Baba Ramdev’s swadeshi brand has mighty multinationals on the run
By Nantoo Banerjee
Few will disagree that making a Rs.1,00,000-crore-plus branded fast moving consumer goods (FMCG) market, led largely by multinational companies and their associates, suddenly busk in the glory of nearly 5,000-year-old India’s own home-grown Ayurvedic formulae products is no joke. A Yoga-guru-turned-marketing-mahaguru from Haridwar, Baba Ramdev, has not only made it happen in just about 10 years, but, in the process, has put some of India’s 100-plus-year-old MNC brands and their associates such as Hindustan Unilever, Procter & Gamble, Nestle, Glaxosmithkline, Horlicks, L’Oreal, Colgate, ITC, etc, at their wit’s end about how to fight the Baba’s Patanjali onslaught in the market. The name, Patanjali, an ancient Rishi, as described by Paramhansa Yogananda in his ‘Autobiography of a Yogi,’ defined ‘yoga’ as a process to ‘control the fluctuations of the mind-stuff’. The word Ayurveda combines two Sanskrit words — Aayush and Veda. In English, Aayush means life and Veda is knowledge. Thus, Ayurveda means ‘knowledge of life’.
Patanjali is posing a threat to MNCs not only in India but also in other countries with large Indian or Indian-origin population, where the Indian brand has already made an inroad.
Seemingly, Ayurveda may have little to do with some of Ramdev’s so-called Patanjali herbal products — from Marie and Digestive biscuits to a host of cooking aids, rice, atta, mustard oil and cosmetic products such as face wash. Never mind that. The modern yoga guru is going strong with newer and newer FMCG products under the Patanjali label that is targeted to reach a Rs.20,000-crore plus business within the next four years. Patanjali is posing a threat to MNCs not only in India but also in other countries with large Indian or Indian-origin population, where the Indian brand has already made an inroad. According to the latest UN survey on international migrant trends, India’s diaspora population is the largest in the world with 16 million of them living outside their country in 2015. Patanjali finds a great export opportunity in some of those countries.
Patanjali seems to be focussing more on FMCG products than initial Ayurvedic medicines, which face intense competition from other big local firms such as Dabur, Baidyanath, Himalaya, Hamdard, Emami, Zandu, Charak, Vicco, Surya Herbal and Arya Vaidyashala of Kottakkal (Kerala). The annual turnover of India’s branded Ayurvedic drug and cosmetics industry is not very large, said to be in the vicinity of Rs.5,000 crore, outy of which exports account for nearly Rs.500 crore. However, multi-product Patanjali is said to have already crossed Rs 10,000 crore sales in last fiscal. Processed food products may have largely contributed to such a massive turnover. The company is now having global ambitions.
Patanjali plans to invest Rs 5,000 crore on expansion of its various verticals. It would be putting aside a substantial portion of funds to open new units and ramp up existing capacity
Recently, Patanjali Ayurved managing director Acharaya Balkrishna said the FMCG major is looking to double its share in the country’s food processing market in the current fiscal. The company plans to invest Rs 5,000 crore on expansion of its various verticals. It would be putting aside a substantial portion of funds to open new units and ramp up existing capacity. Patanjali plans to set up as many as five mega food parks, including one in Madhya Pradesh and another in Maharashtra, both ruled by Bharatiya Janata Party, with which the Baba enjoys a special relation. The Ramdev company also has plans to grow medicinal herbs in a big way for dual use, medicines and modern beauty treat. Alongside aloe vera and amla, Patanjali wants to produce a host of herbs such as Tulsi and Ashwagandha. For instance, the company plans to sell 100 tonnes of aloe vera juice per day, up from 40-50 tonnes, currently. The list of Patanjali products is long, covering some 800 items. No other FMCG firm is known to have such a large number of products.
Brand Patanjali’s meteoric rise is expected to interest market researchers and faculties in leading management institutes, which might look at it as a case to study deeper
Patanjali seems to have taken the sails off some of the traditional and well-entrenched branded grocery and processed food products in the market, which are faced with low sales growth and even lower sales margin in the face of growing competition. Patanjali, whose grocery, processed food products and cosmetics are cheaper than MNC brands, is certainly giving the established players in the business a big competition. Going forward, there is nothing to believe that Patanjali will continue to have a free run for long in the crowded FMCG market led by some of the old big-pocket multinational and domestic tsars. Questions are also being raised about Patanjali’s sources of funds to sustain and grow such a large operation, so fast. In just 10 years time, Patanjali has given competitors like Hindustan Unilever, Emami, Godrej Consumer, Colgate and several others a run for their money. According to reports, the company has, so far, been taking short term loans to meet its working capital needs. In the past, public sector banks like Punjab National Bank and SBI have lent credit to the company.
While brand Patanjali’s meteoric rise is expected to interest market researchers and faculties in leading management institutes, the company itself may have to revisit its growth strategies in the face of no-holds-barred competition from established entities, which may leave no stone unturned to put hurdles to its business ambition. Patanjali’s rack visibility in large retail grocery stores is yet to strike discreet consumers. Its product integrity is also being questioned.
An unfavourable test report by the Central Food Lab in Kolkata has led the defence canteen stores department (CSD) to recently suspend sales of Patanjali’s Amla juice. In a letter dated April 3, the CSD is said to have asked all its retailing depots to make debit notes for their current stock of the product so that it can be returned to the company. Incidentally, the same lab in Kolkata had detected high lead levels in Nestle’s Maggi noodles samples two years ago that led Nestle to temporarily withdraw the brand across India.
It is not the first time that the Ramdev company is locking horns with the regulators. It has been questioned for selling noodles and pasta without the requisite licences, and had faced flak from the food regulator, FSSAI, over the allegedly misleading advertisements for its edible-oil products. Hopefully, Patanjali will soon learn how to overcome such business obstacles to maintain its growth and focus on the market.
Most Disruptive Force in the Market
Assocham report says Patanjali has snatched market share from global FMCG majors
Patanjali Ayurveda, steered by Baba Ramdev has turned out to be the most disruptive force in India’s fast moving consumer goods (FMCG) market which is expected to reach the billion-dollar mark by 2020, an Assocham– TechSci Research paper said.
Patanjali, which has expanded its product portfolio across wide range of personal care and food and beverages, witnessed a whopping annual growth of 146 per cent in fiscal 2016 grossing in turnover of $769 million whereas its peers, including ITC, Dabur, Hindustan Unilever, Colgate – Palmolive and Procter & Gamble, among others, struggled to get a growth much less than a double digit.
Patanjali witnessed a whopping annual growth of 146 per cent in fiscal 2016 grossing in turnover of $769 million whereas its peers, including ITC, Dabur, Hindustan Unilever, Colgate – Palmolive and Procter & Gamble struggled to get a growth much less than a double digit
“Patanjali Ayurveda has turned out to be the most disruptive force in the Indian FMCG market. Initially the company focused only on the development of Ayurvedic medicines but gradually started manufacturing food items and cosmetics”. Its products are available in 15,000 exclusive retail outlets, 3,000 Patanjali chikitsalaya kendras and retail chains such as Big Bazaar, Reliance Fresh etc.
“With around 500 products many of them in FMCG category the company has significantly increased its market share. Many of its product launches have impacted share of other FMCG companies in that product category. Some of its flagship brands which have wrested the market share of its competitors include Dant Kranti, Atta noodles and Kesh Kranti”, the paper said.
Patanjali Ayurveda Limited is owned to the extent of 94 per cent by Acharya Bal Krishna, a close disciple of Baba Ramdev. Rest of the small holdings are dispersed among a small group of individuals.
“Like in several other areas the Indian FMCG is also witnessing its disruptive moments. Interestingly the big disruption has come about from unconventional ownership. Yet another interesting aspect is that unlike a few years ago the focus has shifted away from the foreign direct investment in multi-brand retail to home grown Ayurveda. This also reflects a kind of latent desire among the Indian consumers to adopt the products which are safe, healthy and free from side-effects”, said ASSOCHAM Secretary General Mr. D.S. Rawat.
In 2015, the total Indian FMCG market was $43 Billion of which 60 per cent is concentrated in urban areas and the rest in the rural areas.
As much as 91 per cent of the retail trade in the sector is in the unorganized segment in contrast to the developed countries. In the US, the organised segment of the retail trade is 86 per cent. As India would witness the digital penetration and the roll out of the goods and services tax along with better supply chain, the share of the organised segment would grow significantly in the coming few years. The paper said India is also emerging as a strong regional export hub for the domestic and multinational FMCG players leveraging the countries cost competitiveness.
“With growing disposable incomes, middle and upper middle class consumers in urban areas have shifted their purchasing trends from essential to premium products. The premium brands are manufacturing smaller packs or products and in response the firms have begun enhancing their top end product portfolios. The FMCG sector is also riding on the fast growth in e-commerce helped by the entire digital initiative being rolled out.”
E-commerce is among the major drivers for the FMCG sector. The websites such as Grofers, Flipkart and Amazon are making these products readily available to the consumers.
Clothing, Food Next
From Coat to Langot and chain to take on KFCs and Pizza Huts
Having given the multinationals a run for their money, Patanjali is now eying the textile business, which Baba Ramdev considers has the potential of doubling the group’s turnover and growth within one year.,
“From fashion wear to jeans, coat to langot (inner wear), Patanjali is going full steam ahead towards its goal of promoting manufacturing in India,” he said while addressing a two-day Global Investors Summit in Indore, organised by the Madhya Pradesh government.
Ramdev said Patanjali’s textile manufacturing would start with kurta-pyjama and then diversify into foreign wears like the jeans.
Ram Dev said the group is also planning to open restaurants that will challenge established multinational food chains like McDonald’s, KFC and Subway. “We haven’t launched them. But we are working on this direction. In future, it will surely happen,” he said.
The group also announced 111 per cent rise in turnover to Rs 10,561 crore in 2016-17. The FMCG firm said it will double the annual production capacity and number of distributors this year to “become biggest swadeshi brand within one to two years”.
In the FY17 turnover, the share of Patanjali Ayurved, Divya Pharmacy and Patanjali Gramodhyog is Rs 9,346 crore, Rs 870 crore and Rs 345 crore, respectively. In 2015-16, Patanjali group’s turnover had grown by 150 per cent to Rs 5,000 crore.
He said Patanjali group’s plan is to create avenues for the generation of up Rs 10,000 crore income to farmers through agriculture, milk production and other sectors in the next two to three years.
Ayurveda for heart diseases
Eminent heart surgeon Dr Rahul Malhotra has set up a flourishing business in the US, dispensing Ayurveda medicines to treat heart conditions. Ayurveda is finding increasing acceptance as a cure for heart ailments in the US, just as yoga, the ancient Indian science of keeping healthy, has become almost a daily routine for Americans and Europeans and enjoys official patronage in a high-profile city like Dubai, despite the fact that it is part of a Muslim country.
Ayurveda considers that there is a link between the heart and the mind. If one is affected, the repercussions are felt on the other and vice-versa. There are a number of Ayurvedic remedies that help to get rid of heart disease, the indigenous branch of medicine claims.
The bark of Arjuna or the Terminalia Arjuna tree is believed to be highly beneficial in treating heart disease and the medicine is administered in the form of a concoction .of powder made up of arjuna bark and ghee or milk.
The Ayurvedic treatment of heart disease involves a great deal of importance to eating right. A person suffering from heart disease is not supposed to eat foods such as pulses or substances made from pulses, should avoid excess of oils and fried foods. Buffalo milk or cheese made from buffalo milk is strictly avoided. But ghee, vegetables and cow’s milk or cheese made from cow’s milk are encouraged.
A person suffering from heart disease should stay away completely from stimulants such as tea, coffee and other beverages and should give up the habits of smoking and drinking.
Ayurveda also advises that a person suffering from heart disease should not be involved in any kind of strenuous activities that might increase blood pressure. The person should also take a good amount of rest at night as well as during the daytime and avoid staying awake especially at night time. If the person is suffering from other problems such as constipation then it is advisable that he drinks at least a glass of water in the morning or go for a brisk walk..