By Shrishti Kalra
ASSOCHAM declares Patanjali as the biggest disruptive force of 2016 for the FMCG sector. Patanjali recorded the highest growth this year. Even after few of its products were declared unsuitable, why do people still prefer it to other companies?
The massive shift of the Indian consumer market from long established FMCG Brands such as ITC, Dabur, Hindustan Unilever, Colgate-Palmolive, and Procter & Gamble to yoga guru Baba Ramdev’s brand Patanjali has baffled experts. Is Patanjali a knight in the shining armour? Or a mere figure among the ciphers?
Patanjali Ayurved, a privately held company run by Mr. Ramdev’s long-time associate Acharya Balkrishna, has recorded an annual growth of 146% in the fiscal year 2016 grossing a turnover of $769 million. Whereas its peers struggled to get a growth much less than double digit. The company initially focused on the development of ayurvedic medicines. However, its current revenue can be attributed to 500 products, with a focus on healthcare, packaged food, and beauty & personal care sector. It now has a combined worth of ₹ 3.4 lakh crore.
However, the leaps and bounds growth of the company has not remain unadulterated for its products. The District Food Safety Department, in 2012, had filed a case after samples of mustard oil, salt, pineapple jam, besan and honey produced by Patanjali failed quality tests. In 2015, when Patanjali Atta Noodles were launched with an eye to take on Nestlé’s Maggie, came controversies wherein bugs were found in the sealed packet. Recently, a local court in Haridwar slapped Patanjali Ayurved’s five production units with a fine of Rs11 lakh for “misbranding and putting up misleading advertisements” of their products.
Despite these, what has made Patanjali a household brand catering to different income strata and age groups? Is it the hedonic value attached to the brand? Or an unconventional content marketing technique?
Invoking the spirit of nationalism
The anomalous factor that is observed in this growth trend is the ability of the brand to tap the deficiencies and vulnerabilities of the consumer market. Patanjali Ayurved evokes the ethnocentrism of Indians. In the latest advertisement campaign the company raked up ‘Swadeshi’ feelings by comparing the MNCs to the erstwhile East India Company and Baba Ramdev to a national leader. Ramdev’s sales pitch in radio ads is that Patanjali products must be purchased to secure “aarthik azaadi for Bharat”.
Such remarks provide an unjust edge to the brand over its global rivals. Clearly, defeating the spirit of the free market economy. However, allowing such tactics makes the government open to charges of pandering to crony capitalism.
Another distinguishing trait is the penetrative pricing strategy. There is a drop of 25-30 percent of price in almost every product when compared to international brands. This is helping Patanjali reach every household in India. The reduction in price is a barely noticeable difference i.e. the least reduction to capture attention without losing profits.
In response, the rivals are gearing up to combat the challenge. To counter the surging tide of herbal-natural products, Hindustan Unilever has revived its Ayush brand last year. With a plan to launch a range of personal care products, priced between Rs 30 and Rs 130. Samir Singh, executive director of HUL said that the very concept of ayurvedic products inside modern packaging by a multinational company was “way ahead of time”. Global personal care giant Garnier launched its Ultra-Natural shampoos this year. Colgate-Palmolive has been leaning on indigenous flavours like charcoal, salt-lemon and neem.
MNCs are responding to FICCI report of estimated growth in the herbal-natural product market to ₹51,700 crore by 2020. But the consumers are advised not to be guided by blind faith. They are asked to be better informed about the snags that come with such a size of the business and a wide range of products.