Today, consumer products major Dabur will announce its second quarter (Q2; July-September) results amid expectation that net profit may rise quite a bit on-year as well as sequentially – Q1 net was `187 crore – in tune with higher Q2 profits of fast-moving consumer goods (FMCG) majors like ITC and HUL. On Friday, the company’s shares hit a record high of Rs 183.40 in intra-day trade in Mumbai. But none of this may sway Amit Burman, vice-chairman of the company, much. For, his focus these days is on the company’s digital drive.
Unlike most of its consumer market peers, Dabur has taken the digital route to engage with consumers directly. In an interview with Nupur Anand, he explains how digital reach, new product launches and a stronger international business will give Dabur an edge over its competitors. Edited excerpts:
Dabur has gone digital with healthcare.
Yes, we have, with ‘liveveda.com’, a healthcare portal where you can buy our products. That’s another way of reaching out to people. Digital will help us in disseminating information and expanding our distribution reach. Consumers are going online these days to seek natural remedies, so we provide information on natural cures relating to ailments as well as hyperlinks to our products. Then, there are ‘mybeautynaturally.com’ and ‘daburdentalcare.com’. Launched in early October, they target personal care and oral care. Similarly, ‘daburmediclub.com’ targets medical professionals. We are trying to enhance our distribution via chemists too.
Are all Dabur products now available online?
Not products like juices, but, yes, over a period of time, all products will go online, and they will be mailed to consumers – meaning, initially, a distributor close to you will go and give the product to you and take cash.
Eventually, we do want to convert it into online sales. Initially, however, the idea is to drive people to the portals and connect with them and give them advice.
What are your digital expectations?
We have almost doubled our investment in the last 3-4 years and the vision is to double our business in the next 3-4 years.
In the last few quarters, Dabur has fared better than its peers in terms of volume growth. What’s the reason behind it?
We’ve a very diversified portfolio. All the categories have been doing well. Food and international markets have been bringing a lot to the table. And then, in some product categories such as oral care, we play in niche segments such as Babool and Dabur Red which is a Rs 150-crore brand, and we don’t have any competitors there. The other thing that we did was expand our rural reach.
It was not that we were trying to predict the slowdown; but just before it kicked in, we doubled our rural reach from 14,000 villages to 34,000 villages. This initiative happened at the right time for us.
So, when the contraction started in the urban market, the rural market more than made up for it. If you take the first quarter of this year and the fourth quarter of last year, our rural business has grown 30-40% ahead of urban.
After ‘Project Double’ (an initiative to increase Dabur’s rural reach twofold), are you planning any other such rural expansion project?
I think we have just scratched the surface now and we have a long way to go. With ‘Project Double’, we have targeted about 72% of the total rural FMCG potential. Now, the balance 28% is very scattered. With this, we have targeted the bulk that has the purchasing power. But then, we have a strong new product development pipeline. So, we’ll reach out to more consumers.
Your said food and personal care segments have been doing well. What about healthcare?
We are strengthening our healthcare portfolio. Originally, we were known as a healthcare company that diversified into the FMCG business. I think now a lot of healthcare focus is coming in where the margins are high and there is not much competition from MNCs (multinational corporations). By healthcare, we mean products like Pudin Hara, Hajmola, Chyawanprash. So healthcare and FMCG almost have the same kind of turnovers today. And in healthcare, what we are trying to do is deliver the product in a much more convenient way.
You acquired US-based personal care firm Namaste for $100 million (about Rs 451 crore) in an all-cash deal in January 2011. Has the Namaste business improved since?
It is already on the upswing and we are already looking at introducing our products in Africa and also at having a manufacturing base in Dubai. International business sill contributes about 33% but with Namaste on track, I am sure that it will touch 40% in the next couple of years.
Say something about your new products.
We’ve a very strong pipeline and you can see a lot more products going ahead. We’ve just started marketing packaged coconut water in Punjab. We’ve got a very good response there. So much so that the third-party manufacturer we tied up with there, has not been able to meet the demand. So, there is a huge market for that for sure. I think we should be completely ready for it by next summer or loading of next summer by March.