Organic India has pioneered organic products and supplements in India. The gains are there for all to see. Organic product consumption is slowly but surely gaining ground as consumers shift to a healthy lifestyle. For Organic India, a part of Fabindia with a 63.79 per cent stake, this translates into high growth days ahead. The more than two-decades-old firm seeks not only to expand its product range but also its global footprint.
With health and environment sensitivity increasing by the day, the last decade has seen an increase in awareness regarding quality and nutrient content of foods. Consumers are becoming increasingly aware of the ill-effects of pesticides in conventional farming, with the recent pandemic accelerating consumption of fresh, hygienic and pesticide-free products.
Growth in organic foods has come at an 18 per cent CAGR between 2014-15 and 2019-20. While the market is fast growing, it is yet nascent. Modern trade and e-commerce platforms are boosting the growth as more consumers shift to organic foods. The organic-products market is expected to reach Rs3,870 crore by 2025-26. While beverages made up 36 per cent of the organic food & beverage market, at about Rs500 crore, in 2019-20, organic tea, like the one developed by Organic India, comprises about 80 per cent of the organic beverage market, which touches Rs400 crore.
Organic foods and trends are also seeing huge promotions, with international trade fairs organised annually to promote organic farming. Indeed, health, nutrition and sustainability are increasingly becoming central to consumer values. In particular, millennials and generation Z have been developing a strong understanding of health and environmental issues. They are demonstrating this through mounting spends on environmentally clean products. Covid-19 has accelerated the shift towards organic products. All this is expected to drive double-digit growth of 16-18 per cent in the Indian market over the next five years till 2026-27. In overseas markets, too, the organic-food basket has been exhibiting high-growth trends.
Healthy growth
While the organic basket is widening, Organic India has in many ways pioneered the organic supplements movement in the country. About 25 years back, Bharat Mitra and Bhavani Lev (née Holly Bronfman) set up the company in Lucknow with the objective of focussing on health-care products with Indian herbs grown organically without fertilisers and chemicals. It was a difficult concept to sell to farmers initially, and the duo struggled to get farmers on board.
The biggest challenge in organic production then was how to convince farmers to stop using fertilisers and chemicals that were used for years. Farmers were also sceptical that organic farming would actually improve yields of the plants they were cultivating. However, the duo pressed on and convinced a few farmers of the benefits of organic farming. Slowly but steadily, Organic India roped in many farmers to the idea.
On the other hand, the duo was impressed with the virtues of tulsi, called holy basil abroad. The herb has many therapeutic uses and finds a place in many a household formulation. Even so, it was not used regularly in larger India. To get people accustomed to drinking it regularly, the duo came up with the idea of tulsi infusions that could replace tea.
Organic India thus started an altogether new concept of herbal infusions that have now caught on with the masses. The firm introduced many varieties of infusions and versions of tulsi tea. Farmers not only benefited from greater crop yields, but consumers too benefited from having tulsi regularly. Progress on the organic front has ever since been remarkable. With herbs grown in an environmentally-friendly manner and proving beneficial to health, the products have lived up to the tag line, ‘Healthy Conscious Living’.
“With organic farming, our farmers have been getting double their earlier yields, or more, in rupee terms,” says Subrata Dutta, group managing director, Organic India. “Also, organic farming can be done in a bigger way, and can be scaled up over many acres”.
Over the years, the company has expanded its farmer community as its herbal infusions grew in stature. The firm’s supply-chain includes over 2,200 farmers with about 10,000 acres of certified organic farmland across 11 districts in five states in India. Besides, through associates the firm has access to more than 10,300 farmers, with over 62,000 acres of certified organic farmland. That means it has access to an almost unlimited supply of organic farm produce.
On the buyer side, Organic India started introducing products through two streams. One of them was the famous infusion line of products that incorporate several other herbs besides tulsi to form a concoction with several therapeutic benefits. Organic India’s second product line was in capsule form, where the firm offers several herbs mixed together for consumption and remedial measures for different ailments.
“The farmers have seen what we can do,” adds Dutta. “Now we have a wonderful problem of an equal number of farmers requesting us to convert their land to organic farming so that they can supply to us. On the supply side, we have almost unlimited capacity”.
Ready base
Organic India’s product range consists of infusions, teas, staples, healthy snacks, detox kits, preserves, agri-products, ayurvedic supplements and personal care. Organic India introduced the tulsi leaf in various products and indigenised organic cultivation of various herbs, flowers, seeds and grains such as quinoa, chamomile and chia in India, prior to which these products were primarily imported.
Given how demand has been shaping up, Organic India has made a foray into manufacturing in a larger way. It invested about Rs100 crore to set up a modern integrated manufacturing plant in the agro-park at Barabanki and Rath, Uttar Pradesh. The factory has all the requisite certifications and one more – it is one of the few in India to be lead-platinum certified, a certificate given for good environment practices. Most factories normally don’t go in for this certificate, which comprises higher costs and increases the complexity of the manufacturing process.
But, for Organic India, given its environment and social governance practices, the investment is well worth it. The company has made this investment considering growth prospects in India and overseas. The manufacturing facility could cater to demand for several years.
Organic India products are now synonymous with organic food-and-wellness. Products are sold in 44 countries. In India, they are sold through 74 Organic India stores and a network of retail touch points, including general trade stores, modern trade stores and chemists. The products are also found in Fabindia stores, as well as on third-party e-commerce platforms. Besides, Organic India engages doctors, nutritionists and ayurved specialists, who prescribe its products.
Organic India’s parent Fabindia’s business model is focussed on sustainability by design and has sought to create a differentiated supply-side community through a model of engaging the artisans and farmers across India.
The farmers have seen what we can do. Now we have a wonderful problem of an equal number of farmers requesting us to convert their land to organic farming so that they can supply to us. On the supply side, we have almost unlimited capacity
Expansion spree
But, while Organic India has sizeable operations domestically, it is also big overseas, particularly in the US. International markets brought about 55.61 per cent in 2020-21. Organic India will leverage its experience in existing markets to facilitate its expansion to new markets, increase brand recognition and gain economies of scale and market share.
It plans to expand its footprint to the Middle-Eastern markets, which could increase revenue from the rest-of-the-world markets. The firm is also expanding its range in organic foods to include products with higher margins such as detox products. It intends to focus on expanding in organic foods incl. its line of healthy snacks and staples.
“We plan to increase our production of organic products used daily in households,” informs Dutta. “For instance, we plan to expand our range of organic staples to include more frequently purchased items such a pulses, spices and special cooking oils to capture a higher proportion of the kitchen spending and increase interaction with consumers, daily. Our objective is to utilise our capacities and provide more products. This allows us to expand the community of Organic India through staples”.
Organic India’s revenues have increased at a healthy pace over the last three years. The firm clocked revenues of Rs386.8 crore in 2020-21 – up 7.8 per cent CAGR over the last two years. Revenues from the online channel have risen at a faster pace of 32 per cent CAGR to Rs109.8 crore.
With new products on the anvil, a wider customer base, rising penetration of healthy products through, and upward sloping demand curve, Organic India may be able to show a shining growth rate in the years ahead.