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“Demand for organic has evolved from key trend into a need”
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Monday, 21 March, 2022, 08 : 00 AM [IST]
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 The demand for organic and natural food is here to stay as it has evolved from a key trend into a need.
The ongoing pandemic has now seen consumers rely on organic, natural and immunity-based super foods for their daily needs. There is a growing demand for organic fruits and vegetables and an inclination to purchase immunity-based products and related ingredients. Further, the Indian organic food sector presents an attractive investment proposition and investors are bullish on investing in this space., stated Gaurav Manchanda, founder and managing director, The Organic World, a Nimida Group company, in an email interaction with Nandita Vijay. Excerpts:
How would you describe the current scene for organic food products in India and globally?
The organic food market is expected to reach $380.84 billion in 2025 at a CAGR of 14.5%, globally.
According to the Indian Organic Industry Market Report - 2021, India’s organic agricultural, food, and retail sectors are going strong despite the Covid-19 pandemic in market year 2020/2021. The pandemic has brought about a paradigm shift in the domestic consumption of organic food products. Consumers are now driven by their growing preferences for healthy, natural and immunity-building foods. As per research firm IMARC, the Indian organic food market reached a value of $815 million in 2020. This number is further expected to grow at a CAGR of 24% from 2021 – 2026 suggesting that this demand for organic and natural food is here to stay and has evolved from a key trend into a need. However, challenges related to India’s organic control system and supply chain continue to impact the credibility of India’s organic sector, and its exports.
In your view what are the visible trends?
The demand for organic and natural food is here to stay as it has evolved from a key trend into a need.
Through the pandemic, we have noticed a surge in the demand for organic fruits and vegetables as well as other organic and natural food products. The pandemic has put a focus sharply on health and immunity, helping people to become more aware of what they are eating and urging them to look for healthier alternatives. Consumers now rely on organic, natural and immunity-based super foods for their daily needs. Not only have we witnessed a growing demand for organic fruits and vegetables, we have also seen a growing interest in immunity-based products and related ingredients.
What are the challenges of cost versus volume of sales in organic food products?
The organic food supply chain is limited as compared to its growing demand. One of the foremost challenges is that the production costs for organic products are higher in comparison to conventional products due to the greater labour input, intensive levels of processing and transportation. Since organic products are chemical and preservative free, they have a low shelf life which is also one of the reasons why organic products are more expensive. Transport, storage and stocking of organic and natural food products also adds to the increase in costs.
How receptive have the venture capitalists and private equity players been to fund the organic food product sector?
The organic food products sector in India has witnessed heightened investor activity in recent times with several deals being worked out in this space. We are also witnessing an increase in venture funding in start-ups and early-stage organic food companies. The Indian organic food sector presents an attractive investment proposition and investors are bullish on investing in this space.
There are a couple of reasons for this, primarily being the opportunities for scaling that it offers. India’s share in the $100 billion global organic food market is less than 1 per cent, so the opportunities to scale this up are tremendous. The second reason is the gradual shift in consumer behaviour with an increased awareness about and focus on health. The pandemic has put a focus sharply on health and immunity, helping people to become more aware of what they are eating and urging them to look for healthier, safer and chemical-free alternatives.
Have you raised funds? If yes, share the details.
We haven’t raised funds as yet and our growth has been purely organic so far. However, we are definitely aligned to that path. Our expansion plans include bringing new partners on board, who believe in our journey and mission of creating a healthy and sustainable ecosystem.
Organic and natural food have always been associated as an expensive option. Do you think affordability will pave the way for more conscious consumers in India?
Yes, I agree affordability will pave the way for more consumers. The average premium is 1.35x for organic products in general and not only in The Organic World as compared to non-organic products. At the same time, it is important for retailers to create awareness about the compromise consumers end up making when choosing conventional, chemical laden products. It is important for retailers to take a more responsible approach with respect to offering consumers safe, transparent, better choices.
Have you seen a huge demand for high immunity based natural products and ingredients?
Ever since the start of the pandemic, we have been seeing a spike in the number of consumers buying organic and natural immunity boosting products. The pandemic has brought about a paradigm shift where consumers are becoming more conscious and aware of the food they consume, the nutritional value of the products as well as how authentic and natural they are. As part of the offering of our in-house brand Wellbe, over the last year we have launched certified-organic Moringa, Triphala, Amla and Ashwagandha Powder, as well as Wild Forest Honey and Apple Cider Vinegar – products that are an important part of our consumer’s immunity boosting journey today.
How is your company different from other organic players?
The Organic World has created an industry-first ‘Not In Our Aisle List’ – a list of 25 and expanding ingredients that we have banned from our stores. These include commonly used ingredients such as trans-fat found in commercially fried and baked products, phthalates, sulphates and parabens found across beauty and personal care products, artificial colours and artificial flavourings used across various food products and high fructose corn syrup which is a common sweetener among others.
Studies have suggested that these ingredients could have harmful health effects. Yet, you are likely to find them in your everyday groceries. By ensuring that the products we keep on our shelves at The Organic World live up to a higher standard than industry-established ones, we truly offer customers better choice products.
Currently, we have 2000+ product assortment across brands which includes chemical-free everyday staples; hormone- and antibiotic-free dairy products; toxin-free home cleaning products and detergents; paraben-free personal and beauty care products; health and wellness products made of organic and natural ingredients; snacks free of trans fat and high fructose corn syrup; and chemical-free, 100% safe childcare products.
Responsible retailing, essentially, entails being transparent with customers as well as weighing their best interests over short-term financial profits and growth, and creating an ecosystem that benefits all the stakeholders involved. This commitment has been at the heart of every endeavour at The Organic World and what sets us apart from other retailers. As a responsible retailer, we have set the benchmark for taking a stand to offer customers products that are truly good for them, thereby prioritising the customers’ needs.
What are your future plans in terms of store and product expansion?
The Organic World currently has 13 stores in Bengaluru and is looking to expand its reach in the city with the launch of more stores in key catchment areas as well as expand our footprint in South India in cities such as Chennai & Hyderabad. In terms of a long-term expansion, we are looking to go down the franchise path and expand pan-India. We are certainly looking at doubling our stores and increasing the product assortment under our inhouse labels.
Will affordable organic food pave the way for more health-conscious consumers and how do you envision to change this as a responsible retailer?
Yes, it will pave the way for the consumer base to grow. At the same time it is important for retailers to create awareness about the compromises modern day lifestyles have normalised and how we can go back to our roots by prioritising clean products. Making healthy food and lifestyle choices should be accessible to as many people as possible. The first step on this journey is having access to products across the monthly consumption bucket that are truly good for our consumers.
We as a brand are trying to be accessible, affordable and authentic. We are trying to dial down the prices of a lot of our products by scale and operational excellence. Thus, affordability, accessibility and authenticity, are the three A's that we abide by. We are focussing on becoming affordable for the larger base.
Our strong omni channel presence – brick and mortar stores as well as ecommerce platforms – plays a key role in ensuring our range of ‘better choice’ products are accessible to our consumers. We offer 2000+ organic and natural groceries to fulfil the entire monthly consumption needs of a family and are India’s largest organic and natural groceries retailer.
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