How Baba Ramdev has built a Rs 2,000 crore ayurvedic FMCG empire & plans to take on multinational giants
Baba Ramdev
It's high noon. The summer heat is relentless and cruel; the absence of air-conditioners and the dilatory movement of the two ceiling fans make one long for the city life. The small hall with a seating capacity of around 50 is choc a bloc with television cameras; a couple of yoga mats lie on the floor, and around 10 scribes are on alert, waiting for their subject to make an entry.
We're at the Patanjali Yogpeeth in Haridwar in Uttarakhand, one of the largest yoga institutes in the country. It's also the flagship project of Ramdev, whose name is inevitably prefixed with baba, the honorific term assumed by sanyasis (ascetics).
He enters the hall with 20-odd disciples clad in a saffronBSE 5.00 % cloth and wooden slippers, takes his position in the centre with the followers sitting behind him in a V-shaped pattern.Seated cross-legged, Ramdev's hands rest firmly on his knees, palms facing upwards.... it's time for Anulom Vilom Pranayama, a breathing exercise.
Ramdev blocks his right nostril with his thumb and draws in air from the left nostril. The disciples follow suit. After a few seconds he releases the thumb and closes the left nostril with his ring finger. He then breathes out slowly through the right nostril.
The yoga class lasts for an hour, after which the cameramen pack up, the outdoor broadcasting (OB) vans make their exit from the sprawling campus and, as this writer gets ready for an interview, the yoga guru quickly dons a new avatar: Baron Ramdev.
"Recently, we launched corn flakes and they're better and cheaper than Kellogg's," claims Ramdev, whose company Patanjali Ayurved Ltd sells everything from groceries and medicines to home and personal care items (Ramdev, though, has no equity in the company, with almost all of the shares owned by his close associate, Acharya Balkrishna). "Cornflakes is one of our top sellers. Very soon we will launch oat cornflakes and healthy noodles."
Spiritualism and Materialism
According to filings with the registrar of companies (RoC), Patanjali Ayurved clocked Rs 1,200 crore in revenues in fiscal year 2014, and the company claims to have crossed Rs 2,000 crore last year (numbers for fiscal year 2015 weren't available with the RoC).That puts Patanjali in the same league as home & personal care giants like Emami, which has brands like ZanduBSE 0.05 % balm, Boroplus, Navratna oil and Fair and Handsome in its portfolio, and which in fiscal year 2015 had net revenues of Rs 2,217 crore.
According to filings with the registrar of companies (RoC), Patanjali Ayurved clocked Rs 1,200 crore in revenues in fiscal year 2014, and the company claims to have crossed Rs 2,000 crore last year (numbers for fiscal year 2015 weren't available with the RoC).That puts Patanjali in the same league as home & personal care giants like Emami, which has brands like ZanduBSE 0.05 % balm, Boroplus, Navratna oil and Fair and Handsome in its portfolio, and which in fiscal year 2015 had net revenues of Rs 2,217 crore.
To be sure, the holy pilgrim town of Haridwar is witnessing a seamless confluence of spiritualism and materialism by playing host to the ambitions of Ramdev of building a huge FMCG empire on the swadeshi plank. But for the man known more as a baba, acknowledging the businessman in himself doesn't come easy.
"Hamne ye kaam vyapaar ke liye nahin, upkaar ke liye kiya hai [We haven't done this for business but for welfare]. It's not a business," he insists. "I am not doing this to amass personal wealth. Neither I own a single share of Patanjali Ayurved nor do I take a single penny to promote it."
"We never had a business plan. We also don't know markets or marketing," says Acharya Balkrishna, managing director of Patanjali Ayurved, which began operations two decades ago. "But what we know is serving the people by providing them high-quality products at attractive prices."
Not having a business plan doesn't mean the duo lack ambition. "In five years, I will take swadeshi products of Patanjali to such great heights that foreign companies will dwarf in front of them," declares Ramdev. That's no empty threat. Patanjali will focus on six big product portfolios to drive its growth: a breakfast range including cornflakes, 'healthy' noodles, ghee, Kesh Kanti (hair care products), Dant Kanti (oral care products), which is already a Rs 250 crore range, and Chaywanprash. The company, which is about to launch oats corn flakes, is betting big on ready-to-eat food products, too.
"We are giving a tough fight to foreign companies in each and every segment — be it medicines, herbal cosmetics or foods," asserts Ramdev, adding that all the products are 10-40% cheaper than MNC brands in the market.
"We are giving a tough fight to foreign companies in each and every segment — be it medicines, herbal cosmetics or foods," asserts Ramdev, adding that all the products are 10-40% cheaper than MNC brands in the market.
For instance, if Kellogg's is selling flakes for Rs 91 and Rs 159 (MRP for 250 gm and 475 gm, respectively), Patanjali flakes are available for Rs 85 for 250 gm and Rs 145 for 500 gm. The aggression on the price front is also visible in categories like detergents (vis a vis Surf) and dish wash bars (vis a vis Vim).
DDB Mudra Group confirmed the development. "We have just embarked on a relationship with Patanjali," says Madhukar Kamath, group CEO and managing director, DDB Mudra Group, declining to share more details.
McCann Worldgroup too acknowledged the development, pointing out that one of its group agencies is in the fray. "McCann is not in the reckoning [of bagging the advertising account of Patanjali]. But Patanjali is in talks with one of our sister concerns, TAG," says Prasoon Joshi, chairman, Asia Pacific, and chief executive and chief creative officer (India). He too refused to provide more details.
Bigger & Better
Along with advertising, Ramdev is also keen to professionalise the company by hiring executives from FMCG rivals.
Bigger & Better
Along with advertising, Ramdev is also keen to professionalise the company by hiring executives from FMCG rivals.
"Some have joined, and many more will soon," he says, without naming names.
The competitive streak of an entrepreneur is evident in Ramdev when he shares plans of a new category Patanjali will foray into: malted beverage drinks.
The competitive streak of an entrepreneur is evident in Ramdev when he shares plans of a new category Patanjali will foray into: malted beverage drinks.
The company is set to launch Power Vita as a direct competitor to brands like Bournvita. According to the company's estimates, the market size of the malted food drinks business in India is Rs 20,000 crore (although the companies currently in the category peg it at just Rs 6,000 crore). "In a few years Power Vita will become bigger than Horlicks, Bournvita and Complan," Ramdev tells this writer in his by-now familiar grandiose style.
Marketing experts, though, are in no mood to take Ramdev's ambitions with a pinch of Patanjali salt (yes, the company also retails salt). And the timing of the Maggi noodles controversy may just work in favour of Ramdev's FMCG strategy.
India is today polarised in terms of competition — at one end are Unilever, Nestle and Procter & Gamble, and at the other are the likes of ITC and Emami, says brand strategist Harish Bijoor.
"Now, Ramdev promises to open up a third frontier," he reckons. Consumers are getting more and more aware and active about what they are putting into their bodies. "If Patanjali can offer valid substitutes on the backbone of ayurved, it may just work," adds Bijoor.
Santosh Desai, chief executive of Future Brands, agrees that Patanjali has a robust business model of providing a counterpoint to MNC companies. "It's a legitimate route. There are enough people who think there should be a strong counterpoint to MNCs," he says. "Ramdev is in a position to answer the aspirations of these people."
A Household Name
A Household Name
The brand equity of Patanjali products are built around yoga and the baba who practices and preaches the discipline, explains Ashita Aggarwal Sharma, professor of marketing at SP Jain Institute of Management & Research. Consider the potential captive market Ramdev can address: some 20 crore, or almost a sixth of the Indian population, has attended a class of the Ramdev school of yoga courtesy of some 5 lakh trained yoga teachers working with Patanjali. "Once the consumer trust is obtained [via yoga], reaching them with your products becomes easier," adds Sharma. "Consumers are somewhat unsure of the benefits of the current products in the FMCG space. It's in this gap that Ramdev has placed his Patanjali offerings."
If Patanjali is able to invest in its products and launch new ones, it's also because yoga brings in some cool cash (see How Yoga Brings in the Money). For instance, corporates have to cough up a cool Rs 11 lakh to become a member of Patanjali Yogpeeth, Ramdev's flagship yoga institute (the institute won't reveal the number of such corporate members; Balkrishna says the numbers are not huge). Other than corporate members, the institute also invites founder members (Rs 5 lakh), patron members (Rs 2.5 lakh), life members (Rs 1 lakh), and so on.
Piyush Pandey, executive chairman & creative director of Ogilvy South Asia, feels marketers have a lot to learn from Ramdev. "He is an all-rounder who is battling, bowling and fielding at the same time. Baba Ramdev is a great proponent of a direct marketing FMCG comcover pany, and is one step ahead of the likes of the Amways and Avons of the world."
* * *
On a muggy June morning in Rohini in northwest Delhi, Vijayant Jain, a guru from the Ramdev school of yoga, is getting ready to begin class with 20-odd students.
They start with a somewhat unusual warm-up session — Bollywood music blares inside his 'Fun n Fit" institute, which has huge cutouts of baba Ramdev on its walls.
* * *
On a muggy June morning in Rohini in northwest Delhi, Vijayant Jain, a guru from the Ramdev school of yoga, is getting ready to begin class with 20-odd students.
They start with a somewhat unusual warm-up session — Bollywood music blares inside his 'Fun n Fit" institute, which has huge cutouts of baba Ramdev on its walls.
The moment the 42-year-old Jain changes the music and plays Yo Yo Honey Singh's 'chaar bottle vodka' remix, his students erupt into a frenzy. The speed of the aerobics increases and the tempo is set. After 40 minutes of vigorous stretching and strength training, the class settles down quickly. The music changes rather dramatically, and chants of 'Om' fill the air, as Jain starts his yoga session.
"The new generation knows the value of yoga but they need to be introduced to it in a different manner," he says, explaining the need to begin with a session of Bollywood music-fuelled aerobics.
It also helps Patanjali to tap the market that matters most. Sudha Dabas, a 23-year-old student who is in her final year of MA, is a big Ramdev fan as well as of Patanjali's products.
"I use Patanjali's toothpaste and face wash," she says. "I like the quality and the value-for-money equation."
"I use Patanjali's toothpaste and face wash," she says. "I like the quality and the value-for-money equation."
The youngest student in the class, Shradha Jain, is also a Ramdev follower.
"I like the guava juice," says 10-year-old Jain who has been learning yoga for a year now.
Can Kids be Far Behind?
"I like the guava juice," says 10-year-old Jain who has been learning yoga for a year now.
Can Kids be Far Behind?
Appealing to kids like Jain is an imperative for Patanjali over the longer term, whose products are today popular largely with populations over 35, and even over 45. "Looking at India's demographic divide, 50 per cent is below the age of 25. If the brand has to be relevant over the next couple of generations, it is crucial that Patanjali appeals to more and more young consumers," says Sharma of SP Jain Institute of Management and Research.
Another potential problem is that Patanjali finds buyers because it is synonymous with Ramdev. "This is risky for the business because if the personal brand is tarnished or ceases to exist, the product brand is also affected," contends Sharma. Bijoor, however, reckons that the real hero of Patanjali is not Ramdev but its products and their efficacy.
Indeed, controversy may well be Ramdev's second name. Let's start with the more serious ones. In November 2013, the Uttarakhand government registered 81 cases against Patanjali Yog Peeth and its sister concerns in Haridwar relating to alleged benami transactions, land grabbing and tax evasions. "Except for two or three cases, most of the 81 registered against Ramdev in 2013 stand," says Harish Rawat, chief minister, Uttarakhand.
Observers worry that even if a couple of the charges stick, that could mark the beginning of the end of brand Ramdev, and brand Patanjali.
Then, Ramdev's regressive comments on a few fronts may only succeed in alienating a young audience.
A couple of examples:
"Sex education doesn't make sense. Vedic, moral and spiritual education should be emphasised."
Ramdev's political leanings today place him on a firmer footing when a BJP-led government is in power, but industry analysts rarely approve of businesses being aligned to any one particular party; politics and parties after all are fickle and fairweather friends.
Another potential problem is that Patanjali finds buyers because it is synonymous with Ramdev. "This is risky for the business because if the personal brand is tarnished or ceases to exist, the product brand is also affected," contends Sharma. Bijoor, however, reckons that the real hero of Patanjali is not Ramdev but its products and their efficacy.
Indeed, controversy may well be Ramdev's second name. Let's start with the more serious ones. In November 2013, the Uttarakhand government registered 81 cases against Patanjali Yog Peeth and its sister concerns in Haridwar relating to alleged benami transactions, land grabbing and tax evasions. "Except for two or three cases, most of the 81 registered against Ramdev in 2013 stand," says Harish Rawat, chief minister, Uttarakhand.
Observers worry that even if a couple of the charges stick, that could mark the beginning of the end of brand Ramdev, and brand Patanjali.
Then, Ramdev's regressive comments on a few fronts may only succeed in alienating a young audience.
A couple of examples:
"Sex education doesn't make sense. Vedic, moral and spiritual education should be emphasised."
And: "Bring all homosexuals to me and I will cure them. Homosexuality is a wrong sexual practice. It's unnatural, unproductive and inhuman." (See Interview Congress Swaryiya Ho Gayi Hai). More recently, Ramdev was embroiled in another row when Janata Dal (United) leader KC Tyagi alleged that one of the medicines sold by Ramdev's Divya Pharmacy guarantees a male child.
Ramdev's political leanings today place him on a firmer footing when a BJP-led government is in power, but industry analysts rarely approve of businesses being aligned to any one particular party; politics and parties after all are fickle and fairweather friends.
Then, there is a huge scepticism — more so in global markets — over herbal products and their contents. "Herbal products in India are not subjected to regulatory tests or approvals. How many herbal and ayurvedic products have been tested in the country?" asks Abraham Koshy, professor of marketing at IIM Ahmedabad.
Ramdev, for his part, has an arguably convenient explanation to brush aside the controversies and disdain for him in some quarters. "Media talks about my controversies but people see my contribution towards society," he says. "Baba ke peechhe kyon pade hain? [Why are they after me?].
Is it because I come from a poor, humble background? Is it because I am an illiterate and my parents are farmers?" he asks.
As the sun begins to set on a Monday evening in Haridwar, Ramdev sits down for another session of yoga. His parting shot: "Some perish in controversy. I flourish in it."
As the sun begins to set on a Monday evening in Haridwar, Ramdev sits down for another session of yoga. His parting shot: "Some perish in controversy. I flourish in it."
Source : By Rajiv Singh, ET Bureau; http://economictimes.indiatimes.com
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