Established in 2009, Morarka Organic Foods Ltd, is counted amongst the Indian Organic Food Industry’s top performing players. Executive director, Mukesh Gupta, shares his insights into the nascent but hugely promising market
Rendered by Rutaksha Rawat
Q] What is the current retail value of the organic food sector in India?
Ans: The current market for organic foods in India is pegged at Rs 2,500 crore (USD 401 mn)—1,000 crore (USD160 mn) organised and 1,500 crore (USD 241 mn) unorganised. It is important to note, these figures represent less than 1% of the global share, suggesting the huge potential of this nascent Indian sector. Present growth of the industry is 20% per annum, which is very low; it has the potential to grow by 100 to 150% per year.
Q] E-commerce Vs Retail format–which one is more viable?
Ans: For us, retail proves to be a more viable option as it does not involve logistics costs, nor the pressures of timely delivery. Besides, e-commerce faces tax hurdles in different parts of the country.
“The current market for organic foods in India is pegged at Rs 2,500 crore or USD 401 mn. These figures represent less than 1% of the global share, suggesting the huge potential of this nascent Indian sector. Present growth of the industry is 20% per annum, which is very low; it has the potential to grow by 100 to 150% per year”
Q] What role do women and children play in the growth of the organic market?
Ans: Mammothian. In India, women are in charge of the kitchen and they decide what has to be bought for the kitchen. Since our products cover 90% of kitchen ingredients, women are our No. 1 target audience.
Children, too, are responsible for sales, as parents in India want the very best for their children even if they cannot afford those products for themselves. For ex, they may not buy organic food for themselves everyday but will ensure their child eats noting but. However, upper income families in the country are able to afford premium foods for all its members.
Furthermore, in many instances we have noticed that children are the first in the family to learn about organic foods—either through school, the media, or friends, etc. Thus, they have become sale influencers within their family units.
Q] What factors will push consumerism in the organic food segment?
Ans: As people become more aware of the ill effect of chemicals, contamination and adulteration present in almost all foods available and realise that organic is the only answer to food safety issues, they will slowly but surely convert to organic products. I am certain a time will come when the entire middle class (and those above) will be buying only organic items, and mainstream brands will have to either go organic or at least bring out organic product ranges to retain customers. That’s already started happening to an extent but it will be more prevalent in time to come. Media platforms such as Pure & Eco magazine, India’s only trade magazine for the organic sector, are critically helpful in this regard and help make consumers more aware.
Further, if supply chains are streamlined and more product ranges are introduced, customers are sure to become loyalists over time.
Lastly, more players joining the sector will collectively help expand the market further.
Q] What challenges do you face in the domestic market?
Ans: Surprisingly, the challenge emerges not as much from consumers as one would imagine but from retailers. Many retailers regard the market as unsettled and immature, and are generally not interested in stocking organic products despite the support and robust margins offered by manufacturers. This results in heterogeneous distribution and availability of products to only select retail outlets, where they may go unnoticed or ignored.
Therefore, industry members need to take initiatives in educating retailers about the prospects of organic products. Manufacturers can also help themselves by establishing their own outlets and kiosks, as well as, e-store.
Q] How can the government help the organic sector in India?
Ans: The government can support by granting certification and pesticide residue testing at low costs. Furthermore, excise and sale tax for organic value added products should be removed, and loans should be provided to organic product companies at concessional rates of interest.
Q] What is your advice to new businesses in the segment?
Ans: When it comes to organic, quality and authenticity of the product are of prime importance. So, all players—big and small—need to focus on quality first.
Customerbase will build up organically as your brand gains repute for being pure.
I would also recommend new entrants refrain from VCs as this sector is not a segment that can be pushed into making sales inorganically; that would have an adverse impact on quality. If you lack big funds, start small, but start on your own so you’re not pushed into a corner if the going gets tough.
Q] What does Morarka’s product range comprise?
Morarka’s ‘Down to Earth’ range
Ans: We offer 90% of the items required in a kitchen, including organic grains, pulses, cereals, rice, oil, ghee, etc, under our brand, ‘Down To Earth’.
We also have a textile brand called Back to Basics, which features products made with certified organic cotton, as per international standards. The cotton cultivation for the fabric is certified as per United States Department of Agriculture’s National Organic Program; European Union Standards; and the National Programme for Organic Production (NPOP) of Agricultural and Processed Food Products Export Development Authority (APEDA), under the Ministry of Commerce, Government of India.
Our best selling product is and has always been Wheat Chakki Atta.
Q] What was Morarka’s turnover in 2014? Do you export?
Ans: In the 2013-14 financial year, Morarka’s turnover was Rs 86.26 crore (USD 14 mn). We have been witnessing a growth of 20 to 25% per year and that’s what we envisage for 2015-16 as well.
We have been exporting our grains, pulses, cereals, rice and spices to USA, Canada, UAE, Australia, Malaysia, and Singapore. We seek to double our export volume over the next two years, and are scoping out new markets and partners internationally.
Q] What are Morarka’s future plans?
Ans: Our mantra is ‘Quality with Authenticity’ and we intend to continue with that
ethos template. We want to reach the masses with our value for money organic products and are, therefore, expanding our distribution chain to over 100 cities.
Currently, we have two company owned standalone stores and 70 franchisee stores across the country. By 2016, we will add 30 more to that mix. We also plan to launch a bakery store featuring only organic baked products in the next 3 to 4 months in Jaipur, Rajasthan.