Patanjali’s rivals retool their portfolios with their natural-herbal products at similar price

March 28, 2019

In the past three-four years, Patanjali Ayurved has disrupted the Indian fast-moving consumer goods (FMCG) sector with nature-based products in various categories to challenge the dominance of companies such as Hindustan Unilever.

This has forced rivals, particularly the multinationals, to look over their portfolios to introduce matching products at similar price points to try and regain their market ranking and this seems to be paying off, according to many analysts..

Patanjali Ayurved has shown success in staples such as ghee, flour, Ayurvedic health supplements, toothpaste, edible oil and condiments but less so in noodles, biscuits, personal care, chocolates and juices.

Competitive intensity has faded in the organised end since Patanjali’s products no longer have the unique selling proposition (USP) of being natural with other brands having entered the market at similar or lower price points, experts said.

Many analyst believe that the home grown company’s threat has receded but it is more of a case of Patanjali having lost the plot. They tried too many things. They have not looked at their growing in scale at the back end. They succeeded in demand creation but not in demand fulfilment. They fell short of the institutional strength to sustain the rising volume. Their threat is definitely lower because they had internal issues — supply not being on time, trade not happy with them.

All the same even if Patanjali is able to overcome its recent issues on quality and supply chain, we expect it to gain market share in these commoditised categories at the expense of unorganised players, and not pose a major threat to the listed F&B companies playing in non-commoditised categories,” said the food and beverage report released by Systematix Investments earlier this month. Still, Patanjali retains the ability to create further disruption.

Patanjali cannot be ignored by the market leaders — they are capable of a surprise. The JPMorgan report says there is a downside risk for Dabur’s growth prospects due to the overlap of categories with Patanjali such as chyawanprash, honey, hair oil and toothpaste.

Based on ETIG data, Nestle and Britannia have outperformed on the ground as well as on the bourses, despite competition from Patanjali. Dabur also has managed to keep improving its performance amid competitive intensity.

HUL’s market share in soaps has been resilient even after the entry of Patanjali, according to the latest report by Reliance Securities.

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