EXECUTIVE SUMMARY

Fast –moving consumer goods (FMCG) is the 4th largest sector in the Indian
economy with Household and Personal Care accounting for 50% of FMCG sales in
India. Growing awareness, easier access and changing lifestyles have been the key
growth drivers for the sector. In 2017-18, revenue for FMCG sector have reached
52.75US$. Ram Dev Baba has become the health ambassador of the masses.
Patanjali Ayurved, started by him in 2006, has seen a rapid growth in the past few
years with revenues of Rs.12000 crores in FY 2017-18 from 450 crores in FY
2012. In recent times, there are very few companies which have achieved the
success comparable to Patanjali.

Patanjali offers full product range of food, cosmetics, medicines, books, CDs,
DVDs and audio cassettes. In addition to the above product categories, Patanjali is
trying to foray into new product categories such as Garments (Khadi and Jeans)
and animal feed. Tie-ups with retail chains such as Future group, Reliance retail
and D-mart have helped to boost the sales. At present they are set to export their
products to at least 10 countries. Effective branding and pricing being the most
important strengths of Patanjali, the weaknesses and threats are analysed in the
current study with possible opportunities and a road ahead for the brand through
the SWOT analysis. The current study also considers market statistics of the
FMCG sector and major competitors for Patanjali.

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 CONTENTS

SL.NO PARTICULARS PAGE NO.

1 INRODUCTION 7-12

2 PRODUCT 13-16
CATEGORIES

3 MARKET STATISTICS 17-19

4 SWOT ANALYSIS 20-24

5 ROAD AHEAD FOR 25-27

PATANJALI

6 RECOMMENDATIONS 28-30
AND CONCLUSION

7 REFERENCES 31

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 CHAPTER I

INTRODUCTION

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INTRODUCTION:

1.1About FMCG sector:

Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian
economy with Household and Personal Care accounting for 50 per cent of FMCG
sales in India. Growing awareness, easier access and changing lifestyles have been
the key growth drivers for the sector. The urban segment (accounts for a revenue
share of around 55 per cent) is the largest contributor to the overall revenue
generated by the FMCG sector in India However, in the last few years, the FMCG
market has grown at a faster pace in rural India compared with urban India. Semi-
urban and rural segments are growing at a rapid pace and FMCG products account
for 50 per cent of total rural spending.

Market Size

The Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$
840 billion in 2017, with modern trade expected to grow at 20 per cent - 25 per
cent per annum, which is likely to boost revenues of FMCG companies. Revenues
of FMCG sector reached Rs. 3.4 lakh crore (US$ 52.75 billion) in FY18 and are
estimated to reach US$ 220 billion in 2025. The sector witnessed growth of 16.5
per cent in value terms between July-September 2018; supported by moderate
inflation, increase in private consumption and rural income.

Revenue from FMCG:

Accounting for a revenue share of around 45 per cent, rural segment is a large
contributor to the overall revenue generated by the FMCG sector in India. Demand

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for quality goods and services have been going up in rural areas of India, on the
back of improved distribution channels of manufacturing and FMCG companies.
Urban segment accounted for a revenue share of 55 per cent in the overall revenues
recorded by FMCG sector in India.

Indian FMCG Industry Analysis

Latest update: January, 2020

Source : www.ibef.org

The FMCG market in India is worth $49 billion USD as of January, 2016 and is
expected to grow to $103.7 billion USD by 2020.5 It is the India’s fourth largest
industry. The growing awareness, rising disposable income of the masses and
easier access are the key drivers of demand growth. There is also an increased
demand for premium products because of the growing youth population. Besides
the penetration into rural areas is increasing and thus newer geographies are made
into playgrounds for the myriad FMCG companies. The FMCG industry has three
main segments: Food and beverages (18%), Health care (32%) and Household and
personal care (50%). The FMCG sector has witnessed a CAGR of 11.9% between
2007 and 2016. The urban sector account for 65% of the revenues, while the semi-
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urban and rural make up the rest 35%.6 The current trends in FMCG are product
innovation (e.g. Honitus: non-drowsy), product customization/mass customization,
premiumization, backward integration, outsourcing, increasing rural penetration,
outsourcing, expanding distribution networks, smaller sized SKUs, increasing
private label penetration and reducing carbon footprint.

1.2About Patanjali:
Patanjali Ayurved disrupted the Indian fast-moving consumer goods (FMCG)
sector with nature-based products in various categories to challenge the dominance
of companies such as Hindustan Unilever in the past three-four years. 

That has forced rivals, especially the multinationals, to retool their portfolios to
introduce matching products at similar price points to try and regain their market
ranking, analysts said. This seems to be paying off, they said. 

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The homegrown upstart has been most successful in staples such as ghee, flour,
ayurvedic health supplements, toothpaste, edible oil and condiments but less so in
noodles, biscuits, personal care, chocolates and juices. 

Its rapid growth posed a threat to mainstream FMCG companies by renewing the
natural/herbal/ayurvedic theme and compelling FMCG companies to tweak their
range. For instance, HUL’s personal care products faced headwinds, prompting the
company to relaunch its Ayush brand and acquire ayurvedic hair oil brand
Indulekha. Having sustained similar damage in the oral care segment, Colgate-
Palmolive launched its own herbal toothpaste. 

Sales and Distribution

Patanjali Ayurved sells through nearly 4,700 retail outlets as of May

2016. Patanjali also sells its products online and is planning to open outlets at
railway stations and airports. As per the tie-up with Future Group, all the consumer
products of Patanjali will be available for the direct sale in Future Group outlets.
Patanjali Ayurveda products are also available in modern trade stores
including Reliance retail, Hyper city and Star Bazaar apart from online
channels. Patanjali Ayurved, co-founded by yoga guru Ramdev, is targeting Rs
20,000-crore revenue in 2017-18.

Patanjali Ayurved has also started its FMCG expansion in form of dealership and
distributorship channels across the country and expects wider growth in Overseas
distribution as well.

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Proactive moves in Innovation

Patanjali Ayurveda is aggressively planning to enter into every consumer category.

Currently Patanjali Ghee is expected to be at INR 12 billion in the financial year
2016 and if it gains solid distribution expertise, it could pose a serious threat to its
competitors. An innovative R&D facility equipped with latest technology, Patanjali
has also launched a mobile app which helps the consumer to locate retail outlets
and for online ordering of Patanjali products

Patanjali’s Supply Chain Management

The three phases of patanjali’s supply chain are product flow, information flow and
cash flow. Patanjali has recently completed a tie up with Future group to sell the
products. They also sell their products through their own outlets opened in almost
every district/city of India.
Each outlet has to send their demand to central office at Hardiwar. Then as per the
demand, various products are gathered from various units of Patanjali.
The items are delivered to outlets majorly through Patanjali transport.
 

The reasons for Patanjali’s accelerated growth in a 4P framework are:

Product: Differentiated product that appeals to the Indian belief in

Ayurveda/natural remedies/ ‘hand’ medicine

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Price: Discounted at 20 – 30% compared to competition. Low cost pack sizes –
health juice sachets start at Rs 5, making their product accessible to many

Place: Distribution through Ayurvedic pharmacies which further strengthens their

health proposition. They have continued with their franchisee based distribution
strategy but their tie-up with Future Group has enlarged the product’s footprint,
making its products easily accessible to shoppers. Though going by the complaints
on complaintboard.in, there are several complaints about Patanjali’s online services
on its website, duplication of products and quality of staff. Tie-ups with online
retailers such as bigbasket.com and Amazon have given it access to a growing
middle class base along with reducing its cost on promotions.

Positioning: Strong positioning on Ayurveda and health consistently reinforced by

its ‘brand ambassador”. Ramdev recently added social causes to the identity of the
band. During the Patanjali Conference in May 2017, Ramdev launched a school for
the children of deceased army officers, offering them free education. He even
commented that Patanjali as a brand was not interested in making profits but
developing the future of the country, effectively appealing to the emotions of the
masses.

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Branding

Ramdev is the face and the man behind the whole brand of Patanjali Ayurveda.
The story started even before the idea of Patanjali was conceptualized. Ramdev
started as a yoga guru offering a healthy life style choice and quickly escalated to
fame by TV and live yoga sessions, which had a huge reach and created a big
impact on the Indian people. One of his erstwhile disciple & friend, Acharya
Balakrishna who also happens to be an Ayurveda expert, used this opportunity to
launch a range of Ayurveda & herbal products under brand Patanjali. Combining
these products with the yoga of Ramdev was a good move as they were
complementary to each other and helped each other as a sort of unwritten co-
branding. Patanjali products started to get promoted by Ramdev via the TV
channel (Aastha) and also in his yoga sessions. This association of Patanjali with
the popular and mass accepted yoga guru Ramdev has been a strong and favorable
one. Hence salience or awareness of the brand is high, significantly more in North
India and parts of Western India than other regions, the reason behind can be due
to usage of Hindi as its prime language of communication and promotion. The
brand recall is also quite high. The imagery that Patanjali carries is quite a positive
one, which is seen as a pure, good quality indigenous product and a healthier
alternative than other FMCG products typically found in market. In terms of
performance, by our market research and interviews, the customers are satisfied
with it. Most of the consumers feel that Patanjali is a brand that can be trusted and
hence advices each other to use these products. Since it is lifestyle choice of
choosing the healthier alternative among the existing brands, there is a resonance
among the consumers which results in strong brand loyalty. It is observed that once
a consumer starts using a particular Patanjali product, he or she starts using other
products too of the same brand since all are aligned with Ayurveda. From its
inception, Patanjali has been following ‘Branded House’ strategy that is keeping
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everything under one umbrella brand, unlike most of the other FMCG companies
like HUL, P&G etc. which uses ‘House of Brands’ strategy i.e. there is a
standalone brand for each product line offering. This gives Patanjali a significant
advantage in building a unified brand for itself, its current range of products and
new products which are going to be launched since it can leverage on the already
established brand of Patanjali.

Feasibility - Can other FMCG houses follow the footsteps of Patanjali?

Patanjali has become a strong player in the FMCG sector and even though it offers
Ayurvedic and herbal products only, it is directly competing with the mainstream
FMCG players like Colgate, HUL, P&G and Dabur. Understanding the impact
created by the presence of Patanjali, HUL, P&G and ITC have started equipping
their arsenal by adding herbal ranges to their product line mainly through
acquisition discussed in other part of our study. Let us now see whether this move
by these companies is feasible or not. Firstly, it is to be observed that Ayurveda or
herbal products was not new to Indian market. It existed before Patanjali came into
scene. But those products were either premium & expensive or totally local &
unbranded. In the premium & expensive scenario, those brands were restricted to a
very small market & customer base which was not sustainable in the long run and
also was out of reach of common mass. In the case of local & unbranded, it
suffered from quality & image issues and was also not manufactured in mass.
What was common in both the cases was that neither of them could cater to the
huge number of customers and give them the benefits of Ayurveda. Patanjali came
into the market and addressed exactly this issue by filling the gap and bringing
Ayurveda to the common household at an affordable, rather cheap price. In this
regard, it can be said that they identified the gap in the existing market and entered,
which obviously gave them the first mover strategy. Now however much the

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FMCG houses try to enter the market of Ayurveda and herbal products, chances
are that they will get a tough time dealing with the market which is swelling with
Patanjali products day by day. Secondly, the Ramdev factor is very strong which
the heart of brand Patanjali and a key ingredient to its success. This works in
multiple ways. Ramdev is himself a popular face and has a huge base of followers,
who not only are the early adopters of Patanjali products but also acts as
spokesperson for the brand to their family, extended family, friends, neighbors and
colleagues which serves as a word-of-mouth promotion which has higher
credibility since the users themselves are promoting them out of their good
experience. It also cuts down cost to do other types of promotion form the
company side. Speaking of other FMCG houses, they don’t have Ramdev type of
figure nor can they generate or engage such a huge follower base of Ayurveda.
Celebrity endorsement, which is typical of these companies, won’t really create
that much impact or help in this category. Thirdly, Patanjali’s funds come from
Patanjali Yogpeeth Trust and other sources like yoga camps but there are no share
holder bodies to which the company owes back. Hence the strategy of Patanjali
right from the beginning till date has been to increase market share rather than to
make huge profits. As a result, they could easily manage with keeping their
margins significantly low, keep the product packaging simple hence cutting cost
and keeping promotion cost to a minimal level. The manufacturing plants are also
located directly near their sourcing locations, which is both strategic and cheap.
Equipped with all these advantages, they flooded the market with their huge
product offering and snatched away a significant market share in the process.
Coming to the case of the FMCG companies, they have shareholders and investors
to whom they have to pay back at the end of the day and hence have to keep create
value for them by generating higher revenues. This makes them focus on the
bottom line and hence the strategy followed by them is typically profit making than
increasing market share. Now if they start a product line on the herbal Ayurveda
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range, that will be not sustainable in the long run since to take on the market leader
Patanjali, they have to keep their costs low, something which they cannot afford
nor in line with their current business strategy. Lastly, Patanjali has its own stores
and retail outlets in the form of Patanjali Arogya Kendra, Patanjali Chikitsalaya
and exclusive franchise stores. The Chikitsalaya provides free Ayurveda Doctor
consultation on top of being a retail store to whoever visits the store, irrespective of
them finally making the purchase or not. Even the Arogya Kendra provides doctor
consultation, though it is not compulsory. By such a move from the company, they
are not only selling a product, they are selling a service too which increases the
overall customer experience with the brand. The exclusive franchise store, with its
minimal & simple layout stocked with only Patanjali products helps the customers
make a choice and breaks away from the otherwise cluttered shelves of FMCG
products where differentiation becomes an issue and all brands are almost the
same. Even in hyper markets and other outlets, Patanjali products generally are
stocked in a separate shelf or different row. On the other hand, typical FMCG
companies do not have the expertise to start clinics giving free doctor consultation
nor it will be directly aligned to their business.

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2. PRODUCT CATEGORIES

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PRODUCT CATEGORIES:

Patanjali has a diverse product offering in its marketing mix. The product range of
Patanjali had more than 400 types of FMCG goods like cosmetic products, food
items, haircare, skincare, tooth care etc. The company also has products which
focus on baby segment, healthcare and beauty products for men and women.
Patanjali also produces medicines and as per its sources, all its products are
ayurvedic and free of harmful chemicals. Patanjali food product range includes
biscuits, noodles, cornflakes etc. Patanjali has 300+ medicines for treating many
ailments and body conditions, from common cold to paralysis. Textile, jeans,

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kurta, pyjama etc. is also something which the company is focused on. Hence, this
gives an insight in the product mix of Patanjali.

The above image portrays the branded house strategy of Patanjali in competing
with the major brands in the market with a single name. It caters to a wide variety
of consumer goods. However, spreading too thin across multiple product
categories might result in carpet bombing with products eating into profits of one
another. Also it makes it difficult for the consumers to connect with a specific
product. According to AL Ries and Jack Trout, when a brand extends into a varied
product range there is a high chance of free-ride trap in the positioning strategy
which primarily confuses the image of the brand in the minds of the customers. So
the authors suggest to have a separate brand for each variety of products being
offered. Which is quite opposite to the strategy followed by the Patanjali.

EXPECTED FUTURE PERFORMANCE OF PATANJALI PRODUCTS

Patanjali has around 30 products in its pipeline including a health drink, energy
bar, cow milk powder, digestive biscuits, anti-ageing cream and moisturizing

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cream. In addition to this, they will also look to aggressively market their products
through their e-commerce website, which has not been adopted by major FMCG
giants.

Colgate-Palmolive India has reported its worst sales growth in the last 44 quarters.
Hindustan Unilever has also seen its revenue expand at a weak pace since the last
six years. This trend is likely to continue in the future and estimates indicate that
by 2020, FMCG giants can lose 3%-8% of their market share to Patanjali. In the
toothpaste market, Colgate still remains the market leader but its market share has
declined over the last two years. Ramdev led Patanjali has tied up with Future
group to increase the penetration of its products and this venture result in intense
competition between the two companies.

With a reported turnover of Rs 10,561 crore in financial year 2017 (FY17), Baba

Ramdev and Acharya Balkrisha - led Patanjali Ayurved Limited (PAL) expects its
revenue to hit Rs 20,000 crore mark in financial year 2017-18 (FY18).

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3. MARKET STATISTICS

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MARKET STATISTICS:

Source: Registrar of Companies, Ministry of Corporate Affairs & Patanjali

Patanjali has seen an overwhelming growth of sales and revenues ever since its
entry into the FMCG market. Its net profit has increased drastically from 2010 to
2019
Giving a strong competition to the major market players.

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The brands ayurvedic image contributed to its success and cash cows being ghee,
toothpaste and ayurvedic pharmacy.

4. SWOT ANALYSIS

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SWOT ANALYSIS:

STRENGTHS OF PATANJALI:

BABA RAMDEV:  The name Baba Ramdev is synonyms to Patanjali, it’s because

of his popularity and goodwill that the brand has seen an exponential growth in
such a short span of time.

AYURVEDA & HERBAL: Patanjali has played the card of swadeshi products to

its best. Patanjali products are made of Ayurveda and Herbal natural components
and the brand has been very successful in promoting and communicating the
benefits these Ayurveda and herbal products to its customers.

PRODUCT PRICING: One of the major factors that have supplemented the

growth of the brand is the pricing of its products. Patanjali has used penetration
pricing for all its products making it accessible for customers from every walk of

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life. There is a minimum of 30% difference in the price of Patanjali products and
their competitor products.

STRONG SUPPLY CHAIN AND DISTRIBUTION CHANNEL:  With a total

of 15,000+ outlets all over India, Patanjali has a strong supply and distribution
channels. It sells its products medical centers such as Patanjali Chikitsalayas and
Patanjali Arogya Kendras, non-medical centers such as Swadeshi Kendras.

SELLING THROUGH E-COMMERCE PARTNERS: Patanjali products are

not only available offline but you can purchase them online as well. The company
has partnered with different e-commerce partners who help them sell their products
online and make them available to a wider customer base.

WIDE RANGE OF PRODUCTS: You think of a product and Patanjali will have

it in its product portfolio. One of the biggest strengths of Patanjali is the wide
variety of products that it has in its product mix.

AGGRESSIVE MARKETING AND PROMOTION: Switch on your Television

or any new channel the only ad which is on the loop is of Patanjali. Patanjali knew
that in order to make the most of the first mover advantage (in Herbal and
Ayurveda product segment) they would need to promote their brand and products
heavily and that is what they did.

Patanjali spent heavily on advertising and marketing so as to make people aware of

their products and brand and they very well succeeded in it.

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 WEAKNESSES OF PATANJALI:

Weaknesses stop an organization from performing at its optimum level. They are

areas where the business needs to improve to remain competitive:

TOO MANY PRODUCT OFFERINGS: Having too many products in one’s

product line becomes more of a bane for the brands than a boon. For Patanjali as
well, a major part of the revenue comes from 5-6 product categories, for rest of the
products, Patanjali needs to consolidate them or push them to achieve its ambitious
targets.

 PRICING STRATEGY: It will be interesting to see if Patanjali can carry on with

the same penetration pricing strategy in the future and maintain strong profit
margins. Labor cost, cost of raw materials and increasing competition will play a
crucial role in shaping the pricing strategy of Patanjali in the future.

THREATS OF PATANJALI:

Threats refer to factors that have the potential to harm an organization in the

future. Given the fact, threats give a brand a far-sighted view about the problems
that the brand is likely to face in the future, it is one of the most important factors
in the SWOT Analysis of Patanjali.

COMPETITION FROM OTHER FMCG PLAYERS: Prominent FMCG

players like HUL, P&G, and Marico etc. have also taken the plunge and have come

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up with their own variants of ayurvedic products. This increased competition is
posing to be the biggest threat for Patanjali, who was till now the only provider of
ayurvedic products.

OPPORTUNITIES FOR PATANJALI:

Opportunities refer to the factors which the organization can use to its favor to
grow its market share, sales, brand recognition etc. It’s the second most important
factor in

EXPANDING GEOGRAPHIES: With the portfolio of products and the pricing

strategy that Patanjali has, it has great potential in the rural market and should look
to expand its operations in the vast rural market of India.

GLOBAL PRESENCE: After exploring the Indian market, Patanjali has a

great opportunity to expand globally and can look for the Middle East and African
nation in the beginning. Various other companies such as Dabur have already
expanded globally and have been successful.

Conclusion

There are a number of challenges that Patanjali faces but still, it’s the strong brand
equity, current market position, and the opportunities that pose a strong growth in
the future for the brand.

This concludes the SWOT analysis of Patanjali.

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25
 5. ROAD AHEAD FOR PATANJALI

The road ahead - Challenges

 Maintaining quality and brand promise – The key to buying any Patanjali
product is quality and purity (possibly, that’s why its cow milk ghee’s sales
forms ~50% of its revenues). This stands as a core brand promise.
Consumers associate Patanjali with these attributes. Without a consistent
adherence to quality standards across all its product categories, Patanjali
cannot shake the boardrooms of FMCG giants. Quality becomes even more
important as the company starts relying on contract manufacturers for newer
and “inconsistent” product categories. You just can’t open an apparel and
shoes manufacturing plant overnight, if you are running a food and medicine
plant!
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 An ever expanding product portfolio with brand extensions – Few
brands, such as Virgin Group, have done a tremendous job at brand
extensions, though with failures in many categories. Considering Patanjali
has forayed into categories (such as shoes, apparels, home cleaning
solutions, etc.) that are not directly linked with Ayurveda or purity or
goodness, ensuring their loyal consumers do not get confused with what it
wants to do with the brand and how far it wants to stretch, could be a
challenge in the longer run.

 Absence of a key sub-branded range under Patanjali “Umbrella”

- Further, most of its products are branded under “Patanjali” umbrella and
are then linked with generic names such as Patanjali Atta Noodles, Patanjali
ghee, Patanjali Cornflakes. Their communication largely focuses around the
name “Patanjali” and not around any sub-brand. This could affect sales of
their key categories, if inconsistent product categories do not perform well.
It can also confuse consumers if Patanjali want to increase “product depth”
and launch variants with minute differences. Parle, a biscuit and snacks
company, first nurtured its hide and seek range to a “brand” and then
launched newer “related” biscuit categories within Parle’s Hide and Seek
range. Patanjali can do something on similar lines.
 Image driven branding – Consumers don't just buy products to suit their
needs, instead they buy a solution that offers them value with “trust”.
“Patanjali” is largely co-branded/co-promoted with Baba Ramdev and his
companion Acharya Balkrishna. Any questions arising on their integrity will
surely affect the brand’s performance.

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28
 6.RECOMMENDATIONS AND
CONCLUSION

RECOMMENDATIONS:

To make a successful product, Patanjali’s marketing strategy should attract long

term consumers.

 Most of the Patanjali consumer are facing problem like products are not
available in the market regularly.
 They can increase their distribution channels.
 They have to focus back on product efficacy. Rising above the noise of
advertising.

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  They can increase their outlets and stores.
 So Patanjali Ayurveda should increase their productivity and make sure that
there will be no shortage of products in the market.

CONCLUSION:

Patanjali has given a headache to many marketers with its unconventional ways of
marketing. The Findings show that there are many significant factors that together
make up the buying decision of the product. Customers’ perception towards a
brand is built largely on the satisfactory value the user receives after paying for the
product and the benefits the user looks for. In the above study, a large portion of
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the user is satisfied from Patanjali products. It may be because of reasonable price
of the product. It may be due to ability of the product to cure the problem. The
satisfaction brings in the retention of customer. Patanjali is enjoying the
advantageous position in market through spirituality element involved in its
products. However, it should not ignore the competitors like Naturals, pure roots,
Vindhya herbals. Patanjali in order to retain more customers and satisfy them, must
fulfil the claims made by the company before any other brand may mushroom up
and take away the benefits of marketing through spirituality. A point to note is that
many people are buying Patanjali products due to the hedonic value attached to the
products. Hence, Patanjali (unlike its competitors) is attracting brand-loyal
customers and not price-sensitive customers.

7.REFERENCES:

FMCG in India: https://www.ibef.org/industry/fmcg.aspx

http://www.business-standard.com/article/news-ians/india-s-fmcg-sector-to-reach-
104-bn-by-2020-study-116100500613 1.html

Patanjali: https://www.patanjaliayurved.net/about

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Product Categories: https://www.slideshare.net/rohitgarg308/patanjali-analysis

https://www.kenresearch.com/consumer-products-and-retail/cosmetics-and-
personal-care/patanjali-company-report/39455-95.html

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