Along with yoga, the medicines made by Divya Pharmacy also grew in popularity. Ramdev and Balakrishna opened Patanjali Chikitsalayas (Clinics) and Patanjali Arogya Kendras at several locations in India. At the clinics, the doctors’ services were free. These clinics also had an attached pharmacy, where the medicines by Divya Pharmacy were available. After the medicines became popular due to their effectiveness, Divya Pharmacy diversified into additional products. But obtaining funds for expansion was difficult since Divya Pharmacy was registered under a trust. At that time, funds began to come in from patients who had benefitted from the yoga and the ayurvedic treatment. These included Indians from other parts of the world and also local businessmen. Subsequently Divya Pharmacy was able to obtain loans from banks. Thus, Patanjali Ayurved was incorporated in 2006 as a private company, with Patanjali Yogpeeth as the flagship trust...

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PRODUCTS BASED ON TRADITION…

Patanjali ayurvedic medicines were said to be 100 percent natural, made from potent herbs available in the Himalayas. The medicines were reportedly highly effective against different diseases right from a simple cold and fever to cancer.

The company’s venture into the FMCG segment began with the simple Indian gooseberry in 2005. At that time, some farmers from places near Haridwar met Ramdev and told him about their gooseberry plantations, which they were planning to destroy, as there was no demand for gooseberries. Ramdev then came up with the idea of making juice from gooseberries, so that the plantations would not have to be destroyed and the farmers would also benefit. A fruit processing unit in the northern state of Punjab agreed to process and make juice out of the gooseberries. The amla juice that was launched eventually became highly popular and Patanjali started sourcing gooseberries from farmers all over the country. ...

… AT COMPETITIVE PRICE

The Patanjali products, which were of good quality, were priced 20-40% lower than the products of multinational companies. The higher product pricing of multinational FMCG companies was due to their expenses for hiring brand ambassadors, heavy market promotions. etc. In the case of Patanjali, Ramdev himself played the role of brand ambassador for all its products through his yoga camps, television yoga classes, and appearances..

REACHING THE INDIAN HINTERLANDS

At the beginning, Patanjali preferred to rely on mainly its own distribution channels of super distributors, distributors, Chikitsalayas, and Arogya Kendras. It opened its franchise model in a few select areas where there was minimal or no competition because of non-availability of other competitive brands. Also, most of the franchises were owned by the followers of Ramdev...

APPEALING TO CUSTOMERS

Traditionally, all multinational and large domestic companies advertised their products through indirect channels such as television, newspapers, and magazines. Patanjali advertised through the direct method during yoga camps and during the yoga programs that were telecast. When Sanskar channel started telecasting Ramdev’s yoga in 2002, millions of people across the country began following him. After the first products were introduced, Ramdev mentioned products like amla juice and aloe vera juice during the yoga camps, and people readily bought those products...

POSING A THREAT TO FMCG COMPANIES?

Patanjali, which began as a nondescript company, took only a few years to grow into a challenger to the existing FMCG companies in India. The growing popularity of Patanjali products disrupted the market and took the FMCG sector in India by storm (Refer to Exhibit VIII for more on FMCG Market in India). As of 2016, the popularity of the Patanjali products was growing rapidly. In a span of a decade Patanjali became a Rs.50 billion company. Its phenomenal growth could be gauged by the fact that Dabur took more than 70 years to become a Rs.50 billion company. Patanjali was considered to be one of the fastest growing companies in India, and its revenues were expected to reach Rs.100 billion by 2017. Brokerage firm IIFL projected Patanjali’s revenues to reach Rs.200 billion by 2020...

CHALLENGES

Although Patanjali was growing rapidly, beating popular brands like Coalgate and Dabur there were many challenges that lay ahead for it. The company needed to increase its scale of operations in order to compete with FMCG majors in the country. Sourcing of raw material, for instance, was one of the major challenges as it was critical to cope with the multiplying volumes. Direct sourcing could become a challenge, which could impact the low input costs. The company also went into contract manufacturing to meet high demand. This could also add to the costs. ..

EXHIBITS

Exhibit I:FMCG Companies in India
Exhibit II: Patanjali Food And Herbal Park .
Exhibit III: Patanjali – Vision
Exhibit IV: Patanjali Yogpeeth (Trust) – Organizational Structure.
Exhibit V: Divya Yog Mandir (Trust)
Exhibit VI: Patanjali Products
Exhibit VII: New Products of Patanjali
Exhibit VIII: FMCG Market in India