RECENT study by industry body ASSOCHAM, and global consulting firm EY, have published that the market size for Indian organic packaged food is expected to cross INR 871 million by 2021 from INR 533 million in 2016, growing at a rate of 17 percent.
The substantial growth of this sector is attributed to an expanding urban population base, rising health concerns, growing consumer spending on food products and deterioration of food quality. These four primary factors are also driving the global organic food market, the joint study noted.
Organic packaged food and beverages is an emerging niche market in India and its primary consumers are high-income urbanites. As demand for organic food in the metro cities increase, the companies in this sector are witnessing notable growth with the entry of several new players in the organic food market, said the ASSOCHAM-EY joint report titled, ‘The Indian Organic Market: A new paradigm in agriculture’, which was released during the conference: ‘Organic World: Advantage India’, at New Delhi.
India-based Sresta Natural Bioproducts have emerged as the market leader, with 37 percent value share of the packaged organic food market and 7.8 percent share of the packaged organic beverage market. It has increased its share in the organic food market in recent years, while smaller niche players have taken significant share away from it in the organic beverage market, adds the study.
“In addition to the growing domestic market, India is the second largest exporter of organic products in Asia after China. The increasing export market coupled with the Government’s support has made organic cultivation in India highly successful,” said Amit Vatsyayan, partner, EY. Indian organic food exports were estimated at US$299 million during 2015-16 with total volume of 263,688 MT.
The major export destinations were the US, European Union, Canada and New Zealand. It is assumed that most of the remaining quantity is sold in local markets. Oilseeds comprised half of India’s overall organic food export, followed by processed food products at 25 percent.
According to ASSOCHAM-EY study, India currently holds the ninth position among 178 countries that actively practice organic agriculture. At present, the country is home to more than 835,000 organic producers, 699 processors, 669 exporters and 1.49 million ha area under organic cultivation. However, with only a meagre 0.4 percent of the total agricultural land area designated for organic cultivation, the industry presents extensive scope for expansion.
Pinakiranjan Mishra, partner and national leader, Consumer Products and Retail, EY, says, “With Indian consumers’ increased inclination and awareness towards health and nutrition, the outlook for organic products in India has been very positive. Consumers are today accepting organic food and beverages as part of their daily diet, thereby, creating significant growth opportunities for existing as well as new industry players in this segment. With the participation of numerous Indian and multinational companies and their expansion in the market, India is rapidly becoming a production hub for organic foods.”
India has a remarkable potential to produce all varieties of organic products, owing to the existence of various agro-climatic zones within its borders. The total area under organic certification was 5.71 million ha in 2015-16. This included 26 percent cultivable area with 1.49 million ha and 74 percent (4.22 million ha) forest and wild area for collection of minor forest produce.
Among the states, Madhya Pradesh has the largest area under organic certification (4.62 lakh ha) followed by, Maharashtra (1.98 lakh ha) Rajasthan (1.55 lakh ha), Telangana (1.04 lakh ha), Odisha (0.96 lakh ha), Karnataka (0.94 lakh ha), Gujarat (0.77 lakh ha) and Sikkim (0.76 lakh ha). These states had a combined share of 90 percent of the area under organic certification in 2015-16, highlighted the study.
In terms of organic crops, the combined share of the top 10 categories of organic food crops is around 99 percent. The top four categories (with a share of around 85%) include sugar, oilseed, fiber and cereals and millets.
“According to our findings, metropolitan cities have witnessed a 95% increase in demand in the last five years,” said Vatsyayan. “Many organic food companies are adopting the on-line route to expand their consumer base. The brick and mortar organic stores are usually located in metro and mini metro cities. These companies are reaching out to the rest of the consumers through on-line channels,” he added.
With increasing incidence of health problems such as diabetes, anxiety and stress plaguing urban India, many entrepreneurs are venturing into the area of organic café and marketplace.