When Ancient meets Modern...

Baba Ramdev's Patanjali products have taken the consumer goods world by a storm over the past 24 months. While the herbal and ayurvedic brand has been around for a long time, Baba Ramdev gained massive popularity while joining protest meets held by Anna Hazare over corruption issues. He later dilly-dallied with Aam Aadmi Party and later found support from none other than the BJP which went on to form the Government at the Centre in 2014. Ever since, Baba Ramdev has been among the most searched figures in the internet, not to mention his Yoga classes and ayurvedic products. He has been, by the way imparting yoga techniques for decades and his programmes on yoga are a super hit on hindu spiritual channels in India such as Aastha Tv.

Patanjali, is a name which also belongs to the founder of Yoga and hence the correlation with consumer goods brand. At the moment, Patanjali has over 400 items across Grocery, Personal Care including skin care, dental care, herbal products, washing powder, soaps and detergents, pure Cow's Ghee, Honey and many more. These products are manufactured at a state of the art factory in Himachal Pradesh, located in the North of India with access to the Himalayas. The Brand has had its share of controversies with Baba Ramdev himself being the centre of attraction (or distraction) in various events. A section of Imams of the Muslim Community asked followers of Islam not to use these products since some of them included Cow's urine, which is considered in Hinduism as a disinfectant. It is another matter completely that there are hundreds of muslims who work at the Patanjali's massive factory spread over hundreds of acres in Himachal. With the fall-out of Maggi Noodles (a Nestle product), Patanjali wowed people with their Atta Noodles, considered a healthier option and launched them in Jan. 2016 ever since it's been a super hit. 

Patanjali has been giving tough competition to national and international brands such as Colgate, Nestle, P&G and many others. On the Sales & Distribution front, they follow a similar model such as the good old days of FMCG. The products are sent from the factory to a Super stockist in each Metro who in turn passes it on to Distributors who then pass on to Retail Stores. The entire Supply Chain seems to be working quite flawlessly at the moment. The demand-supply ratio is currently pegged at 1:4 as per market estimates, i.e., there is one unit available for every four people who are looking forward to buy it. This is massive. In Indian history of consumer products, Bajaj Motors has the notoriety for having made people to book a scooter and wait for several years for delivery. Patanjali is in the same vein. People of all ages and segments of the society have been embracing them.

Patanjali recently tied up with the largest retailer in the country, The Future Group and the products have been available on the shelves of Food Bazaar which is the Hypermarket chain of the company as well as in other smaller retail formats such as Nilgiris, KB's Fair Price, to name a few. This approach of taking ancient medicine to modern retail has been an interesting move by the brand which now rubs shoulders with other well established brands such as Surf, Lakme, ITC, Nestle, etc. It is imminent that no brand, irrespective of their origin or utility cannot neglect Organized Retail which was less than 5% of the market a decade back and is now at over 10% of the USD 600 billion market and growing at 20% CAGR. Patanjali is sure to make a dent in the market share of the biggies and news articles have appeared in international magazines that MNCs are already fretting over this issue.

The brand's popularity is largely due to the power of Ayurveda, the way it has been positioned in the minds of the consumers and the Brand Ambassador which is Baba Ramdev himself, who is seen and aspired as one of the fittest Indians. It wouldn't be surprising of the brand attracts significant Private Equity and grows in scale in times to come. Watch this space.

It was a Sunday afternoon and a lazy one at it. And that’s just when someone at home asks for a pack of NAN 3 – a health substitute from Nestle SA that’s given to children. Given that it is a product not available so easily and usually procured from Pharmacies or Drug Stores, no one at home is willing to hit the road and that’s when the friendly Kirana comes to remembrance. One phone call and it would be delivered in a few minutes, suggested one of the members at the household. The next minute, someone was making the call and the friendly voice at the other end was actually prodding for further purchases if the family needed something else. A few other items were included and it was promised the stuff would be delivered shortly. And indeed, it was. In the next 15 minutes, there was a young boy at the door with a bag full of items for well over Rs. 500/-. This can happen, most probably only in India. We as a nation are not yet fully used to shopping in a cycle – although we see major crowds at the large hyper and super markets, consumers miss out buying many things – either they are out of stock or they are out of their shopping list. This is very unlike in the West where there has been an evolution of shopping habits, usually during the beginning of the month, or even on weekends, well in advance for the week ahead. But here, most times we prefer the “just-in-time” way.

 

While the debate and discussion regarding opening up FDI in Retail has prevailed for long, there is little doubt that Organized Retailers could offer such services. “Free Home Delivery” is usually advertised at many Supermarkets like Foodworld, Spencers, Nilgiris and even a few Hypermarkets like Total, Food Bazaar but they all come with riders – that the distance should be within a 3-5 km radius, the total bill value should be above a certain level and that the delivery could take between 2- 6 hours depending on the day of the week and place of delivery. Naturally, since the cost of operating is far higher for Organized Retailers than the neighbourhood kiranas. The big boys need to maintain books of accounts, a mini truck or a van to deliver and a driver to drive (not to forget the maintenance of these vehicles) and many other internal processes. All these are negated with the local kirana. Depending on the level or urgency, the kirana is willing to deliver at the earliest and usually within the locality and most of them operate in one.

Cash & Carry Retailers (are they actually retailers?!?) such as Metro AG have been operating in India since 2001 and most recently Wal-Mart in a JV with the Bharti Group has been operating such stores in Punjab under the trade name “Best Price”. These stores usually sell their wares to the smaller kiranas, hotels, restaurants, etc. who in turn retail to end users and consumers. Since the large Organized Retailers order their goods directly from the brands and suppliers, they are able to pass on higher margins to the kiranas who in fact benefit from this exercise. This has been a strong point supporting FDI in Retail all along since many in the industry believe that it would do well in the long run for the Retailers, the Kiranas and the Consumers.

 

It is quite natural to see more deliveries over the weekends, festivals days and specials events such as Cricket Series and Public holidays as there are more people to consume at home. Not just the kirana stuff, even door-delivery of food and other beverages seems to be on the rise. Last Sunday along with the morning newspapers, there were pamphlets from atleast three restaurants in the area – all small time local operators. An A4 page size pamphlet cluttered with a whopping menu of more than 100 items printed in two colours on the back and front size. But who cares! As long as the food is tasty and delivered on time, nobody bothers. What’s important is not just quick service but the quality of products. Kiranas and small-time eateries take greater care while packing, transporting and delivering as these simple steps are their real “Brand Ambassadors”. If all three were good the first time, chances are they would be called again.

So, no matter how many large Retail formats open up in this country, one reason why Kiranas will remain in business is “convenience” – a fact that most of us live by.

Long Live Kiranas! Long Live Home Deliveries!