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Know the Patanjali effect, which is triggering a 'battle' of brands

Know the Patanjali effect which is triggering a battle of brands pardesi news 1459247793

Patanjali and the tycoon in saffron, Patanjali Ayurved is certainly an FMCG giant in the making.

Patanjali Ayurved has prised open the herbal and the Ayurvedic market for personal care products and foods, setting the stage for a fresh battle of brands.

Even as Indian FMCG (Fast Moving Consumer Goods) companies battle an industry-wide slowdown, several are hitching their wagons to the herbal-organic consumer products category, following in the footsteps of the Popular Yoga-guru cum-business czar Baba Ramdev’s Patanjali Ayurved.

As one of the most recent entrants into the sector, the Rs 2,000-crore (Rs 20-billion) strong, the PatanjaliAyurved, is expanding into every possible daily-use item categories, shocking competitors and impressing investors with rapid growth in its consumer base across the income groups. . The yoga guru says people are drawn by Patanjali's objectives of reinvesting in society and nation building.

Baba Ramdev is not only among the highest advertiser on television today, but by doubling up as brand ambassador for his company, he is increasing awareness for all ayurvedic-herbal products and further opening up the space.        

Large FMCG companies, more notably multinationals, are worried at Patanjali's rise. To counter the ‘patanjali’ effect, the competitor companies such as Emami, Hindustan Unilever (HUL), Dabur and Himalaya Drug Company are rebooting their category strategies and investing in new products and making new acquisitions to reap in the promise of the herbal age.

The FMCG industry is caught in a bind today; Q3 results for FY2015-16 indicate that sales volumes are not growing as rapidly. India's fast-moving consumer goods companies are showing signs of weakness. According to a report by Nielsen (Anticipate with analytics: The future of FMCG), the growth margins has diminished, and volume growth has faltered in recent years. All major players have been hit; HUL's revenue growth in the past seven quarters has consistently fallen, from 13.2% in the June 2014 to 3.2% now. ITC’s non-cigarette FMCG business has fallen from 11-12% in 2014 to 7% now.

There is greater demand today for herbal and ayurvedic concepts and hence greater consumption of Patanjali products. Rivals are now hoping that they can also reap benefits from the emerging ‘herbal trend’.“It is good for the industry if more companies enter. Previously, people were not taking the herbal space seriously but they are now,” Naresh Bhansali, CEO of finance, strategy and business development at Emami said.

Emami recently acquired the Kesh King brand of medicinal hair oil and has also launched sugar-free honey. It was in the race to acquire Indulekha (an herbal hair oil brand) before bowing out to HUL. HUL has, in turn, revived its Ayush portfolio of brands apart from getting back into the herbal hair oil category, one that it had moved away from not so long ago. Are these companies ready to compete with Patanjali? Most say that their products are different and hence do not directly clash. Himalaya, which is pitted against Patanjali Ayurved is also aggressively branding and marketing its products.

Baba Ramdev, the astute saffron business tycoon is closely involved, with all nuances of his business - participating in discussions with advertising agencies, on marketing plans or research, said a senior manager. Ramdev's Patanjali Ayurved becomes a magnet for FMCG executives, draws talent from the competitors herbal firms such as Himalaya. "Baba Ramdev is an astute manager with exemplary oratory skills", said a market analyst, crediting him for the major success of his company. 

Despite not being a stakeholder in Patanjali, Baba Ramdev is probably always available whenever the company requires him - for marketing its products, featuring in ad campaigns, or even negotiating deals. His style is personal, though slightly conversational, but indeed highly successful!

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Patrick Callahan

Pardesi News Reporter

Pardesi News Reporter

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