Baba Ramdev goes for the Kill with Digital

Patanjali as we all know challenged the status quo which existed in the FMCG category and in no time managed to clock a whopping turnover of Rs. 10,561 crore in FY2016-17. At this pace of growth, it is expected to double its turnover this FY to over Rs. 21,000 crore.

What once seemed like a fad and a mad rush for herbal and ayurvedic products has turned out to be a serious business and has made global biggies rethink their India strategy.

Baba Ramdev and his team have shown tremendous business acumen as they launched a slew of products, set up vast and deep distribution channels across urban and rural India and invested heavily in ATL and BTL activities. In 2016 Patanjali went on a media blitz but with a twist. It invested heavily in Television but instead of buying spots on GEC where FMCG companies usually spend a lot, it decided to differentiate itself and undertook a media differentiation strategy.

Unlike most of its rivals, it spent majorly on regional and national news channels. It was clearly a space which not too many FMCG rivals considered and hence provided a perfect platform for Patanjali to stand out from the crowd and clutter.

And while we can all applaud Baba Ramdev for his foresight in identifying a brewing need in the market for ayurvedic and herbal products, there were many others who did try their hands in this space much before Patanjali. Most notably, Hindustan Unilever which is one of India’s oldest consumer product brand, launched ayurvedic products under the brand name "Ayush" 5 years before Patanjali started its operation. However, to avoid cannibalisation of its existing products it decided to launch Ayush as a premium brand and in the process decided to forgo a huge opportunity to create a new segment among value conscious consumers at the bottom end of the pyramid. This strategy clearly backfired and by 2007 it lost steam.

Now to counter the threat from Patanjali and Sri Sri Tattva which is launched by Sri Sri Ravishankar, Hindustan Unilever is adding a large number of ayurvedic and herbal products in the budget or affordable category.

And just when we thought that it will be a corporate battle between Patanjali and Hindustan Unilever on the product and distribution front, Baba Ramdev has taken everyone by surprise by going for a massive online advertisement push.

Patanjali started its experiment of digital advertising with Saundarya cosmetics and Shishu Care lotions and oils for children in February. Since then, it has widened its digital campaign portfolio to 10 products. While the immediate impact on sales is not known, there seems to be no stopping as the focus is clearly on wooing millennials and building connect with youth online.

As per a recent BCG report, India will have over 850 mn online users by 2025. By 2020, half of all Internet users will be rural. Also, 40 per cent users will be women, while 33 per cent are expected to be aged 35 years or older. With adoption of digital medium which holds a strong promise for the future, the strategy is clearly to leverage on digital platforms to build a mass appeal for Patanjali by making youngsters more aware about the benefits of ayurvedic products and offer Patanjali as an attractive alternative.

While the result of this strategy will be only known years from now, the fact is that Hindustan Unilever is still a leader in the CPG space with larger distribution network and deeper pockets than Patanjali. Yet, winning back market share from Patanjali will be a tough ask as it enjoys huge popularity and loyalty among middle-class India. Moreover with Ayush being a much lesser known brand, Hindustan Unilever would need to invest heavily to create more awareness and consideration.

The battle seems to be long drawn and complicated. And it will only get more interesting as Sri Sri Tattva and other consumer goods companies get more aggressive. The winner in this war may well be digital platforms as they will witness larger monies flow in from all players and loser could well be the digital users who will now have to bear an onslaught of advertisement about ayurveda, herbal, organic and swadeshi.

Disclaimer: The views expressed in this article are my personal views and not that of my employer