Dabur walks the baby talk

Homegrown FMCG major takes on MNC giants as it floats a new sub brand for baby care products

Last month, the Rs 7,806 crore fast moving consumer goods company (FMCG) Dabur announced it was setting up a new sub brand, Dabur Baby. While investment details are still sketchy, the company has said that it wants to be a part of every segment within the country's growing baby care market. With that the 130 year old company, has stepped into a market that has traditionally been dominated by multinationals - Johnson & Johnson, Kimberley Clark, HUL and Procter & Gamble among others. But Dabur, buoyed by the segment's growth prospects and the country's changing demographics, is hoping to storm the MNC bastion.
 
According to a report by TechNavio, the baby care market is expected to clock close to 17 per cent as CAGR between 2014 and 2019. Another report by Research and Markets says that the category will be close to $30 billion by 2019, up from $14 billion in 2015. Dabur which already has a handful of products (Dabur Lal Taila, Dabur Gripe Water and Dabur Janma Ghunti) believes that this is the right time to increase its footprint in the sector. 'We plan to expand our presence in the baby care market with newer introductions, and emerge as a serious player in most of the baby care categories in India', says Rana Banerjee, marketing head-health care, Dabur India.

Dabur soon plans to launch a prolonged promotional campaign for its new brand and the increase in its budgets allocated for promotions and advertising is indicative of its intent. The amount allocated in the April-June FY16 quarter is up by 25 per cent as compared to the previous period. In Q4, FY15 Dabur's 'Advertising & Publicity' expenditures were Rs 265 crore while in Q1, FY16 it is Rs 331 crore.

Apart from the promise of high growth, what drew the homegrown FMCG major that has focused on young adult and adult customers into baby care?

One reason was that the company is no stranger to what babies want. Dabur began life in 1884 as an ayurvedic medicines company and one of its early successes was 'gripe water', a concoction meant to relieve colic ailments in babies. Also popular among new mothers was Dabur Lal Tail, a massage oil for babies, and Dabur Janma Ghunti, an appetite builder for infants. Although the company was quick to launch these formulations several years ago, it never really focused on developing the baby care market further as it found greater success in oral care, hair care, foods, health care and skin care. As a result the baby products stayed on the Dabur portfolio but their contribution to the total revenue pie remained insignificant.

Now, with a sub brand dedicated to baby care, Dabur expects revenues to grow. 'We are going to venture into at least two-three baby care product categories by the end of the year,' a company official revealed on conditions of anonymity. While Dabur is not ready to share the categories, he hinted that they would be in every segment that Johnson & Johnson is currently present in--body wash, massage oil, shampoo, skin care wipes, milk body lotion, powder, cream, hair oil and so on. Clearly the company is positioning itself as a challenger to J&J, which has been in the country since 1948.

Dabur is also pitching at the premium league with its new set of baby care products. Its first launch under the new sub brand - massage oil with olive and almond base is priced at Rs 200 for a 200 ml bottle. This is higher than Johnson Baby Oil and Himalaya Herbal Baby Massage Oil, both can be bought for Rs 165.

What makes the company confident that customers will pay a premium for its products?

While Dabur is reluctant to get into specifics, it appears that the company is banking heavily on its strengths in traditional and herbal product formulations. It will leverage its knowledge of traditional medicine and cures and thereby tap into a distinctive target audience as well as selling point. 'While a number of overseas players are offering their international baby care products in India, what they lack is the traditional knowledge', Banerjee added. As an example he says that their new massage oil does not have any paraffin, no other product in the market can claim the same he says.

There is a market for herbal and organic baby care products in India today Banerjee believes. 'Young mothers are increasingly seeking products that not just meet the global standards but which are also true to traditional Indian knowledge,' he said. What is driving the demand for such products is also the improved economic status of new mothers. 'Rising incomes, more women coming out to work, better informed parents and the growing penetration of social network have all contributed to a spurt in demand for quality baby care products that are not just natural but also free of harmful chemicals,' Banerjee explains.