Aggressive on herbal business growth, Baidyanath eyes acquisitions in India, US

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    In India, minimum size of the possible acquisition could be around Rs. 200 crore. (Representative image)

    Baidyanath is eyeing to grow its herbal business aggressively in the US through both organic and inorganic routes. Riding on the increasing demands for herbal products, the Rs. 1000 crore group wants to capture the fast growing herbal market in the US by wide-reaching distribution channels, different product lines and acquisition of firms.

    The century-old Kolkata-based traditional Ayurvedic healthcare company is also looking at acquisitions in the domestic market apart from leveraging the strong brand equity to the fullest extent by targeting young customers through digital marketing. In India, minimum size of the possible acquisition could be around Rs. 200 crore.

    “We are exporting to the US for many years. But this time we are looking to create a brand in this fast growing market for us. We have just launched a new sub-brand under Baidyanath in New York. People in the US are becoming more and more aware of the benefits of herbal products. The way practicing Yoga grew in the US, now Ayurveda is likely to grow in the same way,” said Ameve Sharma, president, Shree Baidyanath Ayurved Bhawan.

    In an interview with FE, Sharma, who is the third-generation scion of the company, said the sub-brand was launched with a fresh look and different product line as single herbs and Ayurvedic medicines would be the focussed areas in the US. “We have tied up with two large American distributors for long-term distribution partnership… By the end of the year we expect that our products will be available at around 8,000 retail stores,” he said.

    For the US market, the company is looking at acquisition from manufacturing point of view. It is also using online platform to boost sales in America, where sales of natural herbs like ashwagandha, turmeric and garlic are on the rise.

    For digital innovation and marketing to boost online sales, Baidyanath has tied up with Indus Net Technologies, an internet consulting firm offering diverse IT solutions to organisations globally.

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    Abhishek Rungta, CEO, Indus Net Technologies, said, “We have been working together for the last five months. Most of the work done has been in online marketing and improving online sales. This is going to be an interesting partnership. Our job as a partner and service provider is to improve their sales as well as bring digital innovation in technology and marketing.”

    Being a traditional Ayurvedic company, Baidyanath products users have an average age of over 35. Its top selling products are Chyawanprash, Kabzhar and Rhuma Oil. Now, through digital channel the company is targeting young generation, offering a wide range of lifestyle products. It will also launch more products in the FMCG space.

    Online sales already picked up, Sharma said, adding the company was hoping to grow total sales by 25% year-on-year for the next five years and of this growth, around 10% should come from digital channel.

    Vaibhav Agarwal, vice president-Research, Angel Broking, said buying FMCG products online was going to increase in India as there was a “very vertical kind” of increase in digital adoption on this front. “Digital marketing is the way to go. If you see globally, countries after countries we are seeing a massive adoption of digital platform. So, anyways it was bound to happen in India,” Agarwal added.

    Baidyanath, which makes around 600 Ayurvedic products, has a product portfolio of 1300 products, and that is far bigger than that of Dabur and Patanjali. In the Ayurveda and herbal healthcare space, the Kolkata-based company is in neck-to-neck competition with Dabur. Baidyanath’s market share is higher than that of Dabur in the Rs. 6,000 crore traditional Ayurdevic market, Sharma said, adding in this space his company’s market share currently stands at 15-20%. And in herbal space the company garners 2-3% market share, where market size could be somewhere around Rs. 20,000 crore in India.

    Companies like Nestle and Hindustan Unilever are facing the heat of Patanjali, but Baba Ramdev’s packaged consumer goods company is no threat to Baidyanath.
    With greater range of herbal products our company has grown faster since Patanjali’s inception, Sharma averred. “We are not competing directly with Patanjali as it is mainly an FMCG player with a major chunk of its sales coming from food products. We are getting in to the FMCG space. What Patanjali has done for us is that it helped the Ayurvedic market grow on the back of growing awareness,” Sharma said.

    In traditional Ayurdevic market space the company wants to gain 5% market share in the next five years. In an aggressive move, it is hoping to capture 10-15% market share in herbal space in the next five years. “As we are now looking to grow aggressively in herbal space, it make more sense to grow inorganically through acquisitions,” Sharma said.

    The 100% family-owned company currently does not have any plan to list its shares on the bourses. “We are completely family-owned company, and we like it that way. Currently there is no plan to dilute stake. Listing could happen after five years, if the company considers to grow very aggressively in global markets and expand to a new segment,” said the president of Baidyanath.

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