FMCG and ayurvedic products major Dabur India highlighted continued demand momentum in the healthcare portfolio and gradual recovery in discretionary/out-of-home segments, a report by Kotak Institutional Equities stated.

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Dabur India was among the companies which made a presentation at Chasing Growth 2021, the annual investor conference of Kotak Institutional Equities. Forty-two companies from across India made the line-up on Day 2 (February 17) of the conference.

According to the report, the foods division continues to be impacted with weakness in hotels, restaurants and cafes (HORECA) and canteen stores department (CSD) channels. But the e-commerce and general trade (GT) segments were doing well, with the modern trade channel recovering gradually. With strong rural demand, the company highlighted the economising of stock-keeping units and a higher prevalence of low unit packs (LUPs) across categories.

However, going forward, the company expects exponential growth seen in the healthcare segment in the recent quarters to decelerate, as concerns around COVID-19 are abating. But aided by the government’s advisory around preventive healthcare, favourable clinical trials and the company’s own initiatives, the management expects these changes in consumer preferences to be sustainable.

Dabur expects new launches to contribute 3-4 percent of total revenue.

The company reiterated the broader innovation imperative by recapping its efforts on multiple fronts — 1) new launches around the power brand architecture, 2) innovation that centres around ‘Naturals’ equity in HPC and Foods, 3) aiming for a larger play in foods with entry into premium valued-added edible oils, tea, ghee, 4) cultivate e-commerce as a quick test ground for innovation with outsourced manufacturing, to begin with, and 5) mainstream Ayurveda with contemporary formats, and cross-pollination from ethical to general trade.

Dabur plans to augment its distribution infrastructure by 1) splitting front-end salesperson across healthcare, foods, HPC and ethical, 2) expanding rural reach, 3) augmenting healthcare shelf-space and visibility drives on modern trade, 4) accelerating capability building and digital marketing for e-commerce, 5) reaching out to Ayurveda doctors to drive prescription-led OTC portfolio, and 6) increasing focus on data gathering, analytics, continuous replenishment, upgraded distributor management system, automated salesperson routine etc.

In the oral care portfolio, Dabur highlighted strong market share gains. Naturals toothpaste constitutes 30 percent of the oral care category and is registering a high double-digit growth rate compared to a decline for white toothpaste.

The management highlighted its aspiration to replicate its oral care playbook across the shampoo category focusing on the Naturals space and higher bottle saliency — 80 percent of the shampoo category is in sachets format. Dabur is targeting market share gains from Reckitt Benckiser in toilet cleaner, new formats in air fresheners launch in underpenetrated foods and possible M&A opportunities in the skincare space.