The yoga gurus behind India’s hottest consumer products
THEY have bushy beards, a preference for loose-fitting robes, hundreds of millions of devotees – and a line of consumer products. Meet the Indian gurus behind the brands challenging some of the planet’s biggest companies.
Baba Ramdev, Ravi Shankar, Gurmeet Ram Rahim Singh and Jaggi Vasudev are among yoga and spiritual leaders lending their names to everything from honey and herbal remedies to toothpaste and clothes. With a ready-made clientele from their vast followers, they are helping to tap surging demand in India for natural and ayurveda-based products to challenge the likes of Unilever, Colgate-Palmolive and GlaxoSmithKline.
The newcomers’ success is snatching market share from larger established suppliers, which have had to develop their own ayurveda lines. Ayurveda is based on a belief that health and wellness depend on a balance of mind, body, and spirit, and can include the use of herbal compounds and special diets.
The guru- connected upstarts have already shaken the market. Unilever’s hold on India’s US$ 11.7 billion ( RM53 billion) beauty and personal care market has slipped more than five percentage points in the past five years, according to researcher Euromonitor International. And local personal care rival Dabur India Ltd. says its growth is slowing, even as the market is forecast to expand 14 per cent in 2016.
“These ayurvedic product sellers are posing a threat to Indian and global players as the product has gained mass appeal,” said Sanjiv Bhasin, an executive vice president at brokerage India Infoline Ltd. Profit margins are shrinking in response, he said. “It has made the existing players enlarge their marketing budgets greatly to try and protect their turf.”
The biggest new competitor is yoga guru Baba Ramdev’s Patanjali Ayurved Ltd., which offers some 500 products spanning food, nutrition, and beauty and personal care. Formed a decade ago, its revenue will at least double to more than US$ 1.5 billion (100 billion rupees) in the year ending March 2017, Ramdev said in November, adding that all Patanjali profits go to charity.
Ramdev said he’s an “unpaid ambassador” at Patanjali and that childhood friend Acharya Balkrishna holds 97 per cent of the company’s shares. That helped make 44-year- old Balkrishna India’s 48th richest person in 2016, worth US$ 2.5 billion, according to Forbes.
“World- class quality, low price and giving away our entire profit to charity are the three main reasons for the boom seen in Patanjali products,” said Ramdev, clad in his trademark saffron- colored robe, in an interview in New Delhi. Executives at multinational companies believe babas, or holy men, like him “don’t know anything,” he said. “Now all tiewearing people are sweating. They realise loincloth-wearing people can do many things.”
Patanjali had a 1.2 per cent share of Indian’s beauty and personal care market last year from 0.2 per cent in 2011, according to Euromonitor. The company is planning to release refined oil, milk and textiles, mostly to counter the dominance of foreign- owned businesses, Ramdev said.
“Why shouldn’t our country’s money stay here and be used for this country’s service?” he said.
Unilever, which began selling “Sunlight” soap in India in 1888, has said domestic brands, such as Patanjali, have been better than multi-nationals at picking up on local trends. Patanjali is a company “which everybody has been following with a lot of interest – incredible branding created there,’’ Unilever Chief Financial Officer Graeme Pitkethly said on an Oct 13 conference call to discuss thirdquarter sales.
The Anglo-Dutch giant has countered this with Hamam soap, which incorporates ayurvedic herbs, and its local unit Hindustan Unilever Ltd. bought hair- care brand Indulekha December last year to add a “naturals” line in hair oil.
Patanjali aims to have 500 billion rupees in revenue in the next three years, Ramdev said. Infoline said the company could grab 35 per cent of both the Indian honey and ayurvedic medicine markets and a third of the market for ghee, a type of clarified butter. ColgatePalmolive and Dabur would be hurt the most by Patanjali’s expansion, Infoline said.
Ayurveda, as practised in India, is one of the oldest systems of medicine in the world.
“In India, the consumer believes strongly in natural ingredients,” Bina Thompson, Colgate-Palmolive’s chief investor relations officer, told analysts on a July 28 conference
These ayurvedic product sellers are posing a threat to Indian and global players as the product has gained mass appeal. Sanjiv Bhasin, an executive vice president at brokerage India Infoline Ltd.
call. New York-based Colgate has introduced toothpastes with neem and clove essence, and recently began selling a charcoal-infused toothbrush and Colgate Cibaca Vedshakti, which contains natural ingredients including eucalyptus, basil and camphor.
“The positioning is a toothpaste packed with the goodness of natural ingredients to help keep dental problems away,” Thompson said.
In October, Dabur India Chief Executive Officer Sunil Duggal described Patanjali’s Dant Kanti toothpaste, which vies with Dabur’s Red brand, as a “fairly formidable player.”
A 200 gram pack of Dant Kanti goes for 75 rupees in India on online shopping portal Bigbasket.com. That compares with 74.80 rupees for the same quantity of Dabur Red and 97 rupees for Colgate’s Active Salt with neem. “Patanjali has made an impact, and we need to counter that,” Duggal said on an Oct 26 conference call with analysts. “We are not growing as fast as we could.”
Sales at Patanjali have climbed as it expanded the number of retail stores selling its own products to almost 10,000 country-wide, building on a franchise system created from its existing yoga outlets.
Ramdev’s yoga followers gave him an easy-to-reach customer base, Infoline’s Bhasin said.
“This has seen him save on ad expenses and marketing costs compared to larger players,” he said. And land around the yoga ashrams Ramdev has established will “give him enough room to expand for the next three years.”
Following Patanjali’s “spectacular” success, Edelweiss Securities Ltd. expects other spiritual gurus, including Sri Sri Ravi Shankar, Guru Ram Rahim Singh, and Sadhguru Jaggi Vasudev, “to go the Patanjali way,” analyst Abneesh Roy and colleagues said in a report in March. — WP-Bloomberg