05th Aug 2016, BUSINESS STANDARDBy R Gopalakrishnan, Author and Corporate Advisor The previous column (BS, 8th July) explored what it would take Patanjali Ayurved to build on its fabulous chutzpah in the FMCG market. Reflecting over readers’ responses,
By R Gopalakrishnan, Author and Corporate Advisor
The previous column (BS, 8th July) explored what it would take Patanjali Ayurved to build on its fabulous chutzpah in the FMCG market. Reflecting over readers’ responses, I think there may well be international opportunities for Patanjali and others: a potentially exciting period for the FMCG players out of India lies ahead. Globally consumers seek wellness out of consumer products, not mere functionality. In this respect herbal, ayurveda and natural brands hold great global promise.
In the Make in India drive, wellness products based on Indian knowledge will leverage the credibility of India as a source.
Wellness is a symphony of body, mind and spirit, which must unite in harmony. The Indian market is witnessing an innovative juxta-positioning of yoga and god men yoga includes physical, psychological and spiritual well-being while god men include yoga exponents, astrologers and holy men. Add to these politics and FMCG business, and something distinctive emerges for the first time. Beliefs, superstition, and passed-down knowledge, all have a strong role in wellness. The intensity of belief in god men is uniquely Indian and that is why they have always been influential in society.
There are two kinds of god men. There are those who are remembered as selfless, austere and philosophical institution-builders. They build durable movements and institutions, not financial empires, which, in turn, attract dedicated followers to continue their work even after their passing on.
There are other god men, who have the unique ability to attract very influential people. Dhirendra Brahmachari held hegemony over his Vishwayatan Yogashram in the heart of Delhi, using government-paid workers in his gun factory, yes, gun factory! Chandraswami was so powerful when Narasimha Rao was Prime Minister that from his Vishwa Dharmayatan Sanathan in Delhi’s Qutb Institutional Area, he dispensed spiritual advice to the high and mighty. Thus India has seen yoga, godmen and politics juxta-osed for long, but adding FMCG business to this is new. This is producing a sustainable, self-standing, long-term business—controversial in parts, but innovative.
Patanjali Ayurved, Sri Sri Ravi Shankar and Dera Sachha Sauda have all entered the FMCG space on the platform of wellness. For many years Kerala championed ayurvedic vaidyashalas. Dabur Chyawanprash, Vicco Vajradanti tooth paste, Kesh King Hair oil, Chandrika toilet soap, Himalaya Liv52 and many more have been around for decades. Mira Kulkarni’s Forest Essentials began in 2000 and subsequently got part-invested into by Estee Lauder. Vinita Jain’s Biotique started in 1992 in collaboration with a Swiss company. So why has Patanjali Ayurved caught big-time consumer interest? There is a confluence of factors.
The FMCG business is tough and competitive, but it is not capital-intensive or technology-driven like metal bending or electronics. Further in a smart reversal of sequence, brand authority was first built through yoga and spirituality; thereafter products followed, based on that authority. A terrific brand activation programme has resulted in great WoM (word of mouth) recommendations by consumers. I quote Andrew Broadbent (econsultancy.com, 27th January 2015), “Through the uses of consumer engagement channels, such as advertising campaigns, experiential events, viral growth and consumer participation, brands gain acceptance as reliable and worthy.”
The timing of the Patanjali launch and the messaging have leveraged the nascent consumer trend towards natural. Patanjali has set up, or is setting up, professional arrangements, using managers experienced in consumer-goods. A facon manufacturing, supply chain partnerships, distributorships, shelf space in modern trade, use of social media and WoM messaging, you name it, and they have been deployed.
Traditional ingredients have innovatively leveraged consumer beliefs. The hair cleanser, for example, has incorporated sapindus foliates (reetha in Bengal, punalai in Tamil). Established shampoo companies could have incorporated reetha. The retail shops now receive products called hair cleanser, body cleanser, teeth cleanser rather than shampoo, soap or toothpaste. Their ‘ayurvedic proprietary medicines’ classification offers a potential cost arbitrage and, if done intelligently, and it could save 15 percent of costs.
I wish, however, that they would not state untruths like “refined flour and palm oil are harmful for your health,” or their spokesman would not threaten retailers with legal action if they sold products at prices lower than that marked. Such bluster may be part of the winner-takes-all-strategy of modern start-ups : rapidly acquire adopters through very high profile communication campaigns, and convert experimenters with urgency. There is a clearly visible political linkage and the platform of propositioning the consumer has a strong linkage to the agenda of the ruling party’s ideology. Finally the company states that it is owned by trusts for the welfare of common people; when profits are earned, they will be used to set up schools, medical facilities and institutions for the advancement of disadvantaged people.
The response by FMCG players is increasingly innovative and energetic as the biggies get aroused by the initial impact of a challenger like Patanjali. The world can be India’s oyster through Make in India. Decades ago P&G (through Richardson Vicks) tried to globalise ayurveda, but maybe the timing was wrong. Now is the moment for players out of India, including companies like L’Oreal, Nestle, P&G, Unilever and others to use Make in India for the whole world.