Patanjali sales growth slows as rivals launch herbal products

Patanjali Ayurved’s growth faltered during the past 12 months as rivals, mostly multinationals, launched natural and herbal products to counter the challenge of the Baba Ramdev-led enterprise.

Patanjali’s sales volumes grew 7% during October-March 2018 and 22% in April-September 2017, according to data from Kantar Worldpanel, a global consumer research firm. That’s a sharp fall from 52% growth in October-March 2017 and 49% during April-September 2016. Last week, Credit Suisse said Patanjali’s FY18 sales growth by value was little changed after a 100% compounded annual growth rate (CAGR) over the past four years. The Swiss financial services company didn’t disclose Patanjali’s actual sales or growth numbers. The company said it has been able to make its presence felt in the market and become a household name in a few years, apart from popularising herbal products, and is preparing for the next stage of growth.

“Patanjali has been the biggest disruptor in FMCG space. As the brand is established and consistently growing, in terms of both shares and retail shelves, our growth is realistic and in sync with other FMCG companies,” said SK Tijarawala, spokesperson at the Haridwar-based company. “Patanjali built its consumer-facing ayurveda business almost from scratch in a few years and gained market share and shelf space rapidly, challenging established multinational brands in all categories it has forayed in.”


For a company that started as a small pharmacy in 1997, Patanjali has launched more than two dozen mainstream FMCG products — from toothpastes, shampoos and other personal care products to modern convenience foods such as cornflakes and instant noodles. Annual sales have doubled every year since 2013 to touch Rs 10,500 crore. Patanjali’s success acted as a catalyst for herbal, ayurvedic and natural products, which now account for about 10% of the consumer goods market. Between FY13 and FY18, these products grew at a CAGR of 21% compared with 11% for the overall FMCG sector.

Experts said Patanjali’s growth was driven by the novelty factor, with devotees of Baba Ramdev as early adopters of its products and rapid entry into multiple categories with value pricing and differentiated positioning. However, over the past year, toothpaste and honey were the only two categories in which it expanded market share, while its share in soaps and edible oil remained the same. Patanjali’s share in hair oil, shampoo and butter has fallen, according to a recent Ambit Capital report citing Euromonitor data.

“With new launches largely done and devotee base penetrated, growth depends on taking market shares from existing players,” analysts Anuj Bansal, Ariha Doshi and Archit Varshney of Ambit Capital wrote in a note. “FY18 witnessed no growth as new launches failed to take off, channel suffered from capital constraints from unsold inventory and GST-led disruptions and competition reacted to claw back market share.” According to Kantar, Patanjali products are present in 37% of households now, compared with 31% a year ago and 16% about two years ago, reflecting a slower pace of expanding its reach.

Patanjali said it isn’t sitting pretty. “We are strengthening our management structure and supply chain to address global expansion. This will result in another phase of our growth driver status in the FMCG marketplace, both in value and volume terms,” Tijarawala said. However, this time around, it will have to compete with more players, other than Dabur, Emami and Himalaya, which have been in the ayurveda space for decades. Leading MNCs, too, have herbal products now – Hindustan Unilever relaunched the Ayush brand of ayurvedic personal care products and L’Oreal introduced a hair-care range under the Garnier Ultra Blends made with natural ingredients.