From teacher to leader: Rise and rise of Ramdev and his 'swadeshi' Patanjali empire

In this age of digital disruption, one would have least expected a yoga guru with no formal education to shake the roots of established FMGC majors using a brick & mortar model, forcing them to rethink on their strategies. It’s intriguing as to how Patanjali managed to achieve so much in such a short time, basically the last 5 years. Among brand sagas, the one, which is firmly etched in the annals of marketing is Nirma which took on Hindustan Lever in the 1980s displacing the multinational to become the largest in the detergents space. 

The simple explanation for such phenomenal success would be to be in the “Right Place at the Right Time” with a flawless strategy executed well. However, if it was so simple, we would have had hordes of such stories. With Ramdev, it was a well-planned strategy built brick by brick over nearly two decades with an ability to manoeuvre oneself to be in the right place sprinkled with loads of good fortune of getting the timing right which helped him to get on to an exponential growth path, he too possibly may not have envisaged. 

A product’s success is based on a few parameters – ability to connect with the consumers and build a strong pull factor through continued delivery. The connecting factor is enhanced with an endorsement from someone whom you possibly trust. And finally the right pricing. However, it’s also important that one is able to satisfy the growing demand without much disruption and maintain quality. 

The seeds of Patanjali were sown in 1995 when DivyaYogMandir Trust was floated to promote Yoga and Ayurveda which was followed by the number of other such organizations and expansion of product range. In the meanwhile, the growth of electronic media, especially in early 2000, gave Ramdev a huge opportunity to reach out to people through the ‘paid’ spiritual and cultural channels. Although there was no dearth of Yoga Gurus in India, but nobody had caught the imagination of the nation like this stomach churning baba. This coupled with YogShivirs  (camps) across the nation attracted people, mainly the middle and the lower middle class since the upper class had latched onto the more sophisticated ones. But how does one describe his ability to charm people?“A little bit self-deprecating, little bit funny, he can make himself endearing very easily” said Priyanka Pathak-Narain, author of Ramdev’s biography in one of her published interviews.

Thus, a popular baba, by now the face of Yoga in India needed to move up from a teacher to a leader, and politics was the natural path. In politics, one needs to strike the right chord for immediate success, which brought to fore the issue of black money and corruption. He found his bearings in 2011 with the Jan Lokpal Bill and there was no looking back thereafter. However, these issues would have meant heightened popularity but would do little for his business goals which was transforming itself into a FMCG player. 

In 2014, with the BJP led NDA government in the straddle, which to an extent owes a part of its electoral success to relentless campaigning by Baba Ramdev, ensured that his business campaign gets an official stamp. Normally a small player wouldn’t dare to challenge the leader many times its size unless it has the backing of the mighty & powerful, but for Patanjali, everything seems to have fallen in place at the right time. The government’s focus on yoga, as well as Ayurveda, seemed to go well with the objectives of Patanjali.

To create a new market, it needs awakening among the consumers and this came in the form of the call of “swadeshi” (nationalism) to promote herbal and Ayurveda to fight the flight of money “looted” by international majors operating in India. This resulted in an enlightening the customers about the benefits of natural & herbal products. The Modi government ignited the nationalist passion as the plank to channelize the citizens to a common goal. Both these resulted in ferociously expanding a comparatively dull market hitherto.

The next 3 years saw the turnover of Patanjali doubling every year, making it the second biggest FMCG player as Patanjali products portrayed nationalism.  Every other organized retailer was queuing up for a pie of Patanjali’s success as they couldn’t ignore the consumer demand. One of the USPs of Patanjali was the low overheads including advertisement expenses. However, by 2016 they were the 3rd largest spenders which is expected to double this year. Looking the top line growth, the percentage spend may not still be significant to eat into the margins. Although it is dubbed as “not for profit” wherein Ramdev has confirmed that all the profits are used for charity. But on the other hand, they are planning to raise Rs 1,000 crore for expansion. 

Formal Business Management Education teaches you to concentrate on your core competence but for Ramdev, core competence doesn’t seem to be yoga, nor Ayurveda or FMCG – It’s about selling anything and everything. How else can one explain the ever growing SKUs as well services. The group continues to surprise with entry into unrelated areas such as textiles, restaurants, security services and now movies. A few more sectors which may be under consideration could be airlines, telecom, infrastructure…..there is no limit for imagination. 

The moot point, however, is whether the group can sustain this stupendous growth, managing the supplies as well as the product quality as they continue to spread themselves thinly. The top 5 products account for nearly 45 pct of the topline. Although there is a team of competent professionals working behind the scene in the state-of-the-art facilities, and huge expansion of facilities is planned across the country with largesse from friendly state governments, the question comes back to managing growth, supplies, quality and retention of key personnel. 

There have been quality issues whereby defence forces CSD units had stopped selling certain products. The group has had problems with Central Food Labs as well as ASCI but have been able to wade through. Both the founders Ramdev and his deputy Acharya Balkrishna have had their share of run-ins with the law, which are now being dubbed as cases of victimization. 

Unlike other FMCG customers, we should remember that most of the Patanjali customers are consumers of faith, some of whom are blinded by trust reposed in Ramdev.

On the employees front, S K Patra, an IIT/IIM graduate, had joined Patanjali in 2011 as a CEO when the group was floundering, and responsible for the growth till 2014 when he quit. The earlier CEO C L Kamal, also an IIM graduate, and the core management team too had quit en masse in 2011 for reasons unknown. Patra’s recent interview indicated his bitterness and the work conditions in the group. This is contrary to the popular perception of being an employee friendly group. 

The external risks for Patanjali seem low given the bonhomie with the incumbent government and 2019 too seems to suggest a continued rule of BJP-NDA unless there is surprise like 2004.  However, as mentioned earlier, the internal risks are high of managing growth, employees, quality and supply. 

The juggernaut will continue chugging along as long as the founders do not commit a major blunder or a surprise change in power equations at the centre. Although there have been murmurs of an IPO, wondering whether they can afford to comply with the disclosures required, thus settling for debt which is available a plenty.

The author is an independent market analyst.He can be reached at @ambareeshbaliga