Dsouza, Bloomberg Quint
Mumbai, 9 January 2017
demand for ayurvedic products grows, especially driven by Yoga guru
Baba Ramdev’s Patanjali Ayurved Ltd., FMCG major Hindustan Unilever
Ltd. has relaunched its Lever Ayush brand in southern India, the
biggest and most competitive market in the space.
The Rs 32,000-crore HUL will offer 20 Lever Ayush products for as low
as Rs 30 in the hair, skin and oral care categories across Tamil Nadu,
Kerala, Andhra Pradesh, Telangana and Karnataka -- the five states are
home to several local ayurvedic brands.
Patanjali, which largely operates in the north, offers products for as
low as Rs 25.
“Traditionally, the southern market consumer is a strong user of ayurvedic
products, which could have made HUL consider launching the product
initially in the south,” said Devangshu Dutta, chief executive officer
at Third Eyesight, a retail and consumer products consulting firm.
"Our current focus is to ensure a successful launch of the new range in
these markets to build a scalable and profitable model. We will
consider the expansion to other markets at a suitable time going
forward," HUL said in an emailed response to BloombergQuint
There are several well-established brands in the south, the largest
market for ayurvedic products, and HUL will find it difficult to make
inroads, says Sageraj Bariya, vice-president and analyst at East India
“(HUL) has been present in the ayurvedic segment with Lever Ayush for a
long time, but this has not been their core competency area. In terms
of price points, Hindustan Unilever will be competing closely with
Patanajli, which has products in a similar price range. It looks
difficult for Lever Ayush to really give a stiff competition to
Patanjali and other players in the south,” Bariya says.
There are more than 15 ayurvedic brands in southern states, the
prominent being Dhathri Ayurveda, Sakunthala, Pankajakasthuri, Heena
Patanjali, which has done well in north India, has also managed to make
a mark in the south despite local ayurvedic brands having a strong
presence, says brand consultant Hairsh Bijoor, founder of Harish Bijoor
In terms of pricing, HUL is competing with Patanjali head-on. The
largest consumer goods company in the country has priced its products
in the Rs 30-130 range, close to that of Patanjali’s Rs 25-110.
South-based Ayurvedic brands have priced their
skin-care products 30 percent lower and toothpastes 20 percent lower
compared to other major brands in the space.
In December 2015, HUL had acquired Kerala-based Moson Group’s Indulekha
for Rs 330 crore, just when competition in the ayurvedic segment had
started to witness some momentum.
HUL decided to relaunch Lever Ayush to compete even more fiercely in
the ayurvedic space by offering lower prices as Indulekha products are
more premium in terms of pricing.
“Despite having Indulekha in their portfolio, the company has
re-launched Lever Ayush as HUL wants a larger market share in the
ayurvedic space, and I expect the company to launch more ayurvedic
products going ahead,” said Prashant Agarwal, joint managing director
at business consulting firm Wazir Advisors.
Arvind Singhal, chairman of management consulting firm Technopak
Advisors, believes HUL’s strong distribution channel will help the
Lever Ayush, launched in 2001, failed to perform
because the ayurvedic market was relatively small, though growing at a
steady pace, experts say.
“With the entrance of Patanjali, the Yoga guru
awakened the latent demand for ayurvedic products, which is now an
eye-opener for other FMCG companies to get aggressive in the ayurvedic
space, as every consumer player wants a share in the expanding
ayurvedic market,” said Agarwal.
Patanjali’s turnover grew over two-fold to Rs
5,000 crore in the financial year 2015-16. The company sees it rising
to Rs 40,000 crore by 2018-19, according to an Axis Capital report
released on December 12, 2016.