SWOT Analysis of
Dabur India Limited
SWOT Analysis Report on Dabur India Limited
COMPANY
OVERVIEW
Dabur
India Limited (Dabur or ‘the company’) is a fast moving consumer goods (FMCG)
company that manufactures and markets ayurvedic and natural healthcare
products. The company sells its various products through its five flagship
brands across natural healthcare products, premium personal care, digestives,
fruit-based beverages, and fairness bleaches and skin care categories. The
company operates in Asia, Africa, the Middle East, North America and Europe. It
is headquartered in Ghaziabad, India and employed 6,154 people as of March 31,
2013.
The
company recorded revenues of INR61,761.2 million ($1,130.2 million) in the
financial year ended March 2013 (FY2013), an increase of 16.4% over FY2012. The
operating profit of the company was INR9,174 million ($167.9 million) in
FY2013, an increase of 16.6% over FY2012. The net profit was INR7,634.2 million
($139.7 million) in FY2013, an increase of 18.4% over FY2012.
SWOT
ANALYSIS
Dabur
is a FMCG company that manufactures and markets ayurvedic and natural
healthcare products. The company is one of the largest Indian consumer goods
company. Strong market position imparts distinct competitive advantage to Dabur
and facilitates revenue and business expansion growth prospects for the
company. However, Dabur faces stiff competition from international players like
Colgate-Palmolive and Unilever against their respective brands. With their much
higher penetration rates, room for growth is very limited for the company.
Strengths
Strong market position
Dabur
is one of the largest Indian consumer goods companies with interests in hair
care, oral care, health care, skin care, home care and food sectors. Dabur was
ranked among India’s top 30 brands in 2013 by an industry source specializing
in brand services and activities. It was also ranked among India's top 500
companies in 2012 released by a business newspaper. Dabur has a strong presence
in many of the FMCG categories. The company holds number one position in
several categories, including air fresheners (with 40% market share), skin
care–bleaches (50%), honey (50%), fruit juices (55%), ayurvedic tonics (67%)
and herbal digestives (56%) with key brands such as Odonil, Fem, Dabur Honey,
Real Fruit Juices and Real Activ, Dabur Chyawanprash and Hajmola. Dabur also
holds the number one position in mosquito repellant creams category with the
Odomos brand. Furthermore, the company commands second position in glucose
category (25%) with its Dabur Glucose brand, and in toilet cleaners category
with Sanifresh brand. Dabur is the third largest company in hair care category
(12%) with Dabur Amla hair Oil, Vatika hair oil and Vatika Shampoos brands and
in the oral care category (13%) with Red toothpaste, Babool, Meswak and Red toothpowder
brands. Outside India, the company’s hair oil market share in Saudi Arabia
increased from 63.4% in FY2012
to
65.7% in FY2013. Dabur also witnessed increase in its market share in the hair
creams category to 27.7% in FY2013 compared to 24.7% last year. In the UAE, the
company’s hair creams market share increased to 26.5% in FY2013 from 23.4% last
year. In Egypt, Vatika is the number one hair oil brand while Dabur Amla Hair
Oil is the second largest hair oil brand. Strong market position imparts
distinct competitive advantage to Dabur and facilitates revenue and business
expansion growth prospects for the company.
Presence in the niche natural/herbal
segment
The
Indian FMCG industry consists of several Indian and international companies
with major presence in food and beverage, personal care, oral care, home care
or OTC pharmaceuticals space. Dabur, on the hand, has made its strong presence
felt in the niche space of natural and herbal products space, not just in the
domestic market, but also internationally. Dabur is not just the fourth largest
FMCG company in India, but also the world's largest Ayurvedic and natural
healthcare company.
The
company has a strong portfolio of niche products that include branded honey,
health tonics and herbal digestives. Dabur has been a pioneer in the Indian
market with each of these product offerings. Honey, typically used in home
remedies in most Indian homes, is positioned as a breakfast spread with health
benefits by the company. Currently, the company commands 75% of the Indian
branded honey market. Dabur Chyawanprash, another pioneering product offering
in the health tonics segment, is based on a 2,500-year-old Ayurvedic formula.
Today, the product is offered in several variants and flavors, each catering to
the unique needs of its niche consumer segments, including kids, diabetics and
the calorie-conscious. Dabur Chyawanprash is the market leader in the Indian
health tonics space with over 65% of market share. In the herbal digestives
space as well, Dabur is the pioneer and also the number one player with its
Hajmola offerings. The Hajmola brand commands nearly 60% of the market share of
digestive tablets category. Overall, the company commands almost 90% of the
herbal digestives market share in India with its various offerings. With a
strong presence in such niche product categories, Dabur has very low/negligible
competition in the above-mentioned markets.
Focus on innovation and new product
launches
Despite
enjoying a market leadership position in several of its product categories,
Dabur has always been focused on innovating to meet its ever-changing consumer
preferences. For instance, the company renovated its oral care portfolio from
toothpowders to toothpastes in order to meet the changing demands.
During
FY2013, the company introduced more than 25 new products and variants across
categories and geographies. Some of these launches in India included Babool
Salt toothpaste, air-freshening gels under Odonil brand, Gulabari Saffron and
Turmeric Cold Cream and Lotion, Turmeric and Saffron-based bleaches under the
brand Fem, new variants of packaged juices under the brands Real and Activ, and
Anardana variant in Hajmola. The company also re-launched its personal care brand
Dabur Amla hair oil, and health rejuvenator and energizer brand 30-Plus with an
enhanced formulation. Internationally, Dabur launched several new products,
including Vatika Henna based Hair Colors, Vatika Black Seed Oil, Dabur
Medicated Toothpaste, Vatika Hair Serums, Curls Unleashed range and others.
Earlier in FY2012, Dabur launched more than 40 new products and variants across
geographies, including Dabur Almond Hair Oil, mixed fruit flavored variant of
the flagship health supplement brand Dabur Chyawanprash, premium face masks and
scrub under Dabur Uveda, a range of professional facial products and body
bleach under the brand Fem, and Vatika Hair Gel in its overseas market.
Each
of the new launches was well-researched and test-marketed before launching in
the market.
For
instance, during FY2013, the company developed new flavors for fruit juices
such as tender
coconut
water and kokam drink under the brands Real and Activ to target the ethnic
drinks market.
Dabur
also carried out R&D in air care, hard surface cleaners, repellents and
fabric care categories, as well as for enhancing the existing product range and
introduction of new products in hair care, hair oils, skin care and oral care
in Indian and many overseas markets.The company plans to extend fruit juices in
other fruit related categories, and to develop other options of culinary paste
like ready to cook gravies/mix like Indian, continental, oriental etc in the
future. It also plans to develop new products in home care and personal care
products. A keen focus on continuous innovation is helping the company bring to
market newer products and newer versions of its existing products. While the
company already commands market leadership
in
most of these product categories, continuous innovation is helping the company
avoid competition in its niche products space.
Strategic acquisitions
During
FY2011, the company made its first overseas acquisitions, thus embarking on an
inorganic growth path. In Turkey, Dabur made its first overseas acquisition,
Hobi Kozmetik Group, a personal care products company that markets a wide range
of hair care, skin care and body care products. Through the acquisition, Dabur
gained access to the company's Hobby and New Era brands. Hobi is a leader in
the Turkish hair gel category with a 35% share, while it also has sales spread
across 35 countries, including the Middle East and North Africa. The
acquisition added a complementary product portfolio to Dabur's existing one,
besides allowing it to expand its scale of operations and strengthen its
presence in the Middle East and North African region. In 2011, Dabur acquired
Namaste Laboratories, a Chicago, US-based company that markets a specialized
range of hair care products to the people of African descent. Namaste is one of
the largest players in the ethnic hair care segment in both US and African
markets. The acquisition not just added a niche hair care product to Dabur's portfolio,
but also expanded its presence in Sub-Saharan Africa. Namaste, with its wide
range of products developed with natural ingredients, is a strategic fit into
Dabur's existing portfolio of natural/herbal products.
During
FY2013, Hobi Kozmetik Group accounted for 10% of international business sales.
The company’s US business accounted for 22% of international business sales,
primarily driven by acquisition of Namaste Laboratories. At present, Namaste
Laboratories derives around 70% of its
revenues
from the US and the rest from markets like Africa, Europe, Caribbean and Middle
East.
Such
acquisitions complement Dabur's portfolio, offering it a strong platform to
enter newer product categories and markets. They also strengthen the company's
international presence by opening up immense opportunities in the newer growth
markets in the international arena.
Weaknesses
Increasing finance costs and tax charges
The
company's taxes and tax rates have been increasing over past few years. The
taxes of Dabur
increased
from INR150 million ($2.7 million) in FY2004 to INR1,830 million ($33.5
million) in FY2013, representing a compound annual growth rate (CAGR) of 32%.
In FY2013 alone, the company’s tax expense increased 24.8% over the past year.
This, in turn, is leading to an increase in the tax rates for Dabur over the years.
During the year, effective tax rate for the company increased to 19%, compared
to 17% in FY2010.
At
the same time, Dabur's interest expenses and finance charges also increased by
nearly 15% and 35% in FY2013, respectively, over FY2012. A cumulative effect of
the increasing finance charges and tax rates has led to a sluggish increase in
the profit after tax margin of the company during the year. This continuous
increase in tax rates could seriously impact the company's otherwise healthy margins
in the long run and increase the burden on its operational performance.
Opportunities
Low
penetration levels in rural India to offer room for growth across consumption
categories Unlike in the more developed Western markets, the Indian market has
a huge untapped rural market that is continuously offering opportunities for
growth in the consumer goods sector. Rising income levels and efforts by
marketers to tap the consumer base at the bottom of the pyramid are paying off
to create opportunities in rural India.
As
per the latest estimates of Central Statistics Bureau (CSO) of India, the per
capita income of
Indians
has been recording a double-digit growth over the past few years. The per
capita gross
national
disposable income grew at a CAGR of more than 15% during FY2010–12. At the same
time,
the Indian FMCG sector grew by 16.2% in rural India to reach INR633 billion
($11.6 billion) in 2012.While the growth in FMCG sector in urban India is
recorded to be much higher at 16.7% during the same period, the low penetration
rates in the rural areas are of special interest to FMCG marketers.
Products
like shampoos, hair oil and toothpastes have very high penetration in urban
India (57%,
80%
and 77%, respectively). On the other hand, penetration rates in rural India for
the same products is much lower; 37%, 67% and 42%, respectively, for shampoos,
hair oil and toothpastes. The urban-rural penetration gap is much pronounced
for products like mosquito repellants (18% rural penetration versus 59%),
instant noodles (3% versus 19%) and floor cleaners (4% versus 26%). Low
penetration rates, along with increasing personal disposable incomes of Indian,
especially rural consumers, are leading to increased demand for quality and
branded goods. The growing influence of media penetration is also being a key
influencer on lifestyle and consumption patterns, leading to immense market
opportunities for FMCG players.
Positive outlook for personal care
market
The
personal care market has been expanding rapidly due to the increasing
purchasing power and
growing
consumer interest. According to industry estimates, the personal care market in
India is
growing
at a rate of 13% per annum. In addition, the demand for cosmetics and personal
grooming products has been on the rise because of the increasing popularity of
beauty contests, increasing disposable incomes coupled with the boom in the
Indian fashion industry. According to industry sources, the cosmetics market in
India is growing at a rate of 20% annually.
Dabur
offers a range of personal care products such as shampoos, hair oils, rose
water, bleaches,
hair
removal products, fairness creams, cold creams, moisturizers, clarifying
creams, repair creams, anti-ageing creams and face fresheners under Dabur,
Vatika, Fem and Dabur Uveda brand names. It also offers professional grooming
products such as OxyLife facial kit, Fem Queen’s Pearl Professional Facial Kit
with oyster pearl extract, Fem Gold Professional Facial Kit formulated with Real
Gold particles, special anti-ageing properties and other moisturizing
ingredients, and Fem Turmeric Body Bleach.Thus, positive outlook for the
personal care products market indicates steady revenues for Dabur in near term.
Growing OTC pharmaceuticals market in
India
The
OTC pharmaceuticals market in India is growing at a steady rate. The OTC
pharmaceuticals
market
consists of the retail sale of traditional medicines, cough and cold
preparations (tablets,
mixtures,
lozenges, topical remedies and inhalers), and indigestion preparations (tablets,
powders
and
mixtures), among others. According to MarketLine, the Indian OTC
pharmaceuticals market
totaled
$1,834.2 million in 2012, representing a CAGR of 8.5% between 2008 and 2012.
India
accounted
for 3.9% of the Asia-Pacific OTC pharmaceuticals market value.The OTC
pharmaceuticals market in India is estimated to grow at a CAGR of 9.7% for the
five-year period 2012–17. Dabur offers a range of consumer health-OTC products
such as memory enhancers, cough and cold medicines, rejuvenation medicines,
gastro-intestinal, medicated oils, baby care products, women’s health products,
and rubs and balms. The company also offers digestive products. By leveraging
its product offering, the company can tap into the growing OTC pharmaceuticals
market for its top line growth.
Threats
Severe competition from international
players in the oral care and hair care categories
Although
the company enjoys a market leading position in several of its niche product
markets, such as herbal digestives and health tonics, in several other FMCG
categories including personal care and oral care, Dabur faces stiff competition
from both domestic and international players. As per the latest industry
estimates, Dabur enjoys the market leading position in categories like
ayurvedic tonics, digestives, fruit juices and branded honey and bleach (skin
care) markets, commanding more than 50% of the market value in each of these
markets. However, in the Indian oral care market, Dabur has only a 13% share,
while in the hair care market, the company has about 12% market share. Despite
being one of the leading players in these markets (oral care and hair care),
the relatively lower market shares reflect the intense competition in these
product categories. Especially, in the oral care, Dabur faces stiff competition
from international players like Colgate-Palmolive and Unilever against their
respective brands of Colgate and Pepsodent. Likewise, in the hair care
category, the company's Vatika and Dabur Amla brands compete with many top brands,
including Sunsilk or Dove from Unilever. Besides these international brands
that largely cater to the urban consumers in India Dabur's hair care brands
also face severe competition from the low-priced domestic brands like Chik from
CavinKare and Parachute from Marico. Additionally, with much higher penetration
rates in the oral care and hair care markets of India, both in the rural and
urban markets, room for growth is very limited for the company, unless it aims
to eats into the competitors’ shares through high product differentiation.
Changing cosmetic trends
If you want SWOT Analysis Report on Dabur, Contact Mahasagar Publications.
