Dabur India Ltd.

Globalization
Nitya Subramani, X, Y

Agenda
The Indian CPG market and industry
Dabur in India
Dabur globally
Dabur in Nigeria
Recommendation

Indias CPG market is attractive and among the

fastest growing in the world
Total market size 2006:
$13.1 billion

56%

44%

Food (incl. groceries)

+8.6%
CAGR previous
3 years

Total market size 2015:

$33.4 billion

Non-Food

Growth categories:
Personal care
Food
Beverages
Household care

+9.2%
Forecast growth
2007-2008

Percentage of Indias
1 billion people under
the age of 20:

50%

160m
teens

The CPG industry is still fragmented, presenting

an opportunity for consolidation

>50%

of CPG sales come from mom-and-pop

outfits making and selling unbranded
and unpackaged goods

Company

Net sales
(INR million)

Hindustan Lever (Unilever)

110,800

ITC

97,860

Nestle India

24,750

Asian Paints

24,410

Nirma

19,170

Nirma Consumer Care

18,140

Britannia Industries

17,130

Dabur India

13,430

Johnson & Johnson

13,300

Rank

However, building national scale in India is a key

challenge
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

2 million
urban

4 million
rural

Market heterogeneity: High

Dabur has built a successful business in India,

achieving significant scale by 2007
Established

1884

Number of products
in 2007:

450

Consolidated sales:

22.6 billion
National coverage:

1.5m
47
1,500

retail outlets

clearing & forwarding locations

distributors

Daburs 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

8 manufacturing plants in India

Consumer healthcare

5 Production units outside India:

Foods

Birganj (Nepal)
Dhaka (Bangladesh)
Dubai (UAE)
Cairo (Egypt)
Lagos (Nigeria)

Prescription medicines
Over-the-counter medicines
Fruit juices
Cooking pastes
Sauces
Bulk items for institutions

International

Daburs herbal image and mass market pricing

helped it become a top 10 player in India
Niche categories:

Core capabilities:

Underpenetrated and highgrowth categories

Differentiated herbal image:

Unique positioning: Ayurveda

platform

Mass market pricing

Capturing the large rural market

in India

Identify consumer needs

Develop localized products
Create niches to drive long-term
growth

Dabur is well-positioned to capture share

domestically, but rising competition is a threat
Strengths

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)

Weaknesses

Opportunities

Young, dynamic population

Fast growing domestic market
Brand extensions (herbal platform)

Niche market
Expensive raw materials (natural ingredients)
Focused on therapeutic (rather than higher
margin cosmetic) products

Threats

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)

Differentiated herbal product

and branding possible in
medicated soaps
Builds on expertise in traditional
medicine, especially for baby
care
Higher margin categories

Differentiated herbal product

and branding possible
Leverages equity in therapeutic
value to higher margin
categories

Extend herbal equity to

skin care and soap?

Leverage strengths in
hair care to the cosmetic
segment?

Strong, established competition

(Colgate , HLL 67% of market)
No home-grown competencies

Highly competitive, crowded in

soaps
Medicated soaps present only
25% of the category
Strong MNC competitors (Reckitt
Benckisers Dettol)
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
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

Domestic Sales

International Sales

2003 2004 2005 2006 2007

Global Revenue
GCC
Egypt

Key external environment considerations

o
o
o
o
o

Product fit
Integration
Alien nature of market
Supply chain considerations
Costly logistics

Pakistan

Bangladesh
Nigeria

US
UK

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

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

High oral care penetration

English speaking
Medium competitive
intensity

Regional split (INR mil.)

Key market attributes

80% of population is
Arabic
High purchasing power

vs.

Replicating Indian brand

architecture and
product portfolio
Leveraging learning
from Indian marketing
mix and media strategy

Dabur needs to adapt strategy to local

consumer markets in Nigeria
Oral Care

Skin Care

Hair Care

Health Care

Home Care

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

One player play

-Coil is the
predominant
product form
-No market for
cream

Market Size
(INR Million)

-Hair care is
beauty related
and cosmetic
-Dabur has
therapeutic and
not cosmetic
equity

Dabur should focus on oral, health and home care

markets in Nigeria
Oral Care

Skin Care

Hair Care

Health
Care

Home Care

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 its
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

Market Size
(INR Million)

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!