In India, yoga gurus sell big

Products with their names help firms compete globally

People stretch while doing yoga at Nehru Park in New Delhi, India, in November.
People stretch while doing yoga at Nehru Park in New Delhi, India, in November.

They have bushy beards, a preference for loose-fitting robes, hundreds of millions of devotees -- and a line of consumer products. Meet the Indian gurus behind the brands challenging some of the planet's biggest companies.

photo

Bloomberg News

Customers wait at a counter at a Patanjali Ayurved store in New Delhi, India, in November.

Baba Ramdev, Ravi Shankar, Gurmeet Ram Rahim Singh and Jaggi Vasudev are among yoga and spiritual leaders lending their names to everything from honey and herbal remedies to toothpaste and clothes. With a ready-made clientele from their vast followers, they are helping to tap surging demand in India for natural and ayurveda-based products to challenge the likes of Unilever, Colgate-Palmolive and GlaxoSmithKline.

The newcomers' success is snatching market share from larger established suppliers, which have had to develop their own ayurveda lines. Ayurveda is based on a belief that health and wellness depend on a balance of mind, body, and spirit, and can include the use of herbal compounds and special diets.

The guru-connected upstarts have already shaken the market. Unilever's hold on India's $11.7 billion beauty and personal care market has slipped more than 5 percentage points in the past five years, according to researcher Euromonitor International. And local personal care rival Dabur India Ltd. says its growth is slowing, even as the market is forecast to expand 14 percent in 2016.

"These ayurvedic product sellers are posing a threat to Indian and global players as the product has gained mass appeal," said Sanjiv Bhasin, an executive vice president at brokerage India Infoline Ltd. Profit margins are shrinking in response, he said. "It has made the existing players enlarge their marketing budgets greatly to try and protect their turf."

The biggest new competitor is yoga guru Baba Ramdev's Patanjali Ayurved Ltd., which offers some 500 products spanning food, nutrition and beauty and personal care. Formed a decade ago, its revenue will at least double to more than $1.5 billion in the year ending March 2017, Ramdev said in November, adding that all Patanjali profits go to charity.

Ramdev said he's an "unpaid ambassador" at Patanjali and that childhood friend Acharya Balkrishna holds 97 percent of the company's shares. That helped make 44-year-old Balkrishna India's 48th richest person in 2016, worth $2.5 billion, according to Forbes.

"World-class quality, low price and giving away our entire profit to charity are the three main reasons for the boom seen in Patanjali products," said Ramdev, clad in his trademark saffron-colored robe, in an interview in New Delhi. Executives at multinational companies believe babas, or holy men, like him "don't know anything," he said. "Now all tie-wearing people are sweating. They realize loincloth-wearing people can do many things."

Patanjali had a 1.2 percent share of India's beauty and personal care market last year from 0.2 percent in 2011, according to Euromonitor. The company is planning to release refined oil, milk and textiles, mostly to counter the dominance of foreign-owned businesses, Ramdev said.

"Why shouldn't our country's money stay here and be used for this country's service?" he said.

Unilever, which began selling Sunlight soap in India in 1888, has said domestic brands, such as Patanjali, have been better than multinationals at picking up on local trends. Patanjali is a company that "everybody has been following with a lot of interest -- incredible branding created there," Unilever Chief Financial Officer Graeme Pitkethly said on an Oct. 13 conference call to discuss third-quarter sales.

The Anglo-Dutch giant has countered this with Hamam soap, which incorporates ayurvedic herbs, and its local unit Hindustan Unilever Ltd. bought hair-care brand Indulekha December last year to add a "naturals" line in hair oil.

Patanjali aims to have $7.2 billion in revenue in the next three years, Ramdev said. Infoline said the company could grab 35 percent of both the Indian honey and ayurvedic medicine markets and a third of the market for ghee, a type of clarified butter. Colgate-Palmolive and Dabur would be hurt the most by Patanjali's expansion, Infoline said.

Ayurveda, as practiced in India, is one of the oldest systems of medicine in the world.

"In India, the consumer believes strongly in natural ingredients," Bina Thompson, Colgate-Palmolive's chief investor relations officer, told analysts on a July 28 conference call. New York-based Colgate has introduced toothpastes with neem and clove essence, and recently began selling a charcoal-infused toothbrush and Colgate Cibaca Vedshakti, which contains natural ingredients including eucalyptus, basil and camphor.

Sales at Patanjali have climbed as it expanded the number of retail stores selling its own products to almost 10,000 nationwide, building on a franchise system created from its existing yoga outlets.

Ramdev's yoga followers gave him an easy-to-reach customer base, Infoline's Bhasin said.

"This has seen him save on ad expenses and marketing costs compared to larger players," he said. And land around the yoga ashrams Ramdev has established will "give him enough room to expand for the next three years."

Following Patanjali's "spectacular" success, Edelweiss Securities Ltd. expects other spiritual gurus "to go the Patanjali way," analyst Abneesh Roy and colleagues said in a report in March.

SundayMonday Business on 12/04/2016

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