In an exclusive interview with GMR, Mohit Malhotra, CEO, Dabur International, talks about the multinational FMCG and herbal brand’s glocal marketing strategy
Give us some background about Dabur International’s presence in the ME. What’s been the core of your marketing strategy?
Dabur International is a wholly owned subsidiary of Dabur India, has an overall turnover of more than $1.3 billion and a market capitalization of nearly $9 billion. Dabur’s International Business Division is headquartered in Dubai.
In the beginning, we used to solicit orders from distributors and the orders were supplied by our factory in India and a factory in Jebel Ali. This model was completely changed in 2003, to build the brand equity among Arabs, rather than catering to only Indians.
In line with this strategy, we launched products that cater to Arab consumers; reflecting the old belief that ‘In Rome, you can do business only if you promote it among the Romans.’
For instance, the Vatika brand, which is a coconut oil brand in India, became an olive oil brand in the Middle East region.
We believed in localizing innovation and chose ingredients trusted by Arab consumers, thus tailor-making the products to cater to relevant audience in the region.
We also expanded our hair care brand portfolio to successfully cater to our target group in the region. Gradually our Arab-centric marketing strategy started paying off, and the AED 20 million business has grown into a AED 1.3 billion business in a span of 14 years.
This has been the success story of Dabur International in a nutshell. Today, we cater to almost 100 countries in 4 continents while based at Dubai, with the support of a huge manufacturing facility in Ras al Khaimah.
Also, if you evaluate Dabur’s growth with other Indian FMCG companies; its growth has been absolutely stupendous, unmatched by its turnover, growth, profitability and the regional reach. Today, we are the largest Ayurveda company in the world.
How do you define an Arab consumer from your perspective?
The game changer in our business model came when we shifted our target audience focus from Indians to Arabs. The marketing mix that works in India doesn’t resonate with the Arab consumer.
The Arab consumer is more evolved and is exposed to modern trends. Unlike Indian consumers, Arabs like to buy from the shelves themselves and prefers direct interaction with the product. So, we changed the product mix model as per the local consumer habits.
Apart from products, we also changed our marketing campaigns. Our TV ads, for instance, are very modern and trade centric. In addition, we overhauled our distribution models.
Previously we used to have Indian distributors here who used to distribute our products only to the Indian groceries, which limited our reach.
We made many changes in the distribution network and partnered with distributors who have greater reach and accessibility to the Arab trade and consumers.
Most of our network partners are amongst the largest distribution companies in the region. This ensured availability of Dabur products in every bakala and grocery store.
What were your strategic responses to the competition from multinational companies?
At the core of our marketing approach is being local-centric. This is in contrast to the marketing strategy of multinationals, which follow a global approach.
We believe that being localized and connected with consumers also match with our business philosophy. I call it ‘globalization’, global architecture but local approach.
Another way we distinguish ourselves from multinationals is by being more ingredient driven. We customize ourselves and make the right mix for the consumer. So that’s our core capability and core USP, which is what differentiates us from other companies in the pack. We have also enjoyed the first mover advantage in the herbal product landscape.
How have you tried to stay closer to the customers?
We have tried to follow the strategy which has made us successful back in India and it is because of this focus on localization the customers see our brand as their own brand.
To establish that close connection with the consumers, they have to see someone they trust in the product’s TV commercials.
Celebrity advertising has paid off so well for us in terms of communicating to the Arab consumers.
We also organize dealer conferences here every year and it is called Majlis, where distributors and agencies are invited and updated on new product information. Packaging also plays a very big role in connecting with customers.
Our marketing mix here is definitely tailor-made for Arab consumers. We are a natural/herbal oriented organization – a global Ayurvedic player and we play in the herbal, natural, and Ayurvedic space. This is even more prevalent in the healthcare space, within the personal care ambit.
If you look at the way the markets are growing today, you will find that if the sub segment in healthcare is growing at the rate of 20 per cent, the segment is at 3 per cent.
What are the latest marketing campaigns that you’ve launched?
Our marketing campaigns, including advertisements and public advocacy is highly localized. We work with local production houses for advertising campaigns and have hired an Arabic PR agency for a deeper connect with the consumers.
We also communicate through Arabic newspapers and this is the key success in marketing for us. Products for the local market were launched with preferences of Arab consumers in mind.
The consumer has to see somebody like them in my TV commercial and relate to the communication. A person should be able to connect with you as an Arab consumer.
The best people are celebrities. Celebrity advertising has actually paid off so well for us in terms of communication and advertising.
We have had associations with a lot of popular Arab celebrities who became great brand ambassadors and did wonders for our brands and ensured that our products resonate with the relevant target audience.
Dabur’s core is herbal and that is the differentiator. It differentiates us from everybody else.
What is the format of marketing you have adopted, digital or a mix of traditional and digital?
Digital is a must in today’s ecosystem. You have to do digital because a foray into digital brings you a better consumer connect. Social media platforms, Twitter, Facebook and WhatsApp have become as important as traditional media now.
Digital media will not completely replace traditional media in the next 10 years but still, it is catching up fast. So gradually our spends are also increasing along with this shift. The format currently is both, traditional and digital. All our brands and sub brands are present on the digital/social media platforms.
Can consumers buy your products online?
All products are available online and the prices are the same as offline. We have a complete different package in the mix to sell on e-commerce platforms because we see e-commerce as a brand building activity and not just a source of revenue.
We are also doing digitization on the backend and we think that is very important.
What are your future plans for this region or globally?
We see a huge potential for Dabur International here because as I mentioned above, customers are returning to ‘back to nature’ mindset and this very identity is Dabur’s strength. I think we are very well positioned currently and we should be able to capitalize on this growing trend.
On the distribution part, with the recent geo-political and currency pressures happening, I think our distribution model has to change a little.
Direct reach to the outlets is becoming more important because wholesale as a channel is going down at a very fast pace, especially with the introduction of VAT.
Is this a case in UAE also?
This is not the case at the moment in UAE, but also a lot of people are moving back. A lot of people used to do business in gray market which is not possible moving forward.
The UAE will pick up as a wholesale market going forward because exports will be beneficial to the wholesalers here.
Our supply chain model is changing at a very fast pace. Going forward, we have to get into localized supply chains. Earlier we had Jebel Ali as just one supply location, but now we have got 10 to 12 supply locations across the region.
The Ras al Khaimah location uses what we call GAFTA, Greater Arab Free Trade Agreement, so whatever we produce, we export duty free. We don’t have to pay the duty because we use GAFTA.
So, if we save 30 per cent, we give 30 per cent to the consumer, or the customer, or the brand building, I benefit. A lot of other companies, Indian companies especially, do not have manufacturing in the region.
So, if they have manufacturing, they will also fall under GAFTA?
Yes, because they are producing and selling here, and it is a region treaty, so producing here means it is duty-free. We could have imported from India but then the feasibility of making and selling here outstrips or the commercial benefits outstrip getting it from India.
We also have production in Egypt and we sell it in Kenya, a country which is signatory to COMESA. That makes it commercially viable. Similarly, we produce in Nigeria and Nigeria is a signatory to West African Nations Treaty. We make localized supply chains function smoothly through such treaties.
I believe diversifying our portfolios is necessary as we go forward, to maintain a profitable high double-digit growth in the region through gaining share.
Categories are declining here; all categories are declining in the MENA region. Shampoo categories are declining; hair oil categories are declining by 2 -3 – 4 percentage points.
You mean sales are declining?
No, categories are declining, the shampoo market itself declining. While they are saying that Saudi Arabia’s GDP is growing at 1.5 per cent, the category declines are still very sharply visible. This has been indicated in the Nielsen data.
If you have to grow, you have to grow by taking share from somebody else, not riding the category growth rates; unlike in India, where the categories are growing at double digit growth rates or a high single digit rate.
If you can ride the wave, you can grow automatically because with the population, the GDP grows, and the category is growing.
By Sunil Kumar Singh