Technoglitch
Core Member
Colgate-Palmolive India reported its worst sales growth in 44 quarters on Wednesday. Hindustan Unilever’s revenue expanded at the weakest pace in more than six years and the new CEO of Nestle India recently got queried by analysts about how Maggi noodles will deal with competition from Baba Ramdev, until just a few years ago, a slightly famous yoga teacher and dabbling anti-corruption campaigner. Now, his company Patanjali Ayurved makes everything from herbal soap to toothpaste, rose sherbet and aloe vera juice.
It’s serious business, and one that seeks to capitalize on a hankering among urban Indians for natural remedies and ancient recipes, but at sensible prices. The long-established correlation between rising household incomes and a greater penetration of Western brands has broken down, perhaps irreversibly. Earlier this month, Mumbai-based brokerage IIFL said entrenched multinationals might lose 3-8% of their 2020 sales to Patanjali.
Colgate still controls 57.3% of the Indian toothpaste market, but its share has come down for a second straight quarter, the analysts say. Meanwhile, Baba Ramdev’s recent distribution tie-up with Future Group, India’s largest retailer, means the fight for market share will only get more intense. The retail group’s founder predicts Patanjali will break into the top three consumer staples companies in India. Colgate, Unilever, Nestle and GlaxoSmithKline may all be affected, though to varying degrees.
To prevent getting beaten by an upstart, multinationals are quite likely to include more herbal and natural offerings in their own product portfolios. Colgate, for example, has introduced a new “Made in India” variant of toothpaste with neem tree extracts. Hindustan Unilever acquired a herbal hair oil brand, forking out $48 million.
Patanjali, by contrast, has just one brand—and one brand ambassador—to look after. That’s reasonably risky, but so long as Baba Ramdev appears on TV looking healthy and fit, the company won’t need movie stars or cricket players to endorse its products. More importantly, multinationals’ natural instinct has been to wow emerging-market customers by flaunting the clinical research that’s gone into their chemicals, lotions and pastes. An attempt to switch track and go herbal may ultimately be rejected as inauthentic.
Either way, shareholders in India’s dominant consumer goods companies stand to lose. If Patanjali’s competitors don’t already realize, the yoga guru has them in a tight spot
Baba Ramdev’s Patanjali making Colgate and Unilever sweat - Livemint
It’s serious business, and one that seeks to capitalize on a hankering among urban Indians for natural remedies and ancient recipes, but at sensible prices. The long-established correlation between rising household incomes and a greater penetration of Western brands has broken down, perhaps irreversibly. Earlier this month, Mumbai-based brokerage IIFL said entrenched multinationals might lose 3-8% of their 2020 sales to Patanjali.
Colgate still controls 57.3% of the Indian toothpaste market, but its share has come down for a second straight quarter, the analysts say. Meanwhile, Baba Ramdev’s recent distribution tie-up with Future Group, India’s largest retailer, means the fight for market share will only get more intense. The retail group’s founder predicts Patanjali will break into the top three consumer staples companies in India. Colgate, Unilever, Nestle and GlaxoSmithKline may all be affected, though to varying degrees.
To prevent getting beaten by an upstart, multinationals are quite likely to include more herbal and natural offerings in their own product portfolios. Colgate, for example, has introduced a new “Made in India” variant of toothpaste with neem tree extracts. Hindustan Unilever acquired a herbal hair oil brand, forking out $48 million.
Patanjali, by contrast, has just one brand—and one brand ambassador—to look after. That’s reasonably risky, but so long as Baba Ramdev appears on TV looking healthy and fit, the company won’t need movie stars or cricket players to endorse its products. More importantly, multinationals’ natural instinct has been to wow emerging-market customers by flaunting the clinical research that’s gone into their chemicals, lotions and pastes. An attempt to switch track and go herbal may ultimately be rejected as inauthentic.
Either way, shareholders in India’s dominant consumer goods companies stand to lose. If Patanjali’s competitors don’t already realize, the yoga guru has them in a tight spot
Baba Ramdev’s Patanjali making Colgate and Unilever sweat - Livemint
