Dabur India

Abhipsita Singh

Anuj Kedia

Rajesh Raja

Sunil Kardam

Agenda

• Analysis of FMCG Industry• Dabur : An Overview• The Restructuring of 2004• Business Profile of Consumer Care Division(CCD)• The Road Ahead: Growth Strategy for Dabur CCD

Porter’s 5 Force Model

Competitors:Highly FragmentedPlagued by grey marketCompetition from MNCsLess Capital Intense butHigh advertising cost

Suppliers:Bargaining Power - LowUndifferentiated raw materials

Barriers To Entry:Economies of Scale: HighExpected RetaliationHigh R&D costs

Substitutes:Traditional homemade remediesUnorganized unbranded productCounterfeit product

Buyers:Distributors and sellersBargaining Power: High

Buyers

Distributors and sellers

Access

Few distributors have strong channels in specific regions and act as suppliers as well as retailers in the region

kirana stores can influence choice of products

Visibility of products

Bargaining Power: High

Agenda

• Analysis of FMCG Industry• Dabur : An Overview• The Restructuring of 2004• Business Profile of Consumer Care Division(CCD)• The Road Ahead: Growth Strategy for Dabur CCD

Dabur Overview

• One of the largest FMCG companies in India – Consolidated Turnover of Rs.15.4

billion ( USD 350 mn)

• Differentiated products – Strong herbal and natural profile– More than 100 years of experience in

Ayurveda

• Wide distribution network – Covering 1.6 million retail outlets – High penetration in urban and rural

areas

• Brand strength – Strong brands in diverse categories

of health and personal care – Mother brand “Dabur” trusted for

natural and herbal healthcare

PRESENCE IN INDIA

Dabur Group - Overview

Business Divisions

8%

11%10%

71%

Consumer Care Division Consumer Health Division

International Business Division Food Business

Largest Indian Personal & Health care Company –

Revenue of over $ 420 MnMarket Cap > $1.7 Bn

World Leader In Ayurveda Portfolio of over 400 Herbal

/ Ayurvedic Products

Strong Internal Competencies Robust Manufacturing Set-up

& state of the art R & D Facilities

Agenda

• Analysis of FMCG Industry• Dabur : An Overview• The Restructuring of 2004• Business Profile of Consumer Care Division(CCD)• The Road Ahead: Growth Strategy for Dabur CCD

The Restructuring of 2004

Drivers

• Internal inefficiencies – organization structure

• Market Factors – too diverse portfolio• Capital market and financial issues

Assessment Summary Evidence

4024P/E

27%17%ROCE

18%12%Op. Margins

IndustryDabur

Process

• Phase I: Consolidation–5 core units, change in structure–Shift to professional management–Cost management

• Phase II: Pharma Demerger

• Non-core units divested• Centralized procurement,

supply chain• New entity – Dabur Life

Sciences

Results

• Improved market performance• Improved efficiency• Significant improvement in capital

market parameters

2429.3P/E

17%21.2%ROCE

12%13.2%Op. Margins

19972004

Rigorous Brand Building

CELEBRITY ENDORSEMENT

REJUVENATION OF BRANDS

Performance Before Restructuring

Operating Margins (1997) ROCE (1997)

Debt/Equity (1997) Net Working Capital (1997)

0

20

40

60

Dabur Colgate HLL

%

0

25

50

75

100

125

Dabur Colgate HLL

%

0

20

40

Dabur Industry

Day

s

0

20

40

Dabur Colgate HLL

%

Market Performance

Management & HR

• Only 4 Burmans on a board of 10 directors• Professional culture• Competitive compensation packages

Cost Optimization

• Operating margins improved to 13% within 1 year

• Reduction in inventory• Reduction in costs from purchase, supply chain

-4048

1216

2002 2003 2004 9M2005Dabur Industry

Sales Growth Performance After Restructuring

0

20

40

1998 2000 2002 20040

20406080

100120

1998 2000 2002 2004

0

50

100

150

1998 2000 2002 2004

ROCE Net Working Capital

Debt/Equity

Performance After Restructuring

Agenda

• Analysis of FMCG Industry• Dabur : An Overview• The Restructuring of 2004• Business Profile of Consumer Care Division(CCD)• The Road Ahead: Growth Strategy for Dabur CCD

Consumer Care Division

• Hair care• Skin care and baby care• Digestives and Confectionary• Health Supplements• Oral Care• Home Care

Hair Care Segment

• Niche Segment - Ayurvedic Products: Leader in the segment

• Tough competition from unorganized segment and local brands Launched Anmol – economy brand

to compete with low price products

• Ayurvedic Products – Leader in Value added segment (premium)

Price

Basic Product•Dabur Anmol•Parachute•HLL Nihar

Value Added Hair oilsVatikaMarico ( Hair and Care)HLL (Clinic Plus Lite)

Dif

fere

nti

atio

n

Strategic Group of Dabur: Value Added Hair Oils

The Skin Care Story

Initial move into Skin care: A failure

•1996, Samara brand launched in Chandigarh and Delhi with 15 products

•Failure due to bad distribution and marketing

•Revamping of the brand in late 1997, Spanish co. Antonio Puig co-ordinated

•Promoted select products- fairness cream & lotion, facial scrub, anti-acne cream etc.

•The range completely withdrawn in 1998

Reasons for failure of Samara:

Products projected as need-based and not on glamour plank

Insufficient advertising and promotional support

•Skin care solution relaunched in 2004 under the brand Vatika

•So far three basic products launched

•The segment has tremendous potential for expansion

Natural positioning of Vatika – made brand extension feasible

Advertising costs reduced, no fresh brand building needed

Vatika Superbrand : from hair care solution to value added natural personal care for women

Creating Awareness:Other brands don’t offer solution to problems caused by pollution, hard water and chemicals

Vatika Woman:Young, contemporary, multi-faceted, achievement-driven and confident.

Promotional Activities Vatika Supermodel 2001

Give a cosmetic and glamorous image to the brand. .

Co-Branding with Vatika

VATIKA BRAND BUILDING

Baby Care Segment

Dabur’s entry

Babycare market

Sustaining the

position

• High customer loyalty in the baby hair care and toiletries

• J&J – undisputed leader• Difficult for Dabur to break into this

segment

• Skin care: highly fragmented – mostly home-made concoctions used

• Preference for natural/herbal product• Dabur entered with ayurvedic massage oils

and baby digestive tonic• Present situation: Market leader with 22%

share

• Refrained from products not directly related to Ayurvedic Expertise (e.g. toiletries)

• Maintained competitive prices in the market

Baby Skin Care Company Shares - 2005

Others40%

Jhonson's Baby Oil

17%

Dabur Lal Tail22%

Wipro Baby Soft Oil11%

Keo Karpin8%

Dabur Baby Olive Oil

2%

Dabur oil and tonic

Price

D

iffe

ren

tiat

ion

Babycare segment: Competition In the value offered

Johnson & Johnson

Himalaya Baby products

Marico Sparsh

Baby Care Company Share by Value - 2005

Others

7%

L'Oreal

0%

Karnataka Soaps & Detergents

1%

Dey's Medical

4%Wipro

9%

Dabur12%

J & J67%

Digestives Category

• Flagship brand worth Rs. 100 crore

• Market Leader with 75% market share in digestive tablets category

• Oldest brand in the Rs. 90 crore digestive market in India

• The power brand of Dabur had grown to be a mature brand – several revival strategies:– Unique Positioning : Not as a

digestive remedy(medicinal aspect)– Launching of Hajmola Candies :

Different Flavors– Celebrity Endorsement : Amitabh

Bachchan as brand ambassador

Competitive Profile

Redefining the Image of Mature Brand

•Hajmola Candy – Different flavors are Albela Aam, Pangebaaz pineapple, Rangeela santra , Chulbuli imli

•Hajmola Candy Fun 2 – available in three flavors : peach, green mango and litchi

Twice the fun and twice the taste as hajmola candy

•Hajmola Anardana - first branded churan in the market with a unique chatpata taste.

•Hajmola Mast Masala - Spices market with dual benefit of taste and health.

• Moved away from the medicinal

aspect and focuses on the mischievous aspect

• Fun-filled digestive tablets

• Candies and yumsticks – Dual benefits of health & taste

• Competitors’ focus – only taste

DIFFERENTIATION

Celebrity endorsement

•Kapil Dev, brand ambassador in 1995

•Amitabh Bachchan, brand ambassador in 2004

•Virender Sehwag, brand ambassador for yumstick

Fine distribution network in both rural and urban areas

PROMOTION

Health Supplements Category

Dabur pioneered the Chyawanprash category

• Has been a market leader since its launch

• Adding relevance to the category- Chyawanprash variant ‘Chyavanshakti’

• Legal battle with Emami over the promotion of “Amritprash”

Dabur Honey:• Largest national player in branded honey

• Redefining honey usage in food products

Dabur Glucose

•Energy source to remain fresh and fight fatigue

•Legal battle with Heinko over the name Glucose D initially, similar to its product Glucon D

Oral Care Segment

Initial Brands• Dabur Red Toothpowder• Dabur Red Toothpaste

Problems:• No differentiation – too few products• Declining tooth powder market

• What Balsara Acquisition brought : Babool : Economy segment Meswak: Premium segment Promise: Popular product

• Wider distribution network in Western India

• With Dabur’s better distribution in India, all the acquired brands grew at more than 30%

Competitive Profile

Home Care Segment

Dabur entered the category with the Balsara acquisition• Odonil : A generic name in Air freshener segment• Odomos : Dominant share of personal application insect repellants• Odopic : Dishwashing and surface cleaner with strong equity in West India• Sanifresh :No.2 in toilet cleaner market

Total market size estimate at about Rs.20 billion

Attractive categories with CAGR of 15-25% and low penetration levels

Insect Repellant PAP

Solid deodorizer

Acquiring the Leader

Agenda• Analysis of FMCG Industry• Dabur : An Overview• The Restructuring of 2004• Business Profile of Consumer Care Division(CCD)• The Road Ahead: Growth Strategy for Dabur CCD

THE ROAD AHEAD FOR DABUR

Proposed Strategies for Organic and Inorganic Growth

SWOT Analysis

Strengths:

Strong BrandStrong financial positionRobust distribution networkIdeal product portfolio for international businessNiche player

Weaknesses:

Key flagship brands like Chyawanprash, Lal Dant Manjan and Hajmola have maturedSkewed presence in the country, lagging in the Southern partsLow on glamour and style quotient

Opportunities:

Huge untapped international marketHuge potential for Private Labels business Booming Indian retail sectorUntapped South Indian marketForay into health clinic concept

Threats:

Fierce competition in the FMCG sectorUncertain commodity prices and dependence on agri-based productsPrice sensitive customers

Growth Strategy

PLATFORMS

CATEGORIES

MARKETS

Current categories New categories

Ayurveda

Herbal

Natural

North, East & West India

South India

Global Markets

Current Product Portfolio

Expanding Reach

of existing products Acquisitions

Innovation

Marketing Innovation•Special Branding exercise for the Southern market•Restructuring of brands: Separating Vatika from DaburAnd establishing it as a completeNatural Beauty solution brand Independent of Dabur.

SCM Innovation•Fwd. Integration of ERPFor suppliers to the Stockists and retailers•Participative relationshipWith the stockist – less Inventory , better estimateOf demand.

Product Innovation•Completing product portfolio at different price points• Innovative packaging•Smaller SKUs e.g. sachets•Redesigning of products for the Southern market

The Road Ahead• “Retailer push” to customers: tie-ups with retail majors like Big Bazaar, Spencers, Foodworld etc.• Unconventional distribution for rural markets , as done by Emami

Parameters for Acquisition

Brand Fit

Minimum overlap of product offerings

High Growth Potential

Access to new customer group

Complimentary distribution channel

The Acquisition Picture

Parameter Dabur Cavin Kare Vicco Labs Ayur Herbal

Turnover 2000 Crores 572 crores 150 crores100 crores

Exports 11% of Sales 8% of Sales 15% of Sales 8% of Sales

Presence: Overall

Across SegmentsPersonal Care,

Foods, Home care

Personal Care Focus

Strong Herbal Beauty Product

Focus

Personal CareLimited (Hair Oil

and Face Pack)

Extensive(Hair, skin creams,

talc, deodorant)

Limited (Turmeric based cream)

Strong (exceeding level of depth)

Brand Image Fit N.A. Not very Strong Very StrongVery Strong

Baby Care Strong Doesn’t Exist Doesn’t Exist Doesn’t Exist

Distribution Network

Very Strong Extensive – South focused

Limited Strong Dealer Network

Ayur Range of Products

Ayur’s Case – The Rationale

Access to a wide range of skin care, hair care, face and body care products

Herbal image is aligned with Dabur’s

Brands are modern and youthful

Strong dealer network specially in north and west India

Products can be used in Vatika beauty clinics

Value for money offerings

Affordable proposition

Renowned research academy

Strategies for the Future

• Packaging– Up-gradation from sachets– New attractive packaging

• Brand– Dissociate Vatika from Dabur– Further rationalize brand image

Vatika Skin and Beauty Clinics

• Vatika woman has a premium image

• Market Size for beauty treatment: 100 crores

• Competition: Kaya Skin Clinic Shehnaz Hussein Beauty Clinics

• Kaya Skin Clinic– 1.5lakh customers,43 clinics across India– Turnover of 43 crores– Rs.1200-1500 per sitting– Services constitute 85 percent of revenues– Products sold at 50 per cent premium

Proposed Model

• Gradual roll out of around 50 clinics around the country– Start with Metros– Expand to Tier-1 and Tier-2 cities

• Projected Figures– Rs. 89 crores in revenues in 4 years with 30 clinics– Rs. 16 crores in profits– Operating breakeven for a Clinic: 5-6 months– Project breakeven: 36 months

• Define Criteria for success of Pilot tests– Operating breakeven at least in under a year

Strategies for South

• Brand endorsement with local artists & sportspersons

• Following regional advertising norms

• Product adjustment to suit the regional needs

• Develop distribution network in South

THANK YOU