The Rise and Fall of Patanjali Ayurved A Swadeshi Revolution in FMCG

In 1995, Baba Ramdev, then an unknown yoga teacher in Haridwar, along with his close associate Acharya Balkrishna, laid the foundation of Divya Pharmacy under the spiritual guidance of Ramdev’s guru, Swami Shankar Dev’s ashram. The mission was simple yet profound: to produce Ayurvedic and herbal medicines to aid in natural healing. Divya Pharmacy operated under the ashram's trust, which initially limited their ability to expand beyond a small-scale operation.

The early days were marked by immense struggle. Financial limitations plagued their efforts, so much so that the founders could barely afford the registration fees for Divya Pharmacy. For the first three years, from 1995 to 1998, the medicines were distributed for free, driven by a passion to promote Ayurvedic healing rather than profit. Every aspect of the operation—sourcing raw materials, grinding, mixing, and packaging—was handled personally by Baba Ramdev and Acharya Balkrishna due to the lack of resources to hire staff. Despite these hardships, their Ayurvedic medicines began to gain popularity among locals for their effectiveness.

The Birth of Patanjali Ayurved Limited : A Milestone in Indian Consumer Goods

As Baba Ramdev’s reputation grew, so did the demand for their products. By 2006, the limitations of Divya Pharmacy being a trust-run venture prompted Ramdev and Balkrishna to explore new opportunities. Their widespread appeal, both among locals and Non-Resident Indians (NRIs), led to funding from Sarwan and Sunita Poddar, NRIs deeply invested in Ramdev’s vision, along with Govind Agarwal and others. This financial backing, along with loans from banks, paved the way for the creation of Patanjali Ayurved, a private company that could expand its product range and manufacturing capabilities.

Patanjali Ayurved was incorporated with a bold vision—to bring Ayurveda to the mainstream market. Unlike traditional Ayurveda companies, Patanjali sought to offer a diverse range of products beyond medicines, venturing into healthcare, personal care, food, hair care, and more. What began as a small pharmacy evolved into a sprawling business empire, providing everything from Ayurvedic health remedies to toiletries, cosmetics, dental care products, and even staple food items.

Defining Patanjali’s Success Formula: Swadeshi and Affordability

Patanjali’s early success can be largely attributed to its differentiation from competitors. While established brands were promoting high-end consumer goods, Patanjali followed the mantra of ‘swadeshi’ (self-reliance) and low-cost products. These ideals resonated strongly with the Indian population, which was seeking affordable yet high-quality, natural products.

Baba Ramdev’s strategy was brilliant. He connected Ayurveda’s ancient wisdom with modern consumer needs, positioning it as a healing system that was natural, effective, and trusted for centuries. Patanjali didn’t just offer products; it offered a lifestyle change. Baba Ramdev, being the public face of the company, furthered this cause by not only endorsing the products but using them himself. This personal touch helped build trust among consumers, making them feel that they were not just buying products, but embracing a healthier, more holistic way of living.

Acharya Balkrishna’s Role in Building Patanjali’s Business Empire

While Baba Ramdev became the face of Patanjali, his close associate, Acharya Balkrishna, played an equally crucial role behind the scenes. Balkrishna owns a 94% stake in the company and acts as its managing director. Despite Ramdev’s public presence, Balkrishna is the driving force behind the operations, expanding Patanjali’s reach from a handful of products to over 2,500 items today. These include Ayurvedic medicines, personal care, and food products, as well as items in niche markets such as clothing.

As of March 2018, Patanjali’s total assets stood at an impressive ?43,932 crores ($6.1 billion), making Acharya Balkrishna one of the wealthiest individuals in India. With an estimated net worth of $2.3 billion, he was ranked as the third-youngest billionaire in India by Forbes in 2021. Patanjali Ayurved’s influence extended far beyond Ayurvedic products—it had become a leading force in India’s fast-moving consumer goods (FMCG) sector.

Production Expansion and Strategic Manufacturing Hubs

One of the key factors driving Patanjali’s growth has been its aggressive expansion of manufacturing capabilities. The company’s Patanjali Food and Herbal Park in Haridwar serves as the primary production facility, boasting a manufacturing capacity of ?35,000 crores ($5.1 billion). As the demand for Patanjali’s products skyrocketed, the company announced plans to expand to ?60,000 crores through new manufacturing units in Noida, Nagpur, and Indore. Furthermore, Patanjali is setting up additional plants in India and Nepal, strengthening its position in the regional market.

In 2016, Patanjali made headlines when it announced the creation of a new facility—Patanjali Herbal and Mega Food Park in Balipara, Assam, with a massive investment of ?1,200 crores ($170 million). The plant, operational as of now, is the largest of its kind for Patanjali and has a production capacity of 1 million products annually. Overall, Patanjali currently operates around 50 manufacturing units across India, ensuring that its products are readily available across the country.

To protect its critical infrastructure, the Patanjali Food and Herbal Park in Haridwar was provided with 35 armed Central Industrial Security Force (CISF) commandos for round-the-clock security. Baba Ramdev, being a highly influential public figure, is also protected by Z-category security, which is among the highest levels of personal security provided by the Indian government.

Diversification Beyond FMCG: The Product Portfolio of Patanjali

Patanjali Ayurved Limited product offerings are vast and varied. From the production of Ayurvedic medicines for treating ailments such as the common cold to chronic paralysis, to launching personal care items and baby products, Patanjali has something for every consumer. In 2015, the company made waves by launching Atta noodles, a healthier alternative to the popular instant noodle brands, tapping into the burgeoning market for quick, convenient, and wholesome food options.

Patanjali has also ventured into traditional clothing, introducing kurtas, pyjamas, and jeans under its clothing line, furthering its reach into diverse sectors of the Indian economy. This diversity allows Patanjali to maintain its status as a go-to brand for consumers seeking quality products rooted in traditional wisdom, at affordable prices.

The Setback: Challenges Faced by Patanjali

Despite its impressive rise, Patanjali faced significant setbacks beginning in 2017. Sales began to decline, and several reasons were attributed to this downward trend:

1. Lack of Innovation: As the FMCG sector continued to evolve, Patanjali was criticized for failing to innovate. The company relied heavily on its existing product range while competitors continually introduced new and improved offerings. The implementation of the Goods and Services Tax (GST) in 2017 also hit Patanjali hard, disrupting its supply chain and operational infrastructure, resulting in a 10% decline in revenue for FY18.
2. Lack of Advertising: Unlike other FMCG giants that invested heavily in advertising, Patanjali scaled back its promotional efforts. As a result, consumers were less aware of Patanjali’s newer products and offerings. The reduction in advertising also hampered Patanjali’s brand recall, which is critical for maintaining customer loyalty.
3. Ignoring Competition: Patanjali’s initial success created a sense of complacency. As the company focused on expanding its product range, it failed to keep track of its competitors. Rivals began offering their own natural and organic product lines, eating into Patanjali’s market share.
4. Poor Management: Patanjali’s rapid diversification across various sectors—beyond FMCG—stretched its management bandwidth. Ensuring quality across thousands of products and different verticals became increasingly difficult, leading to several quality control issues that damaged the brand’s reputation.

Hope for the Future: Baba Ramdev’s Vision

Despite these challenges, Baba Ramdev remains hopeful about Patanjali’s future. He believes that the brand will recover and regain its market dominance. With single-digit growth in FY20, the company is working on adapting to the ever-changing FMCG landscape by investing in innovation, enhancing advertising, and ensuring better quality control to meet the expectations of its loyal customer base.

Baba Ramdev’s vision for Patanjali remains clear: to continue making Ayurvedic products accessible and affordable for every household, while contributing to the larger mission of promoting swadeshi goods and a healthier lifestyle.

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Tushar Kansal