Daybreak - Why Dabur is reinventing itself

Episode Date: February 15, 2023

With increased competition within the country, the over-hundred years old Ayurvedic brand, Dabur, is looking to acquire and expand. It wants to change its story.Just last year in October, it acquired a 51% stake in Badshah Masala, one of the country's leading spices companies.But why does the world leader of Ayurveda brands need to reinvent itself?Tune in.

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 Raman Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast.

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With that, back to your episode. It was in the year 1884 when Darber began its operations as an Ayurvedic medicines company in Calcutta. Its founder, Dr. S.K. Berman, formulated natural cures for diseases like cholera, malaria and the plague. More than 100 years later now, it is the low. largest Ayurvedic and Natural Healthcare Company in the world, with a revenue of more than $1.2 billion. Over the years, the company has evolved into an FMCG brand that sells a range of products from its regular Ayurvedic offerings to toothpaste, juices and a lot more.

And now it is looking to expand even further. Dhaber is hunting for acquisitions both at home and specifically in Southeast Asia. In fact, it has already started off on that path. Last year in October, it made the headlines when it acquired a 51% stake in Baja Masala, one of the leading spice brands in the country. 60% of FMCG's food and the food sector is very, at a very fast pace, becoming branded. As rural India becomes more urban, the unbranded market will become more branded as a disposable income. That was the CEO of Dabar, Mohit Malhotra,

talking about the acquisition in an interview with brand equity. Now, this is just one part of what seems like Darba's largest strategy. And what is that? Reinventing Ayurid for a new brand of customers. But why is Dabr changing its identity from being a brand that sells Ayurvedic medicines to one that sells a lifestyle that covers food, personal care and everything in between.

And how does it do that? Welcome to Daybreak, a new podcast from the Ken. I'm your host, Snigda 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 Wednesday the 15th of February. For her newsletter on Darber, the Ken's Ruhi Kangahari spoke to some examples. executives 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 Ayurwait. 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 Baja Masala. 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 Ayurved 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 Dabber retain its old customers while still appealing to the new ones. But the question that still remains unanswered is this. Dabar is a trusted world leader in the Ayurid sector. What pushed it 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 Dabar. The rise of Patanjali was a moment of reckoning for all Indian FMCG companies. But obviously more for Dabar, whose brand story also revolves mainly around Ayurvah. The second reason that pushed Dabr 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, 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 Darber, this was a once-in-a-lifetime opportunity that had to be utilized. And finally, the third reason that may double rethink its brand identity. I don't know if you've 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 Dabar executive who spoke to Ruhi said that everyone, old and new, was silently eating into the market share of Dabur'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 Gen Z. Coming up next, I tell you about Dauber's new narrative. Now you understand why Dabar 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 $8 billion. So every new market category that Darbar 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, Darbar 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's 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,

company announced that its four top brands were Dabar Amla, Dabar Wattika, Dabur Red Paste and Real Juicees. 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 Ayy Vedh, like for example Chavan Pras, makes just around half of the turnover as four of its most popular brands. Dhabar 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.

Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. 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 Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien.