FMCG major Dabur India is looking for calibrated price increases across its portfolio to offset elevated input-cost inflation while stepping up cost optimisation and improving its product mix to protect margins and sustain growth.
The company is navigating an inflationary environment, with rising crude oil prices amid the West Asia conflict adding to cost pressures across the supply chain, said Dabur India CEO (India Business) Herjit Bhalla during the post-earnings investor call last week.
“We have had to calibrate what we are doing…Our approach has been to look at this as an opportunity, to look across the length and breadth of our portfolio, to be able to see how we can enhance our mix, how we can drive cost optimisation more, how we can take calibrated price increases, and where we need to be competitive,” said Bhalla.
The company is also looking at improving product mix and operational efficiencies to counter inflationary pressures, while ensuring adequate investments behind its core brands, which generate almost 60 per cent of its business.
“Our focus during this time has to be to continue driving investment in these core brands so that we can enhance the category, because we are market leaders in many of them. We can further build relevance, and we can drive usage and occasions to grow penetration as we go along,” he said.
The company is focusing on improving the productivity of its advertising and promotional expenditure, with plans to increase consumer-facing media investments by 150-200 basis points in selected brands and categories.
Dabur’s India FMCG business reported 10.7 per cent growth in the September quarter of FY27, comprising volume growth of 5.5 per cent and pricing growth of 5.2 per cent.
Bhalla said the company would focus on extracting efficiencies across its operations and reinvesting the savings into growth initiatives, including brand building and consumer-facing investments.
“We are looking at our portfolio through the lens of the size of the business and profitability. We believe that it’s important for us to look at that in terms of either enhancing the profitability, or then we push to move out of that part of those SKUs.
“So, we want to do this, not as a one-off exercise, but as an ongoing exercise, because the mix is going to play an incredibly important role, given the current inflationary environment,” he said.
Besides, Dabur has also generated savings of around Rs 115 crore under its Samriddhi cost-efficiency programme and is targeting savings of Rs 170-200 crore going forward.
Its CFO Ankush Jain said operating efficiencies across the value chain, including product mix optimisation and production efficiencies, would help fund the company’s investment requirements.
Dabur has reiterated its full-year FY27 guidance of double-digit growth, with the management expecting continued momentum from its core brands, premium products and alternative distribution channels.
The company is also targeting an increase in the contribution of premium products to 23 per cent over the next 18 months, from the current 20 per cent.
PTI
