Friday, March 4, 2016

Patanjali Ayurved & the rise of the Rs 2000 crore Vedic Empire

Patanjali Ayurved could be the fastest growing consumer goods company in India, as per a report by research firm CLSA. Its revenue has grown from about Rs.450 crore in 2011-12 to over Rs 2,000 crore by end of 2014-15.  The company has managed to achieve this as it directly sources from farmers without any middlemen in the picture and pays modest salaries to employee.
Elaborating on this, Harish Bijoor, CEO, Harish Bijoor & Consults explains, “Patanjali Ayurved is a huge success based on the strength of its product offering, and more importantly its positing stance is holistic, real and ‘back to the Vedas’ in many ways. Price has certainly helped, but what is important to notice is that the product has lived up to its promise every time. I recently asked an audience in Ahmedabad as to how many of them had Patanjali Dant Kanti in their bathrooms. Around 5% hands went up. The next question I asked: how many have a Patanjali product in their home: 90% hands went up. That's the success of Baba Ramdev, Balakrishna and Patanjali Ayurved.”
Riding on Baba Ramdev’s popularity
The brand is undoubtedly riding on Baba Ramdev’s popularity, who reportedly doesn’t own any stake in the company.  Sridhar Ramanujam, Founder CEO, Brand-Comm undeniably gives credit to Baba Ramdev; “Thanks to his yoga programme and dabble in politics he has a wide reach. Most people associate him with ‘healthy’. He has an instant recognition that works as a personal brand.”
Anand Halve, Co-founder and Director, Chlorophyll, has an interesting take, “Long before there was brand and marketing, Baba Ramdev saw that there was a huge appeal for health related products build around 'Indian principles', when he saw the growing appeal of yoga etc. While the MNCs were bringing in their international products (for example L'oreal, Paris) or adding little bits of Indian ingredients (for example Garnier with neem), Patanjali built a focussed ayurvedic brand. So it was not about branding and marketing, but about building a business which at the heart of it had Indian thinking and ingredients.”
Ramanujam feels the yoga guru is the reason behind the brand recall, he says, “Although there’s some advertisement but it’s nowhere close to what other biggies are spending. Look at its wide product range it has built in such a short span of time. Now we will see how they continue to carry forward this momentum. Hope it succeeds.”
Samir Kumar- Head of Creative Strategy, Brand Harvest feels that the Patanjali Ayurved must have found it imperative to gain consumer’s trust. “Baba Ramdev brought yoga to grassroots level. That’s where he built his equity.  Around the same time he was into Ayurveda and health consultation where he saw his market. The brand built trust around the premise that they are not in this to make business. They are leveraging on the trust and cost competitiveness. Overall its roots led it to where it stands now,” he added.
Timing it right
Marketing experts feel that timing has also worked in Patanjali Ayurved’s favour with the growing awareness on well-being and shift towards lifestyle centred on ayurveda. “If the products were launched 15 years back the response wouldn’t have been so heartening. Mood of the country is focused on being healthy,” says Ramanujan, adding that “Patanjali has a clear understanding of what works in India. They know the pulse of the consumer very well.”
Kumar shares his opinion, “Considering the image it has built for itself around purity, ayurveda and yoga, it has helped the brand in its successful marketing in a big way.”
Banking on Maggi controversy
Patanjali Ayurved also took the opportunity to cash in on the Nestl√©’s Maggi controversy last October. It launched its own instant noodles hoping to capture the market with Baba Ramdev even claiming that it would overtake Maggi as the top noodles brand in the country.“
There must have been a certain shift. Maggi has worked extensively to make it to the grassroots while Patanjali already has a strong equity over them. Hence it’s easier for this section to ditch Maggi and take up Patanjali. This will benefit the latter. When it comes to urban audience where Maggi has a strong equity compared to Patanjali, they are not likely to shift loyalties,” shares Kumar.
Halve also approves the move, “If Unilever can launch ayurvedic products, why can't Patanjali launch noodles? And the Maggi controversy just offered a ‘supply shortage’ window of opportunity to satisfy customer demand.”
But Bijoor has a different take, “Out of everything that Patanjali offers, I think its weakest link is noodles. It has given it a high profile, but I do believe this was a faulty entry.”
Looking at the long run 
Ramanujam is very upbeat about Patanjali as a brand and how its entry has stirred the FMCG segment, “Consumer benefits with the entry of a new player with their wide range of products and attractive pricing. This is early warning signals for the multinational brands to get their pricing right.”
He believes that as a big sustaining brand, Patanjali is here to stay but it needs to be cautious, “Patanjali has to be on guard as their gains won’t be easy compared to their early days because the multinational giants have started noticing them.”
According to Kumar, for the brand to survive it needs to rise above Ramdev Baba’s personal image. “Depending on the market it will rise for a certain span of time. But in the long run it has to shift out of the personal equity of Ramdev Baba on which the brand recall is built on. It needs to move to the whole equity of trust and ayurveda, otherwise the brand will die with him.” For this he also suggests a strategy, “Perhaps it needs to get into conventional marketing like other FMCGs which will truly test its mettle.”
But no one can deny the hustle it has created with its presence and emergence. Like Bijoor points out, “Patanjali Ayurved is creating a tectonic shift in the marketing space of India. And the journey of this alternate force in Indian FMCG space has just begun.
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