Organic Food IndustryPresented by Chandresh Dedhia

XMBA – Batch 54

ITM - Matunga

Index

• Organic Food Industry

• Research Objective

• Organic Food Category and Products

• Contaminants and Pesticides

• Regulations and Certifications

• Market Size

• Market Geography

• Market Penetration

• Frequency of Purchase – Trends

• Perception of Organic Food – Trends

• Driving Market Needs

• Building on GAPs

• SWOT Analysis

Organic Food Industry

• India today is on the threshold of an organic revolution and Indian Organic

Food industry though at a nascent stage, has experienced steadfast growth in

past few years. The country’s budding organic food market is transforming

into world’s fastest growing organic food market backed by a shift in

consumer behaviour and spending patterns.

Reports

• According to a YES Bank report in 2012, it was estimated at Rs 1,000 crore

($170 million) - of which Rs700 crore came from exports - and is growing at

30 to 40 per cent annually. The country has 4.43 million hectare under

organic cultivation with a total organic certified production of 171,100

tonne. In comparison, the US organic foods market is worth $26 billion, the

European, $10 billion.

Research Objective

• To uncover the market potential of Organic food in India, understand the

consumer attitudes around

• organic food products in India and to detail the current market dynamics and

consumer behaviour specific

• to organic products fruits and dairy products.

Organic Food Category and Products

ORGANIC FOOD CATEGORY ORGANIC FOOD PRODUCTS

Organic Cereals Wheat, rice, maize or corn

Organic Pulses Red gram, black gram

Organic Fruits

Banana, mango, orange, pineapple, passion fruit, cashew nut,

walnut

Organic Oil Seeds and Oils Soybean, sunflower, mustard, cotton seed, groundnut, castor

Organic Vegetables Brinjal, garlic, potato, tomato, onion,

Organic Herbs and Spices

Chili, peppermint, cardamom, turmeric, black pepper, white,

pepper, amla, tamarind, ginger, vanilla, clove, cinnamon, nutmeg,

mace,

Others Jaggery, sugar, tea, coffee, cotton, textile

Contaminant and Pestisides

Food product Contaminant pesticides

Apples Diphenylamine, Captan, Endosulfan, Phosmet, Azinphosmethyl

Cabbage Methamidophos, Dimethoate, Fenvalerate, Permethrin, BHC

Carrots DDT, Trifluralin, Parathion, Diazinon, Dieldrin

Cauliflower Methamidophos, Endosulfan, Dimethoate, Chlorothalonil,Diazion

Grapes Captan, Dimethoate, Dicloran, Carbaryl, Iprodione

Onions DCPA, DDT, Ethion, Diazinon, Malathion

Potatoes DDT, Chlorpropham, Dieldrin, Aldicarb, Chlordane

Tomatoes Methamidophos, Chlorpyrifos, Chlorothalonilo, Permethrin,Dimethoate

Regulation & Certifications

• For producing exclusive organic foods and marketing we need certification…

Organic certification is a certification process for producers of organic food

and other organic agricultural products. In some countries, certification is

overseen by the government, and commercial use of the term organic is

legally restricted. In India, APEDA (Agricultural and Processed Food

Products Export Development Authority) regulates the certification of

organic products as per National Standards for Organic Production.

Research Tools

Quantitative consumer study was conducted in the following cities of India. A total of 1000 consumer interviews were conducted.

Market Size:

• The market for organic food is extremely nascent in India at present, with very few active brands and low

• penetration even among urban consumers. Estimated Market size of organic fruits and dairy products at

• present is US$ 80 million and US$ 20 million respectively. Organic fruits and dairy products are expected

• to grow at a CAGR of 13-14% and 10-11% respectively over the next five to six years

Market Size by Geography:

This pattern is expected to

continue over the next five to ten

years, post which the trend may

percolate to smaller cities in India

(primarily Tier I cities).

Cities classified as Metro and Mini metro, together are major contributors to both

organic fruits and organic dairy products (85-90%).

Market Penetration

Frequency of Purchase - Organic Fruits & Dairy Products

Frequency of Purchase - Organic Dairy Products

Types of Organic Food Preferred

Knowledge about organic food for non-users

Branded vs. Non-branded purchase

Indian vs. International brands preference

Deriving Market Need Gaps: Basis Key Decision Parameters

Critical aspects to be addressed

Important aspects to build on

Place of Purchase

• Consumer behaviour varies in terms of place of purchase between regular and organic varieties.

• While regular varieties are commonly purchased from any of the local retail options, the organic varieties on the other hand are purchased from organised stores – this pattern is a likely result of local stores not stocking organic varieties.

• Consumers themselves prefer to purchase organic varieties from organised stores –they are sceptical about local neighbourhood stores selling authentic products.

• They also enjoy the experience of shopping in organised stores for these organic products.

Purchase Process

• These categories are characterised by high personal involvement from the consumers in deciding and

• buying – only a few products such as milk or other daily use dairy products are delivered regularly to the

• consumers’ doorsteps by milkman or local retailers. For other products such as fruits, consumers prefer to

• touch & feel before purchasing them. This behavior is similar across regular and organic varieties of fruits

• and dairy products.

Need Gap Assessment

• The organic food market has three key areas of addressable need gaps

1. Key Areas of consumers’ decision making namely– availability, price points, certifications and information. This area is currently characterised by ‘high importance and low satisfaction’ for consumers of organic food.

2. Concept of organic food – health benefit, freshness and taste. Currently they are placed by consumers at‘high/ moderate importance and high/ moderate satisfaction’.

3. visual appeal and portion size/ quantity – can play an increasingly important role in future to enable multiple brands to differentiate themselves. Currently as it is characterised by ‘low importance and lowsatisfaction’.

SWOT Analysis

Strength:

Safe Food

High Quality and improved nutrition

Improved soil health

Environmental Sustainability

Preserves traditional varieties

Favourable Climatic Conditions

Young Customer Base

Double Benefits

Weakness:

Premium Pricing

Lack of awareness among farmers

Lack of awareness in Rural areas

Less Incentive from Government

Intensive in nature and high labor cost

Productivity gaps

Oppourtinities:

Rising Middle Class

Rising Modern Retail

Rising Urban Drift

Surge in Disposable Incomes

Growing Health Awareness

Reduce heavy subsidies on Food and Fertilizers

Earn High Export earnings

Threats:

Substitutes

Competition

Costly and complex certification process

Lack of Infrastructure and certification bodies

Low awareness about Organic inputs

Introduction of GM crops.

Reports

Thank YouChandresh Dedhia – XMBA 54

Sources: Tecnopak, Economics Times, AEPDA