Dabur-PPT

Case Study on Dabur

Presented By:

Industry Outlook• Growth in the total household and total personal care markets has slowed

in 2012 compared with 2005-10

• The laundry segment, for instance, saw an average annual compounded sales growth of 8.4% between 2005 and 2010.

• This is expected to dip to 7.1% in 2012, according to the Nomura report. Similarly, in the bath and shower segment, the compounded average growth rate was 11.7% in 2005-10, which is expected to fall to 8.5% in 2012.

• For the Indian consumer packaged goods industry, the home and personal care segment—representing categories such as soaps, detergents and dishwashing—accounts for 40% of the overall Rs.1.8 trillion industry, according to research firm Euromonitor.

Contd..• Today some 5 billion people live in 37 countries where nominal GDP per capita is in most

cases less than $1,000 a year. Despite representing roughly 70 percent of the world’s population, these emerging-market consumers account for only 35 percent of the world’s GDP.

• This is changing; by 2020 the collective GDP of the emerging markets will overtake that of the developed economies for the first time.

• And over the next 10 years, consumer spending in emerging markets is expected to grow three times faster than consumer spending in developed nations, reaching a total of $6 trillion by 2020.

• Consumer spending worldwide across the 50 FMCG categories covered by the Global Growth Compass grew by about 5 percent a year over the past decade to reach $7 trillion in 2010.

• Eighty-three percent of that spending was concentrated in three segments: food and beverages, apparel and accessories, and alcoholic drinks.

• Over the next 10 years, we expect consumer spending worldwide to grow by $5 trillion, almost double the growth seen in the previous decade and the equivalent of 60 P&Gs

Trends that could influence performance over the next decade

• Demand Trends– A billion new consumers– Consumers ‘going green’– Shifting demographics– Rise of digital consumers– Health and wellness concerns– Modernization and concentration of trade– Rise of the value segment

• External Factors – Rising trade protectionism– Changing tax regimes

• Supply Trends– Increasingly volatile input costs– Labor shortages in emerging markets

Dabur: Background• Dabur, today one of the largest FMCG companies in India, was started by

the Burman family in 1884 in Kolkata (West Bengal).

• With a legacy of 120 years built on attributes of quality and trust, Dabur has proven its expertise in the fields of health care, personal care, Homecare and Foods.

• The business based on the vision of founder Dr S K Burman - "What is life that cannot bring comfort to others", started as a small pharmacy selling healthcare products.Two decades later the company entered the specialised area of Ayurvedic medicines and branded its products.

• With growing demand, Dabur shifted its operations to Delhi in 1972 and a few years later set up full-fledged research operations in healthcare.The company has over 12 manufacturing units in India & abroad.

Contd..• The international facilities are located in Nepal, Dubai, Bangladesh, Egypt and

Nigeria.

• Three of the facilities in India are strategically located in excise duty free zones - Rudrapur (Uttaranchal), Baddi (Himachal Pradesh) and Jammu.

• With the acquisition of Balsara, Dabur now has additional facilities at Baddi & Silvassa (Dadar & Nagar Haveli).

• The company has a multifruit processing plant at Siliguri (West Bengal) for production of pulp and concentrates.

• This is a step taken by the company towards backward integration by locating this facility in proximity to its juice plant in Nepal. Dabur Foods, the subsidiary of Dabur India has also recently acquired a fruit juice plant in Jaipur (Rajasthan)

Products & Brands

Entry Strategies• After establishing itself on the herbal platform in India over the years, Dabur

began to look at global markets to achieve growth.

• Till 1989 the focus of its operations was on fulfillment of export orders through domestic manufacturing.

• Post 1989 it began to look at setting up an international business. For this it appointed Redrock as its franchisee based out of Dubai to focus on demand generation in the Middle East and Egypt.

• It also started initiating local manufacturing in Dubai and Egypt. Thereafter, it acquired Redrock and its manufacturing facilities and renamed it Dabur International with the responsibility of handling all international operations of Dabur.

• This international hub went on to set up a greenfield manufacturing facility at Cairo under its subsidiary Dabur Egypt Limited. It also set up new manufacturing facilities in Bangladesh and Nigeria that became operational in 2005.

Contd..• Dabur's products are exported to more than 50 countries across the world. Its

products are available in the markets of the Middle East, Southeast Asia, Africa, the European Union and America.

• These markets are serviced by the company's offices and representatives located in USA, UK, Russia and Sudan.

• The herbal health care and personal care range of the company has been successfully selling in these international markets.

• Dabur India Ltd set up new subsidiary in Sri Lanka – Dabur Lanka (Pvt.) Ltd. The company will establish a new export-oriented manufacturing facility for producing a range of fruit-based beverages in Gampaha, north of Colombo in 2011.

• Dabur has recently made two strategic acquisitions for gaining access to newer markets, entry into virgin categories and access to advanced technologies in the highly developed consumer markets of Turkey and USA.

Contd..• Dabur is now truly a global player, with an overall turnover

of over US$ 1 Billion and a market capitalization of ~US$ 4 Billion.

• Its International Business Division headquartered in Dubai is the cornerstone of its growth strategy delivering over 40% CAGR growth and reaching a milestone of AED 1 Billion only within 8 years of its existence.

• Product-specific strategy followed in international markets - Ayurvedic supplements and private label in developed markets, personal care in Middle East, toothpaste and soap in Africa, healthcare and personal care in Bangladesh.

SWOT Analysis• STRENGTHS:

– Century Old Company– Established Brand– Ayurvedic/ herbal Product line– Leader in Herbal Digestives where the product has 90% of the

market share– Innovativeness in Promotions– Dabur’s overseas business contributes 30% to consolidated sales led

by CAGR of 32% in last 6 years

• WEAKNESS:– Profitability is uneven across product line– Soap sector is not a core category for Dabur which is in demand– Dabur is in theraputic field not in cosmetic

Contd..• OPPORTUNITIES:

– Extend Vatika brand to new categories like Skin Care and body wash segments

– Launch several OTC brands– Southern India Market– Exploring new geographical areas- local as well global– Oral Care Segment– Launching new Products like Hair oils, Herbal and Gel Toothpastes etc.

• THREATS:– Competition in the FMCG sector from well established names– Other fields of medicine- Allopathic and Homeopathic– Markets where Herbal products are not recognized like in case of Nigeria– Consumer taste and preference– Country’s Political and Economical Risk

Market Share

International Business accounts for 30.6% of revenue: Dabur International (17.5%), Hobi Group (2.7%), Namaste Labs (10.4%). International Sales breakdown: Middle East (30%), Africa (25%), Asia (14%), US (28%), Others (3%)

Competitor AnalysisOral Care Skin Care Hair Care

Market Size 14.3 Billion Units 13 billion units 15 billion units

Products Tooth Paste Facial Skin Care Product

Oil, Shampoo

Competitors Colgate - Palmolive, Dr. Fresh Inc., GlaxoSmithKline, Johnson & Johnson, Jordan AS, Lion Corp, Kao Corp,

Global Gillette, Oral-B Laboratories, Unilever NV, Church & Dwight, Dentaid,

Henkel KgaA, Procter & Gamble, Sunstar Inc., etc

Loareal holds 12% of global market

Procter and Gamble holds the first position with market share of

more than 24%

Growth Rate 12.8% since 2008 21% since 2010 19% growth rate by 2015

Conclusion• Started as an exporter in 1980,

• focused on order fulfillment through India manufacturing,

• set up franchisee at Dubai in 1989, demand generation led to set up manufacturing company in Dubai and Egypt,

• local operations further strengthened in 2003 onwards,

• set up new manufacturing facilities in Nigeria, RAK and Bangladesh and

• in todays scenario, focus is on Global supply chain and more localization and with the growing demand in different segments of CPG has huge potential to grow.

Thank You!!