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Dabur India- Case Study
Dabur is a leading consumer goods company in India that is looking to strategically expand its product portfolio and global presence. In Nigeria, Dabur has traditionally focused on oral care, skin care, hair care, health care, and home care products. However, to be successful in Nigeria, Dabur will need to adapt its strategy to local consumer markets and avoid over-standardization. It is recommended that Dabur focus on oral care, health care, and home care in Nigeria, leveraging its herbal platform to develop new product categories tailored to local needs and consumer preferences.
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Dabur India- Case Study
- 1. Dabur India Ltd.- Globalization Nitya Subramani, X, Y
- 2. Agenda The IndianCPG market and industry Dabur in India Dabur globally Dabur in Nigeria Recommendation
- 3. India’sCPGmarket is attractiveandamong the fastestgrowingin the world Total market size 2006: $13.1 billion Food (incl. groceries) Non-Food 44%56% CAGR previous 3 years Forecast growth 2007-2008 +8.6% +9.2% Total market size 2015: $33.4 billion Growth categories: • Personal care • Food • Beverages • Household care 50% Percentage of India’s 1 billion people under the age of 20: 160mteens
- 4. TheCPGindustryis still fragmented,presenting anopportunityfor consolidation of CPG sales come from mom-and-pop outfits making and selling unbranded and unpackaged goods >50% Rank Company Net sales (INR million) 1 Hindustan Lever (Unilever) 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 Industries 17,130 8 Dabur India 13,430 9 Johnson & Johnson 13,300
- 5. However,building nationalscale inIndiais a key challenge Market 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 marketers 6 millionRetail outlets 4 million rural 2 million urban
- 6. Daburhas built asuccessfulbusinessin India, achievingsignificantscale by 2007 1884 Established 450 Number of products in 2007: 1.5m National coverage: retail outlets 47 clearing & forwarding locations 1,500 distributors 22.6 billion Consolidated sales:
- 7. Dabur’sassets span4 businessunitsand several productionfacilities in Indiaand abroad 4 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 • International 8 manufacturing plants in India 5Production units outside India: Birganj (Nepal) Dhaka (Bangladesh) Dubai (UAE) Cairo (Egypt) Lagos (Nigeria)
- 8. Dabur’sherbal image andmass market pricing helpedit becomea top 10 playerin India Core capabilities: • Identify consumer needs • Develop localized products • Create niches to drive long-term growth Niche categories: • Underpenetrated and high- growth categories Differentiated herbal image: • Unique positioning: Ayurveda platform Mass market pricing • Capturing the large rural market in India
- 9. Daburis well-positionedto captureshare domestically,butrisingcompetitionis a threat Strengths Weaknesses • 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) • Niche market • Expensive raw materials (natural ingredients) • Focused on therapeutic (rather than higher margin cosmetic) products Opportunities Threats • Young, dynamic population • Fast growing domestic market • Brand extensions (herbal platform) • Rise in competitive intensity in its core categories like hair care, putting pressure on volumes • Slowdown in rural demand
- 10. HowshouldDaburstrategically expandits productportfolioin India? Strategicchoice: 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) • Strong, established competition (Colgate , HLL – 67% of market) • No home-grown competencies Extend herbal equity to skin care and soap? • Differentiated herbal product and branding possible in medicated soaps • Builds on expertise in traditional medicine, especially for baby care • Higher margin categories • Highly competitive, crowded in soaps • Medicated soaps present only 25% of the category • Strong MNC competitors (Reckitt Benckiser’s Dettol) Leverage strengths in hair care to the cosmetic segment? • Differentiated herbal product and branding possible • Leverages equity in therapeutic value to higher margin categories • Competition • Traditional mass market targeting and pricing a problem in more aspirational cosmetic segment
- 11. Forcontinuedlongtermgrowth,internationalmarketsare becomingmoreandmorerelevant 2003 2004 20052006 2007 Domestic Sales International Sales Global Revenue GCC Egypt Pakistan Bangladesh Nigeria US UK 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 Key external environment considerations o Product fit o Integration o Alien nature of market o Supply chain considerations o Costly logistics
- 12. DaburInternationalhas traditionally focusedon differentcategorieswithAfricanconsumers 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 Regional split (INR mil.) 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 Key market attributes • 80% of population is Arabic • High purchasing power • Replicating Indian brand architecture and product portfolio • Leveraging learning from Indian marketing mix and media strategy • High oral care penetration • English speaking • Medium competitive intensity vs.
- 13. Daburneeds to adaptstrategyto local consumermarkets in Nigeria Oral Care Skin Care Hair Care Health Care Home Care Market Size (INR Million) 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 -Hair care is beauty related and cosmetic -Dabur has therapeutic and not cosmetic equity One player play -Coil is the predominant product form -No market for cream
- 14. Oral Care SkinCare Hair Care Health Care Home Care Market Size (INR Million) 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 it’s 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 Daburshouldfocusonoral,healthandhomecare marketsinNigeria
- 15. Avoidproductstandardizationand adaptto local marketsherbal 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 accommodate new product production
- 16. 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
- 17. Where is Daburnow? 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 international customers 2subsidiary group companies and 8 step-down subsidiaries Product presence in over 60 countries 17international manufacturing locations 12Billion-Rupee brands (over $18M)
- 18. 2012 Dabur productrepresentation 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
- 19. Global Market • InternationalBusiness 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.
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