Dabur plans to establish a new manufacturing facility in South India
By siliconindia | Monday, 20 November 2023, 03:52:52 PM IST
Dabur, an FMCG and ayurvedic products maker, plans to open a new factory in South India within a year. The company's business there has doubled in the last 5-6 years, and it now receives 20% of its domestic sales from the region. Dabur is identifying market gaps and launching customized products. It is also adding new manufacturing lines and augmenting its capacity to meet the demand.
Dabur India plans to expand manufacturing in international markets, including the Middle East and Europe. The company is consolidating operations by shutting down some units and opening new ones under the GST regime. On Dabur's business in South India, Malhotra said, "We have made substantial progress in South India; it now contributes 19 to 20 percent of Dabur's domestic business. This was not even 10 percent around seven to eight years back, and thus contribution from the Southern region has doubled".
When asked about the new plant in South India, Malhotra said, "I do not think it's a few years away. Maybe it is a year away . Within a year, we might plan something for South India as business scales up". Dabur's last investment to open a new unit was at Indore, where it had invested around Rs 350 crore.
Several FMCG makers, including Wipro, have jumped into the food segment in the southern market with relevant regional offerings. Dabur is identifying gaps there to launch customized products. "We are creating a framework in the company where we can create products which are exclusively meant for the South of India for which we have got this framework called RISE, which is regional insights, speed, and execution," said Malhotra.
He added that some brands, such as Dabur Red, contribute 40 percent of its business in South India, and Dabur Honey and Odonil are very salient there. "So we are looking at a lot of pollination of products in South India to increase our saliency," he said. However, Malhotra added that compared to other FMCG makers having a saliency of 30 percent, Dabur's salience is in the range of 20 percent. "So there is a huge gap of 10 to 15 percent to be covered in the South. That area will be our focus for geographical growth," he added.
Talking about international markets, he said MENA (Middle East & North Africa) is the largest market and a "growth frontier". It has a manufacturing facility in the UAE and uses the Greater Arab Free Trade Area Agreement (GAFTA) to cater to Saudi Arabia. Dabur uses Common Market for Eastern and Southern Africa (COMESA) while manufacturing in Egypt and supplying to East Africa. Dabur also has a factory in Turkiye, which ships to European markets. It also has a South African factory catering to SADC (Country / Southern African Development Community) markets of 12 countries. While in the US, it has a contract manufacturer, which also caters to the Canadian market.
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