Get a demo Do I subscribe? News sign-up
Print

Yoga guru challenges global brands

News, 30 March 2016

HARIDWAR: International FMCG brands in India, who have spent years building up their customer base in the country, are now facing a serious challenge from a homegrown company that emphasises the natural source of its products.

Based in the ancient city of Haridwar in Uttarakhand state, Patanjali Ayurved is a private company co-founded by Acharya Balkrishna and Baba Ramdev, a political campaigner who gained national fame through his televised yoga lessons.

The company has seen tremendous growth since its foundation ten years ago as Indian consumers embraced its range of FMCG goods based on the ayurvedic model of India's traditional medicine system.

Competitive pricing also helped to push Patanjali's sales to $300m in the 12 months to March 2015 and it is forecast to more than double sales to $750m this year, the Financial Times reported.

The newspaper quoted an HSBC report from last month, which stated that "the rise of Patanjali has been nothing short of meteoric, posing a challenge to the companies that have dominated the consumer scene in years".

"The company's business model is rewriting the rules of consumer marketing in India," the report added.

In order to explore Patanjali's business model and the philosophy underpinning it, the Financial Times travelled to Haridwar to speak with its two co-founders.

"We don't mind multinational companies but they are only after profits – people are not their priority," asserted Acharya Balkrishna, the company's managing director.

"We are giving competition, so MNCs [multinational companies] start thinking of people and are forced to bring prices down," he added.

Baba Ramdev, who is reported to be close to Prime Minister Narendra Modi, joked that the company has no need for celebrity endorsement because he, Ramdev, is "the brand ambassador", as he then outlined the firm's core principles.

"Our goal is not to crush anyone," he said. "No crushing. No violence. No intolerance. Our main ideology is healthy competition."

It is this competition that may concern leading FMCG brands because Patanjali plans to ramp up its challenge with the forthcoming launch of a nutritional drink powder that will compete with established products from GlaxoSmithKline and Cadbury India.

"If they do not take him seriously, he could be a serious threat in many categories," warned Arvind Singhal, founder of retail consultancy Technopak.

"It's the only product I know where someone from the lower income strata, middle income strata and top income strata are all customers."

Data sourced from Financial Times; additional content by Warc staff