In order to combat the present inflationary environment and maintain its growth trajectory, Dabur India has joined the growing list of FMCG firms in India that are concentrating more and more on the food and beverage industry. In the instance of Dabur, the company is also entering the food market in addition to growing its distribution network for its beverage portfolio to increasingly serve rural areas and town classes outside of tier-1 cities. The purchase of Badhsah Masala for 588 crores was a significant move in that direction.
A greater allocation of ‘187 crore from the ‘326 crore in capital expenditures approved by the company’s board earlier this week would go toward increasing capacity in the beverage segment for juices rather than the ‘139-odd crore for Dabur’s red toothpaste. The company wants to expand its one-liter juice pack production line by 58,700 kiloliters and boost the juice portion pack capacity by 17,600 kiloliters from 34,000 kiloliters at the moment. After commencing in June, the facility is already operating at 90% of its potential.
“We have the vision to expand our beverage portfolio to a food and beverage portfolio. We have a 70% market share in the beverage play, but we would like to extend this to the food segment,” Mohit Malhotra, CEO, of Dabur India, told analysts over the earnings call for the quarter that ended September.
The rural market and smaller towns present a significant possibility for growth in this area, according to Mayank Kumar, marketing head (foods and drinks), Dabur India. The business is bolstering its distribution through outlets outside of its conventional FMCG portfolio. Dabur is likewise relying on swift commerce to expand its beverage lineup. “Rapid commerce is certainly helping,” he added. “Earlier, quick commerce generated 15% of revenues for beverages, and now has gone up to 30-33%.”