How Dabur became agile and fearless

From rolling out online-only products to fast-tracking launches and entering new categories, how Dabur has donned an aggressive avatar to beat the pandemic

Published: Aug 13, 2020 07:13:26 PM IST
Updated: Aug 13, 2020 08:32:52 PM IST

bg_20200719mohitmalhotra094-1Image: Madhu Kapparath 

 

The contrast is striking. Mohit Malhotra, chief executive officer of Dabur India, talks about the pre-Covid era in terms of new product development (NPD) and launches. The home-grown FMCG major waited for over two decades to roll out a flurry of new products. The idea was simple: wait for the right time. But the time never seemed to be right and the wait turned out to be eternal.

Fast forward to the post-Covid lockdown era. Dabur has crunched new product launch time from 1.5 years to 2 months. Take, for instance, Tulsi drops, a natural immunity booster which it rolled out in the April-June quarter. “Just in one quarter, it has posted sales of Rs 7 crore,” says Malhotra. Some of the other products, he lets on, rolled out during the quarter include Haldi drops, Amla juice, Ayush Kwath Kaadha and immunity kit. In personal care and hygiene it launched Veggie wash, antiseptic liquid and soap, floor cleaner and multi-surface disinfectant spray.

 The result has been equally striking. NPD, which as a percentage of revenue to Dabur used to be a paltry 1%, shot to 5.5% in April-June quarter. Conceding that this high share of NPD can’t be sustained, Malhotra contends that Dabur would be content if NPDs’ contribution to revenue stabilises at 3-4%. So what has changed at Dabur? Malhotra explains the structural change. Dabur, he stresses, has become agile. “We have also become more fearless,” he says. What, though, has made Dabur take a leap of faith is Covid-19. The FMCG player, which has always stayed true to its ayurvedic product and positioning, saw a massive opportunity of being present in multiple categories in health and personal care.

The neo aggression in Dabur is evident. A company which never rolled out ecommerce-exclusive products has been on a blitzkrieg of sorts, of late. Take, for instance, baby care products and apple cider vinegar that it has launched only for Amazon. The idea behind online-exclusive products is simple: high margin, and millennial-first. If the products scale, then they would be extended to modern trade and retail; and if they don’t, then they remain online-only, keeping operational and distribution cost in check. From a negligible share of sales from ecommerce to Dabur’s revenue, the company is likely to see around 5% sales coming from online this year. “This calls for a lot of e-commerce-exclusive products,” says Malhotra.

The CEO decodes the twin strategy—strategic and tactical—behind the launch of NPD in healthcare and personal and hygiene space. The new products in healthcare portfolio such as Tulsi and Haldi drops are strategic in nature. The idea is to create a market and take pole position. “The markets for such products were missing. We are creating and will lead the space,” says Malhotra. The move works in terms of gaining mindshare quickly as well. Reason: the new categories don't require high-decibel advertising as there is no competition. “So one advertising is 100% share of voice here,” he adds. Dabur, he lets on, is also exploring an entry into value-added immunity tea and developing Chyawanprash in a different format.

The tactical approach is in the home and hygiene category where there are white spaces to fill. “The market size should be sizeable enough,” says Malhotra, dishing out examples of new products rolled out such as sanitiser, antiseptic soap or an antiseptic liquid. “These are big markets in which we would take share,” he adds.

Dabur is also looking at rationalisation of portfolio of the tail products and SKUs. The company, Malhotra underlines, will undertake an exercise of reducing the tail, which doesn't have a turnover or which are not margin accretive to the company. The idea, he lets on, is cut the tail so that there's not too much of pressure on the back-end.

What’s also being done at a war-footing is bringing in more cost efficiency. Taking the lead is Project Samriddhi, which looks into the value chain of the company right from sourcing of raw material to packaging material and all kinds of costs. The company has roped in consultants, and the results are encouraging: a saving of Rs 40 crore in first quarter (April-June). “We expect around Rs 100-120 crore savings from Project Samriddhi,” says Malhotra. The amount, he adds, will not flow into the operating margin, and would be used for brand building.

Dabur, reckon retail and FMCG analysts, has stepped on the gas at the right time. Covid-19, points out Saurabh Jindal, analyst at Bonanza Portfolio, is a big opportunity for the company to dip into its portfolio of health and home care. The company, he lets on, is rebooting itself at a perfect time. “There are many new niches that Dabur can create and occupy,” he says.

Meanwhile, Malhotra wants to maintain the aggressive intent and momentum. “Thanks to Covid-19, we have become more nimble. And it’s here to stay,” he says.

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