Started in 1991, Pittie Group focussed on the real estate business for 20 years before diversifying into various other businesses which included FMCG distribution, e-commerce, quick service restaurants and media. Building a strong pan India distribution network as the sole distributor of Patanjali products, the group is now concentrating on building a retail presence for its businesses. In conversation with BrandWagon’s Chandni Mathur, Aditya Pittie of Pittie Group talks about the strategy ahead, also explaining why the group is bullish on media. Excerpts:
As the sole distributor of Patanjali products, how has Pittie Group’s association with the FMCG major been so far?
We started Patanjali’s modern trade around three years ago, when the company was on a `1,000 crore turnover run rate. We started with a pilot through Reliance Retail in five stores, and made about `5 lakh a month. Now we are making almost `35 crore a month in modern retail with every retailer except Future Group as it has a direct tie-up with Patanjali.
What are the challenges that the company faces in retail distribution?
One of the major challenges that we faced was with Swamiji’s (Baba Ramdev’s) policy of Patanjali products never being sold on a discount. They are sold on MRP pan India which is unheard of in FMCG. All the supermarkets have a clear philosophy that they will always be below MRP. For us to convince them to sell Patanjali on MRP was a difficult task. But all the retailers were extremely supportive. People think it is only a price based phenomenon when it comes to acceptance of these products but I don’t think Indian consumers are so price sensitive. It’s a combination of low price, good quality and the concept of swadeshi. I believe more and more consumers will convert to Patanjali, and once you convert one product to Patanjali, the probability of converting all your products gets higher. It has a large assortment and will be entering new categories in the future including baby care, to drive growth.
Is the distribution network for Patanjali products expanding to international markets as well?
Patanjali doesn’t react or plan based on what other FMCG companies do. It is clear that it will do what is best for the Indian consumer regardless of what others are doing. Patanjali is working on a very strong strategy for export. The demand is there and the company is forming a strategy on how to service that demand.
What about Pittie Group’s re-entry into the media business?
We had an opportunity to buy Sanskaar TV and we ran the channel for a couple of years. We then got a good opportunity to sell it so we decided to exit the business. But since the genre was close to the family’s heart, we re-entered the business with Shubh TV, which launched in April this year. In this genre, Sanskaar TV and Aastha control about 90-92% of the market share. We intend to jump straight to number three in the next few months itself due to the support we are getting from the saint community. I think there is scope in India for niche content and we want to cater to that need within the realm of ‘Indianness’, but we are generally bullish on the media business so we will look at more opportunities. We also intend to launch spiritual magazines under the Shubh brand in the future. We have just got a license and will be adding a new channel called Shubh Cinema, set to launch within the next six months. The channel will showcase movies which are in the spiritual and patriotic space.
These genres are known to generate very little in advertising revenue. How do you plan to be profitable?
We expect Shubh Cinema to generate good advertising revenue but for Shubh TV, the revenue is generated by selling airtime. We are trying to position Shubh TV as a go-to destination for people who want to watch premium bhajan content or spiritual music content. We have set up a state of the art studio and are inviting singers across the country to record for us, encouraging budding singers and monetising it through our arm, Shubh Music. The music will be available on Hungama through ringtones etc and one will also be able to buy CDs. We might look at Shubh Music as a TV channel eventually. We have also launched Shubhtv.com, which is India’s first spiritual OTT platform, on Android and iOS.
What value has investing in companies like Yogurtbay given you? What is the future strategy?
We own majority equity and have management control in Yogurtbay, and have expanded from one store when we invested, to almost 11-12 stores now, of which three-four are franchises and the rest are company-owned. Since the QSR business is tough, especially for a dessert category like frozen yoghurt, we have decided to shift our strategy to the FMCG business. Very soon, consumers will be able to buy products on supermarket shelves with a new branding. The pricing will be low but the quality will be premium. There is huge scope in the value added dairy business, but if it is just ice-cream, you can’t take on the likes of Amul.
How is your e-commerce platform Shubhkart performing? How are you building its offline presence?
We have over one lakh products and 150 merchants from across the country. The challenge and opportunity is that most of the consumers in this category are not even online. As and when the next half billion people go online, we believe that conversion of buying habits of consumers will migrate from offline to online. Shubhkart is seeing good traffic and we are now trying to add more services. For example, based on a person’s date of birth and problems, the website will dynamically recommend what products they should buy from our category of Yantras.
In the offline retail market, there is no particular brand pull in this category. We did a pilot with Reliance Retail to give us a pooja section in 10 of their stores. Now we intend to take it to 20 more stores and other supermarkets. As and when we go regional, we will have to change the assortment based on the region we are selling in. We intend to go to at least 1,000 supermarkets by the end of this fiscal and generate about `15-20 crore in turnover, which is an ambitious target but achievable as it is a high margin categry. As long as retailers support us, scaling is not a problem.