Dabur India- Case Study


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Dabur India- Case Study

  1. 1. Dabur India Ltd. -GlobalizationNitya Subramani, X, Y
  2. 2. Agenda The Indian CPG market and industry Dabur in India Dabur globally Dabur in Nigeria Recommendation
  3. 3. India’sCPGmarket is attractiveand among thefastestgrowingin the worldTotal market size 2006:$13.1 billionFood (incl. groceries) Non-Food44%56%CAGR previous3 yearsForecast growth2007-2008+8.6% +9.2%Total market size 2015:$33.4 billionGrowth categories:• Personal care• Food• Beverages• Household care50%Percentage of India’s1 billion people underthe age of 20:160mteens
  4. 4. TheCPGindustryis still fragmented, presentinganopportunityfor consolidationof CPG sales come from mom-and-popoutfits making and selling unbrandedand unpackaged goods>50%Rank CompanyNet sales(INR million)1 Hindustan Lever (Unilever) 110,8002 ITC 97,8603 Nestle India 24,7504 Asian Paints 24,4105 Nirma 19,1706 Nirma Consumer Care 18,1407 Britannia Industries 17,1308 Dabur India 13,4309 Johnson & Johnson 13,300
  5. 5. However,building nationalscale in Indiais a keychallengeMarket heterogeneity: High• 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 marketers6 millionRetail outlets4 millionrural2 millionurban
  6. 6. Daburhas built a successfulbusinessin India,achievingsignificantscale by 20071884Established450Number of productsin 2007:1.5mNational coverage:retail outlets47 clearing & forwarding locations1,500 distributors22.6 billionConsolidated sales:
  7. 7. Dabur’sassets span4 businessunits and severalproductionfacilities in Indiaand abroad4 business units:• Consumer care• Hair care• Oral care• Health supplements• Digestives and candies• Baby and skin care products• Consumer healthcare• Prescription medicines• Over-the-counter medicines• Foods• Fruit juices• Cooking pastes• Sauces• Bulk items for institutions• International8 manufacturing plants in India5Production units outside India:Birganj (Nepal)Dhaka (Bangladesh)Dubai (UAE)Cairo (Egypt)Lagos (Nigeria)
  8. 8. Dabur’sherbal image and mass market pricinghelpedit becomea top 10 playerin IndiaCore capabilities:• Identify consumer needs• Develop localized products• Create niches to drive long-termgrowthNiche categories:• Underpenetrated and high-growth categoriesDifferentiated herbal image:• Unique positioning: AyurvedaplatformMass market pricing• Capturing the large rural marketin India
  9. 9. Daburis well-positionedto capturesharedomestically,but risingcompetitionis a threatStrengths Weaknesses• Local consumer knowledge• Indian heritage• Ayurvedic (herbal) platform• Product engineering (R&D)• New product introductions (5-7% of revenueannually)• Targeted and priced at mass market• Strong rural presence (50% of sales)• Focus on channels (loyalty programs,software)• Niche market• Expensive raw materials (natural ingredients)• Focused on therapeutic (rather than highermargin cosmetic) productsOpportunities Threats• Young, dynamic population• Fast growing domestic market• Brand extensions (herbal platform)• Rise in competitive intensity in its corecategories like hair care, putting pressure onvolumes• Slowdown in rural demand
  10. 10. HowshouldDaburstrategically expanditsproductportfolioin India?Strategic choice: Pros: Cons:Target an herbal niche inoral care?• Differentiated herbal productand branding possible• Builds on expertise in traditionalmedicine• Use competency gained through2003 acquisition of BalsaraHygiene Products• Large market size (in value)• Strong, established competition(Colgate , HLL – 67% of market)• No home-grown competenciesExtend herbal equity toskin care and soap?• Differentiated herbal productand branding possible inmedicated soaps• Builds on expertise in traditionalmedicine, especially for babycare• Higher margin categories• Highly competitive, crowded insoaps• Medicated soaps present only25% of the category• Strong MNC competitors (ReckittBenckiser’s Dettol)Leverage strengths inhair care to the cosmeticsegment?• Differentiated herbal productand branding possible• Leverages equity in therapeuticvalue to higher margincategories• Competition• Traditional mass markettargeting and pricing a problemin more aspirational cosmeticsegment
  11. 11. Forcontinuedlongtermgrowth,internationalmarketsarebecomingmoreandmorerelevant2003 2004 2005 2006 2007Domestic Sales International SalesGlobal RevenueGCCEgyptPakistanBangladeshNigeriaUSUKInitial Global Business Model Follow Indian diaspora to Persian Gulfo Primary demand generationo Minimal product adaptation Follow existing manufacturing locations Expand to other target segmentsLong-term Global Business Model Target local mainstream populationo Explore cost of existing products adaptationo Explore products most easily adapted to newmarket Adopt necessary heterogeneityo Introduce country specific productsKey external environment considerationso Product fito Integrationo Alien nature of marketo Supply chain considerationso Costly logistics
  12. 12. DaburInternationalhas traditionally focusedondifferentcategorieswithAfrican consumersArab consumer Asian consumer African consumerFootprints Middle East & North Africa South Asia, UK & US East, West & South AfricaTarget customer Arab female Asian male African male & femaleCore categoriesHair oilsHair creamsShampoosOral careHair oilsShampoosDigestivesOral careOral carePersonal washHome care (insect repellent)Core market Dubai India NigeriaTotal market size (INRmil.)1,340 1,500 320Regional split (INR mil.)GCC – 760North Africa – 460Iran, Iraq - 120Pakistan – 440Nepal – 640Bangladesh – 200UAE - 210Central Africa – 10East Africa – 60South Africa – 10West Africa – 240Key market attributes• 80% of population isArabic• High purchasing power• Replicating Indian brandarchitecture andproduct portfolio• Leveraging learningfrom Indian marketingmix and media strategy• High oral care penetration• English speaking• Medium competitiveintensityvs.
  13. 13. Daburneeds to adaptstrategy to localconsumermarkets in NigeriaOral Care Skin Care Hair Care Health Care Home CareMarket Size(INR Million)5,000 6,000 N/A 350 N/AProducts Toothpaste Soap RelaxersHair pomadeGlucose Mosquitorepellent creamStrategic Intent To becomesecond largestplayerTo become thethird largestplayer in soapsTo create a marketfor hair oilsTo become astrong player inglucose marketTo replicate theIndian productportfolioImperatives -Become a leaderin herbal niche-Launch herbal gelLaunch a herbalsoap withlocalizedingredientsLaunch DaburGlucose-Leverage Indiacompetency-Launch OdomoscreamStrategic Issues -Unilever and P&Gstrong-Herbal niche notcrowded-Fragmentedmarket, smallplayers-Soap is not corecategory forDabur-Hair care isbeauty relatedand cosmetic-Dabur hastherapeutic andnot cosmeticequityOne player play -Coil is thepredominantproduct form-No market forcream
  14. 14. Oral Care Skin Care Hair Care HealthCareHome CareMarket Size(INR Million)5,000 6,000 N/A 350 N/AProducts Toothpaste Soap RelaxersHair pomadeGlucose Mosquitorepellent creamStrategic Intent To becomesecond largestplayerTo become thethird largestplayer in soapsTo create amarket for hairoilsTo become astrong playerin glucosemarketTo replicate theIndian productportfolioChallenge Can Dabursuccessfullytarget herbalniche andestablish astrong marketpresenceCan Daburoperate in soapsuccessfully?Can it extendherbal equity tosoap?Can Daburleverage it’sstrengths?Can Daburbecome No.2player?Should Daburcreate a newcream categoryin Nigeria?Recommendation YesHigh potentialmarketMaybeTherapeutic, notcosmeticNoCosmetic nottherapeuticconsumer focusYesPotentialexpansion intofood categoryYesKeep naturalproduct valuepropositionDaburshouldfocusonoral,healthandhomecaremarketsinNigeria
  15. 15. Avoidproductstandardizationand adapttolocal markets herbal platformin 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 accommodatenew product production
  16. 16. Final RecommendationsDual strategy Consolidate the domestic market and expand internationally in selectedgrowth marketsLeverage core therapeutic herbal/ ayurvedic platform Build a platform to enable Dabur to become a global ayurvedic leaderAlthough requiring an adaptive strategy, Nigeria can be anattractive market for Dabur International
  17. 17. Where is Dabur now? Leading consumer goods company in India (Turnover $1 billion)2Strategic Divisions:• Consumer Care Business: Addresses consumer needs across FMCG spectrum• International Business Division: Addresses health and personal care needs of internationalcustomers2subsidiary group companies and 8 step-down subsidiaries Product presence in over 60 countries17international manufacturing locations12Billion-Rupee brands (over $18M)
  18. 18. 2012 Dabur product representation 5 Master BrandsDabur, 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
  19. 19. 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.
  20. 20. Thank you!