A 'natural' progression in consumer markets

Latest weekly data of the country’s top ten advertisers by the Broadcast Audience Research Council of India (BARC) shows Patanjali Ayurved in august company. It shares space with the likes of Hindustan Unilever (HUL), Reckitt Benckiser, Procter & Gamble and Mondelez (Cadbury) among others on the list.

Patanjali, in fact, has been a consistent presence in BARC’s top ten advertiser list for a while now, implying it has no plans to go slow on advertising anytime soon and also that it will continue to take aim at its rivals, mostly multinationals, in its bid to promote its products.

But while the Baba-Ramdev co-founded firm has gone after MNCs with a vengeance, projecting their products as those which contain harmful chemicals, there has been an interesting fallout of this aggression. The biggest is the growing acceptance of herbal/ayurvedic products among lay consumers in India, something Baba Ramdev likes, but which has also prompted his rivals such as HUL and Colgate to respond quickly. 

As herbal/ayurvedic products increasingly become mainstream, HUL, the country’s largest consumer goods player, has stepped up its focus on Lever Ayush, its ayurvedic range of products, taking it to markets across the country. Other products such as Indulekha (an ayurvedic hair oil brand acquired by HUL two years ago) and Citra (a herbal skin care range introduced this year) complement HUL’s naturals portfolio and are likely to see additions going forward as the herbal trend gets deeper in India.

But as MNCs take to ayurveda like never before, owing partly to their thrust on global products and formulations, domestic herbal players such as Dabur and Emami, who’ve for long operated within a niche, have now strengthened their position in the marketplace, thanks to the growing acceptance of their products. 

Abneesh Roy, senior vice-president,  research, institutional equities, Edelweiss, says that Patanjali’s move to promote ayurveda in India has aided firms such as Dabur, Emami and even HUL to find their feet in the herbal space. “These companies have the wherewithal, distribution and advertising muscle. The basic groundwork done by Patanjali to create awareness has allowed these and other firms to innovate and take the trend forward,” he says.

Predictably, newer players have been emboldened to enter the ring due to these moves. A month ago, direct seller Amway expressed its desire to enter the herbal/ayurvedic space under the Nutrilite umbrella.

In a conversation with Business Standard, Samir Behl, president, Europe, India and Africa, said, “We are trying to adapt Nutrilite into something more Indian by using more herbal and ayurvedic products. We are doing a fair amount of work in that direction and will have a whole range soon. We would be launching products more in tune and understandable to local people.”

Clearly, companies across the board from listed players to unlisted entities realise, say experts, that there is a need to participate in the herbal story in some way. The question is: Can the market accommodate all? 

“You have to understand that the herbal/ayurvedic space is being pushed by the desire among people to use chemical-free products. So it will continue to grow. Also, this trend has collided with the broader trend of people wanting to lead healthy lifestyles. In other words, health consciousness and the need for chemical-free products have come together. So, I don’t see the market shrinking at all. It will grow and is in a position to accommodate all,” Anil Talreja, partner, Deloitte Haskins & Sells, says.

An indication of where the herbal/ayurvedic space is headed in India was provided recently by market research agency Nielsen. Speaking about the personal care category in particular, it said that naturals as a segment would grow two and a half times that of the non-naturals segment, constituting half the overall market in the next few years from 41 per cent now. Non-naturals, on the other hand, would shrink from 59 per cent to 50 per cent, Nielsen said.

To give a sense of where the overall market for ayurvedic products is headed in the country, consider this: The government of India expects the market to touch Rs 52,000 crore (or $8 billion) in five years from Rs 16,250 crore (or $2.5 billion) now. The overall market here includes all categories from personal care to food to ayurvedic medicines. While the government did not give a break-up of individual categories, an over three-fold growth of the market in five years, say experts, is huge.

In a recent investor call, Colgate’s global CEO Ian Cook said that the trend of chemical-free products was getting widespread, prompting the company to launch products on the naturals platform in all principal Asian markets by the end of 2017. Eurasian markets, which include West Asia (Middle East), would see naturals-based products being launched by the first quarter of 2018, he said.

“The interpretation of naturals is different in various markets. In India, naturals implies products based on ayurveda,” he said. “In Russia, China and the US, naturals implies use of local ingredients available in those markets.” 

Colgate already has two toothpastes on the naturals platform in India, Cibaca Vedshakti and Colgate Swarna Vedshakti, the latter launched in October. In China and Russia too, Colgate has rolled out toothpastes on the herbal platform using ingredients available there.

Amway too has herbal products in the Chinese market based on local medicines and could continue beefing up this portfolio just like it intends to do so in India by growing herbs and using them for local research & development.

“We are big on organic farming. We have our own farms in Mexico, Brazil and working closely in India with the states and farmers,” Behl of Amway says.

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