Patanjali Ayurved: Will the Growth Momentum Sustain?

In January 2016, leading institutional broker Credit Suisse downgraded Colgate Palmolive India to ‘neutral’ rating in the wake of severe competition from the oral care products of Patanjali Ayurved (Patanjali). Patanjali was giving tough competition to other big FMCG companies operating in India. Since it was established in the year 2007, Patanjali had expanded from being a seller of pure medicinal products to a full-fledged FMCG company. The company priced its products cheaper than its competitors by sourcing raw materials directly from farmers. Patanjali could easily bank upon the growing demand for ayurvedic and natural products among urban consumers who perceived them to be safe and free of harmful chemicals. According to analysts, the most important factor was the association of the Patanjali brand with the popular yoga guru, Baba Ramdev (Ramdev). Patanjali’s products were promoted at Ramdev’s yoga classes organized across the country. Ramdev personally promoted Patanjali’s products but did not charge the company. Due to Ramdev’s personal image, many customers of Patanjali stayed loyal to the brand...