When homegrown FMCG major Dabur India Ltd sold its pharmaceutical division Dabur Pharma to the German diversified health care firm Fresenius Kabi for Rs 880 crore in 2008, Anand Chand Burman, the founder of Dabur Pharma, saw it as a profitable exit from a good business. There was little room for sentiment even though Dabur Pharma, which specialised in manufacturing cancer drugs, was Burman’s first health care venture. He started it in 1989 as a division of Dabur India and it was demerged into a separate entity in 2003.
When Burman is not busy with his personal investments, he attends the quarterly R&D meetings at Dabur. “I have already got the R&D report [for the next meeting in November] in front of me,” Burman tells Forbes India. There is a lot happening at the 130-year-old fast-moving consumer goods (FMCG) major that manufactures various natural health care products, premium personal care products and also fruit-based beverages.
Last year, Dabur initiated a ‘future-ready’ strategy to launch new products in new formats and packaging that appeal to the younger generation. This will be done in phases over the next three years. “Consumer tastes have evolved and we want to keep pace with that by launching products that buyers want and in the way they want them,” says Burman.
Burman’s office is well stocked with Dabur’s products—many of which are yet to hit the market. He places the glossy package of a skin serum on the table. “This is unlike a [typical] Dabur product,” says Burman, pointing to the glossy packaging. The skin serum 3D Botanica is part of the ‘future-ready’ initiative.
In other words, Dabur is overhauling its product portfolio by adding new products, revamping existing ones and phasing out those that no longer generate sales (like the Dabur Uveda skin care range). “We are looking at our traditional ayurveda products and asking if we can introduce them in new formats,” says Burman. For instance, Dabur’s 30-year-old brand Gulabari has been repositioned as the first beauty brand of a teenager. Under the Gulabari brand, Dabur will launch an entire skin care range, including cold creams, moisturisers, face packs and face washes.
“Youth comprise around 70 percent of India’s population. They are health conscious and shun tradition,” says Krishan Kumar Chutani, executive director of marketing, Dabur. “But Dabur is not young. We are all about tradition and health care, so we had to take steps to modernise.”
The last time Dabur went through a similar product strategy rejig was in 1996 when it launched three new products: Real fruit juice, Dabur Red toothpaste and Dabur Vatika hair oil. In FY15, each of the three products crossed the Rs 1,000 crore turnover mark.
Perhaps the most striking change has come in Dabur’s 75-year-old iconic health supplement brand Chyawanprash, which now comes in three flavours—chocolate, mango and mixed fruit. “My granddaughter loves the chocolate flavour,” says Burman with a chuckle. The chocolate flavour was launched this year. “Chyawanprash needed a makeover because though people bought it for its health benefits, the taste put off people.” Dabur has also launched ‘sugar free’ Chyawanprash for diabetics. The new variants have worked well for the company, contributing to 10 percent of the brand’s revenue. In future, Chyawanprash will be launched in biscuit, candy and bar formats.
Burman is particularly excited about Hajmola Yoodley, a ready-to-drink ethnic beverage. Dabur launched Yoodley this year in six variants—aam panna, nimboo shikanji, guava, jaljeera, golgappa and kaala khatta. Burman’s personal favourite is the guava variant. Unlike Chyawanprash, the launch of Yoodley marks the entry of Dabur into a new product segment—ethnic beverages. “We launched this drink because we felt consumers are moving away from carbonated drinks,” says Burman, explaining the rationale for entering the ethnic beverage drink segment. “We feel there is enough market for it.” The organised market for ethnic drinks is Rs 150 crore while the unorganised market for such drinks could be anywhere around Rs 1,500 crore, according to Dabur’s internal data.
Product samples of Yoodley are lined up along Burman’s desk. Yoodley’s packaging is eerily similar to that of Paperboat, another ethnic beverage brand. “[But] Yoodley looks better,” says Burman cheekily.
Neeraj Kakkar, chief executive officer and founder, Hector Beverages, which owns the Paperboat brand, says the market size for ethnic drinks is quite large and can coexist with carbonated drinks. He hasn’t tried out Dabur’s Yoodley yet but says, “Anything Dabur does will be good.”
Burman’s passion for R&D drives a lot of decisions the company has taken. Dabur spent Rs 22.31 crore for R&D in the financial year 2014-15. “I think his passion has translated into a lot of new things on the business front, such as widening our health care product range,” says Chutani.
Sure enough, Dabur’s over-the-counter ayurveda product range will see additions such as pain relief, maternal health care, menstrual health care and baby care products. It has already launched a baby massage oil and more such products will follow in due course. All the new products will be ayurveda based. “You will see more aggression from us because the market is changing fast,” says Burman.
Joydeep Bhattacharya, head, consumer products and retail practice, Bain India, says revamping products is something most FMCG companies do on a regular basis to reconnect with customers. “For instance, Horlicks went through a significant renovation recently,” he says. But there is a catch. “When you revamp a brand, you often see mixed results, some succeed and others fail.”
Burman knows this quite well, “Every quarter, we will launch a new product or a new variant of an existing product,” he says. “Will all of them succeed? Unlikely. Some will succeed, others won’t,” he says with all the wisdom of the 35 years spent at Dabur.
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(This story appears in the 29 October, 2015 issue of Forbes India. To visit our Archives, click here.)
Its sad to know that Indian business men of repute are selling their stakes and companies to foreigners in order to cash out. Already we have very few manufacturers who kept holding the Indian flag and they two are cashing out turning into investors or traders. They earned out of Indians and when the time comes for them to pay back to the economy they sell out and let Indian manufacturing get invaded one more time like the East India company time. Come make in India and we will rest.on Oct 23, 2015