After meteoric rise, Ayurveda products losing momentum

Despite leading companies launching hundreds of natural and herbal personal care items, the contribution of ayurvedic products has either remained stagnant or fallen over the past two years of the pandemic, which had been projected to give them a boost.

For instance, the contribution of the herbal segment in oral care has remained at 28% for the past two calendar years, said industry executives citing Nielsen. Within hair oils, it's declined to 7.1% from 7.8% in 2020. The share of ayurvedic shampoos has risen marginally from 8.1% to 8.8% in this period.

Industry executives attributed this to a few large brands that launched products before the pandemic but lost momentum and consumers shifting to large established ayurvedic or non-ayurvedic brands, compared with smaller ones that had distribution issues during the outbreak.

Dabur India CEO Mohit Malhotra, however, said some consumers are increasingly preferring herbal, natural and ayurvedic products for their personal care needs.

"This is evident in the oral care segment, where the ayurvedic and naturals categories have been growing at a much faster pace as compared to the normal white toothpaste," he said. Dabur said it has expanded its share in the oral care and hair oil category, including perfumed oil and coconut oil.

Nielsen data show the growth rate of ayurvedic toothpaste brands such as Cibaca Vedshakti, Colgate Swarna Vedshakti, Lever Ayush and Himalaya had slowed over 2020-21 with some brands' growth rates declining on a quarter-on-quarter basis. In shampoos, Patanjali's growth rate mostly fell, dragging down the overall category's contribution.

The stagnation followed impressive growth during the pre-pandemic years on the back of the meteoric rise of Patanjali and mainstream companies entering the segment to compete with the Ayurveda-based brand.

Going Beyond Established Brands
For instance, ayurvedic oral care contribution surged from 22% to 27% between 2017 and 2019.

A 2021 Euromonitor survey showed that about 41% of Indian population took vitamins and supplements for stronger immunity in 2020, rising to 50% in the next year. With heightened interest in such products, consumers explored more ayurvedic formulations that led to companies launching products mainly in the packaged food space in contrast with a few years ago when personal care was their preferred choice of entry into the space.

Also, over the past two years, the shift to online shopping helped consumers experiment with new products, going beyond the top, established brands.

"Since we customise the product for every customer profile, it gives us an edge over legacy brands who are still offering generic products," said Jatin Gujrati, business head, Vedix, which has launched several ayurvedic products including oils, serums, shampoos and oral care. "As customers gravitate towards chemical-free products and customised products, D2C (direct-to-consumer) brands will grow faster which is already evident in our repeat purchase data."

A recent report by HDFC Securities said the ayurvedic trend was largely started by Patanjali and Dabur but is no longer limited to any category or company as D2C trend will disrupt the wide consumer basket, both for consumer non-discretionary and discretionary categories. Industry executives pointed out that market researchers haven't taken D2C brands launched a few years back into account.

"Being D2C gives us the ability to innovate and improve faster than our legacy peers as we are directly listening to our customers," said Senthil Kari, vice president at Kerala Ayurveda. "Our businesses are tech-enabled which gives us the agility to innovate fast and roll out new products."

In the next five years, essential oils and oral care will corner 5-10% of the market from the legacy brands, he said.