Daybreak - Why is Darth Vader selling toothpaste for Dabur?

Episode Date: May 8, 2024

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.For example, the company's toothpaste brand Dabur Herb'l Charcoal recently collaborated with Disney for its Star Wars franchise and hired Darth Vader as its chief innovative officer. Just last year in October, it also acquired a 51% stake in Badshah Masala, one of the country’s leading spices companies.  But why is the over-hundred years old established company trying so hard to change its narrative?  Tune in.Daybreak 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 Raman 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. I found something really bizarre yesterday.

Darth Vader, the most dangerous Jedi from Star Wars, has a LinkedIn profile. I'm not kidding. Before you think, What in The Dead Star am I talking about? A post on the profile already has that question answered for you. And it says, thrilled to embrace the power of the dark side with Darbo-Hurbel activated charcoal toothpaste.

Apparently, Darber has hired Darth Vader as the chief innovation officer at Darbo-Hurbel India. Now, never in my wildest dreams had I imagined that I would see a day where Darth Vader would be selling products for the largest iraubaliener. and natural health care company in the world. The thing is, with a revenue of over a billion dollars, Darber is trying to evolve. From a company that began selling Ayurvedic medicines to treat constipation and cholera, it is now a full-blown FMCG brand that sells everything from toothpaste and juices to shampoes and cosmetics. But lately, the company's revenue has been flat. So to fix it, Darber has been looking for acquisitions both at home and specifically in Southeast Asia.

In fact, it has already started off on that path. In October 2022, it acquired a 51% stake in Baja Masala, one of the leading spice brands in the country. And now, the company is going a step further. It wants to recalibrate its target audience. It wants to go from boomers to zoomers or those below. the age of 25 years. The idea is to reinvent I-Weder for a brand new segment of customers. And Darth Vader selling charcoal toothpaste for the more than 100-year-old brand is a result

of that. Which brings me to the question, is Dauber going through an identity crisis? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nicka Sharma, and I Don't Chase the News Cycle. Instead, twice a week on Monday's, Wednesdays, and Friday's and Fridays, I will come to you with one business story that is worth understanding and worth your time. By the way, daybreak episodes also drop on Tuesdays now featuring my new colleague, Rahal Philipos. Today is Wednesday, the 8th of May.

My colleague Ruhi Kandahari spoke to some executives who work at Dabar. And one of them made a very interesting point. They said that the company's new avatar compared to its old identity as a prescription Iyrivedic medicine brand is turning out to be a lot closer to the real meaning of Ayurveda. Ayurveda is, in fact, being portrayed as a lifestyle now. Which is why Dhaber is making a foray into new categories like kitchen essentials. This includes stuff like Atta, tea, edible oils and now, of course, spices with the acquisition

of Baja masala. Very strategically, the brand is trying to continue. every consumer good with the idea of pure or herbal or goodness. Not just that, it is also 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 Ayurveda and selling them with a new story, which is why the packaging is now way more glamorous.

It is using newer mediums to sell these products like e-commerce. A fresh new narrative is being created. But imagine if Darth Vader was real and he had teeth, do you think he would use daubour charcoal toothpaste? In my opinion, he wouldn't care. But what I'm trying to tell you is that clearly Darber is going out of its way to be appealing to a new segment of customers while also retaining its old ones.

Now, the question that still remains unanswered is this. Dabber is a trusted world leader in the Ayurveda sector. So why would it have to do all of this? To find out, stay tuned. Essentially, there were three major developments that pushed Dabur to seriously focus on building a new narrative, a one that suits the changing times. Reason number one came in the form of the Haridwar Bres. based Patanjali way back in 2006.

In a span of 10 years, Baba Ramdev's Patanjali collected more than a billion dollars in annual sales. Like Ruhi wrote about it 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 a perspective, let us look at Patanjali Ayreve's annual revenue. For comparison, India's largest FMCG company, Hindust uniliver, has an annual turnover of about $6 billion. So it was not just Dabar.

The rise of Patanjali was a moment of reckoning for all Indian FMCG companies. Of course, what is now happening to Patanjali is a whole different story, of course. So, for a brand like Dabar, whose story also revolves around Ayurveda, the success of Patanjali was a moment of introspection. The second reason that pushed Darber to rework its brand personality was the pandemic. Initially, when vaccines were still being developed, people around the world were desperate. It was only around that time when suddenly there was a demand for traditional Indian medicines and recipes. People were basically looking for all kinds of plants and herb-based items that could improve their immunity and overall health without any side effects.

Kapiva, which is an Ayyrivedic D2C brand, conducted a survey which found that awareness and adoption of Ayurveda has almost doubled in the pandemic's aftermath. According to the survey, 4 out of 5 people believe that COVID has increased their willingness to embrace Ayurveda. They believe it is an easy-to-use format that can fit in their daily lifestyle and it will increase the usage of Ayurvedic products in their lives. In fact, close to 90% of the people believe that Ayurveda had no side effects. For Darber, this was a once-in-a-lifetime opportunity that had to be utilized. And finally, the third reason that made Darber 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 who sell products based on traditional ingredients. All their messaging is around purity, nature and Ayurveda. For example, there's Mama Oret in personal care and Kapiva in the beverages segment, which have been seeing some success with 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, were size.

silently eating into the market share of Darber's popular brands. And as it turns out, what the new audience wanted from Darber was very clear. They needed both convenience and some tradition. So, the executive said that Darber decided to be proactive with its storytelling to millennials and Gen Z. Coming up next, I will tell you more about Darber's new narrative. Now you understand why Darber is going beyond its home. home turf. For instance, India's edible oil business was recorded at $23 billion as far back as in 2014. The premium tea market, meanwhile, is worth $67 million. The Aywetic medicine market is

somewhat about $8 billion. So every new market category that Dabr enters, like dairy, diapers, staple food, opens up new growth opportunities for it. Even if it may not be able to dominate them. And finally, Darber seems to have accepted that some brand stories, some channels and some markets are going to work out in the future, while others may not. Which is why Darber's new strategy is called power brands. In its efforts to retell a new brand story, it is letting some of its other brands be, even if they shrink. But on the other hand, it will focus on some specific brands for growth. So the company is consciously choosing to make a compromise by putting some of its brands on the back burner if they don't

find a fit or if they don't show promise, like promise toothpaste. In July 22, for example, the company announced that the four top brands were Dabur Amla, Dabar Vatika, Dabur Red Paste and Real juices. Each one of these brands have an annual turnover of over $100 million. The first two are known for hair oils, the third is a toothpaste, and the last one is known for fruit juices. And Darber wants to focus on nine such power brands out of the over 250 products in its portfolio. So it does not matter if this means that one of its main brands that is actually closely linked to its past, which is traditional Ayurveda, for example Chavan Prash, makes just around half a turnover as its four most popular brands. Dabar is okay with that. So it seems that

Dabar is getting ready for a different sort of a future and for that it is willing to let go of some part of its legacy and embrace others to get there. But changing perception about a brand, especially one that is as old as Darber is not so straightforward. It is a risk. Plus, Ayurveda as a USB alone may not be enough to attract the kind of consumer that Darbar 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.

subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv Siyadh.