Who Can Beat Baba Ramdev On Business Front?
The biggest pull for Ramdev's products comes from the fact that Patanjali products directly cater to his large base of disciples and followers, who look at him as the single source of inspiration and find his yoga sermons and antics as a potent solution to their health problems
Photo Credit : PTI
Baba Ramdev's business is fast expanding and is growing to become a behemoth. The emergence of his Patanjali Ayurved Limited has not only started a new war within the market to sell organically produced products but has also made established brands re-strategise their selling and marketing
A vibrant hoarding, a colourful wall with product description and its benefits, and an array of shelves displaying a range of fast moving consumer goods (FMCG); some of these are regular household items and some of these are based on herbal and ayurvedic formula. This is not a common retail store; it is a newly opened retail outlet of the newly established FMCG Company, Patanjali Ayurved Limited in a suburban area of Janakpuri, New Delhi. The store is catering to a huge catchment of locals within the area. People are not only buying products of daily use but are also brand ambassadors in their own way for the items they are buying. A word of mouth from existing buyers and the high publicity has added to the popularity of the products that are being sold at the outlet.
This is not just the story of one single Patanjali store. It is the story of the achievement of almost every single retail outlet of the company. Formed in as a privately owned company, 2006 and made public in the year 2007, the company is today a retail behemoth in the world with 85,000 retail outlets around the globe. It employs roughly around 7000 directly and around 2 lakh indirectly. With around 200 domestic products of food items, cosmetic items and the ayurvedic medicines, the company has already broken decades of hegemony of other FMCG and retail giants such as Hindustan Lever Ltd and Proctor & Gamble. Even ayurved products giant, Dabur India Ltd is now challenged with the products.
Patanjali Ayurved has four business divisions: home care, cosmetics and health, food and beverages, and health drinks. Company's website suggests a healthy turnover. It shows a turnover of Rs 451.22 crore in Fiscal 2011-12. The sales stood at Rs 317.66 crore reported in Fiscal 2010-11.1
The growth since then is not hidden. It reported 150 percent growth in sales of Rs 5,000 crore in Fiscal 2015-16. In his own words, the Company aims to achieve a sales of Rs 10,000 crore in Fiscal 2016-17. Almost every year, the Company has launched new products and entered into new segments. The revenue target, if achieved, will take Patanjali Ayurved ahead of multi-nationals such as Nestle, Colgate-Palmolive and Procter & Gamble.2
What has led to the phenomenal success of Patanjali products? The answer lies in the charismatic preacher, yoga guru, Baba Ramdev, who has been leading the swadeshi campaign from past one decade and has become one of the strongest proponent of ayurved-based medicine. Brand's enormous success within a short span of time is the result of the faith in the very healing nature of yoga, for which Ramdev stands for. Today, he is among the few Indian yoga gurus, who is now a global icon.
Factors driving business growth
The biggest pull for Ramdev's products comes from the fact that Patanjali products directly cater to his large base of disciples and followers, who look at him as the single source of inspiration and find his yoga sermons and antics as a potent solution to their health problems. Rough estimates suggest that he has a follower base of over 2 crore just in India.
Moreover, the promotion done through various marketing campaigns of products pull people in large numbers. Almost all campaigns highlight the benefits of its products - zero side effects on account of them being produced from natural raw materials procured from farmers directly and grown organically within the country. Such campaigns have generated trust among buyers for products.
In addition to the above factors, Ramdev plays the swadeshi card to sell his products. A number of his followers, who might be motivated for the cause of the country, find this rationale convincing.
There is tacit government support and political lobbying around Baba's company and his antics.
The popularity and strong marketing of Patanjali products also has at some levels endorsements by various political lobbies and political parties at both regional and national level. This is probably the reason why Ramdev himself is often seen at various events and high profile celebrations. This has added pull and charm to his swadeshi mantra. High drama, loud noise and media coverage around certain events caters to his business motives indirectly.
The health guru doesn't fear announcing a war against the multi-nationals and their products at a number of occasions. His strong political affiliations, surplus cash reserve & government supported events often provides him an easier platform to challenge other FMCG and retail companies that have been in the business for long. He effectively uses such events for the promotion of brand Patanjali.
For example, the satyagrah announced by Ramdev in June 2011 was much publicised and was widely covered by the media. Recently Ramdev appeared at a charitable football match in July 2016 to promote two pet projects of Prime Minister Narendra Modi - the Swachh Bharat Mission and the Beti Bachao, Beti Badhao campaign for girl child empowerment.
In the words of his communication advisor, Shantanu Gupta, "Baba Ramdev is a health enthusiast and football promotes good health. So he agreed to become the brand ambassador for the match."3
What goes against Patanjali - Pricing dilemma - Often the authenticity of Patanjali products are being questioned by other MNCs that has been in the business since decades. The claim has some basis. The price of various organic and herbal items being sold by Patanjali are cheaper than the ones being sold by other MNCs and some ayurvedic medicine companies such as Himalaya and Dabur. It is still a mystery and thing to speculate that how is Patanjali able to produce the same category of goods and items at cheaper rate.
What lies ahead?
It is likely that Ramdev will achieve what he is intending to in the next five years. From this stage, there is definitely no looking back. The internal demand and huge consumer base within the country will prove to be a vital factor for further growth but not just for Patanjali but for all retail and FMCG companies.
The target set by Baba Ramdev represents a third of the size of India's entire packaged consumer products market at present. The total market size is estimated at about Rs.3.2 trillion a year and projected to grow 12-15% annually over the next five years, reaching Rs.6.1 trillion in 2019, according to a September 2015 report by industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) and tax advisory and consulting firm KPMG.4
The expansion will also be based on some of the new areas of planned investments and businesses. Over the next few years, Patanjali Ayurved plans to focus on six areas: natural medicine, natural cosmetics, natural dairy products and food, natural cattle feed and food supplements, bio-fertilizers and bio-pesticides, and natural indigenous seeds. All these businesses promise growth on account of the latent internal demand.
For example, a host of companies and cooperatives have already announced natural dairy products. Bio-fertilizers and pesticides are already seen as the game changer in increasing the agricultural produce in the country.
The real challenge is yet to come
A market war is set to begin between the likes of multi-nationals and Patanjali. While multi-nationals have realised the power of Patanjali wave, they have also started to compete with the brand in their own way.
Rural market in India still remains untapped, even for Patanjali. Most companies and rivals are setting partnerships with farmers/suppliers for their wide range of products. For example, Hindustan Unilever has started its Project Shakti on these lines.
Today, almost every company is reaching across rural India through a strong distribution network and continuous value added and technology driven innovations. Some of these initiatives include, promoting entrepreneurship, creating jobs, expanding manufacturing and distribution and imparting training to farmers and rural folk on new age technology.
A strong focus is also being given on enhancing the people experience. It is for this very reason, companies are now treating their employees as assets. Baba Ramdev and his men understand these challenges. The company now has to strike a fine balance between modernisation, innovation of its own plants and promotion of swadeshi.
A war is also going on between Patanjali and other brands to win the trust and partnership of distributors. In April, 2016 Mumbai-based Pittie Group, the nationwide distributor for Patanjali products, sewed up a distribution arrangement with Apollo Pharmacy. It also has a marketing arrangement with Kishore Biyani's Future Retail Ltd. for selling Patanjali products in 243 cities across India. Patanjali Ayurved has also teamed up with billionaire Mukesh Ambani's retail chain Reliance Retail to sell its products.
Who are better placed today-Indian or Multi-nation Companies?
The real question still stands staring-will it be HUL, P&G, Nestle & likes who are going to turn the tables upward down by pulling out some magic-wan & stop Baba's Bus (rather make it speed slow) by putting up their speed-brakers in various forms (like- Baba recently accused then for using ASCI to create rokus against Patanjali Ads) or there's some dark sheep who have the potential to come out & strike the balance in this FMCG War!!
One theory is that the old horses like Baidyanath , Emami or the Leaders like Dabur have a better chance to take Baba Head-on or the people who started the legacy of 'Vedic Sciences' & original Ayurvedic formulations-the Maharshi Mahesh Yogi's Ayurvedic stable- Maharshi Ayurveda are also well placed to create a position against Baba and try to come near to him, as the two things which are going to play in force are definitely- 1) the 'Trust of Nature' which Baba had played much in his favor & become its mentor Brand Ambassador; 2) the Swadeshi factor, where again Baba has taken a lead and is now started been seen as a 'Crusader'!!
Looking at the above factors, we should watch & see if any original Indian Co. can stand out and take this courage to not only ride the Baba wagon but also dare to beat him one day?
Whatever happens in the short to long future, consumer is going to be the winner. The market will be flush with options of buying and the opportunities in various forms: Ayurveda (more natural) vs. Modern; Different Price Points; Options to buy from-online vs. modern kirana store vs. ayurvedic kirana stores; choice of ingredients-this claim vs. that claim. Consumer is the KING as overall, in this course of FMCG war, the 'health awareness' & health consciousness' is definitely growing manifold as for the 1st time the war has purely taken the route- 'who can make you more healthier in true sense'.
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