Dabur India to rejig brand post-Fem acquisition

Having acquired a 72 per cent stake in Fem Care Pharma, homegrown FMCG company Dabur India is all set to change the brand structure of its skin care category to accommodate the recently-acquired brands.

Fem will now join the ranks of Dabur, Vatika, Real and Hajmola as the fifth master brand in Dabur’s portfolio. It will continue to operate as a separate subsidiary of Dabur and will subsequently be merged into the company, Dabur India Chief Executive Officer Sunil Duggal told analysts. Fem Care’s over-the-counter (OTC) business will be channelised into Dabur’s consumer healthcare division.

Dabur is targeting an entry into the high-growth skin-care market with Fem Care’s portfolio, which includes products such as fairness bleach, hair remover and liquid soap. The company has only a minor presence in the segment with Gulabari and Vatika brands.

Despite the acquisition, Dabur plans to launch a new ayurvedic skin care brand by the first quarter of FY10 to cater to the mass prestige category. Speaking to the analysts about the changes, Duggal said, “Our independent ayurvedic skin care brand is under development though the launch may be delayed for a few months as we are assessing the synergies for renewing our brand architecture.” He, however, did not reveal investments lined up for the same.

Further, the company plans to operate its skin care vertical under three core categories. On the one hand, it will roll out new products in the rose-based Gulabari brand in the mid-range segment and on the other it will cater to the entire spectrum of mass to premium skin care category with its brand Fem.

“There is a huge potential to scale up the Fem portfolio,” Duggal said. The new ayurvedic skin care brand will form the third rung of the skin care vertical and will operate in the ‘masstige’ (mass prestige) category allowing Dabur to have a portfolio across price segments.

Further, Dabur hopes to capitalise on Fem Care’s channel presence in domestic and international markets. It can now promote its core brand Vatika in a network of over 25,000 parlours in India where Fem has a significant presence.

“Valuation for the deal is somewhat expensive given the market conditions, but Dabur had been scouting for opportunities to enter the skin care market for a while. The benefits of buying an established brand with strong market presence will balance out the cost for the company in the long run since margins for the products are higher,” said Anand Shah, sector analyst with Angel Broking.