Dabur focuses on Innovation and New Product Launch
Due to the Covid-19 pandemic, supply chain activities have often been disrupted internally and externally which affected the FMCG sector heavily. Lockdown policies have disrupted the supply of raw materials and the demand for finished goods.
Supply chains were highly vulnerable to FMCG firms because of a substantial drop in consumption for the initial period of Covid.
Innovation is a way companies use to maintain competition in the market during the pandemic. The companies made innovations by adopting the technology in process innovation and product innovation flexible delivery following the customer demands.
Dabur India aims to clock Rs 100 crore in sales from its digital-native brands in FY23. Dabur plans to launch superfoods such as chia seeds, pumpkin seeds, and other healthy snacks under its Real Health brands on the e-commerce channel. In February 2022, Dabur launched Dabur Virgin Coconut Oil to strengthen its presence in the coconut oil market. Dabur also launched Health Food Drink ‘Dabur Vita’ and Winter healthy chyawanprash in 2021. In October 2021, Dabur entered into Diaper market with Dabur Baby Super pants.
Dabur’s 8 core brands (Dabur Amla, Dabur Red Toothpaste, Real, Chawyanprash, Dabur honey, Lal tail, Pudin Hara, and Honitus) account for 65% of revenues to lead for future growth. Dabur has entered a slew of new categories, however, success in large segments like fruit drinks, premium health Supplements, Pickles, and Baby products hold huge potential over the long term.
Dabur is building blocks to sustain double-digit growth led by 1) sustained increase in direct rural reach from 55000 villages to 88000 villages 2) GTM initiatives in Ecom and Modern trade and 3) sustained innovation across the portfolio including regional customization and 4) Double-digit sales guidance in IBD business.
In contrast to industry trends, Dabur India's rural demand outpaced urban in 3Q backed by steady expansion in rural distribution footprint. With >46% rural share & most products being non-discretionary in nature & across wide product categories, Dabur India will remain one of the key beneficiaries of an uptick in rural demand.
Inflationary pressures to sustain in the near term, however for Dabur India, the Raw material basket is less elastic to overall inflation with Mentha up 1.6% YoY and Sugar up 9.4% YoY (down 2.8% QoQ) as compared to other listed companies, although prices of LLP, essential oils, packaging, etc. have moved up. Dabur India has taken calibrated price hike of 5-6% in addition to cost optimization to mitigate this impact. However, with the pace of its new launches, the margins of Dabur Ltd are expected to remain volatile in the near term.
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