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Dabur subsidiary plans line extensions for Spirulina, new products - Views on News from Equitymaster

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  • Dec 23, 1999 - Dabur subsidiary plans line extensions for Spirulina, new products

Dabur subsidiary plans line extensions for Spirulina, new products

Dec 23, 1999

Dabur subsidiary Sanat Products (Sanat), manufacturers of ayurveda and herbal products under the Sunova brand name is planning a line extension for its largest-selling Spirulina range. Spirulina is one of the richest health foods in the world referred to as the ‘greatest super food’ by several international bodies. It is derived from algae at the company’s facility in Tamilnadu. It is also used by NASA scientists during space missions.

The line extension could be into syrups, cookies and candies. It is also planning a Vitamin C tablet around the Spirulina product.

Sanat also plans to launch three to four new products every year. Apart from the recently launched gel for arthritis (Nopane gel), it also produces Rejuva, a stress and vitality capsule and Bioslim, a slimming capsule. It is also looking at launching products to cure diabetes, hair fall and HIV Infections.

Spirulina being an established product implies that the company need not prove the efficacy of the product all over again. It would however imply a much higher ad spend in order to increase market penetration.

Further for the new products, the areas/diseases which Dabur is targeting not have a very wide market in India but also enjoy an extremely huge export market. As it is, Sanat’s domestic sales to export ratio stands at 50:50 and it will continue to remain that way.

Market View:
Dabur has been re-rated post implementation of a new business model. The model focused on family, health care and other ayurvedic products and exiting the non-core business, aggressive brand building through higher ad spend, recruitment of professionals as CEO and divisional heads and improvement in distribution and supply chain management. Although the market does not expect any further re–rating in the near term, the stock should continue to out perform on the back of its superior earnings growth.


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