Yoga guru Ramdev's Patanjali has taken the India's fast-moving consumer goods (FMCG) market by storm. "You never expected Patanjali to grab up to 5 per cent market share in India's total Rs 1.2 lakh crore FMCG market which has taken years for other players like Colgate, Emami and Godrej," industry veteran Milind Sarwate told NDTV Profit. (Watch)
Milind Sarwate is CEO of Increate Value Advisors, an advisory firm, which he founded after quitting Marico. He spent over 16 years in Marico in different roles and is credited with being instrumental in scaling up the FMCG player's growth.
"He (Ramdev) has definitely done something different. I think in FY15 Patanjali's turnover (revenue) was Rs 2,000 crore. This year (ending March 31, 2016), Patanjali is targeting a turnover of Rs 5,000 crore to Rs 6,000 crore," Mr Sarwate said.
Explaining the success of Patanjali, Mr Sarwate said, "This space was lying unexplored. Yes, there were companies which brought in natural ayurvedic or herbal products. But there was nobody who could claim the differentiation or specialty."
"The second factor in its success is the huge scaling up Patanjali has got," Mr Sarwate said.
Overall, "he (Ramdev) has been able to put together the whole space of herbal, natural and Ayurveda - something that is not western. Himalaya did try to do this earlier. Patanjali's success first of all lies in marshalling everything together."
However, the tipping point for Patanjali's success has been "urban acceptance it has got. It makes a difference," adds Mr Sarwate. Besides, "Patanjali's products are 20-30 per cent cheaper."
He lists out various factors which are helping Patanjali derive a cost advantage.
"A typical FMCG company would spend 10-14 per cent on marketing. Patanjali would be spending maybe 8 per cent. Patanjali is spending much less on manpower cost, maybe 2-3 per cent as compared to 6-7 per cent an FMCG company would spend," Mr Sarwate said.
Mr Sarwate also says that Patanjali has executed its marketing strategy 'really well. They have realised that their differentiation lies in their being in and around Ayurveda space."
Going forward, Mr Sarwate says, distribution would be a big challenge for Patanjali. "Execution in distribution will be a big challenge. You need to have systems and processes," he says.
Also, "I don't know how persistently Patanjali would be able to maintain the pricing," adds Mr Sarwate.
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