Patanjali is here to stay!

A report by ValueNotes Strategic Intelligence, September 2016

Why this report?

Over the last few years, PatanjaliAyurved has emerged out of nowhere to become one of Indias leading
FMCG brands. News reports suggest that revenues in FY16 have crossed Rs 5,000 crores! All of us now
see Patanjali outlets at street corners, highway stops and markets. Of late, large advertising spends have
kicked in and the company is expanding coverage to include the vast network of kirana shops, as well as
modern retail.
Patanjali is present in all kinds of product segments, from food to personal care to home care to hygiene
and has multiple products in these segments. Never has any emerging FMCG player attacked
simultaneously across so many products. According to some analysts,Patanjalicould gain 10% market
share in multiple product categories by 2020.
Little wonder that all the FMCG companies are worried, and analysts are buzzing around trying to figure
out whats happening. After all, Indian consumer stocks enjoy rich valuations and there is a lot at stake.
To begin with, even though one does not know the basis for market share numbers, it is evident that
Patanjali is a significant player in several categories especially in personal care and food products.
The question on everybodys mind is Is it sustainable?
The value of FMCG businesses lies in customer stickiness, as brand usage tends to be habit forming
I use Colgate because my mother used it. While Patanjali has made inroads, sustainable future growth
will depend on customer happiness and quality (whether defined as taste or texture or effectiveness, as
appropriate to the product). This leads to several questions:
- Why did customers buy? Is it price, or something else?
- Are customers happy? Will they continue to buy?
- In which products/categories are Patanjali customers happiest (stickiest)?
- Who might get hurt because of Patanjali?
- Is usage of one Patanjali product leading to the next?
- Are there any chinks in their armour?
Though definitive answers to these questions will require substantial research, ValueNotes conducteda
limited dipstick study of Patanjali consumers in Pune to see if any quick insights were forthcoming.
Note: This was not intended to be a large all-India survey, and the sample is too small to draw precise
quantitative conclusions.The intention was to get a sense of what customers (of Patanjali) think about
their products, and why they like (or buy them). Our focus was on personal care, home care, food
products and ayurveda products (healthcare).
The results are indeed very interesting read on!

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Referrals driving product trials and adoption

Key Influencers

Others
11%
Newspapers /
Magazine ads
8%
Referrals
46%

TV programs
/ads
- spiritual channels
11%

TV ads on other
channels
18%

Baba Ramdev
Yoga Camps
6%

About 46% of our respondents began using Patanjaliproducts after recommendations from friends or
relatives. Though the (direct) influence of Baba Ramdev Yoga camps appears low in this survey, these
are a vital channel for Patanjali. We found that most of the early adopterswere directly influenced by
Baba Ramdev or the yoga camps. These early adopters are also followers of Baba Ramdev and his vision,
and aggressively recommend the brand. This is akin to having a large marketing or sales force at no
cost. These core followers are also highly
motivated, even evangelical about the cause.
Baba Ramdev has had a huge impact in our
decision to try Patanjali products. Even if a movie
The early adopters were mostly aged between
star would have been the face of Patanjali, it
age of 45 75, and their recommendations
would have been obvious that it was only for
carry weight with the younger generation. A
money. Not Baba Ramdev though, he really wants
large chunk of referrals are coming from
to help Indians live a healthy life.
grandparents, parents, uncles/aunts and such
like.
More recently, thanks to the heavy ad spend, customers being influenced by advertising have increased
in number.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Healthy & Quality are the most important attributes

67%
55%
36%
28%

26%
11%

During the initial phase of Patanjalis expansion, Baba Ramdevs persona played a very important role in
marketing Patanjalis products. The trust factor
It is Ayurvedic, as is proven by the backing it
developed when he showed the benefits of
receives from Baba Ramdev, and the fact that it
using herbal and natural products in his yoga
is Swadeshi with such great quality makes it a
camps. Now with increasing referrals, the
really great brand.
Patanjali brand is strongly associated with
health: high quality herbal and natural
products.
Patanjali is a brand which is based on
Ayurved. With Patanjali we can be sure
that the products are actually 100%
natural and chemical free, while the
same cannot be said about some other
big brands out there.

Herbal/natural products score as the biggest reason for

purchasing Patanjali products. In this context, the Baba
Ramdev association provides the trust factor, in that
products are healthy and natural.

Price and quality are also seen as important, indicating a

value for money proposition in the minds of customers.
Ultimately, its impossible to isolate different factors as
they work in conjunction. In Patanjalis case, trust in Baba Ramdev, coupled with Swadeshi and health,
and of course aggressive pricing seem to have done the trick.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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A Patanjali customer on average uses > 5 Patanjali products

Percent of respondents using Toothpaste

63%

Hair care

58%

Biscuits

57%

Soaps

49%

Honey

36%

Face wash

27%

Ghee

26%

Dishwash bar

25%

Juices

24%

Noodles

20%

Chavanprash

17%

Atta

12%

Dal

8%

Churna

8%

Syrup

6%

Agarbatti

3%
0%

10%

20%

30%

40%

50%

60%

70%

Given its spread across multiple product categories, as well as exclusive outlets (reportedly ~10,000
Chikitsalays and Aarogyakendras) Patanjali benefits substantially from cross-selling. The customer
is induced to buy more than one Patanjali product. Our survey
found that customers were happy to choose amongst products
even if they didnt like one, they ended up liking another.
The current high usage of certain products/categories in
personal care (toothpaste, hair care, soap) and foods (biscuits,
honey) along with decent satisfaction levels is driving growth
in newer categories. Clearly, Patanjali is able to maximize brand
awareness and extend its brand successfully over a vast number
of products.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Satisfied customers across FMCG categories

Satisfaction levels
100%

80%

60%

40%

20%

0%

Very dissatisfied

Dissatisfied

Somewhat satisfied

Satisfied

Very satisfied

While satisfaction levels and reasons for this satisfaction varied across products and categories, by and
large, customers appear to be satisfied. In no category, did satisfaction levels (very satisfied and
satisfied) fall below 60%.
Even more critical, though price is definitely a factor for several
customers, especially first time customers; they are invariably
convinced about some other attribute or benefit, could be health
benefits, taste or effectiveness.
In the following sections, we look at specific products/categories
and what customers have said.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Toothpaste is one of the most loved products

A good 80% of Patanjali toothpaste customers were satisfied,

with 47% of them being very satisfied. Toothpaste is also the
category with highest consumption in our sample 63% of the
respondents have used the toothpaste.

The toothpaste has a very great taste

which reminds me of dantmanjan we
had when I was a child. The taste tells
you that it is organic and the results
show the quality they have.

Good mouth feel, very effective for

strengthening teeth and gums, and is
ayurvedic.

The primary reason for the high levels of satisfaction is the widespread
belief in the effectiveness of the toothpaste. Almost 80% of satisfied
customers said that health or effectiveness in curing dental problems
Good flavour and gums
dont hurt anymore after
using it. Toothache is not
there

Does not use fluoride (can cause

acidity), very effective - serious gum
problem got resolved.

was their primary reason for using the product. Respondents

attributed this to its herbal and ayurvedic components. Many
customers said that toothaches, cavities, gum problems and the
like were reduced after using Patanjali.

Here, Colgate appears to be the biggest loser as nearly 50% of satisfied

Patanjali customers in our sample were earlier Colgate users. Dabur is next
with close to 20% of (satisfied) respondents earlier using one of Daburs
products.

Colgate, Pepsodent
stopped completely herbal is better.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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High satisfaction for biscuits a result of health perceptions

In the biscuit category, more than half of the satisfied customers

liked the taste of Patanjali biscuits, though there were some that
didnt like a particularflavour. However, the health factor is
huge, with close to two-thirds of respondents mentioning this as
the prime reason for them to choose the product.

It is transfat free, less cholesterol

deposit, herbal, nomaida. Baby likes
Patanjali biscuit and its taste.

Atta main reason, good quality.

Some customers, even while stating they didnt like the taste,
still purchased the product for health reasons.This is not
surprising, given that Patanjali has positioned its food
products as a healthy alternative.

Taste is not good, but since it doesnt

contain maida we use it.

Salty biscuit is good taste, quality,

reasonable price. MariegoldPatanjali
is not good in taste.

Interestingly, two-thirds of respondents continue to

consume existing brands (along with Patanjali),
especially Parle and Britannia; but a third of them have
stated that they have discontinued buying their earlier
favourites.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Mixed feelings about honey

Though a significantly large number of customers expressed satisfaction with the honey, the reasons for
choosing the product were mixed, with quality not asdominant.
Earlier was using Dabur.
In fact, several customers were not so
No taste difference as such,
Value for money, is runny
only price difference.
thrilled about the quality. Price has been a
and not too thick.
more significant factor here than in many
other products.
Will continue using Dabur
Honey, as it seems to be thicker
and concentrated.Patanjali was
cheap so tried out.

Dabur is clearly the biggest loser in this category, with more than
90% of the respondents mentioning that they have switched from
Dabur products.
It is good but right now a
bit confused to identity
authenticity and purity of
actual honey.

While there are satisfied Patanjalicustomers,

many others are not about to give up Dabur,
voicing doubts about the quality of Patanjali
honey (even as they continue to buy other Patanjali products).

Very sugary, doesnt taste

like honey, tastes like sugar
syrup. It crystallizes means it
has sugar content. Honey
never crystallize

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Soaps skin deep

In soaps, satisfied customers cite quality followed by fragrance as

important attributes. In terms of quality, many respondents stated that
the product was good for skin, did not leave a dry feeling. However, there
are quite a lot of detractors (more than in other categories, where
negatives were fewer) and around 20% of respondents claimed that
quality was bad, or the product caused itching, ormade similar comments.
Smell is not good,
comparable to lifebuoy
soap, though low in price.

It causes lesser dry skin and

no itching. Also, it has nice
feeling due to good fragrances
like Mogra and Kesar.

Close to a third of the respondents said they used the product as it was
natural or herbal and therefore had substantial benefits, particularly in
terms of skin care.

In soaps, all the incumbent brands

seem to be suffering premium
and mass brands such as Lux, Dove, Pears, Lifebuoy, Cinthol; as
well as other herbal or health brands like Medimix and Dettol.

Natural ingredients, less side effect,

better quality, trust. Foreign brands
had bad effect on skin (especially kids).
Patanjali is good for sensitive skin
even. Very impressed.

In many instances, respondents did not rate the quality or

effectiveness higher than earlier used brands, but said that it was
natural or swadeshi. So even when quality is not perceived as
better, other attributes are influencing
Mogra and rose are best. Have
purchase.
nice fragrance, soft for skin and
has no chemicals.

Harsh on skin, get itching,

hard soap, not good smell.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Dish wash more dirt per wash!

Though on a smaller base, users of dish wash soap are among the most
Good fragrance, in neem and
satisfied of our respondents. Even though there is no direct health benefit
lemon flavour, good quality as
(or perceived benefit), many users felt
utensils are clean.
that its organic status was positive.
Organic - made of ash, doesnt
stick on utensils and easily
However, the primary reason for usage
washed off under water.
was effectiveness in cleaning dishes. Around two-thirds of the satisfied
customers stated this as a
Vim bar discontinued as it is very
reason for using Patanjali.
soapy. Patanjali is better, easy to remove
Interestingly, several respondents stated that the product
lasts longer, and this combined with price makes the product

stains, less quantity is required.

a value for money option.

Buying dishwash bar along with
other Patanjali products. Nothing
unique about it though.

Nice smell, lasts long as less

soap is used per utensil.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Dont want chemicals in our hair!

Hair care customers of Patanjali appear to be extremely happy with the

anti-dandruff shampoo, but in contrast the normal shampoo (Ritha) is
rated quite poorly.

Sunsilk stopped due to chemicals.

Excess chemical used to make hair
dry and use of conditioner was
imperative. Patanjali shampoo
makes hair fine and there is no
need of conditioner even.

The primary reason cited is effectiveness. Most respondents feel that

dandruff protection was enhanced by using these products. However,
when asked which products were discontinued and why the main
reason for switching was organic/lack of chemicals. So even as customers
Coconut oil is good due to
are happy with effectiveness, a significant differentiator appears to be
lesser hairfall, but shampoo is
the inherent organic nature of Patanjali
not good.
products.
Really good quality oil - 5
rating, shampoo is 3 not
All major shampoo and hair oil brands
effective.
Earlier Pantene. It has a lot of
are losing customers to Patanjali.
chemicals and causes hair fall.
Among our respondent set, the biggest
losers appear to be Sunsilk and Pantene
in shampoos, while Parachute is the biggest loser in oil.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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A product for every taste

As weve seen, customers are more than ready to try new Patanjali products, even if they dont like a
previously used product. Given that the average respondent in our survey uses (or has tried) > 5
Patanjali products, they do end up liking some even if others are not appreciated.
This is driving trials and adoption of a much wider range of products, and the table below provides
some glimpses into emerging (for Patanjali) product categories.

Noodles
Key differentiator is health,
i.e. made of atta

Nothing innovative. Just an alternative to

Maggie goof up.
Its a safe option, atta made, not using
Monosodium glutamate (MSG).

Mixed response to atta. The

branded players have not
been
as
affected (by
Patanjali) as have small local
suppliers.

Quality is good but chapatis get harder after

sometime hence discontinued.
Healthy, but rotis are not very soft.
Local atta used earlier. Patanjali has
multigrain and is a healthier option.

Detergents and floor cleaners

have yet to make an impact.
Customer reactions are more
positive for detergents.

Natural ingredients, lesser side effects, better

quality, trust. Liquid washing soap good for
delicate wash and even recommended by
shopkeepers.
Earlier was using floor cleaner -Lysol. Not a
very pleasing fragrance and quality.
Discontinued it and use Patanjali only.

The newly launched energy

bar and awla candy are
appreciated by users.
Natural juices (like awla) are
rated high, though not all are
happy with the taste.

Awla candy - best candy.

No competitor - they are early birds. Usingawla
and aloe vera juice has become a part of
lifestyle-its a wave.
Amla juice. Very effective. Taste is not great,
but it is not supposed to be great. Very good for
treating stomach ache and general digestive
health.

Atta

Home care

Juices & Candy

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Cooking oil &Ghee

Mixed responses for ghee
and vegetable oils. In ghee,
most of the respondents
were earlier using unbranded
products.

Natural ingredients, less side effects, better

quality, trust.
Too yellow in colour, flavour not great.
Not very good taste, smells like coconut oil.
Vegetable oil - the smell is bad and cannot
consume it.
Vega oil (mustard) - is very good quality,
authentic.

As a result of Patanjalis close

association with Ayurveda,
consumers are open to trying
several of its medicinal (OTC)
products.

Dabur(Chawanprash) discontinued. Patanjali

is more effective.
Tulsi syrup is good for treating cold.
Eyedrop is very good, very effective.
BP medicine is very good.
Balm. Soothing, nilgiri smell, effective.

Across products, one of the

consistent complaints about
Patanjali
products
was
around packaging.

Good quality product but packaging is not

good. At times leakage is there. Have
discontinued buying.
Need to improve packaging.

Healthcare

Packaging

Clearly, not all of Patanjalis products will be equally successful. However, the vast range of products
means that consumers will probably like at least one, if not more of these products. That is, assuming
they can be induced to try. At the moment, this does not appear to be a problem, as seen by the
openness of respondents to try multiple products even if they didnt like a previous purchase.
Overall, the underlying brand values in the eyes of the customer appear to be centred around phrases
like natural, herbal, ayurvedic, healthy, etc. This is even true of products that have no direct
correlation with health.
No doubt this is part of a larger trend towards healthier lifestyles and a move to natural products,
globally. However, in the Indian context, we can safely say Patanjali has probably accelerated this trend,
and exploited it hugely even as incumbents with similar value propositions (Dabur, Vicco, etc.) have
been left standing.
Of course the competition will fight back, so consumers are in for good times.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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Patanjali is here to stay!

Future usage

No, 7%

No, 4%
No, 40%

Yes, 93%

Yes, 96%
Yes, 60%

Use Patanjani products in

Future

Purchase other Patanjali Purchase organic products

products
from MNCs

Patanjali has not only ridden the wavefor natural and herbal products, but has helped define this trend
in the Indian market. The strong association of Baba Ramdev with yoga, and hence health and fitness
have created a brand that is fundamentally perceived to stand for health.
Lower prices, reasonably good quality and a motivated and loyal customer base are driving referrals.
Now advertising and distribution via traditional retail could help drive growth further. Not to forget the
ever proliferating number of products and variants.
As per our survey, >90% of respondents indicated that they will continue to use Patanjaliproducts, as
also try out other products from Patanjali.
At this stage one does not know much about Patanjalis inner workings and profitability, but one thing is
for sure theyre not going away in a hurry!
Interestingly, more than 60% of respondents expressed willingness to use multinational or other brands
if they launch organic/herbal/ayurved products. Competitors are already drawing up plans to introduce
more such products or align themselves more strongly with the health message. Colgate already has a
neem product.
Further, we expect many new entrants with healthy, traditional or ayurvedic products. Patanjali
will also inspire other spiritual leaders to follow suit.
The battle for Indias FMCG market is well and truly on.

Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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About ValueNotes
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Patanjali is here to stay! | A report by ValueNotes Strategic Intelligence | September 2016

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