Quick Take | Why Baba Ramdev, and not PM Modi, is the real driver of khadi's popularity

Yoga-guru-turned-businessman Baba Ramdev’s marketing of swadeshi did not just ensure a hockey-stick growth curve for his consumer upstart Patanjali Ayurved, it simultaneously helped state-owned Khadi and Village Industries Commission (KVIC) – the marketer of khadi branded products -- to become the largest entity in the packaged consumer goods and apparel industry.

In fiscal year ended March 2017, KVIC had total sales of Rs 52,138.21 crore. Since FY13, the company has witnessed a compounded annual growth rate of around 33 percent. KVIC’s FY17 revenue is more than the annual revenue of any of the apparel retailing companies or consumer packaged goods companies in the country. In comparison, the country’s largest packaged goods company Hindustan Unilever had revenue at Rs 34,487 crore in FY17.

This is the first time since KVIC's inception in 1956 that the state-owned entity has grown so fast. But, what could be reason for this jump in KVIC’s growth?

There are two reasons that jump to mind.

One, the current government has given some impetus to revive KVIC that has been struggling due to plenty of reasons, including labour issues. The support ranged from loan support, reconstitution of its management, and making khadi compulsory wear for Government officials at least once a week, among others . Even, Prime Minister Narendra Modi promoted Khadi in the first episode of his weekly radio programme ‘Mann ki Baat’.

Two, the marketing of swadeshi by Baba Ramdev. This probably was more responsible for KVIC’s rapid growth.

Towards the end of FY15, Ramdev started talking about the goodness of Ayurveda, and then slowly he switched to marketing the theme of everything swadeshi, coupled with his pointed criticism of multinationals who he blamed for looting India.

Between FY15 and FY17, Patanjali’s revenue jumped from Rs 2006 crore to Rs 10,561 crore, while KVIC’s sales increased to Rs 52,138.21 crore from Rs 33,135.90 crore. KVIC is yet to publish its results for FY18.

Ramdev’s marketing helped increase Patanjali's popularity. The company emerged as the disruptor in the packaged consumer goods industry, and gave CEOs of big FMCG companies sleepless nights until they figured a way to ride the Ayurveda-herbal-natural wave.

What Ramdev’s marketing blitz kreig did was, in fact, rapidly convert a small market into a gigantic one. Patanjali was spending heavily on advertisements, especially across regional language television. The fact that Ramdev has millions of followers, especially in rural areas, helped.

While the market expanded fast, Patanjali had a limited reach. The alternative people had were products sold at more than 15,000 KVIC stores across the country. Besides products like soaps, shampoo, honey and other herbal and ayurvedic products, KVIC also sells apparel.  It has also built consumer trust over decades of maintaining good quality. This worked.

The wave swelled into a giant tide when, in FY17, FMCG multinationals and home-grown biggies hopped on to the ayurveda-herbal-natural bandwagon -- capitalizing on the publicity created by Baba Ramdev. Companies like Hindustan Unilever, Procter & Gamble, Colgate-Palmolive, Nestle, Dabur, among others, launched their set of products.  The tags – ayurvedic, herbal, natural -- prominent, and the ad spends plenty.

While products sold at KVIC stores are not cheap, they are cheaper than some of the prominent brands. Moreover, KVIC has an unbeatable advantage, at least for some part of this market – everything it sells is swadeshi.