Source: LiveMint.com, Dec 01, 2016
Mumbai/New Delhi: They have bushy beards, a preference for loose-fitting robes, hundreds of millions of devotees—and a line of consumer products. Meet the Indian gurus behind the brands challenging some of the planet’s biggest companies.
Baba Ramdev, Sri Sri Ravi Shankar, Gurmeet Ram Rahim Singh and Jaggi Vasudev are among yoga and spiritual leaders lending their names to everything from honey and herbal remedies to toothpaste and clothes. With a ready-made clientele from their vast followers, they are helping to tap surging demand in India for natural and ayurveda-based products to challenge the likes of Unilever, Colgate-Palmolive Co. and GlaxoSmithKline Plc.
The newcomers’ success is snatching market share from larger established suppliers, which have had to develop their own ayurveda lines. Ayurveda is based on a belief that health and wellness depend on a balance of mind, body, and spirit, and can include the use of herbal compounds and special diets.
The guru-connected upstarts have already shaken the market. Unilever’s hold on India’s $11.7 billion beauty and personal care market has slipped more than 5 percentage points in the past five years, according to researcher Euromonitor International. And local personal care rival Dabur India Ltd says its growth is slowing, even as the market is forecast to expand 14% in 2016.
“These ayurvedic product sellers are posing a threat to Indian and global players as the product has gained mass appeal,” said Sanjiv Bhasin, an executive vice president at brokerage India
Infoline Ltd. Profit margins are shrinking in response, he said. “It has made the existing players enlarge their marketing budgets greatly to try and protect their turf.”
The biggest new competitor is yoga guru Baba Ramdev’s Patanjali Ayurved Ltd, which offers some 500 products spanning food, nutrition, and beauty and personal care. Formed a decade ago, its revenue will at least double to more than Rs10,000 crore ($1.5 billion) in the year ending March 2017, Ramdev said in November, adding that all Patanjali profits go to charity.
Ramdev said he’s an “unpaid ambassador” at Patanjali and that childhood friend Acharya Balkrishna holds 97% of the company’s shares. That helped make 44-year-old Balkrishna India’s 48th richest person in 2016, worth $2.5 billion, according to Forbes.
“World-class quality, low price and giving away our entire profit to charity are the three main reasons for the boom seen in Patanjali products,” said Ramdev, clad in his trademark saffron-coloured robe, in an interview in New Delhi. Executives at multinational companies believe babas, or holy men, like him “don’t know anything,” he said. “Now all tie-wearing people are sweating. They realize loincloth-wearing people can do many things.”
Patanjali had a 1.2% share of Indian’s beauty and personal care market last year from 0.2% in 2011, according to Euromonitor. The company is planning to release refined oil, milk and textiles, mostly to counter the dominance of foreign-owned businesses, Ramdev said.
“Why shouldn’t our country’s money stay here and be used for this country’s service?” he said.
Unilever, which began selling “Sunlight” soap in India in 1888, has said domestic brands, such as Patanjali, have been better than multinationals at picking up on local trends. Patanjali is a company “which everybody has been following with a lot of interest — incredible branding created there,’’ Unilever chief financial officer Graeme Pitkethly said on a 13 October conference call to discuss third-quarter sales.
‘Sunlight’ to ‘Hamam’
The Anglo-Dutch giant has countered this with Hamam soap, which incorporates ayurvedic herbs, and its local unit Hindustan Unilever Ltd bought hair-care brand Indulekha December last year to add a “naturals” line in hair oil.
Patanjali aims to have Rs50,000 crore in revenue in the next three years, Ramdev said. Infoline said the company could grab 35% of both the Indian honey and ayurvedic medicine markets and a third of the market for ghee, a type of clarified butter. Colgate-Palmolive and Dabur would be hurt the most by Patanjali’s expansion, Infoline said.
Ayurveda, as practiced in India, is one of the oldest systems of medicine in the world.
“In India, the consumer believes strongly in natural ingredients,” Bina Thompson, Colgate-Palmolive’s chief investor relations officer, told analysts on a 28 July conference call. New York-based Colgate has introduced toothpastes with neem and clove essence, and recently began selling a charcoal-infused toothbrush and Colgate Cibaca Vedshakti, which contains natural ingredients including eucalyptus, basil and camphor.
“The positioning is a toothpaste packed with the goodness of natural ingredients to help keep dental problems away,” Thompson said.
In October, Dabur India chief executive officer Sunil Duggal described Patanjali’s Dant Kanti toothpaste, which vies with Dabur’s Red brand, as a “fairly formidable player.”
A 200 gram pack of Dant Kanti goes for Rs75 in India on online shopping portal Bigbasket.com. That compares with Rs74.80 for the same quantity of Dabur Red and Rs97 for Colgate’s Active Salt with neem.
“Patanjali has made an impact, and we need to counter that,” Duggal said on an 26 October conference call with analysts. “We are not growing as fast as we could.”
Sales at Patanjali have climbed as it expanded the number of retail stores selling its own products to almost 10,000 nationwide, building on a franchise system created from its existing yoga outlets.
Ramdev’s yoga followers gave him an easy-to-reach customer base, Infoline’s Bhasin said.
“This has seen him save on ad expenses and marketing costs compared to larger players,” he said. And land around the yoga ashrams Ramdev has established will “give him enough room to expand for the next three years.”
Following Patanjali’s “spectacular” success, Edelweiss Securities Ltd expects other spiritual gurus, including Sri Sri Ravi Shankar, Guru Ram Rahim Singh, and Sadhguru Jaggi Vasudev, “to go the Patanjali way,” analyst Abneesh Roy and colleagues said in a report in March.
Sant Shri Asaramjibapu Ashram, Sri Aurobindo Ashram, and BAPS Swaminarayan Sanstha are other organizations that not only cater to the spiritual needs of millions of followers, but are also emerging as suppliers of fast-moving consumer goods, the Edelweiss report said.Shankar’s Sri Sri Ayurveda, in particular, is showing “renewed aggression” as it rides on the brand equity of its founder, whose “Art of Living” movement has 370 million followers worldwide, it said.
Sri Sri Ayurveda is beginning to use mass media, point-of-sale advertising and online retailing, Edelweiss said. In October, the group began selling a range of ayurvedic health drinks under the Ojasvita brand and signed Olympic silver medallist P. V. Sindhu to help promote it in a market dominated by GlaxoSmithKline’s Horlicks brand.
“I foresee requirements for pan-India exclusive stores,” said Tej Katpitia, the company’s chief marketing officer.
Ramdev and Shankar’s products are benefiting from Prime Minister Narendra Modi’s “Make in India” platform aimed at supporting local brands as well as trust in their products, said Shreyansh Kocheri, a research analyst in India with Euromonitor.
“Consumers have immense trust in both these personalities and hence perceive their products to be of good quality,” Kocheri said. “Consumers are increasingly becoming cautious of the products they consume or apply on their skin. They are on the lookout for natural, herbal and ayurvedic products which they perceive to be healthy and not have any side effects.”
Pranay Naithani, a television producer in Mumbai, said she switched to Patanjali and other ayurveda-based products after finding them superior to the organic lines from multinational companies she was buying. “It’s not because Patanjali products are reasonable — it’s more because of the quality of the products,” the 27-year-old said.
The popularity of ayurvedic and traditional herbal ingredients in modern consumer products in India coincides with a resurgence of Hindu nationalism, said Meera Ashar, deputy director of the
South Asia Research Institute at the Australian National University in Canberra.
“One of the ways in which Hindu nationalism maintains itself is by highlighting its own uniqueness and antiquity,” Ashar said. The search for objects and practices of national antiquity, which isn’t peculiar to India, has been “seamlessly merged with contemporary consumerism” there, she said.
“People like Baba Ramdev and Shri Shri Ravi Shankar have capitalized on these dual desires by claiming to package ‘tradition’ as a product of modern convenience,” she said. “Their own status within Indian society offers legitimacy to what they claim is ‘tradition,’ giving us phenomena such as ‘authentic’ Indian pasta.”
That may help all suppliers of ayurvedic products.
“Patanjali also opened up a lot of doors,” Dabur India’s Duggal said in October. Ramdev “has been very instrumental in expanding the whole franchise within ayurveda. So, I think we should see him not as a threat to be fought on a one-to-one basis, but as a facilitator.”