TREAD WITH CAUTION

A Unilever and Tata veteran lists six risks that upstart Patanjali must guard against

Quartz india
Quartz india

In the relatively staid fast-moving consumer goods (FMCG) market in India, a boundary spanner has made a huge impact through the superb timing of entry and scaling up: the Patanjali brand has made a significant consumer impact in a very short time.

I reflected on what the company must be watchful of to convert such a grand beginning into a sustainable, long-term business. What are the risks they must guard against?

The first is excessive brand extension and distraction. So long as the product range is squarely in the wellness space—I include personal products and ghee in wellness, but not mustard oil, noodles or detergents. Stretching the image into jams, noodles, detergents and cattle feed is neither smart nor image-consistent. Patanjali has a choice to make: create scale by being a minor player in a large number of categories or become a significant player  Patanjali has made a significant consumer impact in a very short time. in chosen categories.

The second is the ability to deliver a consistent quality, day after day, year after year. FMCG companies have built systems of quality assurance, safety, food standards and general excellence over decades. This is not rocket science, and delivering results reliably requires a strong systems orientation. Because consumers are hassled with lifestyle pressures, they long for natural, ayurvedic remedies, which stand pre-sold in the consumers’ minds. They trust blindly, and that trust must never be broken in terms of ingredients, quality and freshness. That is a tall order to deliver. Some of the quality complaints on social media are horrendous.

The third is to remain focused on the consumer rather than on the competitor, which can take away focus from the consumer.

Patanjali should remember that long-lasting, value-creating consumer companies are rarely controversial entities. They are almost self-effacing because they are always trying to strengthen consumer trust! Advertising or product claims that get struck down by legal courts or by standards councils do not augur well for Patanjali. Suggesting that other edible oils in the country carry carcinogens or add sodium benzoate as a preservative and then claiming that their product is “chemical-free” is avoidable! How can a detergent be chemical-free? The consumer does not really care whether Patanjali deals a death blow to MNCs or Indian manufacturers.

The fourth is product distribution. “Herbal-related” brands like VLCC and The Body Shop rely on exclusive stores rather than general trade. Patanjali’s ability to get corporate stacking in modern trade is impressive. Currently, Patanjali offers tight retailer margins, but reaches 10 per cent of the retail universe. It is expanding distribution gradually on the strength of consumer pull, but there is a long, long way to go.

The fifth is to dilute the political connections of the business. Consumer research data shows clearly the disapproval of consumers when the Patanjali brand ambassador gets involved with political statements or movements. Changes of government regimes can change fortunes, for example, the availability of bank loans, favourable tax breaks, easing up of investigations into pending quality/tax cases, connection with powerful people, and so on.

The sixth is the Icarus syndrome. If an entire business is constructed on the platform of one brand ambassador, there is inherent risk for life after. With growing success, differences of opinion and compatibility among the stakeholders could crack open. History shows that it is only after commercial god-men die that the putrid remnants of their ashram or empire became visible to the public.

Excerpted from R Gopalakrishnan’s book A Biography of Innovations with permission from Penguin Books India. We welcome your comments at ideas.india@qz.com.

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