In-depth study of Indian organic market, Market assessment and Business entry strategy

1. Business Plan – Market assessment and entry
strategy
Vishesh K Chhabra. All rights reserved.`

2. Mission
• To educate consumers about the nutritional and environmental benefits of organic foods.
• To be viewed amongst global leaders in organic food.
Goal
• Market the most nutritious and wholesome food as possible.
• Enable a healthy human livelihood by providing quality employment, cooperation, organic education and
community growth.
• Promote a respect for the diversity, dignity, and interdependence of human, animal, plant, soil, and global
life.

3. Executive Summary - Market
7 September 2017 3
Market
Competition
Drivers &
Challenges
• Total market for organic in India was valued at INR 1000 Cr in 2013
• Organic food offers more benefits as compared to conventional foods
• Domestic market of organic food products will grow further in the near future
• The market is highly competitive with large number of producers and promoters
• India enjoys the comparative advantage of being an agricultural country at a
predominant stage with large quantities of production
• Major share of the market is occupied by promoters who are involved in
distribution of these products to end consumers through various retail outlets
Drivers:
• Huge domestic market
• Organized retail enhancing
distribution network
• Govt. initiatives
• Increasing health consciousness
among consumers
Challenges:
• High prices of organic foods
• Lack of integrated supply chain
and difficulties for farmers

4. Organic Agriculture Worldwide: Current Statistics
Organic Market

5. Domestic consumption of organic food is still in a nascent
stage in India with a huge potential market
Overview:
• Organic food cultivation in India has been a traditional
concept which exists from centuries
• Products used for domestic consumption are generally
uncertified
• Increasing health consciousness of consumers, their
changing preferences coupled with support from the govt.
has driven the market
• A strong correlation exists between the growth of organic
food and development of the retail formats such and
supermarkets and exclusive stores
• Organic cultivation in our country ranges from organic food
products to other organic products like cotton, body care
products, garments and cosmetics
• The country’s budding organic food market is transforming
into world’s fastest organic food market backed by a shift in
consumer behavior and spending patterns.
Reports
• According to a YES Bank report in 2012, it
was estimated at INR 1,000 crore – of which
INR 700 crore came from exports – and is
growing at 30 to 40 per cent annually.
• The country has 4.43 million hectare under
organic cultivation with a total organic
certified production of 171,100 ton. In
comparison, the US organic food market is
worth $26 billion, the European, $10 billion.

6. India: Organic
Organic agriculture land in India (including in-conversion areas) by
2012: 500’000 Hectares
Share of organic agriculture land 0.28%
Development of organic agriculture land:
India
2009 2010 2011 2012 Change
11/12 [ha]
Change
11/12 %
1,180,000 780,000 1,084,266 500,000 -584’266 -53.9

7. Organic food market in dominated by the promoters
involved in distribution of products to the end consumers
Overview:
• India has a comparative advantage over many
other countries in terms of farmlands used for
organic food cultivation
• The market is highly competitive with a large
number of producers and promoters
• Majority of the farming is done by small and
marginal farmers
• Many intermediaries have flourished who are
promoting organic production
• The large consumer base of these products lie
in Ties 1 cities where consumers are aware of
health benefits of organic foods
Distribution structure
Major players: Organic India, Morarka foods, Ecofarms, FabIndia, Herbal hills, Gayatri organics

8. Domestic market – Organic segment
Product Volume
(MT)
Value (Cr)
Tea 1500 150
Coffee 750 45
Rice 5000 22.5
Jaggery, Sugar 6000 45
Wheat & Flour 3000 12
Pulses 2500 21.25
Fruits & Veg 5000 20
Product Volume
(MT)
Value (Cr)
Millets Flour 2000 8
Oils & Ghee 2000 50
Squashes & Jams 500 5
Snacks 500 2.5
Honey 2000 25
Others 5000 100
Total 36250 548.75
Source: YES bank

9. Market share

10. Bangalore Market Statistics: 2014 and beyond
Bangalore metropolitan population by 2021. Decadal Population Growth
Rate – 47%, Area (sq.km) – 1,30614 Million
Average annual addition in IT/ITeS workforce for past 2 years; expected to
grow at least at this rate for next 3 years100,000+
• For the past two decades, Bangalore has been the fastest growing city of India. Bangalore termed as
‘World City’ being established Silicon valley of Asia; in addition it has multi-cultural population, good
education & social infrastructure, and improving physical infrastructure.
• As per absorption analysis, Bangalore’s buyers are more sensitive compared to other southern Indian
cities towards quality of the product.
• Good social infrastructure: Bangalore has well developed business and social infrastructure including
renowned health institutes, modern formal retail malls, entrainment options and star category hotels.
• It is among the top 10 preferred entrepreneurial locations in the world.

11. Key Challenges – Organic Market
7 September 2017 11
Source: An Introspection of Organic food value chain
http://www.slideshare.net/monikabishnoi/organic-food-value-chain
29%
50%
21%
Challenges faced while Getting
Organic Products
All
Lack of supply
Less variety
35%
41%
6%
6%
12%
Challenges faced while Selling
Organic Products
High price
Unawareness
Not
interested
Low discount
structure
All

12. Potential Customer Analysis
7 September 2017 12
Source: An Introspection of Organic food value chain
http://www.slideshare.net/monikabishnoi/organic-food-value-chain
56%
44%
Awareness
YES No
21%
2%
14%
11%18%
34%
Source of information of organic food
Magazines / Pamphlets
TV/radio
Dieticians / Doctors
Friends / Neighbours
Internet
Any other
19%
29%
45%
7%
Place of purchase of
grocery items
Supermarkets
Departmental
stores
Local grocery
All
48%
5%
26%
9%
12%
Buyer of food items in the
family
Lady of the
house
Husband
Both
Parents

13. Potential Customer Analysis
7 September 2017 13
Source: An Introspection of Organic food value chain
http://www.slideshare.net/monikabishnoi/organic-food-value-chain
39%
19%
6%
36%
Premium Amount
over Conventional
5-10%
10-15%
15-20%
Can't say
23%
50%
27%
Motivational Factors
Taste factor
Health factor
Quality
37%
13%11%
6%
8%
3%
22%
Preferred type of
Organic food
Vegetables
and fruits
Cereals
Pulses
Beans
Spices
Processed
foods
All

14. Critical aspects to be addressed
7 September 2017 14
Factors Buyers Non buyers
Availability An important factor to drive repeat purchases –
currently, poor & irregular availability often lead to
switching back to non-organic varieties
Low availability limit exposure and
therefore reduces possibility of trails
by non-users
Price points Critical factor to encourage repeat purchases and
experimentation with multiple products -
currently prices perceived as too high esp. when
compared to non-organic varieties though
associated health benefits make them see it as
worth the money spent
High prices inhibit trial by them since
they don’t see a pertinent need to
spend more than current spends on
non-organic varieties
Certification /
Authenticity &
Information
Currently, this is a grey area in the organic
market, with no assurance for consumers
regarding the products authenticity and claims
made by companies
Critical factor to convert the non
buyers by providing them with
relevant and easy to understand
information about the organic
products

15. Important aspects to build on
7 September 2017 15
Factors Buyers Non buyers
Health Benefit These consumers broadly understand the health benefits and
have some understanding of the positive impact – therefore,
they are likely to explore this category through their own will
However, there is a lack of clarity on the exact benefits
offered by replacing non-organic products with organic ones
These consumers have some or no idea
about health benefits over non-organic
variety – therefore, trial may not happen by
self, but more through promotional offers or
recommendations from known people
Need for a providing a strong case to non
buyers to switch to organic products based
on health platform
Freshness They perceive organic products to be more fresh than non-
organic varieties but limited stocks at retail stores defeat the
perception
Freshness compared to non-organic varieties
is not seen as a differentiator esp. since the
non-organic varieties are more readily
available
Taste
Don’t perceive taste as an significant advantage factor over
non-organic varieties – also taste not critical since they
perceive it to be a healthier option
No experience of taste aspect since they
have not bought/tried organic yet

16. Place of Purchase
7 September 2017 16
• Consumer behavior varies in terms of place of purchase between regular and organic varieties
• While regular varieties are commonly purchased from any of the local retail options, the organic
varieties on the other hand are purchased fro organized stores, this pattern is a likely result of a
local stores not stocking organic varieties
• Consumers themselves prefer to purchase organic varieties from organized stores – they are
skeptical about local neighborhood stores selling authentic products
• They also enjoy the experience of shopping in organized stores for these organic
Purchase Process
• These categories are characterized by high personal involvement from the consumer in deciding and
• Buying – only a few products such as milk any other dairy products are delivered regularly to the
• Consumers’ doorsteps by milkman or local retailers. For other products such as fruits, consumers
prefers to
• Touch and feel before purchasing them. This behavior across regular and organic varieties of fruits
• And dairy products

17. Need Gap Assessment
7 September 2017 17
• The organic food market has three key areas of addressable need gaps
1. Key Areas of consumers’ decision making namely – availability, price points, certification and
information. This area is currently characterized by ‘high importance and low satisfaction’ for the
consumers of organic food.
2. Concept of organic food – health benefit, freshness and taste. Currently they are placed by
consumers at ‘high/ moderate importance and high/ moderate satisfaction’
3. Visual appeal and portion size/quantity – can play an increasingly important role in future to enable
multiple brands to differentiate themselves. Currently as it is characterized by ‘low importance and
low satisfaction’.

18. SWOT Analysis – Organic food Market
7 September 2017 18
Strength:
• Highly experienced supplier &
distributor
• Ability to sell products online
• Strong portfolio
• More efficient operational structure
Weakness:
• Premium pricing
• Buyers / consumers driven market
• Lack of established markets
• Limited flexibility in pricing
• High transportation costs
• Competitors are offering similar
products
Opportunities:
• Large untapped market- widening
consumer base
• A developing segment of health
conscious people
• Ability to develop additional stores
• Potential of developing markets
• Affiliate relations with suppliers
Threat:
• Changing in regulations can impact
the business
• Products are already sold by major
competitor
• Increases in price inputs can cause
upward pricing
• Disruption of production facilities

19. Value Chain Analysis
7 September 2017 19
Procurement Prospects: Lack of Proper Supply-Demand
Customer Analysis: Three Type of Customers: Distributor, Retailer, Franchise
Poor awareness of Organic Products
Customer are price sensitive
High Interest in trying organic product
Internal Environment: Lack of Decentralisation
No Sales force
Poor marketing of product

20. A
B
C
Availability
Price points
Certificate &
Authenticity
Information
Visual appeal
Portion size
Health benefits
Freshness
Taste
Importance
Satisfaction
Low
High
High
Final Analysis of Market and Strategy Foundation

21. Three dimensional Promotional Strategy
7 September 2017 21
Mapping of Retailer
•Mapping of Retailers and
creation of Zones
•Establishment of
Networking team
•Specific corners / Shelf in
Malls (Metro, Big Bazar)
•Higher Retailer Margin
in comparison to
competitors.
•Free wares on Bulk
Orders.
Awareness Campaign -
Print media, Posters &
Internet
•Disadvantages / side
effects of Regular
products (pesticides /
fertilizers)
•Advantages of Organics
•Certification categories
and importance
•Availability zones
•Distribution of Free
samples
•Business Card strategy –
Sachet of Samples
•News Paper Inserts
Exhibitions
•Product Detailers at
various Malls,
Hospitals,
supermarkets & Kirana
stores
•Canopies at various
malls, Joggers parks,
schools, fitness centers.
•Arranging of Organic Day
/ Organic Fests quarterly
could be done – support
of NGO’s
•I use Organic – Products
banners

22. Target customers
Producer
Distributor
Supermarkets
Direct
Consumer
Organic stores /
Specialty stores

23. Bangalore Organic Market by Key Players
1,680
240
192
4,176
1,152
624
816
720
Market Size - Bangalore
Organic India Navdanya Fabindia Others Consious Food 24 Mantra Ecofarm Moraka

24. Target Group of Products
9600
11520
13824
2700
3240
3888
0
2000
4000
6000
8000
10000
12000
14000
16000
Year 1 Year 2 Year 3
Estimated Organic Market vs
Target Group
Organic Market Target Group
4500
500
1000
300
700
1000
1600
0 1000 2000 3000 4000 5000
Tea
Herbes
Spices
Honey
Rice, Wheat & Pulses
Oils
Fruits & Vegetable
Sales by Group

25. Sales Estimation by Customers
A Class
Customers Year 1 Year 2 Year 3
Namdhari Fresh 15 30 45
Nilgiri 15 30 45
Gopalan Organics 9 15 30
Godrej Nature Basket 6 12 24
12 degree onganics 9 15 24
Spencer 15 30 45
B Class
Organic Impulse 3 6 9
Saatvik 1.5 3 3
Herbalife 1.5 3 3
Total 75 144 228
Val in INR Lacs

26. Expected Market Penetration and Market Share
2.8%
4.4%
5.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Year 1 Year 2 Year 3
Estimated Market Penetration
in Target Group
0.8%
1.3%
1.6%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
Year 1 Year 2 Year 3
Estimated MS%

27. Contacts:
Presentation prepared by:
Vishesh K Chhabra
Consultant – Organic foods
Banasawadi, Bangalore – 560043.
Mobile – 8970213000
Email –
visheshchhabra4u@gmail.com