The surge of Patanjali Ayurved in India’s FMCG industry..

I don’t recall something quite like this. The surge of Patanjali products in INdia’s FMCG industry is just such a crazy story. How the image of Baba Ramdev, a yoga guru first synched with the various products and then took off like a rocket is quite something.

As the article says, it is not very often you see analysts releasing reports of an unlisted company:

It is not usual for brokerages in the stock market to write extensive reports on companies that are not listed on exchanges and where their clients cannot possibly invest. It can happen when an unlisted firm begins to threaten listed companies. This is exactly what is happening in the case of Patanjali Ayurved, a home-grown firm with interests in businesses such as food, consumer packaged goods and healthcare.

IIFL Institutional Equities, for instance, in a recent report termed Patanjali a credible threat for consumer goods firms—not trying to beat others at their game but changing the game for them. It expects the company to clock revenues ofRs.20,000 crore by fiscal year 2020. Patanjali is estimated to have more than doubled its sales to about Rs.5,000 crore in the current fiscal year. These are big numbers and the firm’s growth trajectory is reported to be spreading nervousness in some boardrooms as well. It is also one of the biggest advertisers on Indian television.

Patanjali Ayurved started in 2007 and has benefited from close association with well known yoga guru Baba Ramdev. The company is different from a typical business and the stated philosophy is to plough back profits into the company or to be used for social causes. The idea is to be present in as many categories as possible in order to give consumers more choices, and profits are to be reinvested in innovation and capacity expansion so pricing can be made more competitive.

The firm, in fact, has priced its product at a significant discount to others in a number of categories, which is helping drive sales. Patanjali is also said to be benefiting from a shift in consumer preferences towards herbal and ayurvedic products which are considered to be closer to nature. It has also positioned itself as a swadeshi brand, which has an appeal among a category of consumers.

However, the critical question now is, what does the rapid rise of Patanjali mean for other businesses in categories where it has a marked presence or plans to enter?

It is not as if India did not have similar product companies. There were firms like Baidynatah, Dabur etc. But none roared like Patanjali did. The former did not have a strong association with an Indian fitness guru who talked about using Indian natural products over the foreign solutions. Even before Patanjali products became a craze, people were busy making natural remedies suggested by Baba Ramdev  during his yoga sessions. It was a matter of time before those remedies started coming in packaged form via the Patanjali brand.

Though I would argue that the brand has stretched itself to many products which just don’t fit. Things like washing powder etc just don’t make sense with the natural eating products which made the brand famous. One could still associate natural products to soaps, beauty products. But that should be about it. It has even got into biscuits which were criticized by Ramdev for having unhealthy ingredients. Just that it brands its as glutten free/healthy variety. I am sure there could be more Indian alternatives to the biscuit which could sync well with the overall brand offerings.

Nevertheless, a great money spinning story from the spiritual world  which actually asks people to rid themselves of material worries.  But then takes much of the money away…

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