Dabur India Ltd. - Globalization Nitya Subramani, X, Y
Sep 13, 2014
Dabur India Ltd. - Globalization Nitya Subramani, X, Y
Agenda
The Indian CPG market and industry
Dabur in India
Dabur globally
Dabur in Nigeria
Recommendation
India’s CPG market is attractive and among the fastest growing in the world
Total market size 2006: $13.1 billion
Food (incl. groceries) Non-Food
44% 56%
CAGR previous 3 years
Forecast growth 2007-2008
+8.6% +9.2%
Total market size 2015: $33.4 billion
Growth categories: • Personal care • Food • Beverages • Household care
50%
Percentage of India’s 1 billion people under the age of 20:
160m teens
The CPG industry is still fragmented, presenting an opportunity for consolidation
of CPG sales come from mom-and-pop outfits making and selling unbranded and unpackaged goods
>50%
Rank Company Net sales (INR million)
1 Hindustan Lever (Unilever) 110,800
2 ITC 97,860
3 Nestle India 24,750
4 Asian Paints 24,410
5 Nirma 19,170
6 Nirma Consumer Care 18,140
7 Britannia Industries 17,130
8 Dabur India 13,430
9 Johnson & Johnson 13,300
However, building national scale in India is a key challenge
Market heterogeneity: High
• National coverage: • Millions of retail outlets
• Majority in rural areas
• People-intensive operations
• Underdeveloped supply chain
• Costly logistics
• Marketing: • Diverse consumer base
• Many small individual transactions, unremunerative for marketers
6 million Retail outlets
4 million rural
2 million urban
Dabur has built a successful business in India, achieving significant scale by 2007
1884 Established
450 Number of products in 2007:
1.5m National coverage:
retail outlets
47 clearing & forwarding locations
1,500 distributors
22.6 billion Consolidated sales:
Dabur’s assets span 4 business units and several production facilities in India and abroad
4 business units:
• Consumer care • Hair care • Oral care • Health supplements • Digestives and candies • Baby and skin care products
• Consumer healthcare • Prescription medicines • Over-the-counter medicines
• Foods • Fruit juices • Cooking pastes • Sauces • Bulk items for institutions
• International
8 manufacturing plants in India
5 Production units outside India:
Birganj (Nepal)
Dhaka (Bangladesh) Dubai (UAE) Cairo (Egypt) Lagos (Nigeria)
Dabur’s herbal image and mass market pricing helped it become a top 10 player in India
Core capabilities:
• Identify consumer needs • Develop localized products • Create niches to drive long-term
growth
Niche categories:
• Underpenetrated and high-growth categories
Differentiated herbal image:
• Unique positioning: Ayurveda platform
Mass market pricing
• Capturing the large rural market in India
Dabur is well-positioned to capture share domestically, but rising competition is a threat
Strengths Weaknesses
• Local consumer knowledge • Indian heritage • Ayurvedic (herbal) platform • Product engineering (R&D) • New product introductions (5-7% of revenue
annually) • Targeted and priced at mass market • Strong rural presence (50% of sales) • Focus on channels (loyalty programs,
software)
• Niche market • Expensive raw materials (natural ingredients) • Focused on therapeutic (rather than higher
margin cosmetic) products
Opportunities Threats
• Young, dynamic population • Fast growing domestic market • Brand extensions (herbal platform)
• Rise in competitive intensity in its core categories like hair care, putting pressure on volumes
• Slowdown in rural demand
How should Dabur strategically expand its product portfolio in India?
Strategic choice: Pros: Cons:
Target an herbal niche in oral care?
• Differentiated herbal product and branding possible
• Builds on expertise in traditional medicine
• Use competency gained through 2003 acquisition of Balsara Hygiene Products
• Large market size (in value)
• Strong, established competition (Colgate , HLL – 67% of market)
• No home-grown competencies
Extend herbal equity to skin care and soap?
• Differentiated herbal product and branding possible in medicated soaps
• Builds on expertise in traditional medicine, especially for baby care
• Higher margin categories
• Highly competitive, crowded in soaps
• Medicated soaps present only 25% of the category
• Strong MNC competitors (Reckitt Benckiser’s Dettol)
Leverage strengths in hair care to the cosmetic segment?
• Differentiated herbal product and branding possible
• Leverages equity in therapeutic value to higher margin categories
• Competition • Traditional mass market
targeting and pricing a problem in more aspirational cosmetic segment
For continued long term growth, international markets are becoming more and more relevant
2003 2004 2005 2006 2007
Domestic Sales International Sales
Global Revenue
GCC
Egypt
Pakistan
Bangladesh
Nigeria
US
UK
Initial Global Business Model Follow Indian diaspora to Persian Gulf
o Primary demand generation o Minimal product adaptation
Follow existing manufacturing locations Expand to other target segments
Long-term Global Business Model Target local mainstream population
o Explore cost of existing products adaptation o Explore products most easily adapted to new
market Adopt necessary heterogeneity
o Introduce country specific products
Key external environment considerations o Product fit o Integration o Alien nature of market o Supply chain considerations o Costly logistics
Dabur International has traditionally focused on different categories with African consumers
Arab consumer Asian consumer African consumer
Footprints Middle East & North Africa South Asia, UK & US East, West & South Africa
Target customer Arab female Asian male African male & female
Core categories
Hair oils Hair creams Shampoos Oral care
Hair oils Shampoos Digestives Oral care
Oral care Personal wash Home care (insect repellent)
Core market Dubai India Nigeria
Total market size (INR mil.)
1,340 1,500 320
Regional split (INR mil.)
GCC – 760 North Africa – 460 Iran, Iraq - 120
Pakistan – 440 Nepal – 640 Bangladesh – 200 UAE - 210
Central Africa – 10 East Africa – 60 South Africa – 10 West Africa – 240
Key market attributes
• 80% of population is Arabic
• High purchasing power
• Replicating Indian brand architecture and product portfolio
• Leveraging learning from Indian marketing mix and media strategy
• High oral care penetration • English speaking • Medium competitive
intensity
vs.
Dabur needs to adapt strategy to local consumer markets in Nigeria
Oral Care Skin Care Hair Care Health Care Home Care
Market Size (INR Million)
5,000 6,000 N/A 350 N/A
Products Toothpaste Soap Relaxers Hair pomade
Glucose Mosquito repellent cream
Strategic Intent To become second largest player
To become the third largest player in soaps
To create a market for hair oils
To become a strong player in glucose market
To replicate the Indian product portfolio
Imperatives -Become a leader in herbal niche -Launch herbal gel
Launch a herbal soap with localized ingredients
Launch Dabur Glucose
-Leverage India competency -Launch Odomos cream
Strategic Issues -Unilever and P&G strong -Herbal niche not crowded
-Fragmented market, small players -Soap is not core category for Dabur
-Hair care is beauty related and cosmetic -Dabur has therapeutic and not cosmetic equity
One player play -Coil is the predominant product form -No market for cream
Oral Care Skin Care Hair Care Health Care
Home Care
Market Size (INR Million)
5,000 6,000 N/A 350 N/A
Products Toothpaste Soap Relaxers Hair pomade
Glucose Mosquito repellent cream
Strategic Intent To become second largest player
To become the third largest player in soaps
To create a market for hair oils
To become a strong player in glucose market
To replicate the Indian product portfolio
Challenge Can Dabur successfully target herbal niche and establish a strong market presence
Can Dabur operate in soap successfully? Can it extend herbal equity to soap?
Can Dabur leverage it’s strengths?
Can Dabur become No.2 player?
Should Dabur create a new cream category in Nigeria?
Recommendation Yes High potential market
Maybe Therapeutic, not cosmetic
No Cosmetic not therapeutic consumer focus
Yes Potential expansion into food category
Yes Keep natural product value proposition
Dabur should focus on oral, health and home care markets in Nigeria
Avoid product standardization and adapt to local markets herbal platform in Nigeria
Build up the a new product category market focused on local consumer needs
• Perform a deep dive market analysis on Nigerian consumer • Target consumer directly • Keep herbal platform and transfer herbal value proposition to mosquito repellents • Use product expertise to expand into oral care
External dynamics
• Geopolitical risk: variation in government (state) support • Production infrastructure: ability to accommodate
new product production
Final Recommendations
Dual strategy Consolidate the domestic market and expand internationally in selected
growth markets
Leverage core therapeutic herbal/ ayurvedic platform Build a platform to enable Dabur to become a global ayurvedic leader
Although requiring an adaptive strategy, Nigeria can be an attractive market for Dabur International
Where is Dabur now?
Leading consumer goods company in India (Turnover $1 billion)
2 Strategic Divisions:
• Consumer Care Business: Addresses consumer needs across FMCG spectrum • International Business Division: Addresses health and personal care needs of international
customers
2 subsidiary group companies and 8 step-down subsidiaries
Product presence in over 60 countries
17 international manufacturing locations
12 Billion-Rupee brands (over $18M)
2012 Dabur product representation
5 Master Brands
Dabur, Vatika, Hajmola, Real, Fem
Dabur Chyawanprash is the largest selling ayurvedic medicine (65% share)
Market leader in herbal digestives (90% share)
Hajmola market leader in digestive tablets category (60% share)
25 M Hajmolas consumed in a day in India
Strategically positioned Honey as a food product- Resulted in market leadership (75%) of branded honey market
Separate Consumer Health Division (CHD) that builds on the Ayurvedic heritage
Offers a range of classic medicines
Global Market
• International Business Division (IBD) caters to markets in Nepal, Bangladesh, Middle East, North and West Africa, EU and US
• Contributes to 30% of total sales
• Promoting Dabur and Vatika in these markets
• Vatika is the fastest growing hair-care brand in the Middle East
• Leveraging the ‘natural’ preference among local customers.
Thank you!