India's Patanjali takes on Western consumer-goods firms

Baba Ramdev has spearheaded a billion-dollar juggernaut

EXECUTIVES at firms selling consumer staples like to think of themselves as “marketing gurus”. But how many could actually contort themselves into the lotus position, let alone attempt a headstand? Such feats are nothing for the top brass at Patanjali, an Indian purveyor of toothpaste, cooking oil, herbal concoctions and much else. Fronted by a bona fide guru, the firm’s marketing strategy—play up the benefits of natural products, then paint foreign multinationals as latter-day imperialists—delivers over $1bn in annual sales, up tenfold in four years. Having dismissed the firm as a fad, the likes of Colgate-Palmolive and Unilever are emulating it.

Baba Ramdev (pictured), an ascetic yogi who is the public face of the brand, makes for an unconventional capitalist symbol. But with Acharya Balkrishna, a devotee of his who serves as the firm’s boss and majority-owner, he has built a consumer-goods powerhouse that is vying with the business-school graduates at the multinationals. Starting out two decades ago as an apothecary of traditional Ayurvedic potions, Patanjali has expanded into personal care, home products, packaged food and more. Mr Ramdev’s beard and saffron robes are among India’s most widely seen corporate emblems.

Marketing textbooks suggest the firm should have stumbled a while back. Whereas multinationals such as Procter & Gamble spend heavily to advertise dozens of sub-brands, Patanjali grew by word of mouth and sells everything from detergent to cornflakes and hair oil under its own name. Established players outsource their manufacturing and sell through shops owned by third parties; Patanjali has its own plants and has built a network of thousands of exclusive, franchised stores across India. Its head office in Haridwar, in the foothills of the Himalayas, is not in a place consultants would recommend.

Nor would they have predicted the success of its formula—good quality and value plus indignant nationalism. Newspaper ads beseech customers to shake off the yoke of multinational firms in the way their forebears resisted Britain’s East India Company. A dash of cow urine in a handful of products, including soap and floor cleaner, burnishes its Hindu credentials.

Patanjali’s rise coincides with the arrival in office of Narendra Modi, India’s yoga-loving prime minister, in 2014 (Mr Ramdev appeared at his political rallies). Its rhetoric is the business counterpart to the Modi government’s Hindu-first chauvinism. Opposition politicians have complained that Patanjali has enjoyed low prices for land in deals with state governments that are run by politicians allied to Mr Modi.

The company is able to offer customers good value partly because it spends only 2-3% of revenues on advertising (consumer firms typically spend 12-18%). For many of its products, its modern plants use much the same machinery and inputs as its rivals, but cheaper staff. Lower costs mean operating margins of over 20% in its last published accounts (the firm is unlisted, and says it plans to stay that way), beating global firms.

Soul trader

Multinational and local rivals at first behaved as if Patanjali did not exist. But after its herbal toothpaste won a dedicated following, in 2015 Colgate launched an offering aimed at Patanjali, the first time in its nearly eight decades in India that it had marketed an explicitly local product. Unilever has a range of Ayurvedic shampoos. Nestlé added 25 products across food categories to ward off the beaming guru, but Patanjali is still coming close to matching its sales (see chart).

Patanjali’s latest push is into food staples such as cooking oil and flour. There it will take market share from unbranded small-scale rivals rather than multinationals, which steer clear of such low-margin business. More products look likely to get the bearded yogi’s seal of approval. A line of purposely frumpy jeans for women is in the works; restaurants may be, too.

Sceptics think the company is as big as it can get without becoming more like the multinationals it decries. It is starting to use some of their methods. Patanjali is distributing more of its products outside its own shop network. It is reportedly outsourcing more of its manufacturing, too. It is increasing its spending on advertising. Mr Balkrishna has considered expanding abroad.

The firm may also face fiercer domestic competition in future. Other spiritual leaders have noted Patanjali’s success. Sri Sri Ravi Shankar, a guru with a big following among the urban middle classes who rivals Mr Ramdev for Mr Modi’s affections, is branching out from Ayurveda into food and personal care. Gurmeet Ram Rahim Singh, a self-proclaimed saint who packs out huge stadiums singing his techno hit “Love Charger”, is now in business too, selling more than 400 products. Others will follow. It does not take a marketing guru to figure out how easily followers can be turned into shoppers.