Few days back, Baba Ramdev’s Patanjali Ayurved made headlines by becoming the third largest seller of FMCG products at the shelves of Kishore Biyani-led Future Retail. The number one is still Hindustan Unilever Ltd (HUL) followed by P&G, whereas, Patanjali was followed by rivals like GCPL, Dabur, Emami and few others.
Seldom does a new company become the focal point of discussion at strategy meetings of FMCG giants. A company can take up to several decades to establish itself in the FMCG sector. Yet, Patanjali Ayurved, set up merely a decade ago, is challenging multinational companies such as Nestle, P&G and Unilever.
Endorsed by Baba Ramdev – a man dressed in saffron robes and armed with the skills of a yoga master – the company is forcing these multinationals to rethink their business models and marketing strategies.
REVENUE CROSSES RS 5,000 CRORES
Over the last few years, Patanjali Ayurved has emerged out of nowhere to become one of India’s leading FMCG brands. News reports suggest that according to revenues in Financial Year 2016 Patanjali has crossed Rs 5,000 crores. Currently, the company is present in all kinds of product segments, from food to personal care to home care to hygiene.
Also read: Power Yogi: How Baba Ramdev became India’s swadeshi FMCG baron
In Indian FMCG sector, never has any emerging FMCG player attacked simultaneously across so many products. Little wonder that all the FMCG companies are worried, and analysts are buzzing around trying to figure out what’s happening. After all, Indian consumer stocks enjoy rich valuations and there is a lot at stake. The question on everybody’s mind is – “Is it sustainable?”.
Also read: MP govt allots 40 acre land at Rs 10 cr to Patanjali Ayurved
Though definitive answers to these questions will require substantial research, ValueNotes conducted a limited dipstick study of Patanjali consumers to see if any quick insights were forthcoming. ValueNotes specialises in the management of competitive and market intelligence, information and research. ValueNotes’ strengths lies in its industry expertise, proven methodology for research and anlaysis, and a team of experienced researchers.
CONSUMER ANALYSIS
According to ValueNotes, the intention was to get a sense of what customers (of Patanjali) think about their products, and why they like (or buy them). Some of the products categories studied in this report included personal care(toothpaste, hair care, soap), home care (detergents, floor cleaners), food products (biscuits, honey)and ayurveda products (healthcare).
The results, presented in a report by ValueNotes – titled Patanjali is here to stay! – has given some very interesting and surprising inputs. As per the research :
46 per cent of the respondents began using Patanjali products after recommendations from friends or relatives.
The early adopters were mostly aged between 45 and 75, and their recommendations carry weight with the younger generation.
The brand is strongly associated with health – high quality herbal and natural products.
The firm’s toothpaste brand had the highest consumption with 80 per cent of the respondents being satisfied with the product (47 per cent of them were very satisfied).
In just about a decade, Patanjali has emerged as one of the top FMCG players in the country – seriously challenging the likes of Unilever, Colgate, P&G, Dabur and Godrej in several categories. In doing so, the company has created its own rules and re-written others – especially around branding and distribution – both fundamental to success in consumer products.
ValueNotes’ inputs on Patanjali in nutshell
To start with Baba Ramdev built a huge fan following around the themes of yoga, health and “swadeshi”.
These ardent supporters were the early adopters of medicinal and FMCG products, and allowed Patanjali to experiment with a wide range of products.
These devotees became unpaid marketers, driven by an almost evangelical faith in the Baba, and his mission towards healthy living. They propagate the brand because they believe in it. Way better than paid employees could ever do! These initial referrals helped spread the word to family, friends, neighbours and especially the younger generation.
Distribution (especially in India) is critical. Getting shelf space is tough, and incumbent FMCG companies have substantial bargaining power. What did Patanjali do? They “empowered” a significant number (~10,000) of their fans to become dealers/franchisees. This helped Patanjali reach customers across India, bypassing traditional distribution channels, and enabling cheaper prices. Better still, the shopkeepers truly believe in the values of Baba Ramdev and Patanjali.
This captive dealer network has also allowed Patanjali to test reaction to new products.
Traditional FMCG companies are cautious, launching and building new product categories in a slow, focused manner – taking time to understand and master new markets. However, Patanjali has defied conventional wisdom, and unleashed a veritable shower of products – literally hundreds, across almost every conceivable FMCG category. More are in the pipeline! Even small shares in so many markets leads to big bucks.
All product sell under a single brand, so more buck for brand-building expenses.
So, today, the brand is so huge that mainstream retailers want to get onto the Patanjali bandwagon. Some are even ready to have separate sections dedicated to Patanjali! Not even Hindustan Unilever has that kind of pull.
Reports suggest that Patanjali’s revenues crossed Rs 50 billion last year, making them amongst the top 10 FMCG players in India – already!
In a business where brand and distribution take decades to build in a large, diverse market like India – Patanjali’s growth resembles that of an e-commerce company.
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