Dabur eyes 75 per cent sales from ayurveda

Ramps up production, marketing and research

Dabur India has set itself a target of generating 75 per cent of its revenue in India from products based on ayurveda by 2020. The move follows the surging popularity of ayurveda and herbal products in the country and increasing competition from rival brands like Patanjali.

Ayurvedic products now constitute 60 per cent of Dabur’s domestic sales. The company plans to increase sourcing medicinal herbs, expand capacity, develop formulations and renew brand promotion.

“In India herbal and ayurveda will be the dominant themes for us,” said Sunil Duggal, chief executive officer, Dabur. “There is a realisation that there is a bigger opportunity for us in ayurveda than we thought.”

The company will soon launch a media campaign stressing its ayurveda heritage.

The majority of Dabur’s forthcoming launches, including its baby care portfolio, will be based on ayurveda. After launching Dabur Baby last year, the company is planning to launch soap, shampoo, body talc and oil.

Duggal said ayurveda-based baby care would help Dabur differentiate itself from market leader Johnson & Johnson and challengers like Hindustan Unilever.

Dabur is incubating 200 products, some of which are planned for launch over the counter. The company has roped in 2,300 farmers to source medicinal herbs.

Dabur would benefit from market expansion because it had a strong product portfolio and a nationwide distribution network, said Arvind K Singhal, chairman, Technopak Advisors. "However, it will have to spend more on brand building so that its messaging is not overshadowed by Patanjali," he added. Dabur is setting up its biggest greenfield plant in Tezpur in Assam to manufacture two-thirds of the company’s products.  The Rs 250 crore plant to be operational next March will cater to markets in the northeast, east and north.

The expansion of its plant at Pantnagar in Uttarakhand by January will make Dabur self-sufficient in India for supply of juices. Earlier, 60 per cent of juices sold by the company were sourced from its plant in Nepal, where political unrest led to a Rs 100 crore dip in sales in September-December 2015.

Economic and political turmoil in west Asia has also forced Dabur to look for new markets overseas, which now contribute a third of the company’s revenue. Duggal said Dabur’s plant in Iran, to be operational by mid-2017, would hedge against such risks.

The company is also planning to buy a plant in South Africa to manufacture cosmetics. Dabur is present in three free-trade regions of Africa but it needs a plant in the south to source consumer goods.
PREPARING FOR A BAD WEATHER

• Ayurvedic products to contribute 75 per cent of domestic revenue by 2020 from 60 per cent at present
   
• Increasing focus on Ayurveda-based products; to launch 360 degree campaign to counter surging popularity of rival products
   
• Set up its own greenhouses, 2,918 acres of land under cultivation for back-end supply of rare medicinal herbs
   
• Largest ever greenfield expansion at Tezpur to strengthen supply in North-East, North & East India
   
• Expansion in Pantnagar plant to end dependency on Nepal for supply of REAL juices by January 2017
   
• Strengthening the African business, entering Iran by mid-2017 to hedge against disturbances in West Asian markets

Source: Company & its investor communications