By Anshia Dutta
In a match that is definitely not made in heaven, the global MNC Louis Vuitton Malletier, the fashion house and luxury retail company wants to buy stakes in the shuddh desi Patanjali Ayurved.
Patanjali—Indian FMCG sector’s game changer
Patanjali Ayurved Limited was established by Baba Ramdev and Acharya Balkrishna in 2006 with the purpose of establishing Ayurveda in coordination with the latest technology and ancient wisdom. Since then it has become, inarguably, the fastest growing company in the Indian FMCG sector—the industry which was once dominated by Unilever, P&G, Nestle, Colgate, Johnson & Johnson, and others. Patanjali produces an array of products ranging from the categories of personal care to food—shampoos, biscuits, ghee, noodles, and now, apparel and footwear as well. It is perhaps the only indigenous company which has such a diverse portfolio of products.
Patanjali has around 15,000 stores, 100 mega-marts, and an extensive sales channel of over 5,000 distributions. It has even tied up with retail chains like HyperCity, Reliance Retail, and other e-commerce platforms. Its revenue has increased manifold in the last decade.
Reasons for rising market share
People are very sensitive to prices, especially the middle-class in India. What attracts people to Patanjali products is the affordability and quality. As compared to other rival companies, Patanjali offers attractive discounts on its products. It also claims that all its products are ayurvedic in nature—natural and void of synthetic and artificial ingredients. It advertises its products as historically and culturally indigenous, thus making it appealing to its customers.
Secondly, Patanjali has a large and trustworthy system of distributors, thus making its products available in every corner of the country. On top of this, Baba Ramdev, the face which is recognised all over the country is its brand ambassador. The success of Patanjali can also be attributed to Ramdev’s association with the brand who is himself considered to be a firm believer of Ayurveda.
Louis Vuitton pumping money into swadeshi brand
Patanjali has disrupted the Indian FMCG sector in a short span of time with its portfolio of diverse products and unconventional market strategies. Since it has brought about a revolution in the industry, L-Catterton, a private equity fund co-owned by LVMH, has said that they are ready to put $500 million that is half of its remaining Asia fund, into Patanjali. Ravi Thakran, managing partner of L Catterton Asia said, “Patanjali has the potential to go to the world and I can tell you today that Patanjali has been a disruptor in its category, as strong a disruptor as many of the global disruptors are and it has taken Indian-ness and celebrated it with pride. However, I know his model is not to work with multinationals and with foreign money but we would love to work with him if we can find a model.”
Although Patanjali is looking for funds to cultivate herbal plants in Andhra Pradesh and to set up plants in Greater Noida, Assam, Telangana, Chhattisgarh, Andhra Pradesh, Nagpur, Haryana, and Rajasthan, there seems no possibility of Patanjali giving its stake to any foreign conglomerate. Patanjali’s Managing Director, Acharya Balkrishna said, “Our terms are very simple that we would not allot any share or stake of Patanjali to them. We are getting loans from the banks without any problems. My condition is that if any fund is looking to support us, they should give us loans with interest lower than the banks and in Indian currency.”
It seems that Louis Vuitton’s wish to buy stakes is not going to bear fruit after all.