In contrast to macro-economic trends, Dabur India continued to see rural growth outpacing urban growth in the third quarter , backed by expansion of its rural distributon footprint. The FMCG major, however, expects inflationary pressures continue to remain a concern in the near term. To tap into value-added milk beverage and healthy snacking segments, the company is now focusing on expanding its Real brand portfolio.
Speaking on an analyst call on Thursday, Mohit Malhotra, CEO, Dabur India said, “Even in a challenging environment, rural demand for Dabur outpaced urban demand. For us rural growth was around 7.5 per cent (in terms of value growth in Q3 FY 2021-22), while our urban growth was around 2.6 per cent….This was driven by our investments ahead of the curve on expansion of our rural distribution footprint and village-level entrepreneurs programme. Our distribution coverage has now gone up from about 55,000 villages to about 88,000 villages and we have now around 8000 village level entreprenuers.” Overall, rural contributes about 46 per cent to the company’s India sales.
In a bid to offset inflationary pressures , the homegrown FMCG major has taken “calibrated pricesincreases “of about 5 per cent in key products across categories such as health supplements, Ayurvedic OTC, ethicals, hair oils and toothpaste, besides undertaking cost-saving initiatives.
“The inflation in this quarter was truly unprecedented at over 13 per cent and this impacted the gross margin of the consolidated business. There is continued inflation in hydrocarbon derivatives, paper-based packing material, raw honey, edible oils and some key spices that we use. Going forward too, we will be taking calibrated price increases in addition to cost optimization to mitigate this impact,” he added.
Malhotra said in the long term, the company expects to grow its brand Real “from a power brand to a power platform”. “Earlier, Real was only operating in the fruit juices and nectars category. But now we have created three sub- brands called Real Fruit Power, Real Milk Power and Real Health. Real Fruit Power will focus on fruit-based beverages. We have expanded this range with the launch of low-priced fruit drinks and value-added beverages. We are on course to making the Real fruit drinks brand a ₹ 100 crore-brand by next year,” he added.
Meanwhile, the company’s sub brand Real Milk Power will focus on value-added dairy beverage offerings such as Real Frappes and Milk Shakes. “Our latest sub-brand is Real Health, under which we are launching a host of healthy snacking options. We have started with the launch of Chia Seeds and Roasted Pumpkin Seeds under this sub-brand and we will be expanding this to launch more such premium and value-added healthy snacking products and superfoods,” Malhotra said.
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