Patanjali pulls FMCG firms to herbal space

Small and big companies line up to try and cash in on the burgeoning market

The herbal-natural products market has got an impetus in recent times with the emergence of Patanjali. The astounding success of yoga guru Ramdev’s venture has not only attracted the attention of multinational fast moving consumer good (FMCG) majors towards the growing segment but also injected enthusiasm in smaller players, trying for years to expand.

While, many FMCG companies are now relooking at their strategy, new and smaller entities have pulled up their socks to cash on the surging organic, herbal, natural and ayurvedic market. Kairali Ayurvedic Group, which started its journey in 1908 in Kerala, offers a range of ayurvedic medicines and consumer goods like herbal cosmetics and tea. For decades, it depended on ayurvedic medicine stores, spas and company-operated wellness centres to sell its products. It recently tied up with pharmacy chains Fortis Healthworld and Guardian Pharmacy. 

Kairali is also working on to increase its retail reach by placing its products on the shelves of major brick-and-mortar outlets. Abhilash Ramesh, executive director, says they’ve started selling in retail markets at Kerala, Tamil Nadu, Uttar Pradesh, Delhi, Nagaland and Andhra Pradesh. The aim is to reach 1,000 outlets (including 300 branded pharmacy stores) by March 2018. Since Kairali offers products that are lightly premium in price, placing its products on regular neighbourhood stores is not being considered for now. As demand for herbal and ayurvedic products are growing “very fast”, Ramesh expects the group’s annual revenue to touch Rs 250 crore by 2020, from Rs 65 crore at present.

Noting the robust retail presence of Patanjali, he estimates that half of Kairali’s revenue would come from retail stores in the near future. Currently, 30 per cent of its sales come from its own centres, 30 per cent through supplies to hotels, spas and ayurvedic clinics, and the remaining 40 per cent from exports.

The buzz over organic clothes had been making the rounds of social media for the past few months since Ramdev had announced that Patanjali was eying the space. Advantage Organic Naturals Technologies, a Delhi-based garments company, recently forayed into the space. It had acquired a patent for making organic clothes in 2007 and is now preparing to launch its own brand, ‘Joy of Life’. It has been supplying to two large exporters for the past eight months and has clocked Rs 1.5 crore in monthly sales since, says Rajiv Rai Sachdev, managing director.

He credits the surge in demand for such products to Patanjali’s rise. “This market is growing by 12 per cent a year, expected to go up to 20 per cent by 2020. So, we are also looking to increase our production capacity, by setting up an integrated textile mill in the next three years,” he said. The company sources organic yarn and processes these into garments, then dyeing with organic colours, using neem, tulsi and apple cider vinegar, among others. As the scale of operation increases, Sachdev plans to dye fabrics. It would add more value to the clothes. Apart from placing his products in  brick and mortar outlets, he is also working on tie-ups with e-commerce majors Amazon and Snapdeal.

Future Group, a large entity, already sells Patanjali’s products through its outlets. It  recently tied-up with Hain Celestial, a New York-based organic foods company. Future will sell a range of products from Hain in India. “With the changing lifestyle of consumers here, we have seen a clear trend of people opting for food that is good for their health. Since Hain is a global leader in the good-for-you food category, we believe they are the best partner for us to bring world-class natural food products to India,” a group spokesperson said.

According to a report from business chamber Ficci and consultants PwC, “consumers’ long-held beliefs that herbal, natural, organic and ayurvedic products are safe and have no side-effects, compared to their alternatives” have helped the segment to grow steadily. Euromonitor International estimates the market for such products in India to grow to  Rs 52,000 crore by 2020 from Rs 44,500 crore in 2016.

To grab a slice of the growing market, FMCG majors such as Hindustan Unilever (HUL), Colgate-Palmolive, Garnier, Dabur, Emami and Himalaya have raised the pitch in the past year. HUL plans to revive its herbal personal care brand, Level Ayush. And, Colgate has relaunched Cibaca to counter Patanjali’s Dant Kanti in the toothpaste space. Garnier has launched a new herbal-natural haircare product range, Ultralight. While, Emami bought Kesh King to strengthen its haircare line of products. Dabur and Himalaya, the two ayurvedic FMCG firms, have also launched a number of products in the space.