There is a saying “When the momentum’s good – ride the damn momentum” and that pretty much sums up what Baba Ramdev has been doing ever since he diversified from his usual yoga discourse into manufacturing herbal FMCG products like herbal tea, wheat, honey, biscuits, nutrients, toothpaste, shampoos, and recently, noodles.
Baba Ramdev has just announced that his company Patanjali Ayurved Ltd, is all set to now diversify and launch a range of Swadeshi Jeanswear and clothing line under the brand name – Paridhaan, in continuation of his efforts to take on multinational companies and promote the use of swadeshi products.
Inspired by demand from his yoga followers for suitable yoga wear, Baba Ramdev came up with the idea of launching a range of swadeshi consumer wear including jeans, and take the fight for market share right into the MNC camp as he has done with other products.
Jeans and more to go overseas
Patanjali has big plans to penetrate overseas markets. It has operations in Nepal for manufacturing a variety of Ayurvedic products and Bangladesh is next on its radar.
For its foray into swadeshi clothing, it has identified Bangladesh as its major overseas market, where it plans to set up a major sourcing and manufacturing unit. Once it establishes itself in Bangladesh, it plans to enter into similar markets in Africa, Middle East and SAARC countries.
According to Baba Ramdev, Patanjali’s products have already experienced phenomenal response from untested markets like Mauritius, Saudi Arabia, Canada and Azerbaijan. If the political situation permits, Patanjali products will soon be seen on retail shelves in Pakistan and Afghanistan.
Patanjali – the new market disruptor
A few years back, the announcement to launch a clothing line would have invited a lot of ridicule followed by indignation from established players against this homegrown upstart, but today, the Rs 5,000 crore Patanjali brand is being taken very seriously by all competitors.
Each year, Patanjali has been growing exponentially and is expected to cross Rs 10,000 crore by the end of this financial year. This is reason enough for established FMCG players to wake up and take notice, since many of them have been struggling for years to gain and retain market share.
Today, Patanjali products are available in over 243 cities in the country and is retailed through a network of 10,000 company owned or promoted outlets. The company boasts of an army of 4,000 distributors that make sure its range of products remain on shelves, as per demand.
Compare Patanjali’s rise with FMCG giant Hindustan Unilever Limited (HUL). HUL’s parent company, Unilever, first started operations in India in 1888 and closed FY 2015-16 with Rs 32,482.72 crore in net sales.
Patanjali, having started commercial operations in 2010-11, ended the year with sales of Rs 446 crore. The company has now set itself an ambitious target of crossing Rs 100,000 crore within 10 years. That’s big for a company which remains privately funded and is not even listed.
If the target is indeed achieved, as per Baba Ramdev, Patanjali will then chase a whopping Rs 50 lakh crore in turnover. Highly ambitious by any standards and if it comes anywhere near that figure, it will drastically change the FMCG scenario, not just in India but overseas as well.
Major expansion plans underway
In coming years, Patanjali has identified the following focus areas – Ayurvedic medicines, organic food and products, Ayurvedic cosmetics, organic seeds and animal feed, bio-fertilizers and pesticides.
Patanjali Ayurved Ltd currently operates out of a massive 150-acre industrial complex in Haridwar, Uttarakhand and its security cover is provided by CISF, the Indian paramilitary force set up to guard government-owned industrial establishments.
The company plans to invest Rs 1,000 crore on an even larger 40 lakh sq feet manufacturing facility at the Mihan Industrial Complex in Nagpur, which is estimated to generate 10,000 to 15,000 direct and indirect jobs for people in Maharashtra.
Patanjali is planning to set up similar operations in West Bengal, Assam, U.P, Andhra Pradesh, Madhya Pradesh, Karnataka and J&K to ensure faster supply to regional markets.
The company has already invested heavily in R&D and employs over 200 qualified scientists involved in developing new products.
So what’s Patanjali’s secret to success?
Baba Ramdev is more market savvy than most would give him credit for. He understood the need for a nation that has always wanted an iconic guru to look up to for spiritual guidance, and built his space around yoga with a blend of spirituality.
But he needed a dedicated audience and his TV channel Aastha, provided him the right platform he needed to establish himself as a leading yoga guru, in a nation that had plenty of yoga teachers already.
Once he built his fan following, it was a matter of time before he started offering his voice and opinion in politics and political matters. He had the UPA government go against him, as he raised his voice against corruption and threw his lot with BJP. With BJP in power, he has decided to monetize the opportunity provided by his large fan following.
Between FY’10-‘11 and FY’13-’14, his turnover grew fast by industry standards and crossed Rs 1,000 crore by FY ’13-’14. But once NDA came to power in 2014, Patanjali’s turnover has been growing exponentially.
It doubled its turnover in FY’14-’15 touching Rs 2,000 crore and closed FY’15-’16 at Rs 5,000 crore. By the end of this financial year, Patanjali is expected to surpass Rs 10,000 crore. At this rate, Rs 100,000 crore could well be within its realm well before 10 years. That’s impressive growth, and yes, political connections do help.
But grabbing an opportunity when it comes by is equally important. Once the noodle market leader Maggi, from Nestle, came under quality cloud, Baba Ramdev was quick to seize the opportunity to enter the noodle business and has since gained significant market share against established players like Nestle, Nissin and ITC.
The role of brand building is critical to any FMCG play and Baba Ramdev fully understands the power of electronic media in brand building. He has fully exploited all mediums to further both his personal brand as a yoga and spiritual Guru, and that of Patanjali, a champion of Ayurvedic and organic products. His recent push for ‘swadeshi’ is towards consolidating that presence.
Patanjali is spending hugh sums on brand building through advertisements. According to Broadcast Audience Research Council India (BARC), Patanjali released 11,897 ads in January of 2016 and increased the same to 24,050 by March. That exceeded the investment on advertising by MNCs leaders like Mondelez India that sells the Cadbury range of chocolates.
Patanjali plans to continue investing heavily to build brand value as it continues to extend its retail footprint in India and overseas.
But there are questions
Besides political proximity, there have been questions raised by the industry and market analysts who have questioned his claims on quality of ingredients used and sourcing of his materials.
Advertisement Standards Council of India (ASCI) accused Patanjali of exaggerating its claims on washing powder, hair oil and mustard oil. Other competitors, too, have been raising their concerns on quality and manufacturing standards followed by Patanjali.
In May 2015, Baba Ramdev’s younger brother, Bharat, was arrested for instigating a clash between local truck union in Haridwar and company’s security guards. That hasn’t helped the company’s reputation.
The General Elections due in 2019 will certainly be a factor in Patanjali’s growth plans going forward, but till then, MNCs will have to contend with a resurgent Patanjali.