Palmolive, and a considerable segment of Unilever in the country, the yoga guru Baba Ramdev is all set to take on GlaxoSmithKline Consumer Healthcare with Patanjali Powervita. This is a global major in the HFD (health food drink) category.
The manufacturer of Horlicks, GSK Consumer, had launched a disappointing quarterly report for the first quarter of this year. It resulted in three domestic brokerages showing concern about ability of the MNC to compete with Patanjali Ayurveda of Baba Ramdev that forayed into the HFD category recently with the Powervita brand.
The brand is positioned in the category that is dominated by Horlicks of GSK Consumer, Bournvita of Modelez, and Complan of Heinz. In the past 18 months, Patanjali has stood out as a stiff competitor to the toothpaste segment’s leader Colgate and instant noodles segment’s dominator Maggi. Among the other FMCG companies, it is a competitor to Dabur in the segments of honey and Chawanprash. It competes with Emami in fairness cream and Amul in cow ghee. Talking of soaps, Patanjali competes with ITC, Godrej, and HUL.
As per a report by Edelweiss Securities, Patanjali’s entry in the HFD segment is a potential risk to GSK tough Powervita is priced at just 5 percent discount to Horlicks. Patanjali entered categories such as honey, toothpaste, and Chawanprash in the past two years without significant pricing discounts. It might be difficult for Patanjali to grab a significant chunk of the market share.
The analysts at Edelweiss maintained their hold score on the stock with a target of Rs 6,703. As per a report by ICICI Securities, GSK Consumer is deriving over 90 percent of the revenues from the HFD business. The entry of a strong challenger such as Powervita might pose a potential risk to the MNC.
