In 2015-16, the Indian market was hit by a huge wave of natural, ayurvedic products. That was the time when Baba Ramdev's Patanjali Ayurved emerged. It made a massive foray into the every-day consumption categories. Right from toothpaste to soaps, ghee, honey and even atta, the Patanjali phenomenon had gripped India.
Smart marketing, affordable products and rapid expansion were three factors that fueled growth for the company in India. This reflected in revenues which doubled from around 5000 crore in FY16 to close to 10,000 crore in FY17.
While growth in initial years was led by the quick adoption and a vast number of products available in the market, a combination of internal and external factors slowed down growth for Patanjali in the fiscal year 2017-18. While external factors like demonetisation and transition to GST impacted sales to some extent, supply chain and weak distribution network also put brakes on growth.
Filings revealed that sales in FY18 were around Rs 8148 crore, which was a 10 percent decline from FY17 numbers.
Even as sales growth for the company has slowed down, data from Kantar Worldpanel reveals that Patanjali has improved penetration levels dramatically, especially in rural areas.
Taking into cognisance the pressure points, Patanjali has been working on strengthening its distribution network. It has been overhauling its supply chain, innovating with incentive structures and increasing direct distribution. This reflects in the data which shows that overall penetration levels of Patanjali products have gone up from 44.5 percent in 2017 to 49.4 percent in 2018. This indicates that 50 percent of the Indian households actually use Patanjali products.
Interestingly, rural penetration for Patanjali has tripled to 43.9 percent from around 13 percent in 2015-16. Penetration is defined as the percent of households that bought the brand at least once in a year.
On a category-wise basis, categories like personal care and food have been high revenue generating categories for Patanjali. While other categories may have slowed down a bit, personal care continues to drive growth for Patanjali. For instance, in the toothpaste category, penetration levels of Patanjali's Dant Kanti have nearly doubled from 18 percent in 2016 to 34.8 percent in 2018. Similarly in the shampoo space, penetration of Patanjali's Kesh Kanti shampoo has increased from 6.1 percent in 2016 to 9.1 percent in 2018 on an overall basis.
Growth and penetration in the food category have more or less stagnated and declined in some cases. Ghee has grown from 2.1 percent in 2017 to 2.2 percent in 2018. Atta has declined on a year on year basis from 1.1 percent in 2017 to 0.5 percent in 2018. However, on an overall basis, Patanjali's penetration across categories has seen a sharp increase led by expansion in the East and South India.
However, analysts say that increase in penetration may not necessarily be good news for the company if it doesn't result in an increase in sales. The data could also suggest that Patanjali has seen a decline of repeat customers or that lower price point SKUs are seeing more takers. Time will tell how market dynamics shape up and if Patanjali will be able to get back to historical growth levels.
First Published: IST