With a population of around 1.31 billion, India is the second largest market in the world in terms of consumer purchase power after China. This has resulted in an intensely competitive FMCG space, for products like packaged foods, beverages, toiletries and many other daily necessities.
So obviously there are many domestic and multinational players vying for supremacy in the Indian market. Currently, Patanjali Ayurved seems to be clearly winning this competition with its revenue (2016-2017) of 105.6 billion INR (1.6 billion USD), paving its way to becoming the most profitable FMCG company in India.
As the saying goes, every coin has two sides. The reason why Patanjali was able to achieve all this in such a short time and what will be the company’s strategies for growing even faster are something important for every Indian to understand. Especially with the company being in the news for 50 tonnes sandalwood export to China, collaboration with the luxury powerhouse like Louis Vuitton and voicing support to legalise marijuana causes concern among the followers as these statements contradict the company’s self-proclaimed tradition and values.
So this may be the right time to take a closer look at this company and understand what’s really going on.
One Side Of The Coin – The Growth Story Of Patanjali
The growth journey of Patanjali is really amazing. It’s not easy for a company to start as a small pharmacy in 1997 and go on to become a multi-billion dollar empire. It is the fastest growing FMCG company in India and currently is valued at 30 billion INR (470 million USD). The company has more than 350 products from soap to toothpaste and from oats to health drinks, with around 4000 distributors, 10,000 stores, 100 mega-marts. Producing goods from its manufacturing plants at Haridwar, Uttarakhand, India and also in Nepal.
The rapid growth of this company is clearly visible by looking at the revenue numbers over the years.
| Year | Revenues (In INR Crore) |
|---|---|
| 2009-10 | 165 |
| 2010-11 | 317 |
| 2011-12 | 446 |
| 2012-13 | 850 |
| 2013-14 | 1200 |
| 2014-15 | 2006 |
| 2015-16 | 5008 |
| 2016- 17 | 10562[3] |
Much of this growth and success can be attributed to the company’s public face & co-founder Baba Ramdev. Being a pioneer in Yoga and Ayurveda, Ramdev was able to promote his products to more than 70 million of his followers, who turned into loyal customers very quickly. Also, they were able to make use of the government support and encouragement under Make In India initiative effectively.
The company was able to instil belief in the consumers that their products are of high quality in terms of ingredients as well as health benefits. And they were also able to price their products 15-30% cheaper than similar products from their competitors. These positive strategies from the company must be appreciated as the consumers were getting the benefits of good quality at low price.
Overall it is great to see an Indian company doing so much within a short span of time using all indigenous material and technology. They were able to achieve what the other Indian Ayurveda companies like Dabur, Himalaya, Baidyanath, Vicco, and Emami were not able to do.
But on second thought, by analysing why the other Indian Ayurveda companies did not see similar kind of success after similar strategies, we do have to question if there is something else that is contributing to the success of Patanjali which other companies were unable to figure out? Is it all fair and square or is there something else?
It could be the company’s Nationalism strategy that fueled this skyrocketing growth, which no other Indian company used as a branding tactic before.
Using Nationalism As A Business Strategy
Baba Ramdev has continuously pitched Patanjali as a “Swadeshi” alternative to all the MNC products which help source Indian money abroad to “Videshi” FMCG companies like HUL, P&G and Nestle.
He also has a fierce stand against Chineses products, portraying China as an arch enemy which is looting Indian consumers.
The company’s mainstream advertisements are also misleading. They correlate Indian culture and family values to the usage of their products.
Maybe this is somewhat acceptable, as these products are made in India for India with Indian ingredients and technology.
But the problem starts when they attribute nationalism and patriotism to their products.
It’s clear that rather than promoting the product’s quality and competitive pricing, they focus mainly on the nationalism as the primary differentiating factor. And call for purchasing Patanjali’s products as a ‘patriotic duty’ of every Indian.
They emphasise on the belief that the money of this nation should not go overseas, which is a very naive proposition in this current day and age of globalisation. Where every Indian has to learn to work with other countries in a mutually benefitting manner.
They also say that their profits are used solely for charity by claiming “collective prosperity and charity are our goals”, but in reality, the situation seems to be very different. As most of the profits seem to be benefitting one individual ‘Acharya Balkrishna’.
Acharya Balkrishna is the second face of the company and its majority state holder with 98.6% stake, He is involved in a lot of speculations like fake degrees and passports but has been rising in India’s richest list year by year thanks to the profits from Patanjali Group. Currently, he is ranked at number 19 on Forbes India’s Richest list. Which is clearly causes a lot of suspicions.
Amidst all this, Patanjali has already positioned itself as a monopoly among Indian Ayurveda companies and now starting to compete with government initiatives like Khadi Bhandar and Gramudyog outlets. This is definitely not a good sign, as these government initiatives are also means of employment for so many people. Also, Patanjali seems not be hesitant to work on pure profit-oriented business deals with the very entities they were opposing like China and foreign luxury brands.
In conclusion, it is saddening to see them contradict their own standards, code of honour and fail to practice what they have been preaching. This is why you should never involve the national sentiments, culture, and patriotism into any business. This might be profitable in the short term but in the long run, due to the immense expectations from consumers any misstep by the company will have disappointing consequences.