Daybreak - Dabur is battling an identity crisis

Episode Date: October 20, 2023

With increased competition within the country, the world leader of Ayurveda brands, Dabur, is looking to acquire and expand. It wants to change its story and focus on a new target consumer.  Just last year in October, it acquired a 51% stake in Badshah Masala, one of the country’s leading spices companies.  But how is the over-hundred years old company planning to reinvent?  Tune in. RecommendationDabur seeks Gen Z approval to shed boomer imageDaybreak is produced from the newsroom of The Ken, India's first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Lately, Darber seems to be suffering from an identity crisis. Everybody knows the company.

It's been around for more than a hundred years. It is a household name in India. Just to name a few of its products, there's Dabar Chavan Prash, Dabar Lal Dantmanjan, which is now Dabar Red Toothpaste, and of course Dabar Puddin Harah, the go-to for many Indians for gastritis and acidity. Over the years, Dabar has established itself as the largest Ayurvedic and Natural Health Care Company in the world, with a revenue of over $1.2 billion. The company has evolved itself into an FMCG brand now that sells a range of products from its regular Ayurvedic offerings to toothpaste, juices and a lot more. But in the last five years, Darber's stocks have been lagging behind its competitors. Nestle saw around 140% jump in its stocks.

Tata consumer jumped around 300%. And Darber just 33%. So it makes sense why the company has been looking for acquisitions both at home and specifically in Southeast Asia. In fact, it's already started off on that path. In October last year, it acquired a 51% stake in Baja Masala, which is one of the leading spice brands in the country. And now the company wants to go a step further.

It wants to recalibrate its target consumer. It wants to go from boomers to zoomers or those below the age of 25%. The idea is to reinvent Ayurveda for a new brand of customers. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nidda Sharma, and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 20th of October.

On a newsletter on Dabber, the Ken's Ruhi Khan Dharie spoke to some executive from the company. And one of them made a great point. The company's new avatar, compared to its old identity as a prescription Ayurvedic medicine brand, is turning out to be a lot closer to the real meaning of Ayurid. Ayurvate is now in fact being portrayed as a lifestyle. And Darber is making a foray into new categories like kitchen essentials. This includes wheat flour, tea and edible oils, and now of course spices with the acquisition of Batchamasa. So very strategically, the brand is trying to connect every consumer good with the ideas of pure or herbal or goodness.

Not just that, it is making the most of its gigantic distribution network across the country for these new products. And the focus is not just on new offerings. The brand is also taking its old products that are based on Ayurid and selling them with a new story. The packaging is now more glamorous. It is using newer mediums to sell these products like e-commerce. A fresh narrative is being created,

one that helps Dauber retain its old customers while still appealing to the new ones. But the question that still remains unanswered is this. What pushed Dabber to do all of this? To find out, stay tuned. Essentially, there were three key developments that pushed Dabar to seriously focus on building a new narrative, one that suits the changing times. The reason number one came in the form of the Haridwar-based Patanjali back in 2006.

In a span of 10 years, Baba Ramdev's Patanjali collected more than a billion dollars in annual sales. Recently, it crossed over $3.5 billion. Like Ruhi said in her newsletter, this was a rival that appeared out of the blue and it quickly became one that had to be taken seriously. To give you perspective, let us look at Patanjali Ayurved's annual revenue. For comparison, India's largest FMCG company, Hindustan Unilever, has an annual turnover of about $6 billion. It was not just Dhabar.

The rise of Patanjali was a moment of reconnoisse. for all Indian FMCG companies. But obviously more for Darber, whose brand story also revolves mainly around Ayurvah. The second reason that pushed Darbar to rework its brand personality was the pandemic. Initially, when vaccines were still being developed, people were desperate.

It was around that time when suddenly there was a demand for traditional Indian medicines and recipes. People were basically looking for all. kinds of plant and herb-based items that could improve immunity and overall health without any side effects. Kapiwa, an Ayurvedic D2C brand, conducted a survey last year which found that awareness and adoption of Ayurvedic brands has almost doubled in the pandemic's aftermath. According to the survey, four out of five people believe that COVID has increased their willingness to embrace Ayurveda. They believe that an easy-to-use format that can fit in their daily lifestyle will

increase the usage of Ayurvedic products in life. In fact, close to 90% people believe that Ayurvah has no side effects. For Dhaber, this was a once-in-a-lifetime opportunity that had to be utilized. And finally, the third reason that made Dabber rethink its brand identity. I don't know if you noticed, but lately, there are a considerable number of new startups and brands that have come up. They sell products based on traditional ingredients. All their messaging is around purity, nature, and Ayurban. For example, there's Mama Earth in personal care and then there's Kapiva in the beverages segment. All of these have been seeing some success in the younger customers. The wellness market in India is valued at a staggering,

$6 billion and it is only growing. Pretty fast, actually. The Dabber executive who spoke to Ruhi said that everyone, old and new, was silently eating into the market share of Dabar's popular brands. And as it turns out, what the new audience wanted from Dabur was pretty clear. They needed both convenience and some tradition. So the executive said that Dabar decided to be proactive with its storytelling to millennials and Genzi. Coming up next, I tell you about Darber's new narrative. Now you understand why Darber is going beyond its home turf. For example, India's edible oil business was recorded at $23 billion as far back as 2014.

The premium tea market, meanwhile, is worth $677 million. The Ayurvedic medicine market is somewhere about. about $8 billion. So every new market category that Darber enters, like dairy, diapers, staple food, opens up a new growth opportunity for it, even if it may not be able to dominate that segment. Finally, Darber seems to have accepted that some brand stories, some channels and some markets are going to work in the future, while others may not. Dabber strategy is called power brands.

In its efforts to retell a new brand story, it is basically letting some of its other brands be, even if they shrink. The company is essentially choosing to put some of its brands on the back burner even if they don't find a fit or don't show promise, like Promise toothpaste. In July last year, for example, the company announced that its four top brands were Dabar Amla, Dabar Wattika, Dabar Red Paste and Real Juses. Each of these brands have an annual turnover of $121 million. And Dabar wants to focus on nine such power brands out of the over 250 products on its portfolio.

It does not matter if this means that one of its main brands that is actually closely linked to its past and traditional Ayyghed, Like, for example, Chavan Prash makes just around half of the turnover as four of its most popular brands. Dabar is okay with that. Like Ruhi said, Dhaber is getting ready for a different future. And it is willing to let go of some parts of its legacy and embrace others to get there. But changing perception about a brand, especially one that is as old as Dabar, is not so straightforward. It is a risk.

Plus, Ayurveda as a USB alone may not be enough to attract the kind of consumer Darber wants, which is those below the age of 25. Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps, and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website.

I am Sniqa Sharma, your host and today's episode was edited by my colleague Rajiv Sien.