Dabur, a prominent manufacturer of FMCG and ayurvedic products, is aiming to establish a new facility in South India within the next year. This strategic move aligns with the company’s expansion plans in the region, as indicated by CEO Mohit Malhotra.
In an interview, CEO Mohit Malhotra stated that Dabur, currently deriving 20% of its domestic sales from South India, has witnessed a doubling of its business in the region over the past 5-6 years. The company is actively identifying market gaps and specific consumer needs to introduce customized products tailored to these markets.
With 13 manufacturing units nationwide, the company is expanding its capacity to meet growing demand. Additionally, it is diversifying its manufacturing activities by incorporating new production lines, according to the CEO.
Dabur India, with an annual capex of approximately INR 350-450 crore, also aims to extend its manufacturing activities to international markets, serving regions such as the Middle East and Europe.
Moreover, the company is streamlining its manufacturing operations by closing down units where tax incentives are expiring and concurrently establishing new units in areas transitioning to the GST regime, as mentioned by Malhotra.
On Dabur’s business in South India, Malhotra said,“We have made substantial progress in South India… it now contributes 19 to 20 per cent of Dabur’s domestic business. This was not even 10 per cent around seven to eight years back and thus contribution from the Southern region has doubled.”
When asked about the new plant in South India, Malhotra said, “I do not think it’s a few years away. Maybe it is a year away. Within a year, we might plan something for South of India as business scales up.”
Dabur’s most recent investment for establishing a new unit occurred in Indore, with a total investment of approximately INR 350 crore.
Within the southern market, numerous FMCG manufacturers, such as Wipro, have entered the food segment with region-specific offerings. Dabur is actively identifying market gaps in this region to introduce customized products that meet the specific needs of the consumers.
“We are creating a framework in the company where we can create products which are exclusively meant for the South of India for which we have got this framework called RISE, which is regional insights, speed and execution,” said Malhotra.
Certain brands like Dabur Red constitute 40 percent of the company’s business in South India, and Dabur Honey and Odonil hold significant prominence in that market, he mentioned.
“So we are looking at a lot of pollination of products in South of India to increase our saliency,” he said.
However, Malhotra also emphasized that, when compared to other FMCG makers boasting a saliency of 30 percent, Dabur’s salience stands within the range of 20 percent.
“So there is a huge gap of 10 to 15 per cent to be covered in the South. That is an area that will be our focus for geographical growth,” he added.
Discussing international markets, he highlighted that the Middle East and North Africa (MENA) region is the most significant market and represents a “growth frontier” for Dabur. The company operates a manufacturing facility in the UAE and leverages the Greater Arab Free Trade Area Agreement (GAFTA) to serve the Saudi Arabian market.
“If Saudi Arabia opens up and scales up, we might look at a manufacturing unit even in Saudi Arabia. We have another second unit in Egypt, which is the second largest market after Saudi Arabia,” he said.
In its manufacturing operations in Egypt and supply to East Africa, Dabur utilizes the Common Market for Eastern and Southern Africa (COMESA).
Dabur also has a factory in Turkiye, which ships to European markets. It also has a factory in South Africa which caters to SADC (Country / Southern African Development Community) markets of 12 countries.
In the United States, Dabur has partnered with a contract manufacturer that also serves the Canadian market.
“Business is doing well in international markets. There is a recovery after Covid but geopolitical issues are always there,” said Malhotra while referring to trouble brewing in the Middle East, and the Russia-Ukraine War.