Specialty retail Nov, 30 2013

Organic business explosion

According to Associated Chambers of Commerce and Industry of India (Assocham), there has been a major shift towards organic products, especially fruit and vegetables in the metropolitan cities as about 62 per cent of metropolitans in the high-income-group

By Yamini S Verma, TFW Bureau
Sr. Sub-editor
Organic business explosion

Awareness of organic products among the consumers is on the rise. Demand for organic clothing especially for kids and infants that are largely prone to infections and allergies have encouraged its market growth. Many people today are concerned about healthier lifestyle and better eating habits, which could be the reason for increase in demand of organic products by 18-22 per cent per annum.

According to Mukesh Gupta, Morarka Organic Foods Limited: “The market size of the organic retail industry in India has crossed Rs 2500 crore, in just three years, and is growing at the rate of 40-50 percent per year.” While Atul Jain, Director, Areva Lifestyle opines that its market is large, and is fast expanding to reach Rs 6000 crore by 2015. Areva has launched its retail business under the brand name Jaiveco which is an education oriented retail chain that promotes healthy lifestyle.

Prospective sector

More and more Indians are saying a big no no to pesticide-laced edible products. The demand of organic food is shooting up, and even health-conscious buyers don't even bother that pesticide-free food comes at a price. Morarka Organic Foods Limited was set up to provide the front-end linkages to the farmers. The motivation was to sell the consumer adulteration free food, while for farmers it became a market linkage support. “Initially, we found many entrepreneurs were upbeat about this as a future business. This was the time when we decided to roll out the distribution and retail through franchise route. The franchisees through retail enable the test marketing, product portfolio development and consumer education,” says Gupta.

“Love for food and focus on health motivated us to be in the business of organic retailing. After travelling across the world, I felt an opportunity that right type of food and healthy products is need of the day for everyone. More and more consumers will now start looking outside their day-to-day groceries need, and primarily look for nutrition and health care. Hence, our initiative is an early start to have consumer trust for long term future,” says Jain.

AGRIMART, Bangalore based brand marketed by Ratanagiri Impex Pvt Ltd., is an initiate of Annapurna group, who have a great deal of experience in agriculture, plantations and business for many decades. The Company was established to promote the concept of mechanization in agriculture and organic farming by offering a wide range of advanced machines and other cultivation products.

Retailing at its best

Areva Lifestyle has opened its first outlet three years back and has received overwhelming responses from people buying healthy products. The brand believes theirs is a convenience-led specialty store, which always generates loyal customers, and there will be a need of such retail outlets in every locality. Today, it has opened four stores through COCO (company owned and company operated) model, and foresees the growth happening via the franchise route.

Currently, for Morarka, the focus has been on adding dedicated clientele. Same focus is on expanding the portfolio. The other aspects are being taken up in different manners. The brand is trying to evolve a new level of consumer satisfaction in food category that too grocery items from one retail point. A large majority of new franchisees are first time committed entrepreneurs.

Growth Drivers

A few factors like selecting right franchisees and their training and support by the franchisors are amongst the major growth drivers for any business. For Areva Lifestyle, high consumer awareness, consumer's health and nutrition concerns plays a vital role in the growth of their brand. Jain says: “Franchising for sure helps brand expand its reach, as the business needs replication of concepts fast across different locations. We as a company work for passion for servicing the need of consumer, which has generated great results so far. Franchisees being owner of their businesses will also share the same passion about the business, which is not possible in a totally employee driven organization. Hence we believe, franchising is a sure shot route to growth both for our company and for our franchise partners.”

Meanwhile, Morarka is of the opinion that demands for adulteration and contamination free food by health conscious consumers is their major growth drivers. “Organic food option is accepted as a solution. Our brand ‘Down To Earth’ adds one more value i.e. ‘Taste’ that is being seen as a bigger driver of sales now,” he adds.

Expansion

Initially, Areva is focusing on north India for expansion including Delhi/ NCR region and then will add cities like Chandigarh, Jaipur, Lucknow, Agra, Jallandhar, Amritsar, Ludhiana, Ferozpur, Bhatinda, Ambala, Kanpur, Banaras, Jodhpur, Udaipur, Dehradoon, Roorkie, Mussorie, Haridwar, Meerut, Modinagar and many more followed by western India. The chain is also looking for franchisees, which are excited about the concept, and will share same level of passion as us. They are preferring women entrepreneurs for this kind of business model, who are easy to be trained on nutrition and family care.

Morarka Organic Foods Limited has already spread out to over 300 cities across India. They have about 500-1000 committed clientele pan India via both company owned and franchise model.

Franchise facts:

Name of the brand

Areva

Agrimart

Morarka

Investment (in Rs.)

11 Lakh

 25 lakh

5-10 Lakh

Area (in sq.ft)

500

1200

300 to 1000

RoI (in %)

28

40

40 -70

Preferred Location

Near residential areas

District Headquarters of potential agricultural belt

Predominantly residential areas, with nearby shops selling every day consumption items.

No. of outlets

4 Company Owned

and 1 Franchised

Agrimart – 55 (All Franchise), Agrimart Zone – 40 (All Franchise)

 5 company-owned & nearly  100 franchise stores

Related: Gaining Grounds with Horticulture Franchise

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