overall sales, there is a cautious note from analysts at JM Financial regarding the potential impact of a widespread premiumization trend in the home and personal care space.
Dabur is also actively pursuing digital initiatives to enhance its market share by optimizing digital processes and expanding product assortments. The company’s e-commerce business now accounts for 9% of its overall business, reflecting an increase from 12% in FY 2019 to 20% in FY 2023 in contributions from new-age channels. Furthermore, Dabur’s digital spending has surged to 31% in FY 2023, up from less than 10% in FY 2018.
