FMCG slowdown prompts Dabur to shorten strategy review timeline | Company Business News

Consumer goods maker Dabur India Ltd has shrunk its cycle of strategic reviews from four years to three years citing short-term volatility in the sector as well as uncertain macroeconomic indicators, according to its top executive.

The maker of Vatika shampoo and Hajmola candy has roped in consulting firm McKinsey & Co to refine and align strategies for the next three years in line with “evolving dynamics”, chief executive officer Mohit Malhotra said.

The move comes as the fast-moving consumer goods (FMCG) sector grapples with a slowdown in urban demand and new-age brands challenge incumbents.

“We typically have a four-year vision plan; we are in the seventh vision cycle exercise. We feel in this volatile macroeconomic environment and the FMCG sector not doing well, we require validation of our strategies through external consultants,” Malhotra said during the company’s post-earnings call Thursday. “We are truncating our vision period from four years to three years so that we are able to fine-tune, align and quickly recalibrate our strategies.”

The strategic vision cycle will include brands such as Dabur chyawanprash and the company’s beverages portfolio.

The company is also making changes to its beverages portfolio in response to greater competition from cola brands in the market. Dabur sells Real fruit drinks, juices as well as milk shakes. The company’s juices and nectars category was impacted in the third quarter due to muted festive season demand and price-driven competition. The category’s revenue was down 10.3% year- on-year.

“Juice consumption is very urban centric. There’s also been a slew of new brands whether energy drinks, or these colas that have impacted the business,” Malhotra said. “We are undertaking a three-pronged approach—first is communication revamp. We want to educate the consumers that colas are just sugar-flavored water. Second is offering more value for money to consumers by reducing the price from ₹130 to ₹100 and introducing a new range. Also offering a little bit of extra margin to the distributor so that distributor ROI improves.”

Q3 financial performance

On Thursday, Dabur India reported a 1.85% jump in December quarter profit to ₹515.82 crore up from ₹506.44 crore in the year ago period. Consolidated revenue during the period grew 3.1% to ₹3,355 crore, up from ₹3,255 crore in the same quarter last year.

The company reported 1.5% growth in India FMCG volumes.

The home and personal care business grew 5.7% year-on-year. Healthcare was down 1.3% in the same period.

“The quarter presented a challenging operating environment. India experienced delayed and contracted winters with October and November being the warmest in many years,” he said. “While urban demand showed signs of moderation, rural markets remained resilient. Rural outperformed urban for the fourth consecutive quarter. Organized trade channels such as e-commerce, quick-commerce and modern trade continue to deliver robust growth.”

Dabur expects sequential improvement in demand over the next few months on the back of an increase in infrastructure investments, good harvest and government initiatives to spur growth in the upcoming budget, Malhotra said.

Meanwhile, the company took judicious price increases in its portfolio citing “inflationary pressures” faced during the third quarter. Dabur also announced plans to raise prices in its oral care and juices portfolio citing volatility in raw material prices.

“Price increases will happen in toothpaste and juices, but we’ll take very calibrated price increases observing the competitive intensity in the marketplace,” he said.