The food business is growing at around 20%, said Amit Burman, Vice Chairman, Dabur.
Speaking to CNBC-TV18, Burman said company's focus area will always be in the ayurveda healthcare and that is where our roots are.
Watch: Seeing good growth coming from rural and traditional channels, says Dabur
He said Dabur really need to get a good acquisition in India. We have been looking around for it. We have got almost Rs 2,000 crore kitty lying with us.
Edited Excerpts: How has demonetisation and Goods and Service Tax (GST) impacted your business?
Both demonetisation and GST have been disruptions. Demonetisation took about three months for the market to come back. People have the new money to go and buy products now. GST as such is also been disruption. What happened was that the trade was not ready for it. However, after one year, it has streamlined and we are seeing good growth coming from rural. We have good growth coming from cash-and-carry, from traditional channel, from modern trade and you can see all the other multinational corporations also reporting those kind of numbers. So it's settled down.
In terms of the wholesale and the retail channels, do you think those are back to normal, there were some disruptions in the wholesale channel particularly?
Both are coming back to normal. Wholesale, particularly is taking a little bit longer, but it's coming back.
Demand has directly translated into volume growth for several of the players. Dabur, in fact clocked close to 8% volume growth in the last quarter. Do you think we are nearing the phase of perhaps double digit volume growth, do you think double digit volume growths are around the corner, do you think FY19 is when volume growths will start hitting the double digit range?
I see that happening. As I said, at least for us because of distribution, expansion and election year. We have also done a lot with doctors. We have now almost 50,000 ayurvedic centers all around the country, which is actually giving a lot of advice to farmers and we have all what ayurvedic products to sell. So, we are doing a lot of stuff behind the scenes to create the demand, to market it. Everything is not to be marketed on television. There are certain things, touch points, which you have in the market, which is reviving the demand.
If you look at the overall domestic pie, about 70% odd of your revenues comes from the domestic business and food contributes about 18% odd of those revenues. What is the kind of headroom that you see for growth in your overall pie?
As I said, we are growing at around 20% on the food business. I think, we can penetrate much more. While the rural areas still have a lot of headroom there, which we can penetrate. Also to convert drink or nectar users into juice is also something which we are doing.
18% is the revenue from the foods business, do you think this could grow to about 25-30%? Are you looking at increasing the share of foods in the overall revenue pie?
Of course, it can. Our focus area will always be in the ayurveda healthcare and that is where our roots are, that is where most of our knowledge is based out of. However, yes, foods and beverages, the way the eating habits are going, people are getting more health conscious, people are moving from aerated drinks into more juices.
By when do you think you could achieve the 25-30% revenue pie for the foods business?
I would say at least more than five-seven years.
2025, is that a potential target?
It could happen.
You would say that for a business to get to the next leap, it's important to make acquisitions, it's important to go the inorganic way. How important do you think are acquisitions for a company like Dabur in India? We have seen international acquisitions playing out.
We really need to get a good acquisition in India. We have been looking around for it. We have got almost Rs 2,000 crore kitty lying with us, plus, of course money we can take from the banks as we have zero debt. So we are ready to do it, but I think we have to get the right product, right brand to do.
Is there an area that you are looking at for these acquisitions, is there a category where you are looking at an acquisition?
I think because our focus has been healthcare, we would look at smaller brands in the healthcare, which have become brands in maybe in a small geography. But we don't have the money to expand and bring it into our portfolio. We can distribute it around the whole country much better than anybody else can, because we have that distribution. That is the kind of brand we are looking at.
How has the ayurveda segment performed for the company?
I think the ayurveda phase is definitely there. I think our competition has done a good job in increasing that pie. We have the backing of science behind ayurveda and we have a lot of new products, which are coming out in ayurveda. So, yes, ayurveda wave is on and we are right there in innovation, in getting the science behind ayurveda and launch new products.
Over the last two or three years is when we have seen the maximum growth coming out from competitors for example like Patanjali Ayurveda. They have doubled their revenues on a year-on-year basis. However, as of now, when we enter into FY19-FY20, when you look at the market from the outside, do you think that the Patanjali wave is over, do you think that the threat that it had on the Indian consumer industry is perhaps ebbing?
I do not think I will comment on the Patanjali wave as such, but all I can say is, when the competitors were there, we lost some share in honey, we lost some share in chyawanprash – we are back to where we were. So, the market has started growing because of them, but our market shares have come back. So, I think we will get maximum to gain out of the whole thing, going forward 2019.
Dabur had a first mover advantage, 135 years of legacy, do you think that perhaps Dabur could have capitalized on this core ayurvedic wave much before competition really brought it into the limelight?
We could have definitely done more in terms of promoting ayurveda in terms of bringing it more urban. However, in every category some disruption happens and then the category grows. We have seen it in the mobile industry, and airline industry. So these things happen and we all want to be ready for it, but sometimes it's not easy to be there.
Yes, I definitely believe that.
So you are saying it is science and quality over faith then?