With a product portfolio straddling diverse categories ranging from Chyawanprash to rose water, Dabur India is in the midst of a substantial makeover of its brands as well as products. The company has forged entries into three new categories in the past few months in an effort to capitalise on the newly affluent urban consumer. Mr V. S. Sitaram, Executive Director of Dabur’s consumer care businesses shares with Business Line the company’s new forays and the outlook for FMCGs in general.

Excerpts from the interview:

How is Dabur realigning its portfolio with the merger of the foods subsidiary?

Dabur Foods currently derives much of its revenues from the Real fruit juice brand, but we also have a non-fruit juice business, the Hommade range. The plan is to leverage on Dabur’s national distribution to get better reach for the foods portfolio.

This apart, we are also revisiting our entire approach to the foods business. We clearly think there is a bigger opportunity. This trend happens in every economy. The first wave of spending happens in the home and personal-care products. When the economy gains affluence, off-take of processed foods starts to pick up.

Our opinion is that India has reached that level of affluence where people are in the market for more convenience, more variety, especially in the health and wellness areas. However, there will be greater clarity on our game-plan a few months later.

We’ve seen Dabur forging an entry into new categories in personal care in recent months. What are the plans for that business?

Dabur India has so far looked mainly at the rural opportunity for its brands, but the real opportunity now is in increasingly targeting urban, upwardly mobile, affluent young people. We thought there was a disconnect between Dabur brands and that set of consumers. So we are trying to get a more contemporary and leading edge feel to our brands. Several of our brands are going in for a facelift and even a complete identity change.

In the shampoo business, Dabur is small but among the fastest growing companies, at about 30 per cent. We are gaining share and adding variants. We added a third one last year. The whole Vatika brand is undergoing a major identity change — the packaging as well as the visual identity — to get an international flavour.

As for skin care, Gulabari (rose water) is one of the heritage brands of Dabur. We found that an important use for this product is as a skin-care ingredient; we have leveraged on that to launch a cold cream and a lotion. That melds well with our strategy of connecting with more contemporary customers. Skin care is a competitive market but we believe that it’s one category where Dabur is un-represented, and as an FMCG major we believe that should be corrected.

Another trend that favours us is that globally, the face-care market is highly fragmented; that is the way the Indian market too will evolve. Yes, the largest brand in India is a big force, but less of a force than it was five years ago. Face care in particular and body care will offer us opportunities for new ideas.

Gulabari is one initiative from us, there will be more. The Gulabari extensions have seen very good initial response and this has enthused us to go back to the drawing board to see what else we can launch. Wellness is to be the centrepiece of our strategy and personal care fits well into that theme.

With health and wellness as the centrepiece of our strategy, Dabur will focus on four verticals. In consumer care we have the personal products; in health, brands such as Chyawanprash and Hajmola; in home care, which we bought over from Balsara, we will be adding to the household care range. The fourth vertical will, of course, be foods. Seventy-five per cent of the brand portfolio has had a makeover in the past few months.

Dabur has recently launched extensions of Chyawanprash and forged an entry into malted food drinks. How are these faring? Isn’t malted drinks a bruising category driven mainly by promos and discounts?

The extensions that we have launched in Chyawanprash are premium products with specific benefits. We recently launched chocolate flavoured Chyawanprash granules targeted at kids. Chyawanprash doesn’t taste too good. But when you mix it with milk it is more palatable. This is like a malted food drink.

We will sell this brand on the proposition. We believe this is a differentiated product. It offers the goodness of Chyawanprash with chocolate flavour. I think we wanted to use the Indian approach as a differentiator. Indians have a belief in the traditional methods of health.

Overall, there seems to be a divergence in performance within FMCGs. Categories such as soaps and detergents seem to be growing slowly, and enjoying lower pricing power, while impulse categories such as personal care are growing at a fast pace. Your comment?

What I see is that the growth in FMCGs is very segment and brand dependent. If you take shampoos, in the sachet segment, you can do very little about pricing. But if you look at bottles, several high-end brands have been launched. The market appears to be polarising into the high-end and price-sensitive segments. So if you take shampoos as a category, there is pricing pressure on sachets. But depending on the brand, the pressure is higher or lower.

In toothpastes, people have been taking up prices but the market is not uptrading. Overall there is a shift towards discounted brands. Our brand Babool is growing very fast, but we have taken price increases in line with the market. I think the trend is also highly dependent on the strength of the brand. In soaps, cost pressures are high and people have been taking up prices on that account.

In our categories such as Chyawanprash, we have a powerful proposition and price increases haven’t impacted growth. Of course, we cannot take prices up unreasonably, but some price increases can and have been resorted to. We have taken up prices by about 3 per cent in this category.

We’ve seen the rural and semi-urban offtake of FMCGs really picking up pace in the first nine months. What is driving that and is that a sustainable trend?

One factor that is driving that trend is that the rural economy is no longer cut off from the urban economy, there is considerable flow-back because of a migrant population.

For several years now, the rural economy has seen good agricultural growth. That, too, is driving this trend. But to my mind, it is the urban growth that is steady and consistent, the rural economy is still volatile and is susceptible in the agricultural situation. But the urban economy is seeing steady growth, rising affluence and incomes. That is driving uptrading to expensive shampoos, skin cream and all those feel-good products. I think people are much more confident about the future and are inclined to spend more.

Does the additional income really go into the categories such as soaps and toothpastes?

I think it would go into good-for-you products and impulse purchases. If you want to get part of that money, we need to offer something better. If you offer something differentiated and special, people are willing to buy. That is happening in skin care and shampoos.

Wouldn’t brands like Olay or Dove be better placed to capture those aspirational spends?

Not necessarily. That depends on execution. If you look at the revamped Vatika it has the look and feel of an international brand. The most premium consumer brands in India have always been Indian. So why not brands from the house of Dabur? Take our Gulabari cold cream, we are not at a discount. We are priced on a par with the market and the brand is doing well.

I don’t think the Indian consumer is saying that I believe only in imported authority. Expertise can be resident in whoever can demonstrate that ability.

How do you expect this year to be for FMCGs?

All the signals are quite positive. I expect it to be very good, on the back of strong two years. I think there is enough money out there with consumers and enough disposition to spend. It all depends on how innovative you are as a company and how much action you can generate in the market.

More Stories on : Interview | Dabur India Ltd | Personal Products

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page