Dabur’s Mohit Malhotra said the FMCG sector has demonstrated a gradual pickup in rural markets in the past 2 quarters, despite countering challenges such as unprecedented heat wave and high food inflation.
The CEO of the homegrown FMCG major said the timely arrival of monsoon, coupled with rural-centric budget with a focus on rural infrastructure, agriculture and employment is a key positive for the sector.
Dabur continued to perform well in quarter one, Maholtra said: “Our diversified portfolio continued to thrive achieving market share
gains in 95% of the portfolio. The International business exhibited a strong growth of 18.4% in constant currency terms backed by market share gains in most of the categories.”
The hair oil wars
Addressing the competitive intensity in hair oil business, Maholtra said Bajaj has become “very aggressive” in the coconut oil category
now.
“Besides Bajaj Almond, they have become very aggressive in coconut. And for them, a new growth pillar is coconut and we’ve seen a lot of prices getting dropped by them and because of which the margin squeeze happening across the entire category,” he said.
“But our strategy has played out well for us, and we are doing well in coconut oil. We are trying to plug all the sub segments wherein we are not represented in hair oil because we have a right to win in hair oil. One was value added and you will see a lot of action in the value added perfumed light segment from Dabur.”
Dabur has also plugged the gap of cooling hair oil. “Coconut, we are just trying to ramp up our ante and in perfumed hair oil, our entire playbook is working well for us with Amla and the flanker brands.”
“Now what’s happened in the flanker brands. There’s not all good news and rosy picture,” he said.
“Our Sarson Amla has not done very well in the previous quarter because the Sarson prices have actually inched down. So there’s a softening of Sarson prices from INR120 per liter, has dropped down to INR110 per liter, whereas the price premium has increased from unbranded to branded and our strategy is to take shares from unbranded to branded.”
There is some sort of price correction, which one will have to do going forward there also, he added.
“And we’ve seen competitors already doing their price correction and gaining share from us. So competitive intensity in nutshell has picked up. Dabur strategy of representing ourselves in all subsegments of hair oil stays and premiumization will also happen. There are some subsegments where we are not present, which we may want to get presence by way of, if not organic through inorganic route also.”
Category breakdown
Within Dabur’s domestic business, the Health Care portfolio grew by 7%, driven by performance in Digestives which grew by 11%, Health supplements registered 7% Y-o-Y growth, recently launched Hajmola Mr. Aam garnered positive feedback from the consumers, the company said.
Dabur Glucose, a key brand in Dabur’s health supplements portfolio, surged by over 30% amidst harsh summer conditions, gaining 70 bps of market share gains.
Within OTC and Ethical category Health Juices, Baby Care and branded Ethical grew in double digits. However, there was some impact of harsh summers on brands like Shilajit and Honitus.
“Going forward, we will continue to focus on consumer-centric engagement initiatives, strengthening the doctor advocacy channel and launching innovative campaigns aimed at reinforcing relevance and expanding market penetration in the health care business.
Coming to the HPC business, Maholtra said in an earnings call that the portfolio achieved an 8.1% growth; Shampoo and Post-Wash segments grew by 14%, driven by strong performance of the Vatika franchise; hair oil franchise grew by 3.3%, with coconut oil posting a robust 20% growth. “Both coconut and perfumed hair oils grew ahead of the category, gaining 25 and 100 basis points, respectively. Additionally, we added Cool King franchise with the launch of Toofani Thanda cooling oil and Cool Talc during the quarter, which has been well received by the consumers.”
Dabur’s Oral Care portfolio recorded a growth of 11.4% with Red franchise growing at 12% and Meswak growing by 18%. “Our core offering of Red Toothpaste continued to gain market shares in the quarter with Dabur oral care products reaching 1 out of every 2 households in the country. Our strategy of focusing on herbal category, driven by Dabur Red Toothpaste has proven to be highly successful,” he added.
Maholtra thinks there’s “a lot of opportunity in the Oral Care segment as the Natural segment which is 30%, has now become 31%, and the growth in the Natural segment is higher than the non-natural segment.”
Home Care sustained its robust growth trajectory with 8% growth during the quarter. Odonil registered a high single-digit growth with particularly strong performance in aerosol and gel formats. In line with Dabur’s strategy to increase our TAM, the company recently introduced Odomos liquid vapourizer. Sanifresh posted a double-digit growth, driven by strong on-ground execution, Dabur said.
Skin Care registered a growth of 6% led by Gulabari, which grew in double digits, and there were new body wash launches under the Gulabari brand.
Food and Beverage segment grew by 4%. Within the segment, the Foods business demonstrated exceptional performance with 21% growth. Badshah also posted a robust growth of 15% year on year. The J&N segment got impacted during this quarter due to exceptionally harsh summers due to which consumer preference shifted to thirst quenching products such as carbonated beverages.
“Our drink portfolio grew in double digits. In the J&N segment, Dabur exceeded category growth, expanding our market share by 330 basis points,” said Malhotra.
Emerging channels like e-commerce and modern trade posted a robust double-digit growth and now contribute to around 20% of Dabur’s India business.