The homegrown FMCG giant Dabur suffered losses after facing cut-throat competition with other domestic brands and foreign players. With the advent of the new century, the foreign players entered the Indian market segment. They started trying to gain the attention of the masses. The brand Dabur has successfully retained the trust of the consumers. But sometimes its condition was volatile, and the situation demanded prompt action and quick recovery.
Liberalization of the 1990s opened the door to the foreign multinational brands. The globalization led to an increase in the demand for consumer products. Like Dabur, all the other companies tried to capture the lion’s share of the market. But the homegrown brand somehow failed to cash in the rising demand. The situation demanded reform in business strategies. The then chairman, alumni of BITS Pilani and IIM Calcutta, Sunil Duggal managed to dominate the consumer goods sector.
The first step taken by Dabur, under the able guidance of Sunil Duggal, was to implement a multi-faceted growth strategy. Dabur focussed strictly on its core business that is manufacturing quality and cost-efficient consumer products. It decided to outsource non-core businesses like IT. Dabur also decided to revamp the product portfolio. It started to explore the rising business avenues like skincare, packaged fruit juice, toothpaste etc. The packaging and presentation of the products were also refurbished, keeping in mind the needs and aspirations of the evolving 21st-century consumers. Dabur chalked out an extensive plan to unlock inorganic growth potential by acquisitions and mergers. This way, the business would gain access to new segments of the consumer market.
As per a report published by Business Today in 2012, Dabur planned to penetrate the rural market as there is much scope of growth. “We recognised – much ahead of the competition – that rural India would become a key growth driver. A blueprint was chalked out to target this consumer class and widen our distribution footprint in the hinterland, a move that is paying dividends even today.”
Post-2000, Dabur started planning of going beyond the geographical limits of the nation. Before 2000, Dabur concentrated on the diaspora market demands, by exporting limited products abroad. Dabur had set small businesses abroad, and it has acquired a good understanding of the foreign market. With that knowledge, Dabur decided to create bases in foreign locations to reach the consumers easily, and not just the Indian diaspora residing over there.
Dabur established manufacturing facilities in foreign locations and reach a higher number of new consumers and also serve the existing consumers. The decision proved to be profitable. The Dabur products gained popularity in Dubai and the Middle East and gradually made a name in the global sector. In 2008-09, during the time of the Great Recession, the company could survive the tough times with its efficient business plans. By the turn of this decade, Dabur could consolidate 30% of the annual turnover from the foreign market. It started its skincare brand Vatika, and it gained huge popularity among domestic and international consumers.
In this decade, Dabur faced severe competition from brands like Patanjali and also the macro headwinds of Ayurveda. Between 2016 and 2018, Dabur’s head was pitted against the wall due to several reasons such as demonetization of 2016, the popularity of Patanjali and suppressed demands. Dabur wanted to reach out to a greater mass; it started cutting costs in advertisements, promotions and bonuses and invested in developing the infrastructure.
In the rural segment, Dabur made separate teams and portfolio for health care and personal care; hired 400 people and successfully attained rich dividends in the recent past. In recent years, Dabur has revived its market share in the sector honey and oral care. Dabur has implemented different strategies based on the products, for ayurvedic products, skincare, oral care, there are different techniques. This shows the dexterity of the brand headed by Duggal.
The market share of herbal and ayurvedic oral care is expanding; the consumers are becoming highly inclined towards natural and organic supplements. As per an interview given by Sunil Duggal to Rediff.com, “We have already slashed price. We are planning to set up a plant, which will cost Rs 100 crore, to ramp up our production capacity for ayurvedic products”.
The introduction of Patanjali was a blessing in disguise for Dabur. The demand for ayurvedic products has expanded, giving a lot of scope to Dabur. The company has got a lot of traction from the ayurvedic products across all the categories, be it toothpaste or hair oil. Dabur is looking forward to overcoming the challenges of cut-throat completion and innovation.
Between 2014-18, the company’s operating margins have shot up to 500 basis points. The credit goes to low inflation rates and the introduction of Goods and Service Tax (GST). 30% of the portfolio is facing inflation, but other domains are stable and the prices are downwards. With the entry of two giant players, Walmart and Amazon, Dabur is expected to witness a growth of 5% between 2020-21. By the end of this decade, Dabur has already created a separate team for managing and handling the eCommerce channel.
The growth trajectory of this Indian multinational brand has set milestones and given valuable lessons for the prospering businesses and aspiring entrepreneurs.
- The multi-dimensional outlook is necessary: Dabur was facing completion from the foreign brands, but that did not stop him from going beyond the geographical horizons. The company established foreign manufacturing facilities, entered into new segments like skin care and healthcare. It targeted the consumers of both rural and urban sectors. Dabur has explored several avenues and not just focussed on the singular product.
- Think out of the box for innovation: Patanjali was a tough competitor of Dabur, it attracted the masses with its ayurvedic products. Dabur observed that the inclination of the masses towards Ayurveda, and started manufacturing the ayurvedic products like oral care. The company turned its competition into its own blessings. Dabur did not stick to its original products but recalled the trust of the consumers with its new range of ayurvedic products.
- A stitch in time saves nine: This phrase is highly applicable to Dabur. Dabur has taken the right steps keeping the time in mind. Dabur expanded its international market, reached the new consumers and served the existing consumers. Thus survived the Great Recession without much difficulty. When foreign brands entered the Indian market, Dabur entered the foreign market and established itself as the pioneer Indian multinational brand.
After serving in Dabur for over 17 years, Sunil Duggal has resigned from the post of Chairman in 2019. We all hope, that the brand continues to win our hearts and trust in the near future as well. But none can see the future, right? You are hoping to expand your business, your strategies and investment options seem beneficial now, but will it be the same in future? You will look for answers on Google, but hundreds of pages of answers will not serve your purpose fully. What you need is expert guidance and advice. How will you get to talk to an Expert?
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