Dabur To Exit Non-Profitable Tea, Vita Malted Food Drink Categories
The packaged food maker has underlined a seven-point agenda to drive growth.
Dabur India Ltd. will exit non-performing categories like Vedic tea, diapers, breakfast cereals, sanitisers and discontinue its malted food drinks brand, Vita.
The move is part of an extensive review of its product portfolio conducted in partnership with consulting firm McKinsey, aimed at reallocating capital towards larger, more promising categories to accelerate profitable growth. The FMCG company aims to achieve double-digit growth in revenue and profit by fiscal 2028.
"The categories that we will get out from are tea, adult and baby diapers, breakfast cereals, the sanitising and Vita categories. These have been margin-dilutive for us," Mohit Malhotra, chief executive officer of Dabur India, told analysts during post-earnings conference call.
These categories cumulatively contribute less than 1% of the overall revenue. "So, we will get out of these categories and focus on big bold equities which we've identified, and the core portfolio is where we will invest," Malhotra said. Apart from this, the company will "aggressively" pursue mergers and acquisitions to build a future-fit portfolio, which resonates with the new generation, particularly focused on new-age healthcare, wellness food and premium personal care, he added.
The packaged food maker has underlined a seven-point agenda to drive growth. Other than portfolio revamp and mergers and acquisitions, these include continued investment in core brands, premiumisation and "contemporisation" across categories and bold bets across health and wellness spaces, distributor consolidation in metros to save costs while doubling down on emerging channels like quick commerce and modern trade as well as refining operating model, which includes cost optimisation, driving efficiency and digitisation across value chain.
"If we look at the past four to five years, we generally focused on increasing market share and consolidating our business in each of the categories," Malhotra said. "But premiumisation has been less focused and it was a deliberate attempt because we wanted to bring Dabur Amla back on a growth path and gain market share."
"Now that we've done all the market-share gain in Chyawanprash, honey, Amla, homecare, skin care, it's 2.0 journey to embark on premiumisation," he said.
Dabur will premiumise its categories across serums, conditioners, shampoo, and masks in its hair care portfolio, benefit-led toothpastes and gummies, powders, effervescent within healthcare.
The maker of Vatika shampoo and Real juice will double down on quick commerce, as well as consolidate stockists and reduce costs in urban general trade. "We will also focus on consolidation of stockists for better ROI, reducing cost to serve in the urban GT channel and enhanced use of digital tools to boost extraction," the CEO added.
Dabur has seven nearly Rs 500-crore brands, which contribute over 70% to its portfolio, including Dabur Red, Real, Chyawanprash and Vatika, Malhotra said. "We will continue to add scale to these brands through disproportionate investments, increasing penetration and driving market share gain."
Besides, Dabur will ramp up its Hajmola franchise and health juices, and target emerging need gaps such as gut health, heart health, stress and lifestyle management through existing and new products.
Dabur India's net profit declined in the fourth quarter of financial year 2024-25, missing analyst estimates. Malhotra expects consumer demand in India "to recover progressively in the coming quarters, both in urban and rural markets". Rural markets contribute to nearly half of the company's annual sales.
