Analysing FMCG Industry and

reviewing the shift towards natural

products with the introduction of
players like Patanjali Submitted By:
19PGHR12 Apoorv Singhal
19PGHR18 E Christine Priscillia
19PGHR24 Kunal Mahajan
19PGHR40 Shruti Asati
19PGHR49 Abhijith N
19PGHR59 Anika Singhal
Research Question
What has been the shift in the FMCG
01 market in the past 5 years?

What were the forces that helped

02 Patanjali gain its market share in such
a short span of time?

How has Patanjali affected the key

03 players in the FMCG industry and
what are their expansion plans?

How is the current slowdown in the

04 FMCG industry going to affect the
growing organic market.
Introduction

• Fast moving consumer goods (FMCG) is the 4th largest sector in the Indian economy and
operates in a monopolistic competition market

• There are a large number of buyers and sellers and the sellers have the power to set
their own price

• The sellers sell a differentiated product and the demand for the products are price
elastic

• The barriers to entry and exit of firms in the market is very low

• There are three main segments in the sector – food and beverages which accounts for 19
per cent of the sector, healthcare which accounts for 31 per cent and household and
personal care which accounts for the remaining 50 per cent.
Shift in the FMCG market

• Before the advent of Patanjali, ayurvedic products were majorly restricted to hair oils and local dietary
supplements

• Patanjali created a substitute for inorganic products with its entry

• It created a separate segment for itself where they were the first movers. Therefore, in the short run they had
economic profits. But in the long run, as more competitors entered the market, their profits reduced

• Lifestyle and availability have accelerated the growth in the natural FMCG products.

• Growth in rural disposable income have also significantly contributed to the growth of the sector

//economictimes.indiatimes.com/articleshow/68041253.cms?from=mdr&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Profit in a Monopolistic Market
Growth of Patanjali
Strong Brand Ambassador Focus on Swadeshi factor
Baba Ramdev and Variety Ayurveda products

Distribution System Advertising

Low Margin, High Volume

Case study in growth of Patanjali Ayurveda Limited – Udit Bhargava, Lalit Tandon, Prateek Rohra
 Patanjali’s Expansion Plans
Tie up with giant
online sellers:
E-commerce websites
Partnership with giant retailers
Own website and retail stores
Boost to its digital marketing
Further
diversification of
products:
enter into textile industry
Target of 5000 cr in first year
USP in textile industry would be
“Swadeshi Apparels”
Increasing the
production capacity:
Invest huge sum of money in
developing 4 new food and
herbal parks in country
Issuing IPOs:
Expects to have turnover of
around Rs100000cr in next 4-
5 years
Can’t solely depend on loans
from banks for their
expansion project.
 Effect of Patanjali on FMCG Market
Financial Year 2015 - 16
• Patanjali made revenue of Rs.5008 crores
• Contributed 1.5 % to FMCG sector.
• Diversification of portfolios to include
Ayurvedic and Herbal products
• Colgate launched its low-priced Herbal
toothpaste-Cibaca Vedashakti
• Patanjali brought back the Herbal trend
back.
• Consumers and Industry have gained from
the arrival of Patanjali
Financial Year 2016 - 17
• Doubled its revenue from the last year
• Used India's cultural roots
• companies are trying to reach consumer
through their grass root levels
• understand consumers better and provide value
• L'Oreal launched its hair care range under
Garnier Ultra Blends made with natural
ingredients
• HUL started a range of personal care products
based on Ayurveda.
Case study in growth of Patanjali Ayurveda Limited – Udit Bhargava, Lalit Tandon, Prateek Rohra
Competitors & Market Share
• Patanjali’s Ayurved division is the main performer of the company
• Some of the products include Desi Ghee, Dantkanti tooth paste, Keshkanti Shampoo, Herbal Bath Soap
and Patanjali Honey.
• Patanjali Ghee is the largest selling product of the company
• Other than the products related to lifestyle and health, the company has plans to touch every consumer
product category.

Patanjali market share of :

• Shampoo 15%
• Tooth paste 14%
• Face wash 15%
• Dish wash bar 35%
• Honey 50%.
Case study in growth of Patanjali Ayurveda Limited – Udit Bhargava, Lalit Tandon, Prateek Rohra
Effect of current slowdown
• Patanjali’s revenues for the year ended March 2018 dropped
10% to Rs 8,135 crore from Rs 9,030 crore

• Its net profit fell by over a half at Rs 529 crore in FY18 against
Rs 1,190 crore a year earlier

• The key reasons for the same can be attributed to the after
effects of demonetization and GST

• Patanjali needs to increase capacity to ensure availability of its

products and it is raising debt

• Debt of ₹2,766 crore as of 31 March 2017, with a debt to

equity of 0.8

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THANK YOU