MUMBAI // An Indian company set up by a popular but controversial yoga guru and selling a wide variety of consumer products ranging from toothpaste to noodles, is giving multinationals a run for their money.
Patanjali Ayurved, founded by the saffron-robed television celebrity and spiritual guru Baba Ramdev, has become one of India’s fastest growing consumer goods companies.
“The rise of Patanjali has been nothing short of meteoric, posing a challenge to the companies that have dominated the consumer scene for years,” according to a report published this month by HSBC.
It says the company is “disrupting the consumer space” and consequently it has cut its target stock prices for companies including Nestlé India, a subsidiary of the Swiss food multinational.
“Some of the stocks considered to be most vulnerable, such as Colgate, Britannia, and Dabur, have already corrected,” it adds.
The brand’s products are based on Ayurveda, an Indian herbal medicine system and the name Patanjali comes from a yogic sage. The private company is based in Haridwar, in north India, considered a holy place by Hindus. Its facilities include an organic farm where it grows ingredients for its products. Patanjali Ayurved was launched in 2006, and among its range of hundreds of types of products, it offers ghee, pickles, juices, dal, haircare products and herbal medicines.
“We expect Patanjali to have revenues of 50 billion Indian rupees [Dh2.68bn] in 2016, up 150 per cent year on year,” says HSBC.
Vimal Kedia, the managing director of Manjushree Technopack, an Indian firm that is in talks with Patanjali for packaging its products, agrees the growth of Patanjali has been phenomenal. He says he expects the company to continue expanding at rapid pace over the coming years.
“Baba Ramdev has a very strong following throughout the country for more than 15 years now, due to his TV programme on yoga and live shows throughout the country,” says Mr Kedia.
“Of late, Ayurveda and homoeopathic medicines and products are catching on once again because people are scared of the news there are side-effects and problems from regular products.
“Whatever Baba Ramdev claims, people believe it. Stores have a separate shelf for his products and people are buying them. His brand is strong and he has positioned his products almost 20 to 25 per cent cheaper than the other fast moving consumer goods products.”
Major consumer companies are positioning themselves to compete with Patanjali. Hindustan Unilever, which is owned by the British-Dutch multinational Unilever and sells brands including Dove, has launched its own range of Ayurvedic personal care products, including shampoo and skincare creams under its Lever Ayush Therapy brand.
Sanjay Chakraborty, a marketing communication adviser based in Ahmedabad in Gujarat, says Patanjali has done a good job of spotting a gap and managing to appeal to Indian tastes.
“Baba Ramdev and his brand Patanjali have become synonymous to each other,” Mr Chakraborty says. “It is an interesting example of leveraging a successful personal brand and connecting with the audience. Since Baba Ramdev has a great following and can be described as a cult brand, so can his brand Patanjali.” He adds that Patanjali’s popularity has been bolstered by a high frequency of its adverts in various media.
“The campaigns have been carefully crafted to project a premium image but available at a economical price bracket,” Mr Chakraborty says.
“Patanjali, a truly 100 per cent Indian product for the country, attacking MNC’s expansion plans, has understood the opportunity. Patanjali in today’s marketing world is a successful case study with the right element of marketing mixed with the utmost understanding of the Indian consumer.”
Neeta Jain, a teacher in Mumbai, says she recently started using a few Patanjali products and now regularly buys the company’s ghee, bathing soap and washing -up liquid.
“I like them,” she says. “The ghee is supposed to be good and they are cheaper than the multinationals.”
The company in the last week of January became India's biggest fast-moving consumer goods advertiser on television, ahead of brands including Cadbury, the Indian newspaper the Economic Times reported.
HSBC also says that companies could learn a great deal from Patanjali’s pricing and marketing strategy.
“Patanjali is rewriting many of the consumer marketing rules in India,” it says. “For example, the popularity of its products underlines how important the concept of value remains to Indian consumers; the more established companies should take note.”
It highlights that the firm is “in the same ball park as the domestic revenues of Dabur, Emami, Marico and Godrej Consumer Products”, which are major Indian consumer goods companies. The bank has slashed its price target for Nestlé India by 6.3 per cent because of Patanjali’s rise.
“This is remarkable, given Patanjali’s relatively limited geographical footprint.”
It adds that the company has about 5,000 exclusive stores retailing its products and “is making inroads into general trade, modern trade and chemist channels. It is also setting up mega- marts in major cities, which will sell Patanjali products exclusively and also offer customers free Ayurvedic medical consultations”.
But the companies Patanjali seems to be stealing market share from say they believe the brand could actually help to boost the overall market for herbal and Ayurvedic products, which could in turn benefit them. "We feel that the entry of more players in this market would actually push demand and accelerate growth in this segment as there will be more awareness about this ancient science and its benefits," Lalit Malik, the chief financial officer of Dabur India, was quoted as saying by the Indian financial newspaper Business Standard.
Meanwhile, Naresh Bhansali, the chief executive of finance, strategy and business development at Emami, one of India’s biggest health and personal care goods companies, told the paper: “It is good for the industry if more companies enter. Previously, people were not taking the herbal space seriously, but they are now.”
The Ayurvedic and herbal personal care products sector has been expanding in India in recent years and has potential for much further growth, analysts say. “During the last decade, the herbal beauty care business has emerged as the new growth frontier for beauty business in India,” according to a report by Kuick Research, a market research firm in New Delhi.
“The market for ayurvedic cosmetic products in India is expected to grow at a rapid pace over the coming decades. The market is only beginning to get populated with ayurvedic brands and it will be a while until it gets too crowded.”
Himalaya, Forest Essentials and Biotique are among some of the most established brands in the ayurvedic and herbal personal care and cosmetics sector.
The French cosmetics company L’Oréal has said that it is planning to research the use of natural active ingredients in cosmetics to appeal to the Indian market.
Colgate in India offers herbal toothpaste alongside its regular products.
Indians have also become more concerned about food safety standards in India after Nestlé’s hugely popular Maggi instant noodles were banned temporarily last year when the country’s food safety regulator said tests had revealed excessive levels of lead in them.
Patanjali launched its own line of instant noodles following the scandal. Maggi has always denied that there were any problems with the noodles and sales resumed in November, but not before the company had already taken a financial hit that ran into tens and millions of dollars because of the issue.
Analysts and industry experts believe that Patanjali will become an even bigger force over the coming years.
“We foresee a very big future for them,” says Mr Kedia.
India’s other business gurus
Sri Sri Ravi Shankar
One of India’s best-known spiritual gurus, Mr Shankar styles himself as a “humanitarian guru”. Originally from Tamil Nadu in south India, he has his own range of Ayurvedic consumer goods, churned out of a facility in Bangalore, including shampoos, toothpaste, and medicine products. He founded the Art of Living Foundation, which aims to promote peace and ease problems in society. He has travelled across the globe to deliver his teachings on spirituality and breathing.
Gurmeet Ram Rahim Singh
A spiritual leader, preacher, and eccentric actor who heads an organisation in north India called Dera Sacha Sauda, Mr Singh launched a new range of organic food products earlier this year. The products include rice, bottled water and honey.
“Our motive is not to compete with anyone in the market,” he told the Hindustan Times at the time of the launch. “However, we appeal to other companies that they come up with organic products too, so the people of our nation can become healthier.”
Mr Singh explained that he saw “farmers injecting chemicals into vegetables, and using toxic sprays and pesticides that are harmful to both man and animal”, which prompted him to launch his range.
A spiritual leader from Kerala who is best known as Amma and sometimes referred to as the “hugging saint”, she is India’s most famous female guru. Her organisation is believed to be worth billions of rupees, and includes expensive schools, a TV channel, and an institute of medical science. She delivers her blessings by hugging people.
Osho was an Indian guru with a huge empire, who died in 1990. He gained popularity all over the world. His brand lives on and his ashram in Pune in India attracts thousands of international guests each year, with the meditation practices he developed still popular among many.
Sri Satya Sai Baba
The spiritual guru from the southern Indian state of Andhra Pradesh died in 2011 at the age of 84. He amassed a huge following in India, despite being a controversial figure, and built up a business empire that included hotels, hospitals and ashrams.
* Rebecca Bundhun
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