Patanjali Ayurved injects new life into herbal market, helps rivals sell more personal care products

MUMBAI: In a short span of time, Patanjali Ayurved has not only made a name for itself among Indian consumers, but also fuelled expansion of the herbal products market and helped rivals sell more home and personal care products, grabbing share from MNCs.

The Baba Ramdev-led company’s sales jumped 64 per cent to Rs 731 crore in the six months ended December and rivals Dabur and Himalaya grew in double digits in a consumer products market that expanded barely 6 per cent, according to IMRB data. The figures exclude commodity products such as ghee and atta.

What’s helping these firms is a growing preference for Ayurvedic products known for natural ingredients and health benefits. In addition, herbal products are cheaper.

"Patanjali has registered a near-80 per cent growth in penetration, which is about 5 per centage points on an absolute level, in one year," said K Ramakrishnan, general manager, IMRB Kantar Worldpanel.

"The first wave of growth came from personal care products only, but the recent growth has been driven by homecare and food and beverages, which still has a smaller base," said Ramakrishnan.

Patanjali started in 1997 as a small pharmacy in the holy town of Haridwar to make healthcare products and was incorporated in 2006 as a company to sell personal care, food and beverage products through its own outlets. The company expanded its reach from 200 Patanjali outlets in 2014 to 5,000 franchise stores currently and launched more than two dozen mainstream FMCG products as none of the existing herbal players catered to categories such as noodles, oats and detergents.

In October last year, Patanjali formed a marketing partnership with Future Group, which will offer over 300 of its products in 77 categories through stores such as Big Bazaar in about 250 cities. Four months after partnering with Future Group, the country’s largest retailer, Patanjali products have cornered a 7-12 per cent share in categories such as detergents, toothpastes, soaps and shampoos at Big Bazaar stores. In food products including oats, noodles and honey, the share gains are 7-37 per cent, according to Dunnhumby, a UK-based research company that has tied up with Future Group for data science.
Patanjali has grabbed share from non-Ayurvedic companies. While the growth of Ayurvedic brands in the face wash category increased to 50 per cent from 36 per cent earlier, the growth of non-Ayurvedic brands eased to 16 per cent from 21 per cent a year ago. The share of market leader Himalaya remained unchanged at 35 per cent as Patanjali gained 7 per cent share.

In shampoos, sales of Ayurvedic brands more than doubled to 194 per cent, while for multinational companies, it declined to 15 per cent from 21 per cent earlier. Categories such as chyawanprash, amla and aloe vera juice saw growth double to 42 per cent, with Dabur retaining its 53 per cent market share.

"This unusual phenomenon of consumer products market disruption is rare as brand erosion or loyalty for well-established brands generally doesn’t happen so quickly," said Devendra Chawla, president, food and FMCG, at Future Group.

Patanjali products were purchased by about 21 per cent of Future Group shoppers in January compared with 2 per cent in October. "While Ayurveda brands were always there, the entire category has now arrived with a bang, thanks to heightened awareness benefiting the overall ecosystem," Chawla said.

Patanjali attributes its success to consumer shift from non-Ayurvedic brands owned by multinationals to Indian herbal companies. Its products are on average 15-20 per cent cheaper than the competition and several rival companies have been running offers and promotions to compete with them.

"Other Ayurvedic companies are coming up with good quality products at even cheaper prices, which is ultimately doing good. The country is huge and the FMCG market is so large that we may not be able to provide for everyone," said Acharya Balkrishna, managing director at Patanjali Ayurved, adding that the company has almost met its sales target of Rs 5,000 crore for the financial year ending March 2016, more than double the revenue of Rs 2,000 crore in 2014-15.

Hindustan Unilever’s net sales increased 10 per cent to more than Rs 30,000 crore in the previous financial year and Colgate-Palmolive (India) sales rose 12 per cent to Rs 3,955 crore.