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    Babas join queue to ape Patanjali: Sri Sri draws plan to fire up FMCG

    Synopsis

    BSE FMCG index has lost over 11% in the past month, with many of its constituents falling as much as 23% as the competitive intensity from Patanjali grew.

    ET Online
    NEW DELHI: For the longest time now, Baba Ramdev-led Patanjali is being seen as the biggest threat to the listed companies in the fast-moving consumer goods (FMCG) segment.

    There are new threats emerging, led by the Art of Living pioneer Sri Sri Ravi Shankar.

    “After the spectacular initial success of Patanjali, we expect other spiritual gurus (Sri Sri, Guru Ram Rahim, Aurobindo Ashram, Sadhguru Jaggi Vasudev) also to go the Patanjali way in the FMCG space. In particular, we are seeing renewed aggression (mass media, events, more products) from Sri Sri Ayurveda (SSA),” brokerage Edelweiss Securities said in a note.

    The BSE FMCG index has lost over 11 per cent in the past month, with many of its constituents falling as much as 23 per cent as the competitive intensity from Patanjali grew. This, at a time when the sector is highly penetrated and is expected to see a low volume growth going forward.

    Sri Sri’s SSA is now emerging as the biggest threat to big consumer brands such as Hindustan Unilever, Dabur India and Nestle. Stocks of these companies have fallen 3 per cent, 11.14 per cent and 13.14 per cent, respectively, over the past one month.

    Many of the consumer durable companies such as Dabur, Colgate Palmolive, Nestle, Emami and others also run the risk of earnings downgrade due to their expensive valuations and competitive pressure that they are facing from Baba Ramdev's Patanjali products, said an ET report.

    "We remain cautious on the India consumer staples space," said Aditya Mathur, a research analyst at Citi. "There are competitive pressures for the incumbents due to Patanjali. Pricing of products might be an issue in categories such as health supplements, including honey, chyawanprash and also certain premium segments such as hand and face wash and others, where the price-value equation could work in favour of Patanjali.”

    “SSA is beginning to use mass media, point-of-sale advertising and decent digital presence (has an app available on own/other websites). At the recent World Cultural Festival, Kishore Biyani expressed his openness to discuss selling SSA products at Future Group stores (similar to his tieup with Patanjali),” the brokerage said.

    SSA, Edelweiss said, is planning to open over 2,500 brick-and-mortar stores across the country and tie up with well-known retail chains to make its products available to a wider consumer base.

    But, can it replicate Patanjali?
    Patanjali has been a runaway success led by Baba Ramdev’s own brand equity and the wide array of product that it offers to millions of dedicated users. The company is well on its way to clock Rs 5,000 crore revenue by the end of 2016.

    “Currently, the commonality between Patanjali and SSA is limited to the strong brand equity of the founder and herbal/ayurveda positioning. Apart from that, SSA is woefully lagging Patanjali, though its product portfolio spans a good range of categories like Patanjali. We believe SSA has a long way to go before it gains Patanjali’s success. But the path will be too tough as the foundation has already been laid and Patanjali has already enlightened consumers,” Edelweiss said.

    Other Babas in the queue
    Sri Sri Ayurveda may not be the last of the spiritual guru-led threat that the traditional consumer-facing companies are facing. Others waiting to capitalise on the Patanjali model include Pujya Bapuji Sant Shri Asaramji Ashram, Aurobindo Ashram and Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha (BAPS).




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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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