This document summarizes the growing organic food market in India. It discusses how organic food consumption is driven by health-conscious consumers and is growing at 60% annually. While 85% of organic production is currently exported, domestic consumption is growing and expected to reach Rs. 7,000 crore by 2015. Modern retailers are dedicating more shelf space to organic products to meet growing demand. Key challenges for organic foods include high prices and customers not fully understanding the differences between organic, natural, and conventional products. The interview with Sunil Kumar of Morarka Organic Foods discusses their product portfolio, expansion plans, and expectations for future growth of the Indian organic market.

1. 30 • PROGRESSIVE GROCER • June 2013 AHEAD OF WHAT’S NEXT www.imagesfood.com
Organically grown food products are
sprouting fresh retail opportunities as
grocers begin to dedicate shelf space
to them, but the organic market is yet
to reach full bloom. Shanti Padukone
delves into this segment to understand
the advantages and challenges at the
retail end
With inputs by Juhi Sharma and Roshna Chandran
Cover Story
Pix: shutterstock.com
Budding Market
For Organic
I
t’s been some time since the urban Indian
woke up to the potentially life-threatening
effects of an unhealthy lifestyle. Since
then, the focus has been on healthy living,
be it imbibing eco-friendly practices,
reducing pollution, or reassessing one’s
lifestyle and food choices. Over the years,
consumers have been consistently exploring
newer avenues to eat and live healthy -—
from embracing gluten-free food products to
becoming vegans.It is these consumers who
are driving the organic industry.
The estimated size of the world’s organic
food and drink market is over USD 60 billion,
where the biggest contributors are North
America and Europe with a 49 and 48 percent
share, respectively. The estimated year-on-
year growth of this market is 10 percent, with
India’s estimated contribution to the world
organic export market about 1 percent.
A report released by Technopak Advisors in
2012 states that India ranks the 7th largest in
the world with a total of 1.5 mn hectare under
organic production. In fact, in the last six years,
land under organic cultivation has increased
by almost 250 percent. By 2015, the organic
food market is
expected to
grow to Rs
7,000 crore
with a CAGR
of 60 percent
from Rs 675 cr
(including exports)
in 2010. Currently,
about 85 percent
organic products
produced in India
are exported to
European and Asian
countries, with the balance
15 percent available for
domestic consumption,
which has been pegged at
approximately Rs 200 crore.
Currently, the organic food
industry is concentrated in the
metros, with about 95 percent of the brands
having their presence in top cities such as
Delhi (NCR), Kolkata, Mumbai, Pune, Chennai,
Bangalore, and other tier 2 towns. The major
organic products retailed include cereals,

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Says Abhinandan, Director of Bangalore-
based Brown Tree, “Eating is one of the most
important events in everyone’s life. The quest
for healthy life always starts with healthy food
and the diet that one takes.Concept stores
for health food such as ours offer a healthy
lifestyle to consumers.”
“Organic food has been always perceived
as the food of the rich and famous. So far,
we have seen their presence in only specialty
stores, targeted at the affluent consumers,
and offering only the exotic variety,” says
Varun Gupta, CEO & Founder, Pro Nature
Organic Foods, who in 2006, saw the potential
in the domestic market and broke the norm
by launching a range of every day staples
and placing them in every outlet for potential
consumers, irrespective of their socio-
economic status. “My aim is to make organic
food the first choice
for all consumers in
India,” he declares.
“Retailers would say that this category has
limited buyers due to high prices. But today,
I feel organic is a key differentiator on retail
shelves. However, the range is not complete,
as organic alternatives to jams, milk, eggs,
pickles, fruits and vegetables are still not
widely available,” he adds.
Natural, not organic
According to the US Food and Drug
Administration (FDA), ‘organic’ refers not only
to the food/product itself but also to how it has
been produced. The raw materials of such food
must be grown and processed using organic
farming methods that recycle resources and
promote biodiversity — two key elements
of environmentally sustainable agriculture.
Crops must be grown without using synthetic
pesticides, bio engineered genes, petroleum-
or sewage-sludge
based fertilisers.
Moreover,
organic livestock
pulses, vegetables, fruits, confectionery,
snacks, bakery, non-dairy beverages, meat
and baby foods. Organic India, Navdanya,and
Morarka Organic Food are some of the leading
players.
Demand and availability
Increasingly available organic products that
are being picked off the shelves are catching
the eye of the retailers and suppliers alike.
There is greater availability and better
accessibility as health-conscious consumers
drive demand. But the segment has been
receiving a lukewarm response, even though
the concept of organics is not new to Indians.
According to Swati Maheshwari, Co-Founder
of the brand Rustic Art, Indians lived a
completely organic lifestyle for centuries since
everything was sourced from nature. However,
when Western culture began to influence our
lifestyle, use of synthetic products became
rampant. It is rather ironic that India needs to
re-learn its own philosophy and culture.
Says Kishan Guptaa, Director and Global
CEO of Lucknow-based Organic India, “Organic
food is not a new phenomenon, during the
ancient age people consumed natural and
fresh food, which was grown without the use
of chemicals and fertilisers. It is only in the
last few years, we have become accustomed
to using and consuming chemicals in our food.
In fact, in some far flung villages, farmers
are still growing and consuming organic
food, as they do not have money to purchase
chemicals for their farms. Through organic
food, we are trying to bring the same pure
and naturally grown food to the consumers
for healthy life. Experts can help in spreading
the knowledge in favour of consuming organic
food, which will propel growth in consumption
and sales.”
“In India, environmental concerns,
impending health hazards and better farming
practices have led to the promotion of organic
farming,” says N Balasubramanian, CEO,
Sresta Bioproducts. “Consumers are becoming
aware of the dangers of non-organic food
ingredients in everyday food, and more people
are learning about the harmful chemicals and
pesticides found in non-organic food.
“Several other factors support the growth of
this niche market,” says Sunil Kumar, AGM-
Sales & Marketing, Morarka Organic Foods.
“These include the increasing number of
players in the segment; aggressive marketing
and promotional activities; increasing
awareness and rising disposable incomes; and
the increasing number of lifestyle diseases
and cases of food adulteration.”
Customers do not understand the
difference between organic, natural,
and chemical-based products.
Maybe that is why there is such an
imbalance in the supply and demand
of these products
– Sanjeev Azad, Conscious Foods

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Organic Food Consumption
Country-wise Export (%)
Local
consumption
15%
Export 85%
Source: APEDA
* Others include Canada, Australia and East Asia,
Source: APEDA
EU countries
60%
Others*
15%
Japan 5%
US 20%
Examples of Modern Retails offering Organic Food
Modern
Retailers
Average store
size (sqft)
% of shelf
space for
organic food
Avg. number
of organic
skus
Existing
atores (nos)
Expansion Plans
Spar
Retail
30,000 - 35,000 7-8 400 9 Plans to open 13
stores by 2013
Spencer’s 15,000 – 25,000 2-5 250 200
(including 30
large formats)
Plans to open 20 to
25 hypermarkets by
2012
Godrej
Nature’s
Basket
1,800 - 2,500 3-5 200 14 30 by 2013
Fab India 400 - 8,000 5-8 >100 142 -
Exclusive Organic Food Stores in India
Retailer Brand Name Farmers Association Store (Nos) Expansion Plans
Organic
India
Organic India 20,000 farmers 6 own stores+ other
retail stores
20 exclusive stores
by 2013
Sresta
Naturals
24 Letter Mantra 8000+ farmers
across 25,000 acres
350 stores (owned +
others)
Another 650 by 2013
Pristine
Organics
Beginnings - Through 15 + modern
retail stores
14
Morarka
Organic
Down to Earth >2.5 lakh farmers 7 own stores Expanding in
mid market retail
segment
Navdanya Navdanya 5,00,000 farmers 7 own stores
Ecofarms
India
Ecofarms 20,000 farmers
across 60,000 acres
Distribution through
modern retail
Source: Food & Agriculture Outlook Report (2012), Technopak
must have access to the outdoors and be
given no antibiotics or growth hormones.
Finally, organic foods may not be irradiated.
Apart from this, organic food is the result of a
product harvested from soil that is not abused
or is clear of abuse after several years (the
number of years differs with each certifying
body). Moreover, the land around this soil
should be contamination-free, and the aerial
fall out of chemicals minimal. That’s why
organic food will not be homogeneous to look
at prior to processing, nor will the produce be
as much as in a conventional harvest.
According to FDA, the term ‘natural’ applies
broadly to products that are minimally processed
and free of synthetic preservatives; artificial
sweeteners, colours, flavours, and other additives;
growth hormones; antibiotics; hydrogenated oils;
stabilisers; and emulsifiers. Moreover, these
products may not necessarily be cultivated in
contamination-free soil. As a result, all organic
food is natural but not all natural food is organic.
Growth in domestic consumption
In the last five years, organic agriculture has
developed rapidly in India and has become
an attractive opportunity for most developed
countries to source organic products from.
There are about 230 to 250 companies
involved in organic export from India, which
exported close to 50,000 tonne of organic
products in 2010. Agricultural and Processed
Food Products Export Development Authority
(APEDA) is targeting exports of organic food
worth 1 billion dollars in the next five years as
Indian produce is receiving wide acceptance
in many mature markets of the US and
Europe.
In terms of domestic consumption, the
growth chart is rather slow. The pattern of
organic food consumption in India is very
different from that in developed countries.
In India, consumers prefer organic food
because of the health benefits it has to offer.
Marmalade, basmati rice, fruits, honey, tea,
spices, medicinal and herbal plants, account
for 98 percent of the total organic food
basket. The other products that contribute
to the remaining 2 percent are oil crops,
coffee, pulses and value-added food products,
amongst others.
The strategy is to focus on reliable,
trustworthy sources of organic
products, and consistently offer
them to regular customers
– Geetha Madhavan, BigBasket.com

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According to N Balasubramanian, with the
advent of organised retail, it has become easier
to talk to the right target audience which is health
conscious and willing to eat good food. Increase
in awareness levels and product availability is
helping the category scale up. This also builds
loyalty because once a customer starts eating
organic food, he/she continues to do so because
it tastes better than the conventionally grown
food, and being free of pesticides and chemicals
is more wholesome. What’s more, the organic/
natural products industry is fashion driven, as it
is considered ‘cool’ to be eco friendly, with the
young generation driving its acceptance.
AGM - Sales & Marketing, Morarka Organic Foods
By Juhi Sharma
Sunil Kumar
Q&
A
What are your observation about India’s organic food market?
In the last 4 years the market has grown by over 100 percent year-on-
year. Fours years ago, the domestic organic food market was around Rs
300 crore, and now it is over Rs 2,500 crore. Although organic food is a
niche market, it is seeing an increasing number of players, aggressive
marketing and promotional activities, and a significant consumer shift
towards it as the segment offers a healthier food choice.
Tell us about your products and retail distribution.
We have around 100 categories and 300 food products. We do not
operate in non-food, FMCG products like detergents because in India
organic detergents are still not accepted. The FMCG space is occupied
by Ayurvedic and herbal formulations. Our products are distributed
through our exclusive franchisee retail stores (more than 58 pan-India)
under the brand name, Down to Earth; our products are also being
supplied to more than 700 traditional retail stores and more than 500
modern retail stores across the country.
We have recently tied-up with Central Police Canteens which are
present across India, and with Sodexo, whose meal passes will carry
slogans promoting Morarka. We will also be supplying to Vaishno Devi
Shrine Board and will also put up stalls at the pilgrim centre. We have
tied-up with restaurants such as the American Embassy’s restaurant,
Have More at Pandara Road, Delhi, and Mr Brown Bakery in Lucknow.
Retail contributes 48 percent to our sales, 25 percent comes from bulk
supply and the rest from our international business.
We have three packaging and processing units in Jaipur, and the
upcoming fourth will be the largest plant in Asia.
How is your brand performing in tier 2 and 3 cities?
The awareness has grown in smaller cities over a period of time, in
fact, we get more business queries from these places. In metros, the
customers are more educated and more aware about the benefits
of consuming organic food, and have a more refined taste and
understanding of such products. But in terms of growth, I would say
that the smaller cities are catching up fast with respect to organic food
consumption. Over the last one year, we have registered sales of around
35-45 percent from these regions.
What are the major operational challenges in operating a store-
cum-cafe concept?
Real estate availability, costing or rent, and ROI are some of the basic
challenges. Apart from these, it is maintaining the quality standards of
perishables like milk, vegetables and the continental range. Also, being
an organic cafe, we cannot add any colours to our food because adding
colours would mean contaminating the organic, pure and natural food.
How is competition growing in this segment?
With growing competition, every player is trying to increase the
knowledge and awareness about organic food. Competition is
also driving suppliers to expand their product portfolio, especially
in categories where they are not present and gain the first mover
advantage. So, we perceive competition differently, rather, more
positively.
What is your average store size and return on investment?
On an average, Down to Earth store size is between 400 and 1500
sqft. For the first six months of opening a store, we do not expect
any ROI because our fixed cost is high. But from the seventh month
onwards an investment of Rs 3 lakh in a tier 2 or smaller city can
generate a profit of Rs 40- to 50,000 per month for the franchisee.
In case of tier 1 cities the investment cost would go up to Rs 5 lakh.
So, ours is a self sustaining, affordable, and easy-to-operate business
model.
What does Morarka’s tie-up with farmers entail?
We have more than 1.5 lakh farmers associated with us. The
government gives the farmers and us subsidies for organic farming on
farmer land, for instance, we have more than 670 farmers associated
with us in Doda village of Jammu & Kashmir. We also guide and teach
them, and assure them that we will purchase their products and market
them under our brand. So, we have a three-way agreement with them:
we teach them, we get them the necessary certifications, and we buy
their products as raw material.
What are Morarka Organics’ expansion plans?
In the next one year, we plan to take our retail sales to more than Rs
100 crore from the current Rs 65 crore. We will be tying up with more
retail chains across the country and double our store count to 100. We
also plan to increase our institutional sales to around Rs 40 crore from
the current Rs 15 crore. We would also take more initiatives to increase
consumer awareness.
What are your expectations from the organic food market in
India?
If the organic food segment can have economies of scale, if better laws
and legislations are implemented in its favour, if ‘sticker marketing’ by a
lot of non-organic brands can be eradicated, and the products be more
reasonably priced, and if they can be promoted as beneficial not only
for consumers but for the environment and the entire world at large,
then we can surely expect the market to grow to Rs 5 billion in the next
three years.

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Suppliers - driven by passion
The ‘organic revolution’ came to India in
small droves. Several of the top companies
today started out small in the early 1990s
-— mainly riding on a passion for healthy food.
Mumbai-based Conscious Foods, for instance,
was started by a nutritionist and naturopath
Kavita Mukhi, who partnered with farmers to
produce and sell organic produce, making it
more accessible to consumers. Mukhi sold
the company in the early 2000s, which is
now a thriving business dealing mainly in dry
organic foods like flours, grains and cereals.
Informs Sanjeev Azad, Director, Conscious
Foods, “Conscious Foods sells its products in
a shop-in-shop format through major retailers
like Godrej Nature’s Basket, Sahakari Bhandar
and Dolce Vita.”
What started as a hobby farm in 1996
became one of the first few organic brands
to cater to the Bangalore market. Amin
Manjrekar, owner of Green Fundas, cultivates
his own vegetables in Srirangapatna and then
sells them to the hospitality industry as well
as to established retailers like Nilgiris and
MK Retail. His company offers a variety of
fresh vegetables like tomatoes, lettuces, basil,
arugula, romaine lettuce, etc; besides rice
and honey; and is also working on cereals and
spices, some of which are out-sourced from
across the country.
Morarka Organics’ humble beginnings took
root in 1993 through the Morarka Foundation
that Kamal Morarka set up in memory of
his late father M R Morarka. In 1994, the
foundation tied up with the State Directorate
of Agriculture, Government of Rajasthan, to
privatise agricultural extension services. In its
efforts to increase production, the foundation
discovered organic farming and organised
one of the largest group of farmers in India to
take it up. In 2006-07, Morarka Organic Foods
Ltd was launched to facilitate direct linkage
between producers and consumers, while
still providing staunch support to the organic
farmers. Today, the company sells condiments,
cereals, grains, spices, edible oils, etc.
For Sresta Bioproducts, the journey was long.
Working in a company selling pesticides and
chemical fertilisers, Rajshekhar Reddy Seelam
(now Managing Director of the company)
decided to give it all up and start an organic
business after witnessing his family falling ill
due to adulterated food. But, it took 12 years
for his dream to germinate. In March 2004,
Seelam started out with contract farming on
2,000 acre, which has increased over the
years to 50,000 acre, with more than 12,000
farmers in 15 states. Sresta is now present in
40 major cities across India, and is exporting to
the US, UK and other countries. The company
sells grocery and processed products under the
brand name 24 Letter Mantra.
Pro Nature products are present in over
2,000 stores across south India — from the
likes of Spar to kirana stores. In fact, a third of
the revenue comes from stand-alone super-
markets and smaller stores. The company’s
positioning away from a “premium organic
fad brand” helped the retailers in these cities
to trust the brand. Pro Nature placed itself
in tier-2 markets like Mysore, Mangalore,
Coimbatore, Erode, Madurai, Salem, Sivakasi,
Tirupur, Trichur, Calicut, Kasargode, Guntur,
Vijayawada, Vizag, Tirupati, Mangalore, and
Udupi in the southern states.
The company is generating Rs 70 to 80,000
per month in revenue from Mysore without
any display or advertisement spend. “If we do
spend in marketing, we can comfortably expect
sales of about Rs 2.5 lakh per month from this
city. And there still remains a large area that
we are yet to capture,“ says Gupta.
According to him, while the general market
is growing at 50 to 60 percent, Pro Nature
is growing by 80 to 90 percent per annum.
He attributes this to growing demand and
better availability of organic products. “There
is a latent demand for organic products and
retailers should tap into this by increasing
their shelf space allocated to them. In fact, the
presence of organic products can be the big
differentiator.”
Challenges
While the entrepreneurial ventures are all
inspiring and motivating, the challenges in
this segment are many. One of the main
issues has been to develop a reliable supply
chain involving growing, processing, storage
and distribution. Another one is to convince
farmers to grow organic produce because of
the three-year conversion period when yield
Indians lived a completely organic
lifestyle for centuries. It is rather
ironic that India needs to re-learn its
own philosophy and culture
– Swati Maheshwari & Sunita Jaju, Erina Eco Craft
Morarka Down to Earth store

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may go down and farmers may not realise any
premium. In Sresta Biop Products’ past nine
years, the model has been developed further,
and the company is now associated with about
12,000 farmers, has 14 processing units, and
over 200 products.
Apart from this, ensuring the organic
integrity and traceability across the supply
chain, methods for processing and storage
are huge challenges. Funding of start-ups
and developmental costs pose challenges of
their own.
In terms of retailing, real estate availability,
high rentals, and return on investment are
some of the primary challenges. Suppliers
agree that back-end supply has to be strong
and logistics, seamless. He adds that one
has to have a sharp understanding of rural
transport, storage, networking and proper
training in handling the products.
Moreover, powders, grains, and cereals all
need to be processed in an organic environment
as well. Azad from Conscious Foods says
that various processes aid in adding to the
‘organicness’ of the processing environment.
For instance, in his company’s manufacturing
facility, they use the process of iron pounding
or low heat grinding of powders and flours to
ensure that not too much natural oil is lost.
While all these challenges hold true,
probably the biggest one is awareness or the
lack thereof. “Customers do not understand
the difference between organic, natural, or
chemical-based products; and are not aware of
the adverse effects of consuming chemically
treated/grown food. Maybe that is why there is
such an imbalance in the supply and demand
of these products,” confides Azad.
Moreover, with the country depending on
the rains for higher agricultural yield, and the
fact that organic farming does not have much
yield as it is, it becomes increasingly difficult
to provide for the masses. This is also the
reason why such products are higher priced.
The solution lies in getting the right volumes of
demand and supply.
The price factor
Consumers complain of the hig prices. The
solution lies in increasing demand and
availability. Suppliers say that retailers have to
be convinced that there is a demand for organic
products. Plus, they demand a higher trade
margin for such products as volumes are low.
“In my view, five years down the line, this
segment will grow significantly and generate
higher volumes, which will increase sales and
drive margins down. As sales increase, the
price differential will come down and the gap
in prices between organic and non-organic
should reduce,” says Varun Gupta.
He enumerates on the cost factors: “The
structural costs of organic food, that is, the
cost of producing, transporting, storing and
maintaining the quality of organic food, is
higher. At the farming level it is very labour
intensive, the yield is lower, and the risks are
higher. Then there are the volume related
costs for organic — as the volumes in organic
are lower, the per unit costs of transporting
these goods is often significantly higher.
Moreover, trade margins for retailers and
distributors are higher to compensate them
for the lower volume, which I think is justified.
The volume related cost components are the
larger drivers of cost escalation for organic
food. The structural costs are not expected
to change much over time. However, the
volume related cost components should see a
significant reduction as sales volume take off
with increasing consumer demand.”
Says Kishan Guptaa,”It is a myth that organic
products are high priced because chemical-
free, natural products cannot be available
below a specific price range. A lot of brands are
selling their products with claims of being 100
percent natural at very low price points; they are
not offering genuine products. For instance, our
pure, organic, stress-free cow’s ghee is priced
Rs 445 for a 500 ml jar. But there are other
brands claiming to offer a similar product for
only Rs 300 per litre. The fact is that it is not
possible that such a pure, organic product could
be available at such a low price point. There is a
need to spread awareness about the right price
points and the reasons for their high pricing,
so that consumers are assured that they are
consuming the right stuff.”
Organics in personal care
Organic products in personal care are also
on the rise. Erina Eco Craft that sells its
products under the brand name, Rustic Art,
was formed in early 2011 to make organic
bathing soaps. Later on, seeing a growing
demand for alternatives to regular, day-to-
day products, the aunt-niece duo Sunita
Jaju and Swati Maheshwari, who started the
company, decided to expand their range,
which now includes six categories — soaps
(in 24 fragrances); body care (lotions, lip care,
massage oils), hair care (oil and shampoo);
baby care (lotion, soap, massage oils, pH
balanced detergent); bio-degradable laundry
Retailers would say that this
category has limited buyers due
to the high prices, but today, I feel
organic is a key differentiator on
retail shelves
– Varun Gupta, Pro Nature Organic Foods
Organic food section at Brown Tree store

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(detergent powder, liquid, flakes and bar);
and pet care (soap). These are hand made at
Auroville in Puducherry.
According to Maheshwari, “Almost all
regular personal care products contain
sodium lauryl sulfate (SLS), a chemical for
cleansing grease, which is a harsh surfactant
(or detergent) present not only in soaps and
shampoos but also in toothpaste, detergents,
etc. SLS is inexpensive and is a great foaming
agent. However, increased usage can damage
the hair follicle, cause permanent eye damage,
and liver impairment.”
Organic personal care products, do not
contain volatile oil compounds (VOC) used in
synthetic products, and are safe to use even on
babies, besides being safe for the environment
as the drainage water remains toxin-free.
At the retail end
How has this segment been performing
in retail stores? The response is mixed.
According to Geetha Madhavan, Business
Head - Mumbai, BigBasket.com, “Organic fruits
and vegetables are most popular amongst
customers. As most of these are consumed
fresh, customers appreciate the importance of
using pesticide-free products. The next most
popular organic category is dry grocery like
rice, dals, flours and spices. The offtake of
oils, packaged organic food, however, is slowly
picking up.”
A senior spokesperson from Haiko
Supermarket states that the category has
been able to get a market share of 15 percent
in the grocery category, which is phenomenal
since the prices are 50 percent higher.
Manoj Satia from Navi Mumbai-based
Direct2You supermarket says that the
category is in demand, but the customer is still
confused about what is organic and what is
not. He has reduced his organic skus from 79
to 23, and has no intention of expanding the
range till the category picks up.
At Bigbasket.
com, almost
200 products
are classified
as organic, from
fresh produce
to grocery items
to condiments
and ready-to-eat
food. According to
Madhavan, in the
overall sales of the
store, the organic
contribution
would be close
to 5 to 7 percent, but in certain categories,
the contribution is much higher. For instance,
there is a large demand for organic Alphonso
mangoes, and the sales contribution is
close to 30 percent, while organic wheat
flour contributes to 20 percent of the flour
sales. “The strategy is to focus on reliable,
trustworthy sources of organic products,
and consistently offer them to our regular
customers,” she shares.
Haiko has around 200 skus in this category
(which are contributing well primarily in
grocery and tea), where they occupy about
15 percent of shelf space. Since the average
sales price is high, the margin is also slightly
higher by 3-5 percent than normal, informs the
spokesperson. The organic products range at
Haiko includes grocery, masalas, juices, dry
fruits, tea, and body care products. Both Haiko
and Bigbasket.com find that the fill rate is not
at its best since the products are produced
under strict conditions and Bigbasket operates
on a just-in-time model.
Another hurdle at the brick-mortar store
level is maintaining the organicness of
the products. While, as mentioned earlier,
the entire supply chain and processing
environment for organic products has to be
organic, it must be the same even at the
store level. Many retailers carry out monthly
fumigation at their store level, and while
these goods are packaged, there is no telling
how much chemical infiltrates the packaged
products. Thus, “till all of this is streamlined, it
is very difficult to maintain organic products in
retail stores,” feels Satia.
“Organic India operates through four types
of sales and distribution models: most of our
sales are generated through modern trade.
Then we have the ‘ethical model’ where our
representative visit a doctor to sample our
product, and he in turn would recommend
it to patients after experiencing its benefits.
We have a customer service centre, where
There is a need to spread awareness
about the right price points and the
reasons for their high pricing, so
that consumers are assured that
they are consuming the right stuff
– Kishan Guptaa, Organic India

8. www.imagesfood.com AHEAD OF WHAT’S NEXT June 2013 • PROGRESSIVE GROCER • 39
customers can call and order our products.
Customers can purchase our products online
by logging onto our website and the order is
delivered free of cost. In the last fiscal year
we posted a turnover of Rs 90 crore and are
targetting a turnover of Rs 150 crore in this
fiscal.
Customers who demand and buy organic
products are mainly from the working class,
more urban and in the upper middle class
category. They are health conscious, have a
higher disposable income, and well educated.
According to retailers, this category will grow
exponentially as customers develop trust in the
brands. The key is to have consistent supply
and good quality all through the year. For
suppliers, maintaining their quality standards
is the key.
According to Gupta, the diehard organic
consumer will prefer to shop at a speciality
store where she will be assured of a wider
range of products. But a general store, by
keeping organic products will be able to draw
Owner of Green Fundas, Bangalore
By Roshna Chandran
Amin Manjrekar
Q&
A
Tell us about Green Fundas.
It started out as a small hobby farm for cultivation in 1992, and in
1996, we shifted focus to organic farming. We also networked with
various individual groups for organic produce such as rice, grains,
and vegetables, etc. By 2002 we were actively involved in the organic
segment when we started marketing our products.
What products were you offering?
Only vegetables, primarily lettuce. We were the first to introduce arugula
rocket in Bangalore, which is used in salads. Then we introduced rice
and honey, and are now working on breakfast cereals and spices.
With fresh produce like lettuce, we have to be quick in distribution and
supply, so we had to set up our back-end efficiencies. We integrated
the farms and the various groups who were working with us. They had
to comply with the quality standards we had set up, and we worked
with them on 2 to 3 year projects. Now, we are regular suppliers to
restaurants, retailers and wholesellers.
Which products are you outsourcing?
Our rice comes from north Karnataka, millets from Andhra Pradesh and
north Karnataka, honey from the Western Ghats, and rock salt from the
Himalayas. This is powdered potassium chloride (not sodium chloride
present in the normal iodised salt) and has medicinal properties. We are
also dealing in oil, millets, spices, and fresh vegetables, and constantly
working on new products. Once we had begun to bottle various jams such
as barbados cherry jam, passion fruit jam and chikoo jam, but had to
phase them out as the raw material was never enough to sustain supplies.
What factors are propelling growth of organics?
Basically, a lot of write ups from the press! That’s how the segment
started to grow. When we were retailing our products in Food World,
I had to stand on the shop floors to explain to the customers about
organic products. There was so much ignorance at that time, but
things have changed and there is a lot of positive perception about the
category, given its health benefits.
What are the challenges in distribution and supply?
One has to have a sharp understanding of rural transport, feeder
satellite stands, co-ordination, point men who pick up the stuff,
networking by phones, knowing which offices are where, what is the best
routing, advising back-end guys on handling of perishable items, etc. We
do not have dedicated trucks, and have to coordinate with transporters.
We have to understand the logistics and how to make it cost effective.
We are transporting to Rajasthan and Gujarat, so we have to find the
quickest method. For fresh produce, we debate whether we should air-
lift it. At the same time, we are trying to keep good carbon credits by not
using too many flights.
We have to consider the distance a product can travel without
spoiling, how easy or difficult is it to handle. Products such as carrots,
potatoes, and garlic transport well, so we send them by road, but only
up to a point, which we can handle,. So we have limits we can push, but
no futher. We have a distribution centre in Bangalore where our quality
control, packaging and delivery to various points takes place. We try
to keep limited stocks but sometimes have 5 tonnes sitting here, so
handling large quantities becomes a challenge. Once we had the place
filled with passion fruits which we converted into juice. But this was for
very specific clients who knew what they could do with it.
How has the organic market changed over the years?
In 2004- 2005, the organic market was not integrated enough, nobody
knew what was happening; there were small farmers growing little stuff.
I have linked a lot of people and we are all inter-dependent; if we fall
short of something we do not run out of stock. Today, if a retailer were to
ask for one tonne of jam, I would be ready with the supply. Also, earlier,
we did not have any packing for our jams, and no printed labels either
— something that we are working on now. We were amongst the first few
organic brands to supply to the Bangalore market. We are now present
in Goa, Delhi and Chennai as well, and will be expanding to Hyderabad
and Mumbai.
How do you differentiate your brand from others?
Our selection and quality of products is very specific and more about
functional foods. We have specific categories in whole staples. Once
we expand to 10-15 items, and our brand is well-established, we will
be in a position to increase our visibility. Presently, Green Fundas is
growing at a CAGR of 50 percent.
The customer
is still
confused
about what is
organic and what is not
– Manoj Satia, Direct2You

9. 40 • PROGRESSIVE GROCER • June 2013 AHEAD OF WHAT’S NEXT www.imagesfood.com
Cover Story
clientele who are more educated and better
aware of the products they choose to buy. “The
grocer should realise that by attracting such
customers he can hope to increase sales of his
other (more premium quality) products in his
store. The same would apply to a supermarket
- if they were to increase their organic skus -
they would get higher footfalls from consumers
who would tend to look at other categories as
well. For the grocer, the trade off would be that
the presence of organic products would build
his brand image as being modern, and thereby
he would draw a better class of consumers.”
Certification and standards
One of the mainstays of organic production
is the certification. According to a 2012
report by Prabodh Halde and Chetana
Bhandari from the Regulatory Department
at Marico, organic agricultural methods are
internationally regulated and legally enforced
by many nations, based in large
part on the standards set by the
International Federation of Organic
Agriculture Movements (IFOAM)
- an international umbrella
organisation for organic farming
organisations established in
1972.
In India, the central
government implemented
the National Programme for
Organic Production (NPOP),
which proposes to provide
an institutional mechanism
for the implementation of
national standards for organic
production, through a National Accreditation
Policy and Programme. The NPOP includes
the policies for development and certification
of organic products and provides national
standards for organic products and processes.
In addition to this, keeping in view the
growing demand and to check fraudulence in
organic production, the Ministry of Agriculture
launched the notification ‘Organic Agricultural
Produce Grading and Marking Rules, 2009’.
Thus, organic agricultural produce may now be
graded and certified under Agmark. Agmark
is the accreditation body, and the Agricultural
Marketing Adviser issues the certificate
of authorisation to certification agencies
authorising them to certify organic farms,
products and processes, to grade and mark
organic agricultural produce. Any accredited
inspection and certification agency under the
NPOP is eligible for the grant of certificate of
authorisation under these rules by applying
with complete documentation as prescribed
in the guidelines. These authorised inspection
and certification agencies in turn certify the
agricultural produce of operators/grower
groups as organic.
In terms of the requirements for organic
certification, the quality of the produce
must be as provided in the NPOP. It must
also comply with residue levels of
contaminants as provided in the
FSSAR rules. The requirements for
method of packing and labelling
of agricultural produce have also
been prescribed. Some of the
packing requirements include
use of food grade packing
material, employing approved
additives for manufacturing
packaging films, etc. The label
of the produce must be provided
with the person/company legally
responsible for the production
with the grade designation mark
securely affixed to each package
as approved. The ink used for marking must
not contaminate the produce. A series of
procedures follow once the product meets the
mark.
Potential growth
Suppliers are planning to expand as they are
looking at the future favourably. Morarka, for
instance, plans to take its retails sales to more
than Rs 100 crore from the current Rs 65
crore in the next one year. It will aggressively
expand its presence through tie-ups with retail
chains across the countrry and increase its
institutional sales to around Rs 40 crore from
the current Rs 15 crore.
Says Kishan Guptaa of Organic India, “This
sector has tremendous potential to grow into
a full fledged industry, but currently, there is
lack of awareness of its health benefits, lack
of availability, and lack of knowledge about it’s
status (it is perceived as a rich man’s food),
due to which the industry’s growth is still slow.
Besides, there are operational problems such
as storage, consistent supply, storage, pricing
issues, genuineness of the products, but these
are manageable.”
He informs that the company has started
farming of a product called ‘kinwa’, which is a
grain-like crop in the regions of Bundelkhand
and Azamgarh in Uttar Pradesh. “We are the
first ones to grow this crop in India and will
introduce it to the domestic market by July in
the modern stores. We will also be launching
a product for men called O Joy at leading
pharmacies and modern retail stores.
Other upcoming companies, too, can chart a
similar growth if only the organic food segment
can have economies of scale, and better laws
and legislations. Making these products more
cost effective, creating consumer awareness
through better promotions and government
initiatives can augment growth.
As N. Balasubramanian sums it up, “India’s
food consumption is more than Rs 3,00,000
crore per annum. Even if we capture 0.5
percent of the total food consumption, it is a
huge potential.” n
India’s food consumption is more
than Rs 3,00,000 crore per annum.
Even if we capture 0.5% of the total
food consumption, it is a huge
potential
– R. Rajshekhar Seelam (L) & N. Balasubramanian, Sresta Bio Products