New Delhi, Jan 13: It may be an unlikely combination -- yoga for inner peace and (fast moving consumer goods (FMCG) for external beauty -- but Baba Ramdev appears to have struck the right pose in both. The guru whose 'easy yoga' has won him a mass following is also cornering the FMCG market with daily use products ranging from soaps and mustard oil to cornflakes.
Baba Ramdev's brands seem to have scaled up quite rapidly. For fiscal 2014, Patanjali Ayurved, the company that manufactures the products, clocked a turnover of about Rs 1,200 crore, up from about Rs 850 crore a year earlier and Rs 450 crore in fiscal 2012, company filings and industry sources said. And in the current fiscal, Patanjali is expected to clock a turnover of Rs 2,000 crore, according to Aditya Pittie, CEO, Pittie Group. This marks a 67% jump from the previous fiscal.
Pittie is the Mumbai distributor for Patanjali's general trade business and a pan-India distributor for its modern trade segment.
Currently, Patanjali is present in almost all categories of personal care and food products -- soaps, shampoos, dental care, balms, skin creams, biscuits, ghee, juices, honey, atta, mustard oil, masala, sugar and much more. Going by current turnover projections of Rs 2,000 crore, Baba Ramdev's FMCG business could rival Emami's (Rs 1,700 crore), and be nearly half of Marico's (about Rs 4,000 crore).
This is despite the fact that most of Patanjali's products are priced lower than its competitors. What gives the company an edge is its very low expenses on advertisements. In comparison, leading FMCG companies spend about 20-30% of their sales on advertisements.
With the Patanjali brand's growing reach and popularity among consumers, it's now being discussed in corporate boardrooms as well. This is in sharp contrast to its quiet beginning in 2007. At that time the existing FMCG brands didn't quite take note. Started through the franchise route in large cities, as the demand for his products grew, Baba Ramdev realized the huge scope within the FMCG sector and started building the range, taking on deep-pocketed multinationals. The franchisee model has grown exponentially: From about 150-200 dedicated outlets in 2012 to almost 4,000 now. The initial success of the franchise route also prompted Patanjali Ayurved to make its FMCG range available in the open market.
This opened up avenues for the company's distributors who were now allowed to sell to other kirana stores in general trade. Here, the yoga guru followed the same path that FMCG companies take.
After general trade, the time was ripe to enter the modern trade segment. Baba Ramdev struck a unique arrangement with Reliance Retail for an exclusive kiosk in its stores, a privilege no other company gets. "We initially piloted (Patanjali products) in five Reliance Retail stores in Mumbai and then took it to 45 stores in the city," Pittie said. Currently, Patanjali products are sold in 400 stores across India and the plan is to take it to 1,000 by end 2015, he said.
It is also perhaps the only brand that charges the same margin for general trade and modern trade. Given the unique customer profile for Patanjali's products, modern retailers aren't complaining. "We wondered initially if there is some relevance of their products for supermarket customers. But, as a modern trade leader, our role is to democratize and celebrate wider choice for our customers. So we decided to work with the Patanjali team to pilot and discover,'' said Damodar Mall, CEO, value retail, Reliance Retail. "Reliance Fresh consumers have pleasantly responded well to our efforts, going by the level of traction Patanjali's products have received at our stores,'' Mall said.
Now some of the Big Bazaar, Hyper City and Star Bazaar stores in Mumbai are also stocking its FMCG products. In modern retail, the company's turnover has grown from Rs 5 lakh from five stores a month to roughly Rs 5 crore now, with same store closing annual sales growth of 20%. "Modern retail currently contributes about 3% of total Patanjali sales with only 30 SKUs (stock keeping units),'' said Pittie. "The target is Rs 500 crore annually,'' he said.
The next step is online - Patanjali's products have just started retailing at e-commerce site BigBasket. "I am now talking to Amazon which has started a new food and grocery gourmet category,'' said Pittie.
Comments
Add new comment