Dabur does not feel quite optimistic about the foods business as it has lower return on capital than the personal and health care business.

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Fem will be positioned in the mass prestige category of skin care. In fact, Dabur is so bullish about the skin care segment that it plans to launch a third brand (in the premium category) in this vertical. This segment has stiff competition from brands like P&G''s Olay, HUL''s Fair & Lovely and Ponds & Beiersdorf AG''s Nivea.

Foods is one category where Dabur falls way behind, though. The company posted revenues of just Rs.737.5 million in the quarter ending September 2008, which was just 12.5% of the total turnover for the quarter. The key brand Real juices has stolen a march from Pepsi''s Tropicana, but faces challenges from products like Minute Maid and Frooti, which are priced significantly less (even up to 46.66% for the same quantity), which is (as Dabur laments), because of their lower juice content. Unfortunately, there is no further categorisation in the juices category, and the audiences perception towards a brand like Minute Maid is so strong that Dabur has to work hard to fight it.

Moreover, Dabur is not really proliferating in the foods segment. Real was supposed to launch more variants as announced last year, but that has not happened. Duggal admits the same as he says, "If given a choice on where to spend Re.1 of capex – food or personal care, I would prefer personal care." Dabur does not feel quite optimistic about the foods business as it has lower return on capital than the personal and health care business. But as Pepsi proliferates into health and wellness products, Dabur may face a threat with its measured approach.


For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).


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