INDIAN ORGANIC FOOD MARKET WITNESSING RAPID GROWTH
Growth is the current zeitgeist of the Indian organic food industry—both in domestic and global markets
According to global market research firm, TechSci Research’s report, India Organic Food Market Forecast & Opportunities 2019, the Indian Organic Food market is poised to grow at a CAGR of 24.49% during 2015 to19.
The Indian Organic Food Market remains an export led one and will continue to grow, with players increasing their range of export offerings and aligning themselves more staunchly with world standards.
Developments in the domestic market also indicate the Indian Organic Food Industry is at the threshold of high retail revenue and consequently, robust business to business sales.
In the current scenario, the domestic market for organic foods in the country stands approximately at USD 45 to 60 million, whereas exports stand at USD 401 million. Both are growing at the rate of around 30% year-on-year, as per estimates.
Taking into consideration the growing demand in the organic global market of USD 72 billion, there is great potential for export of organic products from India. The advantage India has is on account of its varied agro climatic conditions and traditional organic resources, due to which she can produce and supply varieties of products though the year. Non commercialisation of edible GMO crops in India has given further importance to the country as a supplier of organic products.
Trends
Despite the spurt in domestic growth, it is really the entire organic food sector as a whole that has picked up pace in India—domestic, export, retail and e commerce—with all stakeholders recording growth and several new players jumping in the fray. Thus, the market now comprises a vibrant mix of producers, exporters, local traders, retailers, e-tailers and rural and urban farmers.
While specialty organic shops and gourmet stores have, for some time, catered to the nascent organic foods segment, a distributional spread towards mainstream outlets is rapidly expanding in metropolitan cities, with almost all supermarkets and modern trade stores displaying organic products on their shelves.
Whereas earlier, mainstream supermarkets were apprehensive about stocking organic foods, only experimenting with staples such as brown rice, pulses and organic green teas at first, over the last 12 months, these retail chains have started stocking a wide range of organic products (at least a 100+ products per retail chain), indicating a widespread acceptance of organic foods amongst Indian consumers. Ready-to-eat snacks such as organic coconut chips, cookies and trail mixes are fast becoming popular and the snack segment is anticipated to grow in a big way in coming years.
Major consumption of organic foods and beverages in the country is taking place in metropolitan cities, with awareness and demand growing in tier 1 and tier 2 cities as well. The sale of organic food products is the highest in Mumbai, followed by Delhi NCR, Bengaluru, Ahmedabad, Hyderabad, Chandigarh, and Indore.
Despite organic foods being priced approximately 20% higher than conventionally grown foods and beverages, consumers armed with better resources and knowledge of the benefits of organic products do not seem to mind paying extra.
Growth Drivers
In the present scenario, notable growth drivers for the Indian Organic Food market include: increased disposable income, increased awareness of organic foods, improving export standards, widening product categories across all formats, prolific coverage of food adulteration and toxicity; diverse agri climate, vast consumerbase, renewed government focus on the organic sector; and increasing costs of conventional food items, leading organic products to be perceived as more affordable by consumers.
Furthermore, India’s increased GDP has given consumers the confidence to spend. With a GDP growth of 7%, India topped the Global Consumer Confidence Index on The Nielsen Global Survey (by global market research agency, Nielsen) in 2014.
Export
Currently, some leading Indian exporters include Sanjeevani Organics, Terra Greens, Mother India Farms, Rapid Organic, and Phalada.
India is a rich resource for organic products for global buyers, producing approximately 1.24 million MT of certified organic products per year. It is estimated that 65% of the country’s cropped area is organic by default, as small farmers had no choice but to farm without chemical fertilisers and pesticides, which they could ill afford.
There are currently 608 exporters in India, exporting commodities such as basmati rice, soya bean, sesame, dried fruits, pulses, spices, herbs, sugar and honey, as well as, primary processed products such as tea, coffee, mango puree, soya meal, and herbal oils.
The Indian government has given impetus to exports by putting in place requirements that ensure 100% quality. It has incorporated the National Programme for Organic Production (NPOP), an accreditation programme for certification bodies, standards for organic production, and promotion of organic farming. The NPOP accreditation has been recognised by the European Commission, Switzerland and USA as equivalent to their country standards.
Govt Succour
The Centre and State governments in India are supporting the organic sector through various initiatives and schemes. The Indian government has adopted a proactive approach to increasing organic production and export and has bolstered the sector by allocating USD 45 million to organic farming in 2015.
In 2014, the Indian Prime Minister, Narendra Modi, was quoted as saying: “We see huge demand for organic products. People interested in holistic health are prepared to spend on organic food, and the Indian government wants to be involved in satisfying this global demand.” The govt plans to transform North East India into an Organic Hub in order to cater for the global organic foods market. The Centre has allocated USD19 million for the mission, spanning all North Eastern states, including Sikkim, which is on its way to becoming the first fully organic state in the country.
Forecast 2020
By the year 2020, the face of the Indian organic industry would have changed almost beyond recognition, with large corporates, MNCs and major agribusiness investors jumping into the sector. Figures in the forecast period are estimated to reach USD 1,057 -1,208 million for exports, and USD 401 million in the domestic market.
Rutaksha Rawat is editor of Pure & Eco India, India’s only publication focusing on the Indian Organic Industry. She can be contacted at editor@pureecoindia.in
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