Six Lessons that Patan­jali Teaches In­dian FMCG Cos

The lat­est en­trant in the space, Patan­jali Ayurved took much less time than its peers to be­come a 5,000-cr busi­ness and a well-en­trenched brand

The Economic Times - - Smart -

ET In­tel­li­gence Group: Adecadeago it was mod­ern trade which changed the way In­di­ans shopped. Then came ecom­merce and on­line shop­ping. And this time around it is Patan­jali Ayurved — the lat­est force to dis­rupt the branded consumer goods sec­tor. Its rag­ing pop­u­lar­ity and strong brand res­o­nance have some in­ci­sive lessons for the In­dian fast mov­ing consumer goods (FMCG) sec­tor.

Brand Pre­mium Not Needed?

A brand doesn’t have to charge a pre­mium to res­onate bet­ter with its con­sumers. Patan­jali prod­ucts are cheaper than its peers in the same cat­e­gory. “The whole logic of brands charg­ing pre­mi­u­man­dus­ingth­at­premi­um­toad­ver­tise more has been turned up­side down by Patan­jali prod­ucts,” says Milind Sar­wate, for­mer CFO of Marico and founder of In­cre­ate Value Ad­vi­sors.

Prod­uct Ef­fi­cacy is the ul­ti­mate USP

Patan­jal­i­has­brought­the­fo­cus­backon prod­uct ef­fi­cacy. Ris­ing above the noise of ad­ver­tis­ing, prod­ucts have to first de­liver value to the con­sumers. Ghee and tooth paste are the two most pop­u­lar prod­ucts of Patan­jali — even though both of th­ese have enough lo­cal and multi­na­tional com­peti­tors in the or­gan­ised sec­tor. Ac­cord­ing to a re­cent sec­tor re­port by Spark Cap­i­tal, while dis­rup­tion is painful in the short term, it is slated to bring back a key value propo­si­tion of FMCG prod­ucts — prod­uct’s ef­fi­cacy.

A Strong Brand Am­bas­sador

The­fact­thatBabaRamdev,ayo­gaguru him­self, is pro­mot­ing the herbal and or­ganic Patan­jali prod­ucts has proved that celebrity en­dorse­ments work if there is a high con­nect be­tween the en­dorser and the fea­tures of the brand. The Maggi ban last year had showed how brand am­bas­sadors can re­ceive flak in case the brand fal­ters.

Con­sumers have the Last Laugh

Emer­gence of Patan­jali helps keep the es­tab­lished play­ers on their toes and pro­vides the consumer the ben­e­fit of more ef­fi­ca­cious prod­ucts at lower prices. It re­minds the FMCG com­pa­nies that peak mar­gins can­not be sus­tained at the cost of the con­sumers. Patan­jali has re­in­forced that there is scope for dis­rup­tion at any point in the in­dus­try. De­spite the high clut­ter and pen­e­tra­tion and sub­dued de­mand, Patan­jali prod­ucts could make a mark. “This shows that there is al­ways scope for cre­at­ing new moats — which are not easy to repli­cate or com­pete with,” says an an­a­lyst track­ing the in­dus­try. The swift rise of Patan­jali in be­com­ing a ₹ 5,000-crore FMCG busi­ness in the past few years dwarfs the per­for­mance of FMCG firms that took sev­eral years to reach a sim­i­lar size. “For­mal man­age­ment struc­ture can at times slow down the growth of the busi­ness due to over so­phis­ti­ca­tion,” Sar­wate says.

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