SWOT Analysis of Patanjali Ayurved
Patanjali Ayurved (not to be confused with Patanjali Yogpeeth) is a large and rapidly growing FMCG (Fast-Moving Consumer Goods) in India. The relatively young company was founded in 2006 by yoga guru Baba Ramdev and CEO Acharya Balkrishna and has since witnessed surging growth over the past decade. With the company's focus on health products (e.g. herbal, ayurvedic, nature based products and medicines etc), it attained an astounding sales of INR 10,000 crores in FY 2016/7, a 100% growth compared to the previous financial year.
Strong Domestic Presence - Patanjali Ayurved has a dominating presence in India, with more than 47000 retail fronts, 3500 distributors and warehouses (cost and freight) in 18 states. No matter where you go, you will probably find Patanjali products in a local Kirana store or large modern supermarket. In 2015, Patanjali and Future Group, one of India's largest retailers, entered into a marketing partnership. This partnership has placed further enhanced Patanjali's distribution channels by having its entire range of products made available across India through Future Group's Big Bazaar 250+ retail outlets.
Popularity of Ayurveda - Patanjali Ayurved not only has an expansive product portfolio but a strong Ayurvedic lineup as well. Ayurveda is a a system of medicine classified under a form of complementary and alternative medicine. In India, it is extremely popular and even considered mythical with origins going as far as the prehistoric ages. Therefore, Ayurvedic products and medicines are extremely sell-able goods in India. There is even a National Ayurveda Day in India!
Embracing Online Retail - Despite Patanjali having incredible depth in its distribution channels and retail, it has also kept up with modern trends. The corporate giant has made its products readily available with their own online shopping website. Additionally, there are a plethora of online retailers carrying Patanjali products as well, such as Bigbasket, Swiggy and even Amazon.
Popularity of Baba Ramdev - The success story and exponential growth of Patanjali has been often attributed to Baba Ramdev, a charismatic yoga guru. He enjoys an enormous following and popularity not just in India (especially in rural regions which is a huge potential market) but overseas as well. As the icon of Patanjali, it is no doubt that he has contributed much to the positivity, trust and strong branding of the company.
4Ps or the Marketing Mix of Patanjali Ayurved
Over-reliance on Baba Ramdev - The success (and failure) of Patanjali is tied very closely to Baba Ramdev. A mishap happening to him will have a domino effect and drastic consequences for the company. This will play out similar to the Steve Jobs' situation, when Apple Inc was casted in doubt upon his unfortunate death in 2011. Forbes has an excellent article on Steve Job’s importance to Apple (as well as founders of companies in general). The article can be found here. Patanjali’s reliance on Baba Ramdev’s reputation and credentials is perhaps one of their greatest weaknesses.
Prone to Supply Chain Disruptions - Patanjali is susceptible to supply chain disruptions which can hinder growth. In 2017 to 2018, the company witnessed near zero growth due to supply chain disruptions. This was due to demonisation of India’s currency, scarcity of cash and implementation of the goods and services tax (GST). It’s reliance on supply chain and government policies is one of its weaknesses.
Strong Growth of FMCG in India - The FMCG industry in India is rapidly growing and has displayed no signs of slowing down. Over the past decade, there has been an increase in disposable income in rural India. In combination with the low penetration levels of Patanjali in this target segment, it offers an immense room for growth. The government has also introduced policies like the Food Security Bill and cash subsidies which will benefit 40% of households in India. According to a report by IBEF, the FMCG sector is the fourth largest sector in India's economy with FMCG products accounting for half of total rural expenditure.
Growth of Online Retail - Even in the FMCG and food industries, online retail is starting to play an important role. It is projected that 40% of all FMCG consumption will be online by 2020. Within a short span of 3 years from 2017 to 2020, the online FMCG market is expected to double from US$20 billion to US$45 billion! It is an excellent opportunity for Patanjali to further expand on and fortify their online retail experience to capture the online market segment.
Perhaps the greatest threat to Patanjali is the strong competition in the FMCG industry. As described earlier, the FMCG sector is projected to enjoy strong growth with increased government support. This is attracting competitors to delve into the market to obtain a greater piece of the pie. Patanjali’s competitors include larger players like Dabur India, P&G, Marico, Nestle, Hindustan Unilever Limited (HUL) and many more smaller ones. Even Patanjali's retail partner, Future Group, is tempted by the prospects of the FMCG market. Future Group, armed with its Tasty Treat brand, is looking to establish and strengthen its own ayurvedic product portfolio. It poses a strong threat to Patanjali as Future Group intends to make FMCG a Rs 20,000-crore business by 2022.
India Brand Equity Foundation: FMCG Industry in India
Rediff Business: Why Baba Ramdev's Patanjali Ayurved is faltering
The Economic Times: Smitten by Patanjali, Future Group’s Kishore Biyani turns to Ayurveda
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2019 Geronimo Colt