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Sri Sri Ayurveda: Art of Living to Art of Doing Business, the FMCG Way

CASE STUDY, STRATEGY
ET Cases, 20 Pages
AUTHOR(S) : Syed Abdul Samad and Dr. Nagendra V. Chowdary

Case Preview

Sri Sri Ayurveda: Art of Living to Art of Doing Business, the FMCG Way

 

An estimated 3.5 million people from 155 countries attended the World Culture Festival (WCF) held by Art of Living Foundation (AoLF) from March 11th–13th 2016, on the flood plains of river Yamuna in Delhi. Though controversial for its environmental impact, it was an event where 37,000 artists from around the world performed for over three days. Political and spiritual leaders from across the world including Prime Minister of India, Narendra Modi and Delhi Chief Minister, Arvind Kejriwal attended the event. The scale of the event displayed AoLF’s popularity and financial strength, which spent 25.63 crore to organize the festival, without any sponsors and free entry for all.

AoLF started as a humanitarian organization that offered self-development courses/programmes for a stress-free living. Nevertheless, that was not all. It also offered a wide range of FMCG products through its production arm Sri Sri Ayurveda (SSA), which was started in 2003. SSA, which never took up mass marketing before the rise of Patanjali Ayurved Limited1 (PAL), seemed to be following PAL’s strategy with similar product range, marketing blitzkrieg and positioning, however, with a premium pricing. While few analysts considered SSA as the new disruptor in the FMCG space after PAL, few expressed doubts whether it would also be able to follow PAL in terms of market share and profitability?.........................

Indian FMCG Landscape – Growth of Ayurveda

The Indian FMCG market had been growing annually at about 12% over the last decade. It had an overall market size of $185 billion in 2015, of which the branded market was $65 billion and was the fourth largest sector in the Indian economy. Food products was the leading segment, accounting for 43% of the overall market share followed by personal care (22%) and fabric care (12%).

Growing awareness, easier access, changing demographics, increased disposable income and lifestyles, relaxation in Foreign Direct Investment (FDI) rules, increased Minimum Support Prices (MSPs) and loan waivers have been the key growth drivers for the consumer market. During 2015–2025, the sector was expected to increase at a CAGR of 14% to touch $220–$240 billion with women consumers, digital savvy consumers and increasing demand for premium products as the key drivers for growth.............

Sri Sri Ravi Shankar

Born on May 13th 1956 in Papanasam, in the state of Tamil Nadu, India, Sri Sri Ravi Shankar (Ravi Shankar) is a humanitarian, spiritual leader and an ambassador of peace. He holds degrees in both, Vedic literature and Physics. He is also the Chancellor of Sri Sri University, Chairman of the Quality Control of India Yoga Certification Committee, and a member of the Amarnath Shrine Board (appointed by Government of Jammu and Kashmir, India). His vision of stress-free and violence-free society united millions of people across the world through his projects and Art of Living (AoL) courses.............

Art of Living (AoL)

Ravi Shankar founded the Art of Living Foundation (AoLF), in 1981, as an international, non-profit, educational and humanitarian organization that offers self-development courses/programmes and powerful meditation tools to eliminate stress and foster a sense of well-being. It has regional centres in more than 150 countries................

Sri Sri Ayurveda – Product Manufacturing and Quality

Established in January 2003, within the campus of the AoLIC, Sri Sri Ayurveda (SSA) factory operates an excellent production unit along with a research and development division, quality control unit and marketing department. In addition, the facilities have the prestigious Good Manufacturing Practice (GMP), Hazard Analysis and Critical Control Point (HACCP) and Government of India’s Food Safety and Standards Authority of India (FSSAI) certifications (Exhibit II).............

Price, Place and Promotion

SSA’s strategy was similar to that of PAL in terms of products and positioning but differed in terms of pricing. All the SSA products were based on Ayurvedic formulae and made using traditional manufacturing processes and were positioned as the natural/herbal variants to products of other FMCG companies that use chemicals. While PAL’s strength was in pricing its products at 15%–30% lesser than competitors pricing, SSA’s products are priced at a premium to PAL and at par with other FMCG brands (Exhibit III)...............

SSA’s Concerns

Though SSA is an established organization with millions of loyal followers, several concerns place it on shaky ground. Though not many, the controversy with the National Green Tribunal over the use of Yamuna Floodplain for its WCF and the disregard for the country’s regulatory framework in particular are worth a mention...........

Disregard for Business Regulatory Framework

SSA’s business shows a disregard for the country’s business regulatory framework. For instance, the law on ‘collective investment schemes’ (to the extent of INR100 crore), would deter crowd-funding for a business idea that clearly says it is a business – seeking money, and a business is expected to promise returns. However, SSA had crowd-sourced its funds from followers, who do not expect any returns as they were either paying for some services or donating................

The National Green Tribunal Controversy

AoLF constructed a mammoth structure, though temporary, on the floodplain of river Yamuna and temporary pontoon bridges and embankments at many places across the river. Environmentalists claimed that this caused an irreversible damage to the soil, displaced birds and destroyed the floodplain. Consequently, the National Green Tribunal (NGT) slapped a fine of INR5 crore on AoLF for damaging biodiversity in the flood plains of the river Yamuna, which had to be paid before the start of the event on March 11th 2016..................

Competition for SSA

With revved up marketing and promotional activities, SSA emerged as a serious player in the Indian FMCG sector and was set to add to the woes of established FMCG companies like Hindustan Unilever (HUL), Dabur and Procter & Gamble, with PAL as its main competitor. SSA an established name in the South Indian market, could soon be sharing shelf space with the biggies in modern retail chain stores across India and............

Assignment Questions

I. In the light of the business dynamics of the Indian FMCG market, discuss the reasons for the growth of Sri Sri Ayurveda.
II. Discuss the factors that make Sri Sri Ayurveda a challenger brand and analyze its affect on the Indian FMCG market.
III. ..................

Exhibits

Exhibit I: AoL’s Courses and Programmes

Exhibit II: SSA’s Certifications

Exhibit III: SSA’s Premium Pricing

Exhibit IV: SSA’s Advertisements

Exhibit V: Strategies of FMCG Players

Exhibit VI: Other Spiritual Gurus and Organizations in the Indian FMCG Space

Annexures

Annexure I: FMCG Category and Related Products

Annexure II: SSA vs PAL

Teaching Note Preview

Sri Sri Ayurveda: Art of Living to Art of Doing Business, the FMCG Way

 

Synopsis

After Patanjali Ayurved Limited (PAL) re-established the image of Ayurveda in the minds of Indian consumers with its range of products and hard-hitting marketing campaigns, Sri Sri Ayurveda (SSA), which started in 2003, too revved up its marketing and expansion activities to promote its range of ayurvedic products. SSA is a part of Art of Living Foundation (AoLF) – a humanitarian organization that offered self-development courses/programmes for a stress-free living – that manufactures, and sells ayurvedic/herbal/nature-based FMCG products like food and nutritious products, personal care products like candy, ghee, toothpaste, spices, beverages, tea, hair oil, shampoos, gels, creams, soaps, etc. However, they were offered at a premium to PAL’s products and at par with products of other FMCG companies. While it was considered as the new disruptor and a challenger brand in the FMCG space after PAL, few expressed doubt whether it would be able achieve PAL’s success.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The students/participants should be asked to read the following article:

• Michael E. Porter, “What is Strategy?”, http://cfe.unc.edu/pdfs/what_is_strategy.pdf, November–December 1996 – To understand that a company needs to have a differentiating strategy to outperform its rivals

 

Case Positioning and Setting

This case study can be used in the MBA Program for either of the following courses/modules:

• Corporate Strategy/Competitive Strategy – How a disruptive/challenger FMCG player’s competitive strategy can be designed and executed
• Brand Management – How a personal brand equity can be reshaped into a challenger brand

 

Assignment Questions

I. In the light of the business dynamics of the Indian FMCG market, discuss the reasons for the growth of Sri Sri Ayurveda.
II. Discuss the factors that make Sri Sri Ayurveda a challenger brand and analyze its affect on the Indian FMCG market.
III. ................

 

Preamble to the Case Study Analysis and Suggested Orchestration

This case study helps understand the reasons behind SSA’s emergence as a new disruptor in the FMCG space. It helps to analyze the factors contributing to its growth and how Sri Sri Ravi Shankar’s (Ravi Shankar) personal brand equity became an influencing factor for SSA’s success. Further, it allows the participants to debate about the possible ways in which SSA could become more profitable in future and continue to be successful. The case study analysis was carried out as presented in Exhibit (TN)-I.............

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Product code: STG-1-0037, STG-1-0037A

Abstract

This case study is meant to understand how a challenger brand in an entrenched category (FMCG) can be built. Consumer trust precedes the launch of products, at the heart of such a concentric market penetration. The Art of Living foundation (AoLF) too build trust preceding the launch of its products. The AoLF, started in 1981, began offering the Art of Living (AoL) courses both to individuals and corporates (Living Well and Apex courses) and in 2003, Sri Sri Ayurveda (SSA) was started that sold a wide range of FMCG products – candy, ghee, toothpaste, beverages, tea, hair oil, shampoo, etc. With Baba Ramdev’s Patanjali products, ‘Ayurveda’ seems to have become a category that Indian consumers had been waiting for with sufficient mindshare and palpable market shares. Though Patanjali’s strategy seems similar to that of SSA (with similar product range, marketing blitzkrieg and positioning), SSA’s pricing is premium. SSA plans to quadruple it offline stores – called the divine stores – from 600 to 2,500 by 2017. Would this set SSA for a sustainable competitive advantage with sizeable market share and competitive profitability? How would Indian FMCG industry’s competitive scenario be rewritten with two big Ayurveda-based players charting their courses?



Pedagogical Objectives

  • To analyze the factors that have contributed to unique market standing of Sri Sri Ayurveda’s portfolio of product and consumer services
  • To understand the gamut of business ventures started, riding on the brand popularity of Sri Sri Ravishankar’s Art of Living
  • To discuss and debate on the increasing trend and possible impact of spiritualism-led initiatives getting morphed into active business pursuits (for instance, Baba Ramdev’s Patanjali products, Sadhguru Jaggi Vasudev’s Isha Foundation, Yogi Ashwini’s Dhyan Foundation, etc.)

Case Positioning and Setting
This case study can be used for either of the following courses/modules:

  • Corporate Strategy/Competitive Strategy – How a disruptive/challenger FMCG player’s competitive strategy can be designed and executed
  • Brand Management – How a personal brand equity can be reshaped into a challenger brand



This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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