Admin
by on November 11, 2018
642 views

After stunning the business world by raising a small Ayurvedic pharmacy to the stature of a company with Rs 10,000 crore revenue in less than a decade, yoga guru Baba Ramdev's Patanjali Ayurved slowed down last financial year as its revenue growth hit a pause in sharp contrast to more than 100% growth in the previous year. Not only its ambitious target to reach Rs 20,000 crore to Rs 25,000 crore turnover in three to five years looked out of reach, it ran the risk of further erosion. 

But you cannot underestimate the inventive minds of yoga evangelist Ramdev and his aide and Patanjali CEO Acharya Balkrishna. They have not run out of ideas. 

After facing strong competitive response from large FMCG companies with their own Ayurvedic offerings, Patanjali Ayurved is trying to find a new route to growth: agri and food-processing business. It has already entered the dairy sector with products such as cow milk, curd, buttermilk and cheese. It has also started selling greens such as peas, sweet corn and mixed vegetables. Ramdev said yesterday at a Ficci event that Patanjali was now focusing more on agriculture. "We would encourage organic farming, and we are going to bring many products based on it," he said. 

Patanjali is taking a new course after facing several challenges in its current business. General trade distribution remains a challenge for the company due to a strong hold of big FMCG companies. Patanjali is facing brand fatigue as the novelty value and buzz around the brand has gone down. Other FMCG companies have also launched a range of herbal products. They are giving a strong competitive response with their own Ayurvedic offerings too. According to a recent Credit Suisse report, consumer offtake has declined in many product categories. While the company continues to hold sway over toothpastes with Dant Kanti, and in ghee, incremental gains in these categories are said to have declined. 

Dairy, agri business and food processing could be Patanjali's new route to revenue growth even as it struggles to consolidate existing business. According to market research firm Euromonitor, after edible oils, dairy is the second-largest segment in India’s packaged-foods business, valued at Rs 1.2 trillion as of 2017. Though dairy segment is dominated by giants such as Amul which has a firm base in cooperatives, Patanjali has tried to pitchfork into the market with low prices. It is selling milk at Rs 40 a litre, which is Rs 2 less than the prevailing price. Indian food market was worth $193 billion in 2016 and is expected to cross $540 billion in 2020. The sector has been growing at the rate of 12 per cent annually. Vast scope of growth in dairy, agri business and food-processing segments has lured Patanjali which is now facing the heat in its current business from fiercely competitive FMCG giants it had once aimed to overtake. 

"We are aiming to make Patanjali as one of the leading FMCG companies globally," Ramdev said at the Ficci event, taking his business dream a notch up from beating incumbents in India's FMCG sector. He could be basing his hopes in Patanjali's foray into the new sector. While FMCG biggies have beaten back a resurgent Patanjali, it remains to be seen how Patanjali will tackle the incumbents in dairy, agri and food-processing businesses. 


 

Posted in: Business
Topics: ramdev, patanjali