Mumbai: Things are not going well for the Yoga Guru Baba Ramdev and Acharya Balkrishna founded Patanjali Ayurved as the disrupted in the FMCG sector faces a slowdown in consumer offtake. According to a study by Credit Suisse, there has been a sharp decline in consumer offtake in many categories.
Notably, the company recorded almost 100 per cent Y-O-Y growth as it grew from Rs 2,000 crore in 2014 to Rs 10,000 crore in 2017. It was also claimed by Yoga Guru Ramdev that company would eventually overtake Hindustan Unilever (HUL) as it will continue to grow at 100 per cent per year.
Though, the study by Credit Suisse is completely opposite to the claims of Ramdev as the revenues of Patanjali Ayurved have been flat in the current fiscal year. Despite controlling the market on categories like toothpastes with Dant Kanti and ghee there has been a decline in the incremental gains in these categories too.
The report also reveals that the drop in the offtake is much intense in the categories like honey and hair care as other FMCG giants like Dabur, Colgate and HUL are pumping in huge investment in natural products so as to attract the customers back who shifted to the competitor’s camp. Nielsen data has been quoted in the report saying that there has been a steep decline in categories like chyawanprash.
While defending their turf, Dabur reverted back to the competition with strategic pricing, HUL introduced the ayurvedic range of production nationwide and Colgate also came up with ayurvedic products.
During the recent investors’ meet, Sunil Duggal, CEO of Dabur India said that the focus of the company is to defend the market share amid disruptive and aggressive competition. Addressing the investors, he said, “In the past, perhaps we were a little bit more concerned about defending profit. Now we are completely committed to defending share. Also, our response time to disruptive competition has been accelerated to the maximum possible extent. While we maintained the quality of Dabur Honey, we offered consumers better value in terms of lower price.”
As per the report, the major factors behind the sharp drop in the market share of Patanjali are lack of novelty, inability to crack general trade distribution, dilution of ayurvedic credentials on an excessive extension, strong competitive response from large companies with their own ayurvedic offerings and a sharp drop in advertising spends.
The report also revealed that there was a huge upsurge in the penetration of Patanjali Ayurved in the household during the calendar year 2017 as it grew from 27 per cent to 45 per cent. The non-core users instead of the core loyalists were the major drivers of this growth.
The report said that most of the consumers are swaying away from the brand due to lack of newness and buzz around the brand also the other companies are offering similar products with novelty and coming up with better branding.
The report also suggested that the downfall in the consumer offtake of Patanjali Ayurved is due to the internal factors which are driven by Patanjali’s own strategies as well as external factors driven by the competitive response.