Macro Matters

Patanjali noodles and more, Baba Ramdev's got India eating out of his hand

The masses will buy into his assurance that they are a healthy alternative to cooked meals in times of high food inflation.

 |  Macro Matters  |  4-minute read |   20-11-2015
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Baba Ramdev hopes to take the instant noodles market by a storm but Patanjali atta (wheat) noodles ran into minor roll-out hiccups almost instantly after the launch. The Food Safety and Standards Authority of India (FSSAI) said Patanjali Ayurved had not got approval for instant noodles prior to their launch.

Baba Ramdev’s company has, however, said that it is not required to get a product specific approval for launching atta noodles. It has further said that as per FSSAI, noodles come under the "pasta" category for which it had a licence and that Patanjali Ayurved was well within the law to launch the product.

Also read: Why Ramdev's Patanjali is a fascinating success story

The controversy would be settled soon, but it remains to be seen whether Maggi noodles-crazy Indians will train their palates to like Patanjali noodles as much.

Just don’t assume that Patanjali noodles will not succeed in a market where people are increasingly looking to put together a quick meal and there is still a sizeable population that is not hooked on to the taste of Maggi instant noodles.

Patanjali noodles is priced much lower than the popular brands in the market and that can be its competitive advantage. Lower pricing has so far proven to be a winning formula for Patanjali with almost all its products.

Also read - 8 hilarious memes: When Baba Ramdev and Shilpa Shetty did yoga together

Most Patanjali products retail at 15-30 per cent discount to its peers from home grown as well as multinational companies. Patanjali sells a range of products from honey and ghee to face wash and shaving gel through its own outlets as well as through large organised retailers and they have been popular with masses, if not with classes.

Most of all, Patanjali has Baba Ramdev as its chief brand ambassador. So, it does not have to rely on high voltage advertising and sampling like its peers in the market. Incidentally, Baba Ramdev does not hold shares in Patanjali Ayurved - about 92 per cent of the shares are held by his associate Balkrishna and the rest (eight per cent) by Scotland-based NRI couple Sarwan and Sunita Poddar.

Also read: [Hilarious] Baba Ramdev grooves to 'Sexy and I Know It'

Baba Ramdev uses his yoga sessions to showcase and promote Patanjali products, meaning he has captive audience. Given his large following and his assurance that the noodles are healthy option over cooked meals in times of high food inflation, he may soon have masses eating instant noodles out of his bowl. The wealthier classes may just turn up their noses at the thought of tasting the newest instant noodle brand in the market.

Patanjali Ayurved’s strategy to have Baba Ramdev promote each of its products has paid it rich dividend so far. The company - that started as a small pharmacy in 1997 and was incorporated only eight years ago - had total revenues of more than Rs 2,000 crore in 2014-15, making it bigger than healthcare and personal care companies Emami and Jyothy Laboratories, according to independent research brokerage CLSA in a report in August.

The last financial year was very good for the company - its revenues and profits jumped. That has emboldened the company to set a very ambitious target for this year. It expects its turnover to rise two-three times this financial year; the figure is expected to be Rs 5,000-6,000 crore. That would make it larger than Colgate Palmolive India. Patanjali earned 40 per cent of its revenue from the food business, 39 per cent from FMCG products (essentially, cosmetics and homecare products) and only 21 per cent from healthcare and Ayurvedic products, estimates another brokerage firm Edelweiss. It is also one of the most profitable companies in the FMCG sector.

Thinking big is not new to Patanjali. The company set up one of the world’s largest food parks spread over 100 acres in Haridwar in record ten months and commissioned it in January 2010. Brokerage firms describe the facilities to be world class that is fitted with best machinery money can buy. It has also invested in research and development, as well as testing facilities to keep its pipeline of new products busy, the objective being to offer consumers every item that’s stocked in any kitchen and elsewhere in the house.

The company’s weak link is its retail presence - but much is happening on that front too. It has not only opened small stores across many towns and villages, but also tied up with modern retail stores. It has some online presence and an app is set to be launched soon.

For the moment, Patanjali noodles is subject of much ridicule on social media, to some measure thanks to All India Backchod spoof. Baba Ramdev’s followers may just have other plans - they may decide it is health food.

Writer

Tina Edwin Tina Edwin @tinaedwin

The writer is a Delhi-based journalist.

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