Patanjali Ayurved has disrupted the FMCG space with herbal products positioned at attractive points.
Patanjali Ayurved has disrupted the FMCG space with herbal products positioned at attractive points. After growing its sales at a scorching 80% compounded between 2012 and 2016, the company is hoping to clock revenues of Rs 10,000 crore in FY17 and between R20,000 crore and R25,000 crore in FY18.
Even as it plans a tripling of its retail presence to 3 million by March next year, the firm is strengthening its distribution network to be able to reach out to traders. To do this, Patanjali’s advertising strategy is such that it targets traders rather than only consumers. The company is among the top advertisers in the country and sponsors the Pro Wrestling League. Of the total 1.14 lakh insertions last year, 84% were on news channels and nearly 99% on Hindi news channels. That’s one way of reining in costs since this genre is cheaper than GECs (general entertainment channels) but it also means missing out on a core audience. The rest of the FMCG pack relies on entertainment channels to sell their products because news channels have a relatively small share of the viewership pie — English news at 0.03%, Hindi news at 3% and regional news at 3.5%, as per KPMG-FICCI.
Nevertheless, with an estimated advertising budget of R300-350 crore, smaller than those of an HUL or a P&G, the company is heavily dependent on its distribution network which comprises a chain of 80 super stockists and 2,000-3,000 distributors.
The company also has 1,200 Chikitsalayas and 7,000 Arogya and Swadeshi Kendras, which it plans to double in FY17. In an interview to Edelweiss, Baba Ramdev said the company is offering separate distributorships for food and cosmetics instead of the earlier system where one distributor managed both. Distributors are also being appointed at the district, tehsil, and mandi levels. As of now products are sold at 5,000 retail outlets.
Maxus India managing partner Anand Chakravarthy says distribution is the backbone for FMCG and through news channels, Patanjali is reaching out to small traders. “It is showcasing how salient the brand is, persuading these traders to stock up its products, rather than opening their own stores at every nook and corner,” he says.
The move to largely advertise on news channels may not be a good one as India still continues to be mostly a single-TV household, with males watching more news channels than women, who are the decision makers. However, it is a perfect way to boost confidence among traders at a relatively low cost.
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Dinesh Rathore, COO, Madison Media Omega, says the strategy is well though out and should benefit Patanjali in the long run. “Patanjali isn’t just talking to the urban population but rural, too. There, the shopping pattern is different so talking to a male consumer isn’t a bad idea,” he said.
And though the media fraternity applauds the strategy, it is apprehensive about the future. To compete in categories that depend highly on repeat value, Patanjali needs to expand its advertising spend and portfolio to reach out to genres which garner more eyeballs. So far, it has depended on word-of-mouth and associations with the Future Group and online stores like Big Basket.