Tuesday, July 12, 2016

Only when the tide goes back…



Being in a research company has its own advantages. You become aware of many sectors. However, you are still going to be “Jack of all” but a pupil of few of them. Lately, we have been getting various requests in consumer goods domain. It is not hard to figure out what is it regarding? Patanjali – You guessed it right…
Few sources cite that its revenues have crossed Rs.5000 cr. It has reached this milestone in almost half a decade, the feat rarely achieved by even large multinationals. You need to give them their due. The way Ramkrishna Yadav (better known as Baba Ramdev) marketed himself and the company Patanjali really well by making themselves an authority on Yoga, Ayurveda, and natural products is quite commendable. They have found a huge fan following; which has now began new wave of going back to the natural products – natural and organic products for the health conscious people.
However, I am surprised that the research requests came in so late. I believe being in the market has its own positives. You are aware of how the companies and its competitors are performing. Then why didn’t they see the trends shifting. Why didn’t the request come when the revenues were just Rs. 100 cr, Rs. 500 cr. or even Rs. 1000 cr. Maybe the competition didn’t perceive that Patanjali will emerge as such a serious competitor. In investment circles there is a saying that never mention – This time it’s different.
In a capitalist society it’s a hara-kiri to assume that the new challenger is going to lose. Time and again, it has happened – Nirma challenging HUL, LG and Samsung overthrowing BPL. There were different issues associated to both of them. However, the outcome was similar.
The new players get in the market. The existing players overlook the seriousness of the new comer and then find themselves threatened by them. They will adopt “wait and watch” stance and by that time  the challenger reaches the inflection point from which the existing players will face herculean task of gaining back the market share.
We all want to quote Peter Lynch and Philip Fischer but we rarely pay heed to their advice. Didn’t we realize when some people within our circles started to use Dant kranti (toothpaste), Patanjali Honey. We all saw them but conveniently chose to ignore these shifts. Therefore the entire research request coming now might be construed as a herd behavior.
These new shifts indicate the lure of natural and health conscious organic food. I am not saying that existing FMCG majors will keep quiet. In fact, the companies like  Dabur, Emami, etc. who are also into selling of Ayurveda and natural products may have some added advantage. However, smart marketing is needed by these companies. This could have been avoided if they could have spotted the trends early. But it is difficult to define early stage. Maybe early stage is defined as a stage which is not too obvious to entire crowd but is still noticeable to a few people.

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