Business Today

Dabur India: Breaching borders

Sunil Duggal        Print Edition: Aug 5, 2012

The start of the new millennium, the year 2000, brought new challenges for Dabur. Industry overall witnessed a downturn, with demand hitting a new low, but the fast-moving consumer goods (FMCG) industry was somewhat insulated from the crisis and reported good growth. For Dabur, however, those were trying times.

THE CASE
Despite high demand for consumer products, Dabur was not able to grow
THE STRATEGY
Outsourced non-core businesses. Entered new categories. Targeted rural India. Expanded overseas

A decade into liberalisation, the FMCG industry saw competition intensify, with deep-pocketed multinational companies (MNCS) trying every trick in the book to capture market share. The demand for consumer products was rising. But Dabur - despite strong brand recall and trust - was having trouble cashing in. That is when we decided to go for a course correction and implement measures that not only changed how people saw Dabur, but also put the company firmly on the growth track.

A thorough check of our business was undertaken, and the core group decided on a multipronged growth strategy. As the first step, we decided to outsource non-core businesses like IT, and to concentrate on making quality consumer products. Simultaneously, we decided to refurbish our product portfolio and enter several emerging and sunrise categories such as skin care, packaged fruit juice and toothpaste.

The packaging of our entire portfolio was refurbished to put it in sync with the needs and aspirations of the 21st century consumer. In addition, we drew up a rapid expansion plan which also included taking the inorganic route to grow business. 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.

While launching new products and upgrading packaging to remain contemporary, I felt it was also time to expand our horizons and took on the MNCS on their home turf and in overseas markets. This was a big game-changer for Dabur. Before 2000, Dabur's overseas business was limited to exporting a limited number of products for the Indian diaspora in select markets. We felt there was a larger market beyond the diaspora. If we had to reach those consumers, we would have to be based close to their homes. The small overseas business we had established earlier had given us a good understanding of the consumers in these markets. So we set out to create products specifically for them.

As a first step, we decided to establish a manufacturing facility abroad, rather than ship products from India, as that would make us more nimble in addressing the changing needs of consumers, and provide us a leaner and quicker supply chain. This decision paid off - our products soon became favourites with Arab consumers, and our international business became a strong growth engine for the company, helping it tide over the recession, when it hit the domestic market.

After targeting the West Asian market, we expanded our overseas business further by venturing into sub-Saharan Africa and nearby markets like Turkey. Today, our overseas business accounts for nearly 30 per cent of consolidated turnover. Another measure of our international success is that our premium skin and hair care brand, Vatika, is probably the only Indian FMCG brand to report equal turnover from both Indian and overseas sales. Today, Dabur is viewed by consumers and investors as a true Indian multinational.

The author is CEO, Dabur India

 Stories of other companies that faced tough times and emerged stronger, told by the people who were in the thick of things.
 Nitin Paranjpe on HUL Himanshu Kapania on IDEA
 Mahendra Mohan Gupta on Jagran Prakashan Rakesh Jain and Sushil Agarwal on Aditya Birla Nuvo
 Sanjay Lalbhai on Arvind Mills Peter Mukerjea on Star India
 Sanjiv Goenka on CESC Bhavarlal H. Jain on Jain Irrigation Systems
 Govind Shrikhande on Shoppers Stop Sunil Pahilajani on Greaves Cotton
 Anu Aga on Thermax
 Sunil Duggal on Dabur India
 N. Srinivasan on India Cements Arvind Uppal on Whirlpool


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