New Delhi: On an annualized basis, it will, by 31 March 2016, have spent more on advertising in the previous 12 months than Emami Ltd, GSK Consumer Healthcare Ltd, Marico Ltd, Nestle India Ltd and Godrej Consumer Products Ltd, some of India’s largest packaged consumer goods companies.
In five years, it hopes to be the biggest packaged consumer goods company in the country.
Former Bollywood star and member of Parliament Hema Malini will endorse its biscuits.
Olympic medallist, wrestler Sushil Kumar will endorse its ghee.
The it in these sentences is yoga guru Ramdev-promoted Patanjali Ayurved Ltd, which would have spent Rs.360 crore on advertising between November and March as it seeks to establish itself as a serious contender in the country’s estimated Rs.3.2 trillion packaged goods market.
Of the total spend, about Rs.300 crore has been allocated for television, radio, print and digital media, while the remaining will be spent on outdoor, according to two people aware of the development.
An email to Patanjali remained unanswered. Its managing director Acharya Bal Krishna did not respond to repeated calls seeking comment.
Patanjali, founded by Ramdev—born Ramkrishna Yadav—in 2006, is new to the advertising game. This is also the first time it has hired professional media agencies such as DDB Mudra (for creative work) and Vermillion Communication (for media buying).
Patanjali’s brief to DDB Mudra was straightforward: “Highlight the goodness of nature with which these products are made and showcase individual product benefits,” said Vandana Das, president, DDB Mudra (north). The brand will go big on television to get reach, Das added.
DDB Mudra manages only 3-4 brands of Patanjali, including ghee, atta noodles and toothpaste, for which it has created advertising films. More ad films are in the pipeline, said Das.
Currently, Patanjali sells 30 products—mustard oil, flour, butter, biscuits, spices, oil, sugar, juices, honey and toothpaste being among them—at prices that are 15-30% lower than that of its competitors.
Patanjali’s advertising across product categories started just before Diwali when the company launched atta noodles to take on Swiss packaged food maker Nestle India’s Maggi noodles.
That Patanjali would spend money on advertising was known.
The company wants to grow by expanding reach through general trade and modern retail, and expanding into international markets. In October, announcing Patanjali’s partnership with the Kishore Biyani-led Future Retail Ltd, Ramdev said that Patanjali would close the current fiscal year ending 31 March 2016 with Rs.5,000 crore in revenue. In 2016-17, it will start tapping the export markets, and over the next five years, Ramdev said, Patanjali would become the largest consumer packaged goods firm in India.
In absolute terms, what Patanjali will spend between November and March (less than two quarters), is higher than the half-yearly spends of other consumer packaged goods firms such as Emami, GSK Consumer Healthcare, Marico, Nestle India and Godrej Consumer Products. In India, the largest ad spender in the space is Hindustan Unilever Ltd, which spent Rs.3874.94 crore in the fiscal year ended March 2015.
In a report, investment banking firm CLSA said, Indian consumer packaged goods firms, typically spend about 10-15% of revenue on advertising while Patanjali had negligible spending and “relies mainly only on endorsement by Baba Ramdev and his disciples and instructors”. Most of the promotions happen during yoga sessions conducted by Ramdev and the yoga guru depends heavily on followers who are popular celebrities such as Sushil Kumar, to endorse products during these yoga programmes.
According to the CLSA report, Patanjali has the potential to reach out to more than 200 million people who are directly or indirectly linked to Ramdev’s yoga programme.
Analysts believe Patanjali can emerge as a challenger to established packaged goods companies in the long term. CLSA, in a report titled ‘Indian Consumer: Taste of India’, said Patanjali Ayurved, originally founded as a small pharmacy, may be the most diversified consumer goods firm in India, bigger than Jyothi Labs and Emami. “While competition must be keeping its fingers crossed, all we can say is: ‘Wish you were listed’,” CLSA’s Vivek Maheshwari and Bhavesh Pravin Shah wrote in the report.
If Patanjali gains “palpable distribution prowess” over time, it will “pose a serious threat to the competition,” said Abneesh Roy, associate director, institutional equities research, Edelweiss Securities. Roy has visited Patanjali’s plant at Haridwar.