Is organic food an opportunity in waiting?
The Indian Organic Market is a ‘Sunrise Industry’ and has been growing at over 20 per cent CAGR.
Organic products like rice, spices, tea and other value adds contribute over 60 per cent of both domestic and International sales. The emerging buying cities and markets in India include Bangalore, Delhi NCR, Chennai, Hyderabad, Mumbai, Pune, to name a few. The total market constitution of organic food: Bangalore has over 120 organic stores, Chennai has chains selling organic food, Delhi-ncr has over 40 organic stores selling organic food and so on.
Emerging International markets like Canada, Japan, New Zealand, Australia and fast growing markets like the USA, Germany, Switzerland, Austria, etc., constitute over 70 per cent of International organic purchase compared to India, where it still hovers below one per cent.
There are many reasons for this small and low share, but notable enough are:
• High prices - Conventional products are three to four times more expensive.
• Lack of transparency and credibility - Consumer is confused on how to trust organic products. They think certifications in India are easily manipulated. • Inconsistent and irregular supplies -There are many organic products which at times go out of stocks. • Fake organics-as per reports about 30 to 35 per cent of organic products available on shelves are fake and dubious organic. • Dual and inconsistent regulation - There are too many regulators - APEDA/FSSAI/ Third party certifications that make the availability even more difficult.
• Lack of awareness due to low investments in marketing. This is the main cause and most neglected feature of Indian organic market. There are hardly any investments on consumer awareness to increase the size of market. Can we make organic a $2 billion opportunity for India? The answer is YES. But how? In case a firm decides to follow the suggested strategies then the chances are very much high for it to be successful in the long run.
Use of transparency metre in pricing: This includes exhibiting clearly what is paid to farmers as procurement cost? What is spent as wages and salaries? What is being spent on processing?
Reduce trade margins on organic so as to improve off take: All organic companies should take out joint programme to convince retailers/distributors on health and off take aspect to keep trade margins within 30 per cent as compared to current trend of 40 to 45 per cent.
Implement and follow FSSAI regulations: The dubious organic, which is worth over Rs. 250 crore in domestic market, should be dealt with firmly. Hence, Jaivik logo should be enforced very strictly by the FSSAI.
Follow FPO & farm to fork approach: This will help improve and make supplies regular as well as consistent. Declare details of farms and farmers to win trust of the consumers.
Control of Organic certification should be in the hands of one Government authority: It should be either the FSSAI or APEDA or NCOF.
Invest heavily in marketing: We should promote organic food the way National Egg Committee has promoted eggs. We have to spread awareness.
As per a study conducted by ASSOCAHMICCOA recently, the organic sector is expected to touch Rs. 9,000 crore in the next two years in India.
Since health and wellness is a new trend and is growing very rapidly due to the outburst of diseases, there is no doubt that organic is the way forward provided we ensure transparency and value for money.