Dabur takes the digital route to launch new products
Dabur India will launch all its new products in a digital-first environment or through e-commerce channels in the future. This is its strategy to save on investments in establishing new products in a highly inflationary environment. Moreover, since food is an inflation-resistant category, the big FMCG company is also focusing on the segment.
“This (launch via e-commerce) is a good standard playbook that we have established for new product development. It also helps us to retain the investments that underpin the creation of a new product, as e-commerce is a bit more economical channel,” Mohit Malhotra, CEO of Dabur India, told analysts on the call. to second-quarter results on Thursday.
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Malhotra said that the investment in e-commerce channel is not huge and if the same product is launched in general commerce, the investment in mass media especially Hindi satellite is heavy. “It burns a hole in our pockets and with inflation we can’t afford to do that,” he said.
Also, since e-commerce consumers are early adopters and want to try new products and brands, launches work well for the business. “There have been no exceptions to this late and once we launch there we will roll it out to modern commerce and then followed by GT,” he added.
The e-commerce channel grew by 50% for Dabur in the quarter ended September 30 and now contributes about 9% to its revenue, while modern commerce is at 10% contribution.
In recent times, Dabur has launched a line of sanitary napkins via e-commerce, a line of peanut butter under the Real brand, its line of baby care products, apple cider vinegars, products in juices and beverages and edible oils. “The contribution of new products to e-commerce is already 11% for us. We will test the market to see how it performs before rolling it out to modern commerce as we do with most of our key products,” Malhotra said.
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The company has set up a separate infrastructure and also an e-commerce business leader, and Malhotra said the business is being watched closely and showing sequential growth. The contribution of e-commerce was 2-3% four years ago for Dabur.
As a strategy, he said the company only releases the products it has the “right to win” for, and does not seek to compete with organized or large players, but rather digital first brands in this space. .
“We typically compete with early digital players and they don’t have the wherewithal to scale the business into general commerce or brick-and-mortar channels where we have our strength and can grow. Also, we don’t launch in areas where we have strength, we launch in their territory which is digitally first, and if we do well in that digital space, our chances of success in the territories where we are strong are very positive, which is modern trade and general trade, which will come later for us,” Malhotra said.
Regarding the food and beverage portfolio, he added that the company’s vision is to move from the current beverage portfolio to a food and beverage portfolio. “We have a 70% market share in the beverage sector, but we would like to expand that to the food segment,” he said.
Dabur on Wednesday announced the acquisition of Badshah Masala, which is in line with its strategic intention to grow its food business to 500 crore in three years and expand into new adjacent categories.
The company is also expanding its range of juices and mixers under Real beyond urban centers and targeting rural markets and cities beyond Class 1 in the wild.
Commenting on the reasons for the increased focus on F&B as a category, Malhotra said, “In an inflationary environment like this, when all businesses accept price increases, some categories are more elastic than others. . The food and staples market in India remains largely unbranded. So, no matter how much inflation or the market passes inflationary pressure on to the consumer, it is an inelastic demand, whether it is for edible oils or food products. This is why the food category is growing at a rapid pace.