Fiscal Stimulus For Rural India Could Drive Consumerism: Amit Burman, Chairman, Dabur
Progressively, the growth rates for the FMCG industry have hit a low of around 7.5% from a high of nearly 19% in November last year. Volume growths for the FMCG industry are even lower at nearly 4%
Photo Credit : Himanshu Kumar
Recently appointed Chairman of Dabur, Amit Burman, the youngest to occupy the post, is credited with conceiving and nurturing the Real Juice brand and making it a category leader. In a free-wheeling conversation with BW Businessworld’s Jyotsna Sharma, Burman talks about his as well as Dabur’s journey, the challenges they faced along the way, besides a whole gamut of issues including ‘leadership, Indian economy and its challenges, among other things.
What are your views on the state of the economy?
The economy is going through a slowdown for sure, and you see that across industries like automobiles, durables, consumer goods etc. According to syndicated data, the overall growth rates have softened for the industry on the whole. In fact, they are at a two-year low for the industry. And this, they say, is being felt across urban and rural. Progressively, the growth rates for FMCG industry have hit a low of around 7.5 per cent from a high of nearly 19 per cent in the November last year. Volume growths for the FMCG industry are even lower at nearly 4 per cent.
While rural India is witnessing an agrarian crisis, urban consumers seem to be holding on to their purse-strings. This has been further aggravated by the overall liquidity crunch in the market.
However, I don’t think this is structural and the situation should likely improve from the second half of the fiscal with the festive season setting in. If the government doles out some fiscal stimulus for rural India, that would put additional money in the pockets of rural consumers and further drive consumerism for branded consumer staples.
What according to you are the opportunities and challenges in India to become a $5 trillion economy?
It’s an achievable target, but suitable measures need to be taken well in time. While some external factors like geopolitical climate, crude oil prices and rupee value are not in the hands of the government, there are other measures that they can take to drive the economy on the high growth path. Higher spending on infrastructure development will be a key area for the government to focus on. Besides, they will also have to work on boosting private investment, higher disinvestment and pushing forward key structural reforms, along with a focus on creating jobs. The manufacturing sector too needs to revive quickly to drive growth, boost export and generate employment.
Your ayurvedic product portfolio has expanded. Earlier this month Dabur launched Babool Ayurvedic toothpaste. What are your further plans?
Our ayurvedic and healthcare categories have grown 17-18 per cent, led by Dabur Glucose which grew by 40 per cent this quarter.
Oral care is a Rs. 10,000 crore tooth-paste market, of which the whites (non-herbal products) are growing at 4-5 per cent whereas, the naturals category is growing at about 15-20 per cent. The numbers suggest that people are shifting from non-ayurvedic to ayurvedic. Today herbal-ayurvedic-naturals (HAN) is about 27 per cent of the market and it can go up to 40 per cent or 50 per cent with its ability. We have never faced any problem in the oral care market, our Dabur Red Paste was already a big player. Despite Patanjali’s entry, it has been growing at over 20 per cent and now with the Dabur Babool Ayurvedic, we have increased our footprint in the space. Babool Ayurvedic targets the lower end of the segment – the value-seeking consumer. In oral care, we are number three with Dabur Red Paste in fact, in some states like Andhra Pradesh and Odisha we are number one.
You steered Dabur’s entry into the packaged fruit juice segment with Real. Could you tell us about the journey?
When I joined the company I wanted to do something of my own instead of just joining the family business. I was studying in the United States and it is common there to have a glass of juice for breakfast. When I came back here I found there was none available except for the tinned variety that had preservatives and sugars. The juice from the corner juicewala was unhygienic, there were Frooti’s and Maaza’s but the mango was the only flavour available. At this point, I thought of juice as a category, and the idea of getting into packaged juices was born. It was a big boost for me to start it with Dabur, and Real came into being. When we started selling initially, the Dabur as a brand was big and Real used to be small, gradually the Dabur logo was removed from the pack.
What we did ahead of our competition is to make Indian juices flavours like pink guava, litchi and pomegranate. Today we command about 56-57 per cent of the market share in the juice market. It is quite interesting, typically in the FMCG markets, the categories are divided into Indian categories and international categories. Hair-oil is an Indian category, however, shampoo is an international category, and packaged juice is an international concept. In an Indian category typically, you will find an Indian player as the market leader, like in hair oil you have Marico, in the shampoos category you have Hindustan Unilever Limited (HUL) as the market leader, but juice is the only international category where you have an Indian player (Dabur) as the market leader.
Did Dabur also launch mocktails sometime back?
We are not doing mocktails for the mass market, we just did a test run. We are doing a bit of research on it before we launch it again.
Tell us about the challenges you faced along your journey at Dabur.
My first challenge was when we launched the juices through Dabur’s distribution channel. Dabur products had a shelf life of three years and the juices had a six-month shelf life. Our distribution was not geared to handle this. Dabur Chyawanprash stays on the shelf for three years and nothing happens to it but in six months we were getting a lot of returns for juices. The challenge was to build a new distribution system, which we did form but it was a slow learning process for me. The second challenge was in the product itself-- we had launched the un-sweetened product that had to change to a sweetened product. And the third was more to do with family, I think probably if it had not been a family member who launched Real, it might have been taken down a long time ago. There were a lot of challenges in the boardroom but luckily we kept going.
According to you, what qualities should a leader in contemporary times possess?
I think for me it has always been to nurture my team. If you build a team around yourself who believes in the long term vision of your goals and targets, then half of the battle is won. A leader should be there for the team, you need to get into everything and learn everything, but then let the team lead also.
What do you do to relax after a long day?
I am at the gym for an hour every day. Other than that I spend time with my family and like taking short holidays. I like Netflix. Some of the series I have enjoyed watching recently have been Money Heist and Narcos.