Rural sales resist, urban sales still don’t match pre-COVID growth: CEO of Dabur India
Dabur India’s sales network covers around 83,500 villages and the company aims to cover 90,000 villages directly by next year.
“In my opinion, rural will continue to do well relative to urban, at least for us, and we are also putting in place improved infrastructure,” Malhotra said on a conference call with investors this week. last.
In the long run, going forward, the “rural will be resilient”, which grows by around 12% on a 26% basis.
“So rural has a good trend. Urban growth is in the order of 9 percent on an 18 percent basis,” said Malhotra.
“… Rural has a good trend for us and the annual monsoon has been great, the harvest has been fantastic, MSPs have not been deployed, the MGNREGA deal is good, unemployment rates in rural areas are sort of the lowest right now, ”Malhotra added.
The company is concerned, however, about inflationary pressures on commodities, which still continue in the October-December quarter.
“We thought there would be little inflation deceleration, which will happen in the third quarter, but the projection we get for the third quarter is that inflation will only increase from there, and we see no sign of slowing inflation, “he said.
To compensate for the impact of inflation and the continued and sustained pressure, the company has taken price increases in its several categories and has also taken cost-saving measures.
However, there would be no “aggressive price increases” as demand is also picking up.
“Plus, the market is quite competitive here. This is what we are waiting and looking at,” said Malhotra.
While talking about D2C (Direct-to-consumer), said Malhotra, the company is making an effort in this direction and by the end of December hopefully the company will have a platform with a direct D2C connection.
This would be next to the classic e-commerce connection on D2C that he already has, he added.
During new product development, Malhotra said it will continue its exclusive e-commerce initiatives, calling it the birthplace of innovation for the company.
“We are launching exclusive e-commerce brands, our rate of innovation in an e-commerce portal, which represents about 5% of the overall activity, is also in the order of 10 to 12%, in addition to the retail sector. food and drink. . New product developments (NPD) for e-commerce are advancing a lot because there is a cradle for us to see a lot of innovations, ”he said.
Dabur will also keep the bootstrap brands, which have D2C connect exclusively to shared portals, like Amazon, and will try to create its own portal also for D2C connection with the consumer.
While speaking about the demand outlook for its international business, Malhotra said the company expects double-digit growth from the segment as all markets are doing well.
“We would expect double-digit growth in international trade if the third wave of COVID and lockdowns did not occur in the international market,” he said.
During the quarter, sales of “Chyawanprash” and “Honey” showed some moderation after having had a strong tailwind during the pandemic.
As there is little fatigue on health products, but overall, their penetration rate has increased from 4 to 7%.
“Chyawanprash is a small category and to expand the category, we are doing whatever it takes to expand the category, to attract more consumers to it,” said Malhotra.
When it comes to honey, there are other players entering the honey market increasing the size of the penetration levels and Dabur is benefiting from it.
“Unlike the last time we were not very competitive and not very aggressive, we lost market share to Patanjali. This year we are competitive and we are actually gaining our market share and we have won market share in e-commerce, modern commerce … We are also expanding honey in several other formats, ”he said.
Last week Dabur India reported an 11.98 percent increase to Rs 2,817.58 crore in operating income for the July-September quarter, while net profit was up 4.64 percent at Rs 505.31 crore.