dabur comprehensive insights from capital markets day 2023
Dabur, one of the consumer goods industry giants, recently hosted its Capital Markets Day for 2023, shedding light on various facets of its business and future strategies. This article is a detailed summary that provides a comprehensive overview of the key takeaways across different categories.
Dabur's presentation began with an analysis of the demand environment. They noted a resurgence in both urban and rural growth, attributed to a decrease in inflation. The company reported robust performance in the first quarter of FY2024. While July remained stable, there was a mild slowdown in August, followed by a resurgence in September. Dabur's management expressed optimism that FY2024 would surpass FY2023, despite rural areas not yet fully recovering to their previous levels.
Dabur has seen a remarkable increase in growth, with a Compound Annual Growth Rate (CAGR) of 7.8% from FY2019 to FY2023. The company's aspiration is to further accelerate growth to reach double-digit figures. This ambitious goal will be driven by their portfolio evolution strategy. However, until macroeconomic conditions improve, Dabur aims to outpace the Fast-Moving Consumer Goods (FMCG) industry's growth rate by 1.5 times. They also plan to increase the share of premium products from the current 8-10%.
Dabur's presentation highlighted its resilience in maintaining operating margins despite facing significant raw material inflation. The company achieved this through strategic price increases and cost-saving initiatives, particularly under "Project Samriddhi." Dabur expressed confidence in further enhancing cost savings by 25% in FY2024. With expectations of raw material deflation, the company anticipates gross margin expansion. They intend to reinvest a portion of these gains into brand investments and digitalization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin guidance for FY2024 stands at 19.5%.
Dabur's portfolio evolution through new product launches and brand extensions has significantly expanded its Total Addressable Market (TAM) since FY2019. The company believes this has increased its shelf share in various consumer segments. Revenue contribution from new launches has risen from 1.4% in FY2019 to 4% in FY2023. Dabur's strategy emphasizes creating a differentiated portfolio that resonates with the tech-savvy, connected Indian consumer while maintaining a focus on core markets. The company plans to drive innovation to renovate its portfolio and cater to the fast-growing lower-middle-income group.
Dabur's approach includes transitioning power brands into power platforms. For example, "Real" has been expanded to encompass various sub-brands, spanning juices, milkshakes, and health-focused offerings. Dabur aims to address market share challenges in segments like premium hair oils, where they missed the premiumization trend. They are exploring the introduction of international products into the Indian market.
Dabur's expansion strategy extends to new product categories and adjacent markets. The company is also investing significantly in digital initiatives, with digital spending reaching 31% in FY2023. Dabur has partnered with over 2,000 influencers across India and established a social media command center for enhanced online presence. The share of e-commerce business has risen to around 9%, exceeding the industry average.
To cope with the complexity of an expanding product portfolio, Dabur has customized its Go-To-Market (GTM) strategy. Their channels include vaids, ayurvedic chemists, traditional chemists, modern trade, and more. New-age channels have seen substantial growth, contributing to 20% of sales in FY2023.
Dabur has fostered a culture of meritocracy and entrepreneurship, plugging gaps to build capabilities for the future. They encourage open innovation, conducting meetings with employees, channel partners, and vendors for improved formulations. Dabur is committed to enhancing productivity and reducing its environmental footprint.
Dabur's international business is well-balanced between developed and emerging markets. They are a leader in personal care in Egypt and foresee substantial growth potential in Sub-Saharan Africa. While personal care dominates international revenues, Dabur intends to expand its healthcare and foods portfolio across markets.
Dabur remains open to mergers and acquisitions at reasonable valuations. The company is committed to continuing its market share growth and profitability enhancements.
Dabur's Capital Markets Day 2023 provided a holistic view of the company's performance and strategic vision across various categories. With an emphasis on innovation, premiumization, and a focus on the evolving consumer landscape, Dabur aims to continue its growth trajectory and maintain its leadership position in the consumer goods industry.