Wednesday, 2 December 2015

Desi Baba vs Videshi Baniya --- How Ramdev Baba is winning the brand war against the MNC Giants

My first impression of Ramdev Baba was quite impressive. I was 35 years old, running at the top of my career and also earning quite well. But I was also afflicted with hypertension, high blood pressure, cholesterol, triglycerides, thyroid, indigestion, insomnia, hairfall and what not. Every doctor I went to gave me pills which had to be taken for the rest of my life. I was waking up in the morning and taking five pills and then I was taking another five pills before going to bed at night. And I would inevitably wake up in the middle of the night with palpitation and nervous breakdowns making me go nuts. Sometimes I felt I would not live long. Sometimes I felt I should kill myself to get rid of all the pain. In sheer desperation, I enrolled myself in a Ramdev Baba Yoga Shivir to learn the secret of healthy living. 

And frankly speaking, I was not disappointed. What the half-naked sadhu was telling from the podium was sheer music to my ears. Breathe in and breathe out and take control of your metabolic system. Go into deep meditation and control your mind. Avoid junk food. Come closer to nature. Go green. Of course, his discourses also held veiled threat against the multinationals who, he alleged, were polluting the mind and body of the gullible customers with highly advertised and thoroughly publicized harmful carcinogens. I did start implementing some of his teachings. Although I still take the pills, I have to admit that my body, mind and lifestyle have become much healthier than before.

And this week, I happened to chance upon three cover stories done on Baba Ramdev by The Economic Times, Business Today and Outlook. The Economic Times story ‘Desi Hustle vs MNC Muscle’ focused on how Hindustan Unilever and Baba Ramdev’s Patanjali were battling to gain chunks of the rapidly growing Ayurvedic and herbal FMCG pie. The Business Today story titled ‘Baba of All Trades’ detailed on how the Sanyasi was building up an FMCG empire and launching Atta noodles to take on the might of Nestle and other MNC giants. The Outlook story titled ‘Brand Baba’ was on how the Ramdev Baba backed ‘Patanjali’ brand has seen a meteoric rise in very little time.

The facts and figures dished out in all the three articles were quite astonishing.   Although the brand ‘Patanjali’ is associated with Baba Ramdev, he does not own a single share in the company. His associate Acharya Balkrishna owns over 93 percent in Patanjali Ayurved, and his disciples and investors hold the rest. In turn, Patanjali owns 90 percent share in Aastha, the satellite cable television channel that catapulted Baba Ramdev into a celebrity Yoga teacher.  
The turnover of Patanjali has now touched 2,000 Crore with diverse offerings like food (ghee, biscuits, pineapple juice, honey, corn flakes and noodles), cosmetics (face wash, bathing soap and anti-dandruff shampoo), household products (detergent powder, dish wash bar and floor cleaner) and Ayurvedic medicines (nutrients and cures for diabetes, hypertension, cancer and hepatitis).  The company is recording a staggering 150 percent year-on-year growth in turnover and is slated to touch 5,000 Crore mark in 2016.

Now, let us take a quick look at his desi competitors and foreign MNCs. The biggest player, Hindustan Unilever, is expected to touch 35,000 Crore in total revenues this fiscal year. HUL owns an Ayurvedic personal care product line called Ayush. The other major players in the market are Dabur, Emami, Himalaya and Forest Essentials. The multinational companies that he is competing against are Proctor & Gamble(P&G), GlaxoSmithKline(GSK) and Johnson & Johnson(J&J). The total size of the FMCG market in India is estimated to be close to $50 billion.

In the case of noodles, it’s a no holds barred contest between Nestle owned Maggi and Baba Ramdev promoted Atta Noodles. The total size of India’s noodles market is estimated to be 5,300 Crore. With Maggi taking a sudden hit and forced to withdraw from India because of the Monosodium Glutamate(MSG) controversy, there was a huge void that was waiting to be filled up. Maggi was a Mother’s delight (Mummy bhookh lagi /Bas do minute), Bachelor’s delight (Kuch nahin to Maggi bana lena) and a fast food restaurant owner’s delight. But deep down in their hearts, everyone knew Maggi was harmful to health. And Ramdev Baba stepped in with his healthy proposition of Atta Noodles. The Atta Noodle from Patanjali is made from wheat, while the tastemaker is made with rice bran oil, fresh peas, beans and carrots sourced from Uttarakhand farmers. The price has been kept at a competitive 15/- a packet while competitors sell at 25/- a packet.

How did Ramdev Baba’s Patanjali suddenly come out of the blue and snatch away a major market share from the competitors? Well, it is an interesting story, told in a compelling manner in those front page articles. Everything about Patanjali has been unique, and the organization has been reaping rich dividends because of their innovative styles. 

The operating strategy of Patanjali is something that needs to be taken into reckoning. . Most of the key employees of this organization take no salaries. The rest of the employees also paid very modest compensation. They put in long hours in the organization without any complaints or grumblings, just out of love and adoration for their Guru. The Baba also has a succession planning in place --- he is preparing 500 Sadhus to run the venture in future days --- building a corporate structure with a spiritual culture. The administrative and manpower cost is barely two percent of revenue, in comparison to MNCs who spend more than 10 percent on the same.

The brand ambassador of Patanjali is of course, the Baba himself. He travels 200,000 km a year, mostly conducting Yoga Shivirs. Through these Shivirs, he reaches out to a potential mass of 200 million people, many of whom are also loyal customers of the Patanjali products. The captive television channel, Aastha, plays a key part in further promoting the Baba as well as his products. Recently, the company also started giving ads in General Entertainment Channels (GEC) like Star and Zee. The ad agency Mudra has been roped in to develop an expansive promotion strategy. The company is also looking at Southern regional channels to increase penetration in the South.

According the Acharya Balkrishna, the major stakeholder in Patanjali, product development is done based on three principles --- competitive pricing, purity of raw materials and innovation. Patanjali has successfully brought down the price of Aloe Vera juice ---one of the key offerings --- from 1200 a litre to 150 a litre by sourcing directly from the farmers. It has created a revolution in the desi ghee market, where the end product used to be largely adulterated to earn maximum profits. Patanjali has brought the consumer trust back into the desi ghee product, which now accounts for 442 Crore or 36 percent of Patanjali’s turnover.

They also successfully made amla juice and amla candies popular, thereby saving the livelihood of the amla farmers. It’s herbal toothpaste brand, Dant Kranti, also considered very effective, brought in revenues of 200 Crore in the Financial Year 2014-15.  Incidentally, Dant Kranti, is 30% cheaper than Colgate Active Salt and Dabur Red.

And strategically, most of Patanjali’s products have been kept cheaper by 15 to 30 percent in comparison to the competitors. In comparison, Hindustan Unilever’s products are 2 to 2.5 times expensive than the average market price. Patanjali is now getting ready to launch herbal chocolates, rasgulla, idli-dosa mix and energy drinks, besides the atta noodles launched to take on Maggi. There are new manufacturing units being set up in Madhya Pradesh, Gujarat and Rajasthan to ramp up the production.

The distribution strategy of Patanjali has also been unique. Initially, they were depending on their own channels of Super Distributors, Regional Distributors, Chikitsalayas and Arogya Kendras to sell the products. But the turnover actually increased when they went for strategic tie-up with retail outlets. Very recently, Patanjali has tied up with Kishore Biyani promoted Future Group to sell it’s products at Big Bazaar and other Future Group stores in 245 cities and towns.  This is going to give the Baba a big edge in reaching out to the end customers and consumers in a larger scale.

Unlike the MNC behemoths, Baba Ramdev doesn’t have an army of highly paid B-School trained marketers to sell his merchandise. But the word-of-mouth power that he commands seems to be enough to increase his turnover by leaps and bounds. He doesn’t conduct market research and test marketing; he just listens to the demands of his bhakts and launches products as per their need. The FMCG, Cosmetics and Healthcare product market is growing by 15 to 20 percent; Ramdev Baba’s Patanjali is growing at a blistering pace of 150 percent. No wonder the FMCG giants are concerned and are working on counter strategies to sustain their growth.

Despite all the positives, Baba Ramdev did have his fair share of controversies.  His proclamation that Yoga can cure homosexuality drew a lot of flak from the media and the critics. FSSAI (Food Safety and Standards Authority of India) was not too pleased when he announced the launch of Atta noodles without getting the required approvals. The Indian Medical Association (IMA) has written to the Government demanding strict action against him for claiming that yoga can cure cancer, diabetes and heart disease. As per the Drugs and Cosmetics Act, no one can claim complete cure for 54 listed diseases and all these three are included within them. But, all these have been brushed off as minor faltering in comparison to the mega successes that he achieved.

Though Ramdev baba is quite appreciative about his Indian competitors, his is going all out to curb the domination of the MNC majors in the Indian consumer markets. His objective, he says, is to instill swadeshi pride so that Indian money does not go out of the country. And, at this moment, it seems it is Baba Ramdev who is winning the brand war against his foreign counterparts.  He is launching Powervita to take on Cadbury’s Bournvita and GlaxoSmithKline’s Horlicks. He is coming out with Yoga Wear and Sports Shoes to counter Nike and Adidas. He is launching a beauty care line called Saundarya which will directly compete against Lakme, Avon and Oriflame. No wonder, the MNCs are having sleepless nights trying to gauge what he will do next to upstage their apple-cart.