DABUR INDIA LTD.- GLOBALIZATION

PRESENTED BY-ABHINAV PRAKASH

SIDDHARTH JAIN

INTRODUCTION

• The case start with the chief concern about the globalization of Dabur itself.

• Key questions- 1. Shouldn’t Dabur first build scale in the

fast growing domestic market before attempting to go global?

2. Wouldn’t a strategy of pursuing new global markets detract from the company’s core market in India?

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3. How it will face growing competition from the international players, a fast changing retail landscape and an even more fastidious consumer?

CPG- INDUSTRY BACKGROUND

• CPG industry comprised household groceries, food, personal care, detergents etc.

• Broad spectrum of competitors prevailed.

• Main characteristic was low margin but huge volume.

• Chief factors for buying CPG were: -price, brand loyalty and impulse.

India CPG- TOP 10 2005-06

Rank Company Net sales (INR million)1 HINDUSTAN LEVER 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 17,130

8 DABUR 13,4309 JOHNSON AND JOHNSON 13,300

10 KANSAI NEROLAC 10,610

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• Global CPG industry grew by 2.5% in 2006.

• Main stay in the business was stable and large volume.

• In India 1. CPG industry had worth $13.1

billion market.(excluding beverages and tobacco products)

2. Fragmented market.

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3. Underdeveloped supply chain and logistics were costly.

4. CPG market was fastest growing market in the world.

5. Economy poised to grow at 9.2% in 07-08.

6. Young, dynamic and willing population.

7. Market to grow three fold by 2015.

• Expected growth in personal care, food, beverages and household care categories. (Dabur had strong brands in these)

DABUR- BACKGROUNG

• Founded by Dr. S.K. Burman.• Manufactured over 450 products.• Consolidated turnover – INR 22.6 billion

for year 06-07.• Network of 1.5 million retail outlets.• Main four business units- 1. Consumer Care-hair care, oral care,

health supplements, digestives and candies.

2. Consumer Healthcare- both prescription and OTC medicines.

3. food business- fruit juices, cooking paste, sauce and bulk items for institutional customers.

4. international business- it manufactured and marketed the products overseas.

• Eight manufacturing units in india.• Five production units outside India- 1. Birganj (Nepal) 2.Dhaka(Bangladesh) 3. Dubai(UAE) 4. Cairo(Egypt) 5. Lagos(Nigeria)

• India advantage- 1. Differentiated herbal image. Products

based on ayurveda, an indigenous form of medicine.

2. Target at mass market. 3. Product portfolio consisted of

categories that were underpenetrated and had high growth potential.

4. A long heritage.

Domestic capabilities

• Created niches to drive long term growth and have insulation from the market.

• Sales was focused on the channels, not product.

• Sales force dedicated to key grocers, mass grocers, chemists, modern retail outlets and wholesale.

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• Separate sales team to cater rural markets.

• Independent supply chain for each of its four business segments.

Approach to Globalization

• The initial momentum came from - the Indian Diaspora- to the Persian Gulf.

• Primarily exported hair oil to the golf market.

• All international operations had been streamlined under DIL, a Dubai based subsidiary.

Template for globalization

• To achieve goal of securing 20% of its revenue from global operations by 2012.

Template:• A new market for entry should not be

margin-dilutive even in the short run.• A new market should be in the

landscape between Nigeria and China.

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• Acquisition- of brands, relationships and other assets- would be considered to jump start growth.

• The technology on offer at the new geography should be compatible with Dabur’s technology.

• The “herbal” platform would remain the basis for new customer acquisition and brand development.

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• The overall brand architecture would be limited to four core brands in an overseas market.

A focus country should have-• Large consumer populations.• Long term prospects for GDP growth.

Q. Should Dabur build scale first in India before investing in global operations?

• It does not require to first scale in India before investing in global operations. From exhibit 4 we know-

Dabur is market leader in India- 1. Health supplements 2. Digestives and confectionery 3. Air freshners, mosquito repellants. 4. Fruit juice

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• From exhibit 3 we can know that the growth in domestic market was about 15% whereas in the overseas market it was more than 35%.

Q. Does global expansion detract the company from its core market?• No, the company already has a

unit/division for international business separately. All international business were streamlined under DIL. (DIL had seven subsidiaries as- Dabur Nepal Pvt Ltd., Weikfield International(UAE), Asian Consumer Care Ltd., African Consumer Care Ltd., Dabur Egypt Ltd., Dabur(UK) Ltd. And Asian Consumer Care (Pakistan) Ltd.

Q. What are the reasons why Duggal and his team are expanding globally?• The reason for the dabur to expand

globally was strategic one. It would benefit in three ways-

1. Geographical expansion.2. Leverage the natural platform by

capitalizing on the growing global demand for natural product by occupying differentiated competitive niches in the healthcare and personal care segment.

3. Growing organically and inorganically by acquiring assets and driving alliances to build scale globally.