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Oct, 03 2011

CRAFTING PROFITS THE ORGANIC WAY!

With more people queuing up to buy organic products, organic retail is on a new high! Leveraging this growth, organic brands are aggressively focusing on expansion strategies in a bid to retail products high on green quotient.

SMITA Pareekh, a corporate executive, who one day out of curiosity entered in a shop of organic products, now vouches for organic products that the quaint little shop in her local supermarket offers. With more Indians believing in the mandate of 'going green', the urge for organic products have increased manifold.

Detox diet

The demand for organic products is certainly on the rise and going by the estimates of ASSOCHAM, the domestic organic sector is expected to reach Rs 10,000 crore by 2015- a figure that definitely boasts the fact that Indians are all set for a pesticide-free healthy life! Call it the burgeoning awareness or just a desire for greener pastures, organic products have arrived in a big way! Retailers, who, a few years ago were frowning over low footfalls, are now savouring success like never before. Explicates Ashima Agarwal, Category Head, Organic Foods, Fabindia: “Over the years, there has been a lot of awareness about growing green, but the Indian consumer is still wary. This wariness has been one of the biggest challenges, which is largely due to resistance to changing lifestyle and habits and skepticism about authenticity of organic products.” Yet she adds: “There is an increasing awareness and consciousness about the way we consume. We are witnessing growth in terms of both the customer base and the consumption trends. We are, therefore, constantly working towards bringing a great variety to the market. We started with 70 products and today we offer more than 300 products and are still growing.” On a positive note on the upsurge in organic products, Neelam Chibber, Co-Founder, Mother Earth, asserts: “There is a soaring craze for going green and at least 80 per cent Indians are demanding for a greener lifestyle.”

Food for franchise

With this transformation, franchisors retailing organic products are already on the path of rich dividends. Recognising this increasing demand, numerous organised brands have already made their entry into this key segment. To meet the increasing demand across India, the brands have opted for franchise route. Chibber adds: “In terms of number, it's a question of how you tap into the market, along with the design of your products, because Indians are traditionally price conscious and we recycle everything that we use. So, I feel there is an enormous potential for franchising in this segment.” Similarly, Arati T Nagaraja, Managing Director, Zeme Organics Pvt. Ltd., asserts on the escalating demand of organic products retail via franchise format: “It has good opportunity and success rate if done in a planned manner. But to do all this, funding is a must. Zeme Organics is looking for investors to start franchise stores across India.”

While metros and tier-1 cities across India are having a fair share of organic products through numerous franchisee operated outlets, even tier-II and III cities are not trudging behind. Mother Earth is eyeing tier-II and III cities and is aggressively looking out for franchisees. The brand is also planning to open about 20 franchise stores. Meanwhile, Zeme Organics is eyeing a pan-India expansion with 50 stores in the next five years. Besides dividends from franchising of organic products, industry experts believe that franchisors as well as franchisees need to consider a few things. While organic brands are a bit exorbitantly priced due to its exclusiveness and green concept, the price point is one of the primary reasons that make a franchisee hesitant while opting for a franchise of any organic brand. So, what are the aspects that a franchisor must consider? Replies Chibber: “In terms of pricing, one has to be careful and see that the price is not out-of-the-market range. Although it's true that some of the organic products are heavily priced, but at the same time it's also important that a product should be worth it! As long as it is worth the price, then I think pricing should not be an impediment for a franchisee.” Besides, sourcing of products is of utmost importance. A franchisor must decide from where to source the raw material.

Organic opportunity

Considering the escalating demand for organic products, Fabindia launched its organic food range in July, 2004, and offers both agro and processed foods. The range extends from tea, coffee, preserves, pickles, chutneys, sauces, sweeteners, candied fruits, flours, grains, pulses, whole wheat pastas, to instant drink powders and concentrates, herbs, spices, seasonings, breakfast foods, butter, oil, ghee and much more. So what propelled the brand to step into this niche segment at a time when organic retail was still considered a western concept? Agarwal says: “Fabindia's foray into the organic food business evolved as a natural extension of our efforts to provide sustainable development to artisans and craftsmen across rural India. This partnership was further extended to the community of farmers, who support traditional agricultural practices and farm their land organically.” Similarly, both Mother Earth and Zeme Organics have diversified their product range offering a wide range of organic apparel.

Mother Earth also offers an array of home products that are traditional yet contemporary. Besides, the food and personal care products are chemical-free and are made of natural ingredients.

Future perfect

In times of growing health awareness, 'Go Organic' seems to be the mantra that's reverberating across Indian markets. When health of one's family is taking prudence over everything else, it's surely a win-win situation for brands that have already forayed or are eyeing an entry into this nascent yet potentially loaded organic products market.

Call it the burgeoning awareness or a desire for greener pastures, organic products have arrived big way

'Go Organic' seems to be the mantra that's reverberating across Indian markets

The domestic organic sector is expected to reach Rs 10,000 crore by 2015

There is an increasing awareness and consciousness about the way we consume

Sourcing of products is of utmost importance. A franchisor must decide from where to source the raw material

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