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FMCG companies brace up for threat from Baba Ramdev’s Patanjali The company is forcing CEOs in food and FMCG space to sit up and take notice of its products Ratna Bhushan | ET Bureau | 28 December 2015, 8:12 AM IST
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Baba Ramdev’s Patanjali, with more than 350 products ranging from noodles and biscuits to shampoo and toothpaste, is giving heads of consumer goods reason to sit up and take stock. They’ve realised Patanjali can’t be dismissed as the whim of the baba the brand is rapidly becoming a contender in the consumer goods space.
Varun Berry, managing director of biscuits giant Britannia, says he has "personally analysed" Patanjali biscuits. Dabur chief executive Sunil Duggal calls it a ‘disruptive force’.
Future Group food & FMCG president Devendra Chawla toured the 150-acre Patanjali Food Park in Hardwar last week for a "better understanding of the business" since well-heeled consumers are also buying their products at Big Bazaar and Food Bazaar stores.
Another head of a leading personal care firm said his parents use a Patanjali product, not the equivalent his company makes.
"Patanjali is competition even in my own home," he said ruefully. Future Group’s Chawla now begins his day with Patanjali Dant Kanti toothpaste and amla juice. This is the harbinger of a new wave of homegrown brands, he said. "One can get a glimpse of the future of ayurveda consumption in India… many new products are about to hit the stores," he said. Consumption of ayurveda products cuts across income levels. And, as he points out, with acceptance comes extension.
"We are seeing that both mass and the very affluent consumers are picking up Patanjali products," Chawla said. "The advantage it has that once you buy into the ayurveda philosophy, it’s not restricted to just one product.
Consumers end up buying many categories simultaneously a phenomenon not seen with other FMCG companies where individual categories gain or lose a consumer to competition."
To be sure, Patanjali got its entry into department stores through Future after both had signed an exclusive deal in October. Dabur competes against Patanjali with products such as Ayurvedic Chyawanprash and honey.
It’s keeping a close watch. "He (Baba Ramdev) is someone no one has dealt with before and there are no existing analogies which can match him. So, we have to deal with them differently," said Duggal. "We’re taking them seriously. I’ve sampled products which are in direct competition with us."
Ramdev, for his part, has promised to step on the gas by setting up Patanjali mega marts across cities to exclusively sell its products, and is hoping to hit sales of Rs 5,000 crore by the end of FY16.
The yogi, who’s had his brushes with controversy, is spearheading the consumer goods initiative with key confidante Acharya Balkrishna. Patanjali has broken into modern trade and urban households, something that’s worrying established firms which spend crores on marketing.
Patanjali, which has hired actor Hema Malini to endorse its biscuits, has also been increasing its visibility on mainstream television channels. According to BARC, Patanjali became one of the top three most advertised brands on television late last month. "The (Patanjali) products have the right to succeed, especially in ayurvedic categories such as chyawanprash, honey and ghee," said Britannia’s Berry, who has been tracking Ramdev’s biscuits closely.
Aditya Agarwal, director and promoter at Emami group, which has an extensive consumer products business spilling into Ayurveda with leading celebrities such as Amitabh Bachchan and Parineeti Chopra endorsing its brands, is also watching closely. "All competition is good," he said. Ayurveda products "are still not well penetrated but we need to see which of them can succeed in the long term."
Analysts tracking the sector said HIL’s acquisition of Mosons Group’s hair-care brand Indulekha last fortnight is a clear indication that ayurveda is increasingly becoming a preferred choice for consumers. Future Group plans to do business worth Rs 1,000 crore over a 20-month period with Patanjali. At the time of announcing the exclusive deal in October, Biyani had said the products could "bring in a revolution".
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