Ladies and gentlemen, good day and welcome to the Q3 Results Investors Conference Call of Dabur India Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Gagan Ahluwalia. Thank you, and over to you, ma'am.
Thank you. Good morning, ladies and gentlemen. On behalf of the management of Dabur India Limited, I welcome you to the earnings call for the quarter and 9 months ended 31st December 2021. Present here with me are Mr. Mohit Malhotra, Chief Executive Officer, Mr. Ankush Jain, CFO, Mr. Adarsh Sharma, Executive Director, Sales, and Mr. Ashok Jain, EVP, Finance and Company Secretary. We will begin with an overview by Mr. Mohit Malhotra, followed by a Q&A session. I now hand over to Mohit.
Thank you, Gagan Ahluwalia. Thank you all, and good morning, ladies and gentlemen. Thank you for joining us today. At the outset, I would like to convey my best wishes to you and your families for a new year. I also hope that you and your loved ones are staying safe and healthy during this wave three of the pandemic. The operating environment in Q3 FY 2022 has been quite challenging, with economic indicators becoming weak and unprecedented inflation impacting the input costs across the portfolio. In such an environment, strong execution by the Dabur team has resulted in the highest ever consolidated revenue from operations of INR 2,942 crore with a growth of 7.8% over last year.
This is on a high base of 16% last year and brings us to the CAGR of around 11.8%. Consolidated operating profit increased by 9.3% despite unprecedented inflation across categories. Profit before tax saw growth of 10% ahead of the top line. Our profit after tax crossed INR 500 crore for the second time in a row, reaching INR 503 crore during the quarter. Our strategy of focusing on market share gains continues to yield great results for the business. As a result, 100% of the portfolio saw market share gains during the quarter. In terms of the categories, food and beverage business posted a stellar growth of 38%.
The juices and nectars market continued to witness a good recovery, and we have outperformed the industry, leading to a market share gain of 540 basis points during the quarter. This is further bolstered by recent launches of Réal Coolers, Réal Fizz, and Réal Frappé, which have helped expand the total addressable market of our beverage portfolio. The food business under the Hommade brand also performed very well, with a growth of 26.4%, driven by portfolio expansion and innovation. It is well poised to cross INR 100 crore for the year. Our home and personal care portfolio performed very well, with 8.4% growth on a high base of 16%, driven by good momentum across all subsegments of HPC.
The toothpaste portfolio posted industry-leading growth of 8.1% in the quarter, despite a high base leading to a 2-year CAGR of 18%. For the seventh quarter in a row, Red toothpaste, our flagship brand, posted a double-digit growth, riding on its strong Ayurvedic heritage and consumer pool. Our market share in toothpaste segment increased by 50 basis points and is on track to becoming the number two company in this category. Hair oils reported a growth of 6.1%, leading to a 2-year CAGR of 8.8%. Our market shares in the overall hair oil category improved by 90 basis points. Even in the subsegments of perfumed oils and coconut oils, we have seen strong market share gains driven by marketing investments and distribution expansion. Our coconut oil brand, Anmol, has gained number two position in the pure coconut oil category.
Shampoos performed very well in the quarter and recorded a growth of 21.2%. Our market shares in shampoo increased by 40 basis points during the quarter. The salience of bottles continues to see an uptrend and was around 20% during the quarter, indicating a strong traction in the urban markets for our products. Recently, new product Vatika Ayurvedic Shampoo continues to exhibit a strong trajectory on back of good consumer acceptance. Home care reported a strong growth of 19%, driven by double-digit growth across Odonil and Odomos franchises. Odonil reported an increase in market share of 50 basis points, and Odomos increased market share by 40 basis points. Skincare portfolio witnessed a robust growth of 20% with good traction in all the three brands, Fem, Oxy, and Gulabari. We have entered the face wash category recently, and the face washes are showing good early signs.
Healthcare portfolio reported a marginal decline on a very high base of 28% last year. Despite that, our 2-year CAGR remains in strong double digits for the business. Health supplements, including Chyawanprash and honey, posted double-digit 2-year CAGR, and brands continue to be salient in the consumer's mind. This was reflected in strong uptick in market shares, which in Chyawanprash category went up by 200 basis points and in honey category went up by 180 basis points. We continue to be undisputed market leader in the honey market with strong presence in all channels: e-commerce, modern trade, and general trade. The digestive portfolio registered a 12.2% growth on back of improvement in mobility and out-of-home consumption seen during the quarter. While COVID contextual OTC products saw some moderation, Honitus and Shilajit saw strong growth. Our ethical portfolio posted 8.3% growth.
Among channels, we witnessed continued recovery in modern trade in quarter three with growth in mid-teens%. Institutional business also exhibited a good turnaround. E-commerce business was slightly impacted on account of changes in the business model of the platform, but continues to contribute around 6%-7% of our business. Our rural growth was ahead of the urban growth by around 500 basis points, mainly on account of expansion of our reach and infrastructure in rural. International business recorded a constant currency growth of 8.7%. Egypt market grew by 13% and Namaste business posted a growth close to 20%. Turkey business was impacted by currency depreciation, but saw mid-teen growth of 14% in constant currency. Nepal business performed well with a growth of 17.3%.
Overall, our business continues to be on a good trajectory with increase in market shares across 100% of the portfolio. Category volume declines as shown by the syndicated data and inflation continue to be a cause of concern. Our focus on brand building, distribution expansion, innovation, efficiency enhancement, organization capability enhancement, and ESG focus should hold us in good stead in the future. With this, I bring my address to a close and open to Q&A. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their desktop telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use the handset while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Edelweiss. Please go ahead.
Yeah, thanks. My first question is on Turkey business. Turkish lira was down 44% last year and was the worst emerging market currency. Your 14% constant currency growth is good, but wanted to understand, what are the changes in competition in that market in terms of localization and input prices, imported, quantum? Any changes you have done in that market?
Hi, Abneesh. Good morning. In Turkey, what happens is, there's been a currency depreciation, like you rightly said, it's around 40%. Our entire raw material and packaging material which we are using in Turkey, it's all indigenized. There's hardly any element which is being imported from outside which will get impacted. That said, whatever base raw materials like SLES, et cetera, that is coming into Turkey because Turkey doesn't produce on its own. That is in dollar denominated and which gets impacted by the currency and which has led to some sort of gross margin contraction in the Turkey market. That is the cause of concern, which is there in Turkey on account of currency depreciations.
What we have done in Turkey is we are trying to put focus on our export sales from Turkey to outside, to the U.S. and to the other markets like MENA and the CIS markets. Export as a percentage of Turkey business has gone up, which is all dollar denominated, so which kind of compensates for the currency translation losses and the losses that we have on account of depreciation.
Sure. My second question is on your pure herbs, a lot of new launches which you have done in Q3 and earlier also. Like immunity products, are these also indexed to the COVID waves? That's one. Second is, how do you plan to scale this up? Are you engaging with vets? Are you going to do a lot of mass media? Specifically Haldi, Amla, Tulsi and Giloy, for example, will be very indexed to the COVID waves and will fall off when there is much lesser cases. How do you balance between the portfolio? Some products will be more structural, but some will be very linked to the COVID.
I'll just tell you the penetration of healthcare and nutraceuticals in the country is very low. It's sub 10%. As compared to developed countries, the penetration is in the range of around 40%-50%, if you compare it with Southeast Asia and here. That said, the single herb market in India is roughly around INR 10,000 crore, and we are lagging behind and a lot of other companies have taken a first-mover advantage ahead of us. We have a lot of catching up to do here. We've introduced the single herb range last year, and we've got almost around 5-6 products in that range. We are continuously improving or introducing our range. We are doing it in a staggered manner, one by one.
Like in the current quarter, you saw introduction of two new single herbs coming in, which is Shatavari for women's health and Arjuna for heart health is what we introduced. Himalaya and Patanjali are way ahead in the race in terms of the single herbs, and we are catching up. Dabur has the credibility and the heritage and the trust of the consumers, which will be taken into consideration. We'll be launching products at a very fast pace. The category size, as I told you, is around INR 10,000 crore. We are hardly having a turnover of around INR 3 crore- INR 4 crore in this category by this new introduction. The headroom and the space for us to grow is absolutely huge. This is just not single herbs.
Single herbs can be pivoted on ingredients or on benefits or also on nutraceuticals. We are continuously working on the journey to work on innovations. Are they COVID contextual? Answer is yes in the short term, but structurally the market sizes are very big and the penetrations are lower in the country. There's a long-term headspace for us to grow this business as healthcare for us. As far as Amla, Giloy, Tulsi products that you talked about was concerned, yes, during COVID, there was a huge tailwind and we had a huge growth. If you look at in the current quarter because of the tailwind not being there, we have seen a little bit of compression in the turnover of these brands, which is drops and also juices which had gone up by around 100% or 200% last year.
There has been some compression, but that has been more than compensated by the other parts of the portfolio.
Sure. I had one question on the Réal Health, chia seeds and pumpkin seeds. How big is the market? Will your focus be essentially on the e-commerce and your earlier e-commerce kind of products like ghee and premium, say, mustard oil, et cetera? How have they done?
Right. First of all, what we've done in the Réal brand is the Réal brand earlier was limited to only beverages of niche. Now we have created three sub-brands under Réal. One is called Real Fruit Power, which is gonna talk about fruit-linked beverages and anything to do with fruit. The second is called the Milk Bar, in which we launched the Réal Frappé brand, and that's a milk bar which is value-added dairies where we'll get in. The third vertical for us is gonna be Réal Health. These are super foods that we'll be introducing under the Réal Health brand, and therefore, chia seeds and pumpkin seeds are the superfood seeds that we'll be introducing here. They're basically salty snacks that we are introducing and got into this category. It's very big in size.
Long term we see and we want to grow the Réal brand from a power brand to a power platform and get into foods category also and extend the franchise of Réal into foods. As far as the other parts that we introduced, coming to the second part of your question is the e-commerce-driven innovation. Digital native innovations are rampant. If you look at the overall NPD ratio in the company is around 3.6% in the current quarter, but in e-commerce space it is in the range of around 10%. We are very well geared or poised to exit at a rate of around INR 100- odd crore for NPD only in the e-commerce or the digital space. We will end up at around INR 60 crore-INR 70 crore broadly.
Next full year, I think we should be crossing around the INR 100 crore level on the NPD of the digital native brands for e-commerce space. On ghee and mustard oil, it's doing exceedingly well. For the sake of confidentiality, I'll not disclose the numbers yet, but our mustard oil has got very good traction on e-commerce, and we are now selectively rolling it out in modern trade also and so applies with our ghee also. We introduced cow ghee, and now we'll be doing extensions into other value-added ghees like A2 ghee, et cetera there. It's a little margin dilutive to our business, but the category size is so big that the scale more than compensates in terms of the absolute gross margins that we get out here.
Last quick question. In beverages, your market share has improved 520 basis points. Is this a Nielsen data collection issue in the base quarter? Whom have you gained market share? Is it PepsiCo? You expanded the TAM here. Which are the new products in beverages where you have the highest confidence?
Right. First you're asking. I'll answer your second question first before I move to the market shares. The total addressable market for us, which was earlier around INR 1,500 crore, in which we were around 64% market share, has gone up to now around INR 10,000 crore. Because we have expanded from juices and nectars to now drinks. That is what is taking the total addressable market to INR 10,000 crore, in which our market share shrinks to around 10% level. That's how we are increasing the total. If I look at the drinks portfolio, total coolers and also the PET bottle drinks that we've introduced and also Fizz that we are adding, again, we'll be exiting the year at around INR 100 crore of exit sales only on account of drinks.
That's why you see this kind of a growth. This growth is not a hump. I think this growth will continue because our TAM has actually gone up to around 6x-7x or even more, 10x the way we think. In terms of market shares, Réal has been taking market shares from its peers, which is ITC, which is Tropicana, B Natural, and a lot of other localized companies also. The market share gains come on account of our increasing market shares in modern trade. In modern trade, if you look at the overall market shares in juices and nectar segment is in the range of around 63.6%. I think in modern trade, our market shares were very low, almost in the range of around 30%-40%.
We were lagging behind in South India, so we've gained substantially in South India and also in West India where modern trade is very high, and we've chipped away share from our competitors like B Natural, who are very strong in modern trade. Our strategy very consistently is to gain shares in modern trade, which is lagging behind to GT. We are very strong in northern geographies. Gradually, slowly, we are building the business in West, South, and the eastern geographies. The penetration of juices being higher in the South. In South, we're very low in 200 ml packs. With introduction of INR 10 price point, we are gaining shares in the 200 ml and the INR 10 price point segment also with introduction of the Réal Coolers brand.
As far as Nielsen is concerned, I don't think there's any problem in the Nielsen data. We are subscribing to the Nielsen data, and we are seeing these market share gains in line with our gains in primary and secondary. It falls in place. The category as far as Nielsen is concerned, last year declined by around 5%-6%. On back of 5%-6% decline of the category, the category is growing by 19%. Compared to the 19% category growth, we've seen our growth in the range of around 38%-40% in juices, and they were gaining share from ITC, Pepsi, and other smaller players.
Sure. That's very helpful. That's all from my side. Thank you.
Thank you, Abneesh.
Thank you. Next question is from the line of Manoj from ICICI Securities. Please go ahead.
Hi, Mohit and team. A very pleasing performance, you know, in the market context. Good one and good luck. Two questions, and then maybe a couple of ones if I may after that. One, Mohit, you know, over the long period of time, you know, when I look at the pricing, you know, it is, let's say this quarter, 7% revenue, 2% volume, so 5% is price and mix. You know, 5% is a reasonably high number versus the trajectory what I've actually seen in Dabur over a long period of time. I understand that these are exceptional times, you know, but then, you know, I've observed earlier from a company's behavior point of view, there is a reasonable amount of reluctance.
I don't wanna use the word lack of confidence, but reluctance, you know, given the rural exposure, et cetera. Is there any change in thought on pricing, you know, as a vector for growth? Or, or let's say, if you could talk a bit more about, let's say, revenue management, you know, linkages to pricing, some top-down thought process here, with the medium term objective. That's question number one.
Right. Manoj, thank you very much for your kind words. First thing on the pricing front, I think one major priority of the company is not to let the operating margin slip. Therefore, whatever inflation that we have, we want to pass it on to the consumers or through some Samriddhi and the cost saving benefits at least absorbed, not to have the gross margin slip, and that's what you've seen in the current quarter. Our operating margins have actually gone up by 30 basis points despite the inflation. There's some optimization on advertising which has happened, but a lot has been passed to the consumer in terms of 5%. I don't see that there is any reluctance.
We look at the demand situation, the consumption situation in the market, the competitive intensity and the channel mix before deciding the price increases. If you look at the price increases, what we've done, we've got three buckets of business, which is the foods business, HC business, healthcare business, and the personal care business. The highest competitive intensity is in our personal care business. If I have to bifurcate my personal care business also, if the competitive intensity is more only in hair oils. In hair oils, we've let up in terms of taking price increases, and we've been very cautious and circumspect before taking price increases because we don't want to compromise on the market share gains which is happening in all the sub-segments of hair oils. We have taken price increases, but the inflation is huge.
Inflation is to an extent of raw material like, which gets into there, which is hydrocarbon linked, is in the range of 50%+ , is the commodity price increases. Also packaging material, which is also hyper, is also linked hydrocarbon wise, PET bottles and all. There's been a huge inflation hitting us. We could not pass on this entire inflation to the consumer. We have kind of, there's been a gross margin contraction only in the hair oil business, which is 10% of the overall business of Dabur. Now, if you look at the other parts of personal care business, whether it's home care, skin care, and oral care business, we've been able to offset the entire inflation through the price increases.
There is no cautious approach here because the market leader is taking the price increases, and so we take the price increases and there is no problem. Only hair oil the shoe is pinching. As far as the healthcare business is concerned, we have taken a 10% price increase in healthcare business because we have pricing power, and we have taken the price increases there. Be it Chyawanprash or honey or Honitus or Pudin Hara, we have more than offset the inflation impact there. In foods business also, while the inflation impact is not so much in our portfolio of beverages, we have taken a 1%-2% price increases there also to compensate for the hair oil hit which is happening. I think our portfolio is pretty well diversified.
If we face competitive intensity in one part of the portfolio, the other part of the portfolio comes in where we have the pricing power and we are able to pass it on to the consumer. I think that augurs well for the future. While we don't see any much abatement in inflation coming in next two quarters, and hopefully, next fiscal year, the inflation pressures will moderate and, as we lap over the high bases also and, but we don't want to let up on our operating margins. I hope you did do it. As far as NRM is concerned, net revenue, we are gonna be doing a very structured exercise on NRM. We did it in past Samriddhi.
Once again, we are looking at SKU-wise, channel-wide pricing across the board by getting engagement with some outside consultant, and which I'll talk about as and when we get into that kind of an engagement on NRM.
Very clear. Got a lot of follow-ups on this, which I'll probably take offline. Strictly on the second question or clarification which I wanted from, again, from a medium-term point of view was, you know, let's say healthcare as a category without really getting into subsegments of it, including, let's say, starting with the Chyawanprash and, you know, a lot of the existing products, including the medicines which you sell, et cetera. If you could just help us understand, because it's been almost now close to, you know, 18+ months of COVID and the consumer behavior changes, let's say, you know, creating a tailwind for this category in general.
If you could talk, whatever you can disclose, in a public forum in terms of, the marketing side of it, let's say, how much of your growth has actually come from, let's say, you know, heavy users, light users? What sort of penetration gains, per cap increase? The point what I'm trying to understand here is, you know, let's say these businesses have done well, now, how do I really think about, you know, the growth rates for the medium term backed by some sort of, you know, statistical data? Thank you.
Right. First of all, Manoj, healthcare category, I think we are in a great space. If you look at our growth, which in the current quarter and look at the CAGRs for 2 years, our health supplement business is the largest chunk of our healthcare business, is chugging at a CAGR of 11.2%. Don't look at the optical 8.2% depression happening in health supplements because it was on a very high base of around 45% growth, which happened on Chyawanprash and honey. For that, our 2-year CAGR is 11.2%. Our digestive portfolio backed by the Hajmola brand has grown by around 12.2%. As mobility is improving and people start going out, that is doing well, 12.2%.
Last year we launched our Kola brand and a huge innovation is happening on that. This year we've launched LimCola. LimCola has been received very well in the marketplace. It's a tasty digestive, and the tasty digestive category is huge. We are again increasing the TAM in the tasty digestive market and extending it to sprinklers and others. As we speak, you know, I let the cat out of the bag, we've already launched Amla candies under the Hajmola brand and which is already around INR 100 crore-INR 200 crore brand established by Patanjali. That has come in here. Our OTC portfolio is ex-COVID contextual brands like health juices and health drops that we introduced, is also having a 2-year CAGR of around 15.2%, has grown by 8% in the quarter.
Our ethical business has grown by 8% again with a CAGR of around 15%. Overall, healthcare has grown by around 11.4%, CAGR for us, and we are in a good space. That is the 2-year CAGR for the quarter. If I compare it a little bit long-term for you to understand the health of the business, our 2-year CAGR on healthcare business is around 18.6%, around 20% on 9-month basis, which is YTD, which is 18.6%, which is very healthy. There is a growth in 9 months by around 4.6%, despite the high base in health supplement. Now, coming to a little big picture, which is a very long-term basis.
If you look at the total market size of the health supplement business, it again is bigger, and we are expanding the total addressable market here. As I told you, the penetration levels are very low in health supplements. Just to give you some data and the numbers, the penetration of Chyawanprash, which around 2 years back used to be 4%, is now in the range of around 8%, and penetrations have consistently been going up. If I look at honey also the penetrations had gone up, but because of so many number of players actually coming in the market, the penetration of the market has shrunk a bit, but not to the extent what it was pre-COVID levels. It's gone somewhere in between. That's why I'm not able to talk about the numbers so much because of the competitive intensity going high here.
The penetrations have gone down and the number of players have become higher in the honey category. That said, we are in the range of around very low double-digit kind of penetration levels in honey. As the share of voice increases, number of players increase, competitive intensity increase, the size of the pie will only increase. If I have to compare honey penetrations in India and compare to what honey penetration in the U.S., we are sitting at the 1/10 level of what the honey penetration there. There's a huge potential, and Dabur is by far the market leader with around 50% market share across all platforms that we serve, despite some claims by competitors that they've won.
We are number one as far as Amazon and all platforms are concerned. We've gained around 180 basis points market share there. Huge penetration gains possible in this category. We've extended the honey equity into more into cough and cold. As you know that we've launched honey cough and cold now. Honey is an adjuvant which is used in medicines. The potential and the scope and the headroom for growth in categories like honey and Chyawanprash is huge. In Chyawanprash, we've extended Chyawanprash into tablets. Suddenly immunity-led tablet market is very big. Chyawanprash is now getting extended into powders and into granules. We've gone into MFD category. Chyawanprash was operating in a category which was around INR 500 crore.
Now suddenly you start operating in a category which is greater than INR 15,000 crore the moment you get into MFD. Therefore, that's the way we look at the market size. As far as ethical business is concerned, which is again a big business and the backbone or we say, you know, our core business. Here we have only 25% market share, so we are consistently gaining market share from other players. 75% is all smaller players, which are West and South and regional, so huge potential to grow here. In OTC, we operate in three big subsegments, which is baby care. In baby care, our market share is again sub 25%, and we've launched a baby care range like you know, and we compete with J&J, who's the market leader here.
Again, the potential of growth is huge and our penetrations are going up. The second space is where we operate in men's health, where we have Shilajit, and we are extending products out there. The third space that we guys operate is in cough and cold, where we have Honitus brand, and Honitus is gaining market shares consistently. OTC also a good space. I think overall healthcare is low penetrated and our growth strides continue through innovation and also investment behind brands. That's three. I hope I've been able to answer your question in a fair bit.
That's been super helpful, Mohit. That's been super helpful, very comprehensive. I've got a few follow-ups because it was so comprehensive, which I'll take it offline. Thanks for that. One last thing, and I'm gonna come back in the queue. You know, you have kind of started, let's say, you know, harnessing the, let's say, the e-com opportunity, you know, by bringing some products from international. Is there a case for accelerating this? Because you already have, let's say the skincare portfolio which you have built, you know, in the international portfolio, for example, right? I mean, so. Or the lot of packaging innovation which you've already done, you know, in international. The products looks truly very different versus what's otherwise, you know, available in India.
There is a product angle there's a packaging angle there, et cetera, which you could, you know, really use, internally, cross-pollination, right? If I may. Or is it just that in the current prioritization, because a lot of these things would actually need lot of, let's say, gestation investments. How do we think about this as a vector for growth with a 3-year view? Thank you, sir.
Yeah. I think e-commerce is a big future pillar for growth for us. Like I talked about, you know, cross-pollination opportunities definitely exist, and that's a big growth factor for us. Our total NPD contribution on e-commerce is 10% as compared to the overall company, which is around 3.6%. Partly it's coming from international cross-pollination and partly coming from identifying categories which are underserved in India and where we have a premiumization possibilities on e-commerce because the ticket sizes are larger here. That's why I told you that almost INR 100 crore exit rate will be our NPD contribution coming in from e-commerce. Today, e-commerce will be around 6%. The next 4 years, we are looking at this business becoming around 15% of our business and is doing very well.
Backed by innovations here and premiumization here and across different platforms we'll be rolling out, whether it's a grocery platform for foods or it's a Amazon platform, which is amenable to personal care or it's a pharmacy platform for like 1mg and Netmeds. It offers potential for growth across all the verticals of business, and we are working very closely. Not just international business, we also have a business like NewU, where we are very strong on personal care. That also offers a good opportunity for cross-pollination here. We are working on the same. We are a little mindful, Manoj, of the fact that we don't put in products which are ahead of the curve because India market is still a little under-penetrated or under-evolved as compared to the products which are there in the West.
Like we are market leaders in serums, in Hammam Zaith, in new age shampoos. While we have launched Vatika Select range, the adoption by the consumer, because all these no-nasty products, while we put out there, is acceptable by a few niche consumers, but mass acceptance is still a problem. We are looking at it. The opportunity exists, and it's the timing of cross-pollinating it. It's all there as part of our portfolio here, and we can anytime cross-pollinate. The investment requirements on e-com and digital native brands when it is sold on a public platform like Amazon, etc., is fairly limited as compared to a mass market launch.
That is a definite cradle for new products, where we seed NPD, and if successful, then we roll it out in modern trade. It's a great playbook that we have established, and we are working on the same.
Loud and clear. Good luck, team.
Thanks, Manoj.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in conference, please limit your question to two per participant. If time permits, you may join the queue for any follow-up. The next question is from the line of Avi Mehta from Macquarie. Please go ahead.
Hi, sir. Thanks for this, and congratulations on the performance. Just one bit, I mean, two questions. First, is there any further price flow-through that is expected or is taken in fourth quarter? Or would movement back to, you know, historical margins in the gross level be more linked to moderation in commodities costs as we use other levers to maintain EBITDA in the near term?
Right. Avi, couple of levers for offsetting the inflation. Number one, we've taken price increases. Second round of price increases in quarter three only, and there'll be a flow-through impact which will happen in quarter four to exit market shares. Exit price increases impact will definitely be there in the quarter four, and our gross margins in quarter four will be better than what we see in the quarter three because of the flow-through impact coming in. That said, the inflation impact is not mitigating. We are seeing continuous inflation despite a base of 4%-5% inflation in last year. On top of that, we are again seeing a 4%-5% inflation. The company may have to take more price increases going forward.
One is the price increase, and we are mindful of, again, elasticity of demand playing out here with the price increase. The second vector will be our Samriddhi savings and cost savings. Third vector will be leverage happening with the scale building on indirect and S&M overhead. All these factors will play out to try to take up the gross margin levels to the current year average, at least, for the next year, so that we don't impinge upon our advertising for maintaining our operating margin. That's the way we are looking at this, Avi.
Okay, clear. Just wanted to get your thoughts on the rural industry kind of demand. What in your view is driving this weakness, and any thoughts on when do you expect the pickup to happen? I can clearly read from your comments, and please correct if I'm wrong, that we should be targeting stronger than industry growth because of distribution, but still would love to hear your thoughts on how do you see the macro playing out.
Right. I don't know whether your question is about the macro or your question is about Dabur or is it both?
It's rural macro from your thought process and, you know, do you expect this divergence to kind of sustain given we still have factors or dividends around this?
Right. What we see is, if you look at the macro and what the syndicated data actually tells us, that rural demand is lower as compared to the urban demand. We see a 10% growth in value happening in urban, whereas in rural it is at 9%.
Rural is flagging urban from a macro syndicated data that you see. This is the more value data, and this is all price-driven. But if I convert this into volume, we find that in the current quarter, what syndicated data tells me is that volume rural is -4% as compared to urban, which is around flat as compared to last year. This has been moderating quarter after quarter from first quarter, if you see. In first quarter, the total value growth in the entire syndicated data was in the range of around 26%, I think, and that's come down to roughly around 10% now. The volume is also substantially moderated.
That's the macros. When you look at the Dabur business, now Dabur business is completely other way around. For us, rural is chugging ahead of urban. Our rural growth is around 7.5% as compared to the urban growth, which is around 2.6% for us. Rural is definitely ahead, and rural comes on 7.5% on a base of around 25% of last year. Urban also comes on a base of around 18% of last year. For us, definitely rural is belying the market trends, and that is because of our investments ahead of the curve on building rural infrastructure. Our village coverage has gone up from 55 to 88 as we speak. It's ahead of the target that we set ourselves, around 80,000.
Our village-level entrepreneurs have gone up to around 8,000 now, and we generate a sale of around INR 13 crore out of that, and YPD sales around 36. All that is over and above what the market is talking, and therefore our rural growths are ahead of what the market is. From whatever government announcements that have come in post the budget, we feel that that augurs very well for the rural FMCG space to actually pick up from here. We've seen MSP outlays going up and direct benefit transfers happening on account of MSPs directly to the paddy and the wheat farmers. That's gonna augur very well. There's a CapEx investment increase of around 35%, and that'll help generate better employment. MGNREGA enrollments are going up.
The outlay of the government has gone down, but during the course of the year they will increase, I'm sure, the MGNREGA outlays also. Behind a good harvest, I think that all augurs very well for rural. It's a matter of time. We see the gap between urban and rural already reducing from the first quarter to the third quarter, and it's a matter of time before rural will pick up. For us, around 46% of the business contribution is coming from rural. We are pretty positive about rural, and the rural business pickup is happening for us. Yeah .
Perfect. Thank you very much. Thanks a lot. I'll come back in the queue for 3-minute question. Thank you.
Thank you. Next question is from Kunal Vora from BNP Paribas. Please go ahead.
Yeah. Thanks for the opportunity. First one, on, seeds and nuts market. You currently have some niche products introduced, pumpkin seeds, chia seeds. Would you consider entering larger categories of nuts such as dry fruits, which is a largely unorganized market?
Still there is a work in progress happening, but yeah, we are looking at, a sub-brand of Réal called Real Health, and we'll get into most of the superfoods out there which are more snacks. We are working on the same. For the sake of confidentiality, I'm not able to talk about it.
Would these, categories have lower margins, much lower margins? I understand that, target market could be much larger, but, some of them will be commodity categories.
Not really. In the chia seeds and this thing, our price point, this is margin accretive business for us. Our base margin in the foods business is the range around 46%-47%. This is all higher and accretive of that. It's e-commerce space, so we are finding these are premiumization initiatives for us.
Sure. Second one, on the INR 10,000 crore beverage market, what is the market share aspiration over the next 3-5 years? Last FY 2022 has been phenomenal in terms of growth. What's really driving it? I understand if you entered into new categories, how much are they contributing? If you look at the market itself, very strong growth, 80%-90%. What's driving the market growth in the beverages segment?
See, the market growth is being driven by low bases of last year because there was a COVID situation and out-of-home consumption was impacted. Also institutions, HORECA, hotel channel, all that were impacted. The base was very low. On back of a low base. Now you are seeing the market growth of around 19%, which is coming in. As far as Dabur growth, which is 2x of what the market growth is on back of NPDs that you rightly said by increasing the TAM, and that's what we have done. That I told you exit rate will be around INR 100 crore, but the market size is huge. We will be around 10% market share in this huge category, and we have aspirations of taking it to around 20%, going forward. That's aspiration, but gradually, slowly we have built.
Because the infrastructure requirements and the rural penetration requirements or the urban penetration requirements are also different, which is different from juices and nectars where we are present in. As we inch up our market share, we'll be ramping up our infrastructure and then we will grow. Today we have a huge head space in terms of our infrastructure in juices and nectars, which is being used for the drink space also, and we'll be extending it. We are changing our organization structure also a little bit in the company, and we are creating a different vertical for the foods business to provide a thrust on building infrastructure and also building innovations as we speak. Yeah.
Understood. Just one last question. Any thoughts on the PLI scheme, and the benefits which you expect from that over the next few years?
Yeah. We applied for the PLI and we've been fortunate to get the PLI approvals done. There is roughly INR 170 crore of benefit that we've got on the back of our investment of INR 550 crore, which happened in the Indore plant on the juice line that we'll fit up. This will shore up our margins by 2%-3% in long term. This benefit we'll get over a period of next 5-7 years and as we are putting the investment. Around 2-3 notch up on the margins of the food business will be on account of PLI.
Understood. That's it from my side. Thank you, sir.
Thank you.
Thank you. Our next question is from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead.
Hi, this is Prakash here. Thanks for the opportunity. Two questions from my end. You know, baby products, now we have a wide range. So if you could, you know, comment, what's the game plan? Because, you know, there are 20 million+ babies born in India. Lal Tail has been doing well as a brand. It has gained traction. With some of these newer launches, can this, you know, portfolio become 2x-3x in the next 4-5 years? If you could comment on the current size, that will help. Secondly, on Chyawanprash, we've launched some, you know, new variants, Avaleha. So is it at a test marketing stage? What is the price difference to the base variant? If you could give some inputs, that'll help.
Right. Baby care we have launched on e-commerce space, so it's completely digitally native brand for us. It's baby care. We still haven't rolled it out to modern trade, and we are watching the progress. While it's doing very well for us and we've got good gains on baby and it's also margin accretive to our business. We are trying to complete the range, again, baby care on the e-commerce space before we roll it out to selective modern trade. We are in no hurry to scale up this business. We are waiting and watching, seeing, getting the consumer feedback and making improvements in our portfolio and then we will be scaling it up. The potential is absolutely huge like you rightly alluded to. That's how we are working.
Lal Tail is our power brand and a power brand which is only in the range of around INR 100-odd crore. We have a plan to take it up as this power brand from INR 100 crore to a INR 1,000 crore level. That's our game plan for all our power brands going forward in long term. That's why this initiative of rolling out the entire baby care range, because no company in baby care exists in isolation for a product format. You have to be existing as a range, and this range has to be promoted with medical practitioners, and that's how the entire credibility comes in with the consumer. That's the path that we'll be working on baby care.
Sure. That's clear. On that, Chyawanprash, where are we in? Is it test marketing? Is it a premium product?
Chyawanprash is we have launched an extension of Chyawanprash. Chyawanprash today is sold under the OTC range for us. OTC we reach out to around INR 2.75 lakh chemist outlets. This vertical of the business is very different from the other vertical, which is the ethical business vertical, wherein we go to the Ayurvedic counters and sell our ethical products. Because Chyawanprash moved from ethical business to OTC business, today ethical business doesn't have a Chyawanprash available with them. This Chyawanprash that we've introduced as Dabur Chyawanprash is basically a gate opener for our ethical business, and it's for the prescription market, and it's much more premium as compared to what the existing Chyawanprash is. We sold through the medical practitioners and not through the advertising route.
That's why this new Chyawanprash has come in, which is the classical recipe from another classical text.
Okay. It'll be what? 1.5x-2x the base variant?
Around 2x the base variant.
Understood. Thanks. I'll join back with you if I have more questions. Thank you.
Thank you.
Thank you. The next question is from Arnab Mitra from Credit Suisse. Please go ahead.
Hi, Mohit. Congratulations on a very good growth on the high base. My first question was on, you know, your foods growth. If I look at, you know, Q3 FY 2020, which is the last quarter before COVID, you had about INR 200 crore turnover in foods and beverages, which has now become INR 300 crore. You know, this growth, you mentioned about INR 100 crore annualized is coming from the new products. Has the core nectar business also seen higher growth, or is there some other categories which have also come in here which have, you know, helped this INR 100 crore addition over this, you know, 2-year period?
Arnab, as far as food business is concerned, our business has increased in market shares. We've gained around 540 basis points in market share as far as food is concerned, and that market share gain is happening in the juice and nectar market. In juice market also, wherein we have Réal Activ brand, in the nectar market, we have a 1-liter mixed fruit juice. We've basically gained market share of 500 basis points, reaching up to around 63.4% market share, the highest ever in the core space of the nectars. To top it up, we have launched drinks, and in drinks our gain in market shares is very marginal because the category is so big, around INR 7,000 crore. That is very marginal. Therefore, I'm not talking about market share gains there.
It's the core business market share that I'm talking about. Majority growth that you see of happening at 38%, majority is coming out of our core business, in which we are gaining market share, which I talked about earlier in modern trade. In regions we are not very strong, basically modern trade. Where our national market share is around 63%-64%, but our modern trade market shares are sub 50%. There we have increased market shares which are much ahead of 500 basis points also on back of good tactical schemes, consumer promotions, and we've gained shares from our lead competitors, which is Tropicana or which could be B Natural and others. That's on back of that.
That said, our future that we are looking at long-term is the entry of drinks in INR 10 price point, and there we are making big strides because that market is very big. Therefore, now we started internally looking at not just market shares in the juice and nectar space, but also in the drinks space. We are tracking that very well, and that's got an excellent reception in the marketplace, both our PET bottles and coolers which are INR 10 price point and Tetra Pak. Now we've gone into the fizz market also, which is a huge 30,000 crore market wherein the share of throat will come from carbonated beverages, which is Coca-Cola and Pepsi's of the world.
Sure, Mohit. My second question actually related to this is, you know, this INR 100 crore run rate that you have, as you mentioned, you've seen very good offtakes and there's no challenge in, you know, offtakes in the market. What is the constraint of growth here in the sense, given the size of the category? Is it your own capacity or is it that you want to be at a slightly higher price point, so you will not play in the belly of the market? Therefore, how should we think of potential, you know, scale-up from this INR 100 crore as you go forward? Also, if you could just talk about the distribution width in terms of how much of your existing direct reach actually is carrying any of these beverage products.
Right. Therefore, a couple of constraints here, Arnab. One is capacities. Today, we are looking at third-party manufacturing. As the business scales up for drinks, we'll be putting up our own lines, and we've got a PLI benefit also in Indore Greenfield, wherein we are putting up two lines for the beverages also. This is both for Tetra Pak and also the drinks line. As you know that the GSTs have gone up in aerated beverages, so that's also been a little bit stumble that we've had. We are taking up the case with the government, and there are big boys in the marketplace who are also lobbying with the government to reduce the GSTs on the aerated fruit beverages, basically. We are looking at setting up our own unit.
Still plans are early, I can't talk about that, but we are looking at plans of setting up our own greenfield for the aerated beverages. That is as far as the capacity is concerned in augmenting capacity. There's sufficient capacity available in third party. The moment you do third party, you have a margin downside there. Therefore, eventually as the business scales up, we have to bring it internal. As far as distribution is concerned, today we are adding on the juice and nectar distribution. As the business scales up, and as it is scaling up, the way we are seeing a very strong reception, we are building a separate network of distribution, which is the E&D distribution, which is completely different from the way the distribution of GT is happening. We are creating a separate vertical.
We've actually created a separate vertical of food. As you know, there was a separate vertical. We're just scaling it up. The number of feet on street is going up, the infrastructure is being ramped up, and we have a different organization structure now to handle the foods business going forward. These are the two impediments that we see. Investment is no impediment from the company, whether it's CapEx investment or advertising investment, because this is more of an impulse purchase and you sell what is seen on the shelf. It's more impulse. It's more point of sale, which is important and driven by more distribution here.
Just one last question on this. It was, you know, like Hommade, you have this target of potentially reaching a INR 500 crore turnover. Do you have any such thought on the drinks business, on what size it should be in 3- 4 years' time?
Yeah. We are looking at around 5%-6% market share year gains in next 4 years. By the way, I'm not talking about that. We are actually working on a vision exercise, and we'll have a separate forum, wherein we'll talk about a little long-term of around 4-5 years is what is our ambition on the same. It's a 5% premium market share in toothpaste. Yeah. Thank you.
Okay. Thanks, Mohit. Thanks all the best.
Thank you. Next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Yeah. Hi, Mohit. Good afternoon. Thanks for the opportunity, and congratulations. Just two observation. When we look at the international business, we had a very strong growth, and on a high base, we have grown almost 8.7%. What I was trying to look at, again, when we look at quarter four, our base growth was almost 21% ahead in constant currency. In the current circumstances, how one should look at the growth in the international market? Maybe if you can spare a minute explaining how one should look at the margin, because largely you have addressed these all issues in last two to three quarters.
Yes, Shirish. IBD is in a good space the way I see. We are looking at the full year growth of around double-digit growth rate happening in IBD. The different parts of our international business are faring at different rates. First, I'll talk about our MENA region. Our MENA region was impacted by high inflation happening on back of the crude. We as a personal care business was impacted. There was a margin contraction which happened, but on back of some R&D benefits and others, we've been able to do a lot of mitigation out there, and the business has grown by around 5%-6% in the MENA region. The hard currency regions like North America has done very well. The Namaste business has grown by around 20%.
Our Turkey business I told you has grown by 14%. Our Nepal business is doing exceedingly well, growing by around 17%. Overall, I think the business is on a good trajectory of growth and double-digit is what we are looking at as a long-term growth coming on back of A, geography expansion and B, our market share gains in the respective markets. Market shares in all the categories in even in the MENA region are growing well for us. As far as margins are concerned, we are working on the margins and we are taking commensurate price increases in all the categories. You know, the per capita incomes are higher, so and we are at a low price point in most of the categories where we exist.
There is an opportunity in the headroom to take the price increases. On the back of that, we are looking at no margin contraction but margin expansion. We will see our operating margins only going up in the international business for us.
Yeah. Just quick observation. On slide 6, there is no mention of Bangladesh business. Is it by mistake or the Bangladesh business is not important for us?
No, no, Bangladesh business is very important for us. I think there's a huge opportunity in Bangladesh. Bangladesh in the last quarter was impacted by COVID and impacted by some supply constraints which happened in Bangladesh because of containers not being available. It is a short-term. If you look at the CAGR growth of Bangladesh, it is in high single digits. But we have some work to do in Bangladesh, that's why you don't see a mention out there.
Okay. My second and last question on the oral care. You did a fantastic job, and you mentioned that you gained 50 basis points market share. Especially you're saying that you're targeting to number two. What is it that's working? And this product extension into the mass natural segment, how big opportunity we can see in next 2-3 years? And if we can spell out what is the current exit market share in the month of December for oral care?
Our market share is in the range of around 16.4%. That's the kind of market share that we have in oral care. Red Toothpaste is a flagship brand doing exceedingly well and gaining market shares. On Red Toothpaste we saw a growth of around 11% happening on RTP whereas the category was growing at around 6% odd. We've gained market shares in the oral care space and much ahead of the lead player. Our Herbal toothpaste that we've launched in South market and other markets also doing exceedingly well for us. We'll be looking at launching premium variants on e-commerce space also and to ramp this up.
Long term, we will look at a double-digit growth happening in oral care through our premiumization initiatives and other regional initiatives also.
Thank you.
Hope you will continue surprising us.
I don't know. I hope it's on the positive side of surprise.
Thank you. Our next question is from the line of Percy Panthaki from IIFL. Please go ahead.
Hi, good afternoon. I just wanted to understand on the interplay between your margins, ad spends, et cetera. I see this quarter, while the EBITDA margin has expanded slightly, it is on the back of a double-digit cut YOY in the ad spend. I'm assuming, given the innovation pipeline you have, you would need to increase the ad spends from the current level. Meanwhile, I think, input costs have further inflated also. With a higher ad spend and input costs also, sort of, inflating sequentially in Q4 versus Q3, how do we look at the EBITDA margins for the next quarter?
I mean, not particularly fussed about the quarter, but let's say for the entire full year FY 2023, do you think there is a risk that the YOY EBITDA margins will slip down?
Right. Percy, first of all, let me tell you that we will not allow the operating margins to actually slip by. If you look at the YTD numbers, our EBITDA margins have actually remained where it is, and they've actually expanded by around 99 basis points in margins. We've been able to maintain the EBITDA margins for the whole business. That is what we will maintain going forward in the next quarter also to have a full year operating margins not to slip by in the business. That is something that we are working with, and we will not let that get compromised at all. That said, how will we deliver that? Your question is, our top line growth is the first priority for the business.
We want to drive top line on back of innovations, e-commerce, modern trade entry, our GPM expansion, rural. Therefore, when the top line is robust, then we'll get a leverage across all the other heads. Therefore, we will look at our manpower expenses, leveraging. We will look at our treasury income coming in a bit. We will look at our indirect overheads, actually leveraging. We are getting some benefits also. Our variable cost, fixed cost, all that leveraging and helping and growing at a lesser rate than a top line, and therefore a positive leverage. That is the first contributor to our management of the margins. The second is price increases across verticals wherein we are price leaders and we are the ones which control the pricing table, like I alluded to in healthcare. We've taken 10% price increases.
The inflation may not be that much, but we've taken 10%. In foods, we've taken price increases. In other parts, rather than hair oils, we've taken in other parts of the HPC portfolio also, we've taken price increases. If need be, we'll take another price increase, another round of price increase also to offset the inflation impact. As far as advertising is concerned, we will continue to invest behind our power brands. What you see is in advertising, optically, it may seem that we've reduced our advertising spend by 16%. What is not visible to you is the trade spends and the consumer spends and the other spends. If you look at that, our overall spends have remained flat. Overall A&P has remained flat.
We have just taken out resources from one bucket and put into the other bucket and managed. That's the way. In an inflationary environment, little bit optimization of the advertising expenses can't be ruled out. That will happen going forward also. We are not starving our power brands. This power brand architecture is working very well. If you look at our power brands contributors, 60%-70% of the business, their advertising expenses are in line with the top line growth. We've not cut back on advertising expenditure in power brands. If you look at the YTD advertising growth, for us, it has actually gone up by around 16%. Overall, the total advertising expenses have gone up by around 16%. A&P expenses have gone up by 16%.
In one quarter we have moderated, but overall, if you see, it's not. If you look at the absolute percentages are also in the range of around 8%. This will remain around 7%-8% advertising to top line ratio percentages also. We are not cringing. We are continuously focusing on investing behind our power brands, investing behind our innovations, and trying to draw out the cost from efficiencies in the business.
Understood. Secondly, just wanted to understand your take on the price elasticity of demand for your products. Do you think that price increases will be accretive to the overall sales growth? Or do you think there will be some zero-sum game between price increase and volume growth, and therefore the top line growth that you had projected, let's say 6 months ago, whatever you had budgeted, the same kind of top line growth will come through?
No, Percy, I must first tell you our volume growth for the whole year. If you look at the YTD 9 months ending December, our volume growth has been 13% in the business the way you see. Our quarter volume growth is 2%. Now, why this is 2%, while optically you see that volume is reduced sequentially, it's not the case. My case sales or the tonnage growth in the business is around 11%. You know, my cases have grown by 11% because my juices have sold more as compared to my other portfolio. That's why you see a volume growth of around 2% here. That's the optical sort of volume growth, because which is value weighted is what you see. As far as price elasticity.
No, my question was more looking forward for the next four or five quarters, because till now in the 9 months, we have not seen very high price hikes. We have seen maybe an average price hike of 4% or something for the 9 months. But going ahead as the price hikes pile on, how do you expect the equation between volume, price, and value to play out? Is it sort of do you think we will have to, as analysts, increase our overall top line growth estimates? Or do you think it will just be a rebalancing between price and volume?
No, I don't think so. I think that's a case of scenario of a market leader. If you look at our price increases, they are happening in healthcare. Healthcare is relatively inelastic to price increases, and people buy a cough syrup irrespective of it going up INR 5 or down. It's pretty inelastic healthcare portfolio, which is 30%. In another 20% of our portfolio, which is the food business, again, we are market leaders, and there also prices, and we've gone into the drinks market as well. I don't think there is a price issue because we are into taking market shares. In personal care also, we are looking at our volume gains coming on back of market share increases.
Not really as a price leader that if I take up the prices and the elasticity and it will become a zero-sum game and the volumes will actually shrink. Yes, we have to be mindful of the category growth rates, and we will continue to win in the marketplace and grow our business higher than the category growth by gaining market share. That's how you've seen the current quarter the business has happened, and that's how we've been doing in past couple of quarters, and that's a journey that we'll be traversing going forward. I hope I've been able to answer.
Understood. One last quick question, if I might squeeze in. In the last couple of years, we have seen a really sort of a revolution in the BPC space in India in terms of online brands, Nykaa, Purplle, Myntra, everyone getting into this. In this space, premium BPC is really exploding. I think we have a gap there in terms of our product portfolio. I think we have a clear sort of right to win in terms of introducing natural ingredient-based or Ayurvedic-based skincare or rather overall BPC kind of brand. What are your thoughts on that?
Sorry, did you mention D2C or did you mention BPC, beauty personal care?
BPC, beauty and personal care.
Absolutely. Absolutely.
Something like a skincare or some related products to beauty and personal care is where I think I know we have a small participation through Gulabari and Fem, but that's not really fully capitalizing the market opportunity that has presented in the last 2-3 years. It's really exploded.
No, you're right, Percy. Absolutely rightly alluded, and we are very conscious and cognizant of this opportunity which is coming up, especially for the digital native and for the e-commerce platforms. We are working on the same, as we speak, and working very aggressively. We are not just open to organic. We are working on organic entries, but also we are open to inorganic plays here. That's why we've got a war chest of around INR 5,500 crore kept in our balance sheet for that purpose, because it's a quick ramp-up through inorganic and there are a lot of startups which are available. As and when we see a right valuation and more synergistic target, we'll get into that and ramp up our BPC space through that.
We've evaluated some brands also, but unfortunately, we've not been able to get onto. We are working on that space. There is an organic entry being planned. Because you know, one thing is that in this space, we have existing brands, and existing brands have got their extendibility issues, like you said, Fem and Gulabari. A lot of work needs to happen. The team is already on it and conscious of this opportunity.
Right, sir. Thank you and all the best.
Thank you, Percy. Thanks.
Thank you. The next question is from Latika Chopra from JPMorgan. Please go ahead.
Yeah. Thank you. Hi, Mohit. Probably extending a little bit from, you know, the one of the prior questions is on your growth expectations on top line for the next year. Considering you said a large chunk of your, you know, revenues or a significant part will relatively be inelastic towards price. You always kind of targeted a high single digit volume growth, you know, for the business overall. Are we putting in a case that next year probably we are looking more at a mid-teen kind of a revenue growth, considering pricing growth is going to be more like, you know, 4%, 5%, 6%, given the kind of price increases you've undertaken so far?
Right. Latika, we're still in the process of creating our vision exercise for next 4 years to come. I think the work is already in progress, and I can't really talk about the numbers for next year. Yeah, for the current year, definitely a double-digit volume growth and a double-digit value growth is what we had targeted, and that's what we'll be exceeding our targets also. In the current year, definitely it's a double-digit volume and value, and for the full year basis. Now, for next year, the vision exercise is underway, and we'll talk about the numbers as the vision document is created for us.
Sure. The second bit that I wanted to check was, you know, there's a lot of product portfolio expansion by Dabur over the last 2 years. Is it possible for you to share what is the total SKU size for the company today versus what it was 2 years ago? I remember, if I'm not wrong, you mentioned that the share of NCDs in channels excluding e-commerce is 3.6%. Could you elaborate how you define this NPD? Is it like products introduced over the last 1 year or 2 year or 3 years?
Right. The way we see it, that innovation is gonna be the center stage of all the activities that we guys do, and it's gonna be an important pillar for growth. If you look at the last vision, last 4 years also, around 4%-5% of the business has been contributed by the new products, and so will be the case going forward in the future also, and across all the verticals of Healthcare, Foods and Personal Care. We see a lot of opportunity in both evolving our brands and also renovating and also innovating across our portfolio. The total SKU size in terms of numbers has gone up from around 1,300 SKUs or to around 1,500 SKUs.
That said, this is the NPD introduction, but we have also done the rationalization of the tail as we go along. We have rationalized quite a number of SKUs. Mr. Ankush is here. Ankush can talk about it.
Yeah, Latika. To add to your question on this, the SKU rationalization as well, last year beginning, we did some exercise and almost 15% of our SKUs, which were contributing less than 1% of our sales, we almost culled. We would be doing a similar exercise, and we are making a governance framework around this as well in order to improve productivity and efficiency and cut it, you know, beyond.
Sure. This definition of NPD is what you've launched over the last 2 years or 3 years.
Yeah. The way we define NPD is last year and the current year.
Also in the current year. Okay. The last bit, Mohit, was you know, you've given this increase, you know, size of the portfolio and CPDs, of course e-commerce is a big channel driver here, but any more changes you have made on the general trade or modern trade sales distribution infrastructure? You did allude to something on the F&B side earlier, but you follow a split sales structure. Have you gone one notch down in that level to enhance the productivity per store?
That's right. What we are doing, Latika, is first of all, let me talk about the distribution system. Earlier we had three verticals for distribution. One is HPC, one is HC, and one is foods vertical. What we've done is we've done experiments and in a couple of main towns, we have divided our HPC portfolio into HPC one and HPC two. That has given us very good dividend as we've done those changes in the North market, and we will be extending that going forward. The HPC portfolio will be divided into two. That's one. As far as efficiency is concerned for the productivity improvement in the sales, we've already put out the EDGE score. It's called Everyday Great Execution, which talks about line source, build cart, and how much time the salesman is actually spending.
That's more of a machine learning of the data and the heuristics that we have and then giving a push list out to the consumers. Therefore, the productivity has gone up. Our EDGE scores are consistently actually going up, and we are bifurcating our sales force into bottom boxes and top performers. Top performers being rewarded and elevated in the company and bottom box has been joined in the organization also. That said, a lot of sales force has been put on third-party payroll and from the stockist payroll, so that exercise is also happening. As far as the foods vertical is concerned to provide focus as we go on into the drinks. We are ramping up our infrastructure and next 3 to 4 years we'll be adding roughly around 900 ft on street for the distribution focus.
Juices will be a big focus and essentially a resource to drive the food business being created, reporting to Executive Director, Sales also for us.
Sure. Thank you so much, and all the best.
Thank you. Thank you, Latika. Yeah.
Thank you. The next question is from the line of Kaushik Poddar from KB Capital Markets. Please go ahead.
You spoke about the e-commerce part. Can you talk about, I mean, how do you see the e-commerce say 3-5 years down the line?
E-commerce today contributes to around 6% of our business. In 4 years' time, we expect e-commerce to go up to around 14% of our business. That's the way we see e-commerce as a channel growing in the country.
In 5 years or 3 years? Is that 14%? 5 years.
In 3-4 years. Yes.
3-4 years. Okay. See in e-commerce, you have introduced this mustard oil and all those things, probably at a little bit of premium pricing. How do you see that playing out, those kind of products playing out? What is the long-term strategy? Do you plan to introduce those things in the modern trade after some time?
Absolutely. That's, for us, e-commerce is a cradle for innovation, so all the value-added foods we'll put out there, and as they scale up and we reach a threshold level of business coming in e-commerce, then we'll be rolling out in selective modern trade, premium modern trade, and then from premium modern trade to regular modern trade to OFOs and then to GT. That's the way we'll follow a life cycle of a brand going forward. The intent long term is to grow those businesses and build scale there.
Okay. Thank you.
Thank you.
Thank you. Our next question is from the line of Krishnan Sambamoorthy from Motilal Oswal. Please go ahead.
Yeah, thanks for the opportunity and congrats to Mohit and team for a very good set of numbers in the current environment. Mohit, my question goes back to the comment that you made about 200-300 basis point margin improvement in the F&B business as a result of the PLI benefits. Just to put this in context, INR 100 crore of sales in drinks has this been margin dilutive for the category? And particularly now that you are targeting to double that, would that lead to a margin, a downward revision in margins, which would then be reset to 200-300 basis point higher because of PLI?
Yeah. That is on the entire foods business and the vertical that we have, which include juices and nectars and also the drink segment. It is just not limited to drinks like maybe you've understood it not. It's entire business. We are looking at our business also scaling up and doubling the way it is, growing. This PLI benefit will be happening on the entire business. That's the way it is, Krishnan.
Yeah. My question was more on will there be a downward reset in the interim because of higher share of drinks, INR 100 crore and maybe potentially to INR 300 crore of revenue, because drinks may be lower margins than juices and nectars? Can you just clarify on that?
So in the current quarter which we are discussing, there would be drinks would have slightly lower margin, but it is being more than compensated by improvement in margins in other portfolios. If you have seen the margins, PBIT margins as per the segment reporting, the margins in our food business have improved by 300 basis points.
If you look at the segment reporting, which we've already published, our foods margins are going up, Krishnan. The PLI benefit will only help and support that margin going up. To add to that, we have premiumization initiatives also in Réal Activ that we're introducing, a lot of premium brands like you saw the chia seeds and all, that will compensate. The drinks portfolio that we talked about is a little margin dilutive, but not so much. That also we are doing a third party today. The moment we bring it in-house, I think then our margins will notch up here. Overall, next 3-4 years, we are only looking at our food margins to go up. We have launched milkshakes and masala range of juices, which are also margin accretive to the overall business.
Very clear. Thanks a lot, Mohit and Gagan.
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the floor over to Miss Gagan Ahluwalia for closing comments. Thank you, and over to you.
Thank you for participating in this earnings call. A transcript and webcast will be available on our website soon. For any clarification and queries, you may please contact us. Wishing you a nice day ahead. Thank you.
Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Dabur India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.