FINAL INTEGRATED

PROJECT
ORGANIC INDIA

ORGANIC INDIA
MKT 701 – CLASS 2 – TEAM 5

ORGANIC INDIA
M. Sameer Kumar

Uttam Kumar Sarkar

Shantanu Ray

Vaikunth Swaminathan

M. Sameer Kumar Shantanu Ray

ORGANIC INDIA
Uttam Kumar Sarkar Vaikunthan Swaminathan

M. Sameer Kumar Shantanu Ray

Uttam Kumar Sarkar Vaikunthan Swaminathan
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EXECUTIVE SUMMARY
Organic India was established with the aim of setting up a sustainable business model to support the

source of revenue of thousands of poor farmers in India by providing training and education, enabling

self-sufficiency and transferable skills. This idea became a movement as organic and biodynamic

farming methods were developed and practised.

But producers or companies of organic products are continually struggling to optimise the scale

of their operations while maintaining profitability. It is primarily because of the gaps in the regulatory

framework for organic products in India. In addition to the procedural challenges aboutcertification and

quality assurance, the increasing costs of inputs and the extended conversion period from conventional

to organic farming are a few of thecritical challenges faced by the companies like Organic India. On

the other hand, a lot of companies meet significant resistance in the form of lack of adequate

postharvest facilities for organic products. With existing infrastructure capabilities, avoiding

contamination and cross-contamination of the product is quite challenging. The marketing of organic

products comes with its own set of challenges related to global competitiveness and also due to

significate differences in global and national quality standards.

The rapid evolution of the organic market can be credited to numerous factors like the emphasis

of having good health, improved income and lifestyle, increased awareness regarding advantages of

organic products combined with a lot of government programs.

SITUATIONAL ANALYSIS
PRODUCT ANALYSIS

Organic India manufactures, processes and markets certified organic, herbal and Ayurveda products.

Organic India was established in 1997 in Lucknow. Organic India is engaged with more than 1,000

marginal farmers in several clusters of around 2.4 million ha in Uttar Pradesh, Andhra Pradesh, and

Rajasthan. They grow spices and herbs such as Tulsi, to produce a host of herbal supplements, medicines,

spices, edible oils and other food products. The company has set up various retail outlets throughout the

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country. These have contributed significantly to the company’s turnover. Additionally, the company earns

40% of its revenue from domestic sales whereas close to 60% of its revenue is generated from exports

to 35-40 countries including the USA, Australia, Israel, United Kingdom (UK), Germany and many other

European nations.

Organic India is a vast and growing business delivering exceptional quality true wellness

organic foods and products. To havea better presence of the company in the market, few suggestions

have been given as listed: The Company has not explored the area of organic grocery items. It is

suggested that the company should launch organic grocery items such as rice, pulses and spices to

promote the message of true wellness further. The company can also diversify further in the field of

vegetables, fruits, dairy, poultry and livestock. Indian offers significant scope for organic textiles

production. ‘To eat Organic’ then why not to ‘Wear Organic’. Production of organic cotton is another

viable area yet to be explored by the company.

MARKET AND COMPETITO R ANALYSIS

The organic markets in India are primarily spread across food and beverages, health and wellness,

beauty and personal care and textile industries. The highest growth is observed in the organic food

segment, followed by textile, beauty and personal care. Present organic food segment in India is

valuedat INR 40,000 million which is likely to increase by INR 100,000 million – INR 120,000 million by

2020 with a similar increase in exports.

Market Size of packaged organic food and beverages

(in INR million)
600
520
500 460
380
400
300
300

200 160
100
100

0
2011 2012 2013 2014 2015 2016

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India’s exports market of organic products increased by 17% between 2015-16 and 2016-17. In

India, the majority of the demand comes from tier 1 cities. Companies are witnessing significant growth

as demand from metro cities increased.

Turnover of top organic companies in India

(in INR crores)
Others 450
Fab India 20
Navadanya 25
Nature Basket 30
Ecofarms 85
Conscious Food 120
Morarka "Down to Earth" 128
24 Letter Mantra 200
Organic India 350

0 50 100 150 200 250 300 350 400 450 500

ENVIRONMENTAL PROBLE MS AND OPPORTUNITIES :

EME RGI N G TR EN DS :

 The current market size for organic food products is US$533 million, exhibiting 17% growth in

2015. According to ASSOCHAM, metropolitan cities have witnessed a 95% increase in demand

in the last five years.

 To enlarge their customer base, many organic food companies are exploring the online route for

reaching out.

 To generate consciousness about the advantages of organic farming to farmer’s, lot of

promotional events are taking across India very rigorously.

 The increasing demand for organic food has led to an increase in its retail shelf space in

organised retail stores across India.

 To give customer sufficient choices a lot of companies are now focussing on increasing their

product portfolio.

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CH A L LE NGES I N O R GA NI C S E C T OR I N I NDI A:

With the support from Government and private players,an organic farming sector in India is evolving

rapidly with its one-of-a-kind offerings to promote a healthier lifestyle. Challenges faced by organic

industry today which can be grouped into three heads:

Producer-level challenges:

 Improper policies and lack of standard procedures in certification make a lot of companies and

farmers to get demotivated

 A lot of awareness campaigns and cultivation research in organic farming is leading the farmers

to stick to conventional agriculture.

Processor-level challenges:

 Many farmers are apprehensive of organic farming since it involves high production costs.

 A significant challenge India faces is that of increasing its share in the global organic food

export market, instead of global competitiveness.

Consumer-level challenges:

 Many consumers in India are still unaware of the health benefits of organic food products.

 The cost of organic food products in India is currently higher than that of conventional food

items.

SWOT ANALYSIS
STRENGTH:

 Day by date as awareness for a healthier life is increasing the potential for organic food

products is also growing proportionally.

 A vast network of farmers who produce for Organic India with over 10,000 acres of land under

cultivation across pan India.

 Lot of products of Organic India like Tulsi Herbs and Tea which are widely accepted in countries

like US, France, England, Australia etc., would have immense opportunity to grow in domestic

markets also.

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WEAKNESS:

 Unlike brands like 24 letter mantra and nature basket, we offer minimal products like herbs,

tea and ayurvedic.

 With increase awareness regarding organic food lot of competitor brands are promoting very

aggressively among the target consumers.

 With the advent of e-commerce platforms like Amazon, Flipkart all competitor organic brands

are getting associated with them to increase their reach among the consumers which Organic

India could not able to do till now.

OPPORTUNITY:

 Schemes like Rashtriya Krishi Vikas Yojana & Pradhan Mantri Kaushal Vikas Yojana are

encouraging more farmers to change from conventional farming to organic farming.

 In recent times offline supermarkets have increased a lot across all the places. Having tie-ups

with these stores to sell our products will increase brand availability.

 Presently Organic India is making only herbals and ayurvedic products. Exploration of grocery,

dairy and textile items gives a lot of scopes to grow.

THREATS:

 In recent times more and number of domestic and international brands is entering in this segment

across PAN India.

 Organic food prices are pretty high price comparing to conventional foodstuffs. The proper

justification for the price plays a significant role in repeat purchases from the customers.

 Compared to others brands in the segment Organic India is spending very less as far as

advertising and promoting the brand is concerned.

MARKETING OBJECTIVES
Organic India has to keep a two-way approach to marketing. It should not only target the

consumer’s/end users for their products but also farmers, who in future will be their suppliers and

stakeholders. They should have a strategy to expand the Organic agriculture itself. It should increase

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the farmer base under them which will directly improve their production and further strengthen their

customers as in this situation; it will help them attain: Lower cost, Greater flexibility of supply, lesser

storage time on various other advantages

On the customer side, their goal should be to establish among the customers the apparent

benefits and differences of Organic products over chemical products. Such that once a person uses the

organicproduct, he/she should be able to differentiate and appreciate the organic product. They may

not become customers immediately, but knowing the advantages may try to become one shortly.

Organic India has to be work on Pricing and availability as these two are the main hurdles in their

growth prospects

MARKETING STRATEGIES
We will divide the Strategies into two parts:

 Supplier Targets:

 67% of the total farmers in India own on an average of less than 1 hectare of land.

 1% of the Farmers come in Large Holdings category of 10 hectares or more.

Target market 1: Farmers with 1-10 hectares of Land. This kind of farmers are to be further segmented

and right ones identified for partnering and converting their Farm to organic farming

Target market 2: Farmers less than 1-hectare land. This target supplier is again to be strictly segmented

based on Education, Loan Repayment and Cooperative farming exposure etc. to identify the

prospective people for partnership

 Customer Targets:

Target Market 3: Urban Consumers are using the product. Their needs are to be studied and products

to be released and sold likewise

Target Market 4: Future Customers who through modern marketing and awareness tend to prefer

Organic products.

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MARKETING MIX STRATEGIES

 Product: Organic India’s total revenue is Rs. 350 Crores (highest in the industry), out of which

60% comes from Exports, though the market share that it has in India is only 16%. It means that

it has been able to give Quality products and marketed them seamlessly. But to sustain and

grow more it has to expand its production as well as the market in India along with increasing

the number of products. It is because market share and presence in India is only going to

motivate the large Holdings farmer towards Organic Agriculture in future. Once the large

Holdings farmers also tend to become the target Suppliers, Organic Industry as a whole can be

benefittedregarding both Cost and Productivity.

 Price: Organic India has been mainly benefitting from Exports. Its expansion into Indian markets

won’t be as profitable initially due to pricing and lower profit margin in India. Nevertheless, to

enter a variety of Products and increase the market share, it has to keep the price low and

expand the land base

 Place: Organic India owns its distribution. It has both retail stores and online marketing across

the world. The focus must be given to expanding its distribution and cold storage facility to

accommodate higher quantity and variety of Products in the future

 Promotion: Organic India does Content Marketing through Blogs which it has to expand more. It

should create workshops and Tour Potential Farmers to its Organic farm and Process. It has to

increase online advertising which can only be effective once it expands its products and enters

essential food market rice, pulses and wheat

MARKETING IMPLEMENTATION
MARKETING ORGANIZATI ON

Organic India has to Market itself equally to its Product Customers and as well as suppliers. Only then it

will be profitable for the company and the industry as well. The Level and magnitude of Supplier

relation will directly affect its Productivity and Cost. As its Vision, it has to venture in all the products

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that can be turned Organic. For this, it has to attract the Farmers, first the right ones. Through

Segmentation, it has to evaluate the potential farmers and create cooperative wherever necessary.

Main hurdles in this industry are the effective implementation of Farming techniques on a large scale. As

the company expands, the education and application of techniques should not deteriorate as this will

cause the failure of attracting farmers.

Once the farmer market is captured, customer end can be entertained with various products at

lower price. The company has to leverage on its current distribution and storage techniques to handle

the critical demand and supply chain as the items have a low shelf life.

ACTION PLAN AND BUDG ET

The company has to work on two supplier targets presently, i.e. Marginal (< 1Hectare) and Small

Farmers (1-10 hectare). For now, the Large Holdings farmers need not be targeted as it will be heavy

on the budget

 In the first type of supplier, segmentation, as discussed, is to be done demographically such as

education level. Long with this, a background check is to be carried out like Loan Repayments,

legal liabilities etc.

 In the Second target farmers, education level, previous cooperative farming experience, soil

quality, previous losses and yield etc. to be additionally checked to find the potential Farmer

with whom business models can be built.

 Entering Agreements like ESCOs, where for a limited period (5 years), the farm will be tilled by

the company along with the farmer (including their education and certification). The company

will buy the produce at a slight premium compared to the market price of a chemical product.

Once the three years of certification is over, the land will be tilled for another two years and

again at the same price will be bought from the farmer. Now, this will be sold as Organic food

in the market with certification and the invested amount during the three years is realised. At the

end of 5 years, the Farm is given back to the farmer as an Organic farm. This kind of

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agreement is to be named & marketed effectively so that the Farmers are attracted and want

to join it.

CUSTOMER TARGET SEGM ENTS

Customers, who are already buying organic products, need to be provided products at a lower price

which can be only achieved with higher production and variety of products. The company has to invest

in increasing the product portfolio by adding more organically cultivated products. Future Customers

need to be made aware of the advantages of Organic Products:

 Shop in Shop Concept to be extensively used to advertise the Brand to Customers.

 Few events where possible massive discounts should be given so that individual customers buy in

bulk. For, E.g. buying 5 kg Organic Rice at the price of 6 kg regular rice (Currently 1 kg

Organic rice costs three times Normal Rice). The idea is to make people use in Bulk so that once

they observe the taste and health difference, they at least know the effect and difference of

using Organic food and that the benefits are not a myth.

EVALUATION, CONTINGENCY AND MONITORING

Indian agriculture is plagued with problems of negligence, improper framework and being a source of

Famer’s livelihood rather than a business. Issues are to creep in as the company grows. There are many

cases of farmers stealing their crops, using a small amount of chemical pesticide and fertiliser by the

farmer to gain short-term profit from the company etc. The farmers are to be monitored, educated from

time to time along with the Farms to avoid any liability effectively

On the consumer end, the various marketing promotions like discounts are to be monitored so

that they are the beneficiary and quality products reach them from time to time. Customer feedback

and grievances are to be rigorouslyobserved in a growing industry as it may take away any growth

prospects away to the competitors.

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FINANCIAL DATA
ORGANIC EXPORT MARKE TS

After China, India is the second biggest exporter of organic products along with its extensive increasing

domestic market. Support from the Government in increasing the export market has been beneficial in

making organic cultivation in India very fruitful. Indian organic food exports were projected at US$299

million during 2015-16 with total volume of 263,688 MT. The critical export destinations were the US,

European Union, Canada and New Zealand.

Value of Organic Export (in INR crore)

* Textile excluded
3000

2428
2500
2107 2099
1866 1937
2000

1500

1000
699

500

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

EXPORT OF ORGANIC PRODUC T IN FY 2016 -17

Export of Organic Product in FY 16

60%
50%
50%

40%

30% 25%

20% 17%

10%
2% 1% 2% 1% 2%
0%
Oil Seeds Processed Cereals & Pulses Spices Tea Dry Fruits Others
Food Millets

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India’s exports of organic products were increased by 17% between2015-16 and 2016-17. Even

though we have only 0.4% of total agricultural land under organic cultivation, the segment has

widespread cope for expansion.

With the presence of various agro-climatic zones within its borders, India has tremendous

potential to cultivate multiple varieties of organic products. It included 26% cultivable area with 1.49

million ha and 74% (4.22million ha) forest and wild area for the collection of minor forest produce. The

organic production area in India falls essentially under two management systems: (1) National

Programme on Organic Production (NPOP) and (2) Participatory Guarantee System-India (PGS-India).

There was an increase in area at a CAGR of 6% from 2010-11 to 2015-16 and absolute

growth of 29% during the same period. It is likely to grow at a rate of 8% -10% till 2020.

Organic crop share in India (2009-10)

Others 1%
Rice 1%
Tea / Coffee 1%
Pulses 2%
Wheat 4%
Herbal & Medicinal 6%
Spices 6%
Other cereals & Millets 9%
Oil Seeds & Soyabean 11%
Cotton 29%
Fruits and Vegetables 30%

0% 5% 10% 15% 20% 25% 30% 35%

The combined share of firstten categories has been around 99%. Sugar, oilseed, fibre and

cereals and millets are the major four categories with a share of about 85%.

Madhya Pradesh, Maharashtra, Rajasthan, Telangana, Odisha, Karnataka, Gujarat and Sikkim

has combined share of 90% of the under certification.

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Organic agriculture area by state (in hactare)

New Delhi
Manipur
Punjab
Haryana
Himachal Pradesh
West Bengal
Kerala
Uttarakhand
Gujarat
Telangana
Madhya Pradesh
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

CONCLUSION
The International organic market is quite big, and consumer demand is growing for health and wellness

foods. The World Organic food market is USD 90 billion today and will increasemanyfolds to USD

230-280billion by 2025 thus becoming increasingly mainstream. The packaged food category will

reach about USD 70 billion by 2025. The Indian organic sector, driven primarily by exports, is

estimated at 415Million USD which does not comprise even 0.5% of the global business. Though the

domestic organic marketing India is nascent, there is a mature and developed market for packaged

products and increasing demand for healthy foods.

The primary objective of this vision is to make the farmer as the ultimate beneficiary. Any

market linked value chain can become successful only when farmers are an integral part of it. With this

vision we can ensure that there is the continuous purchase of farmer's organic produce at a premium

price, thus helping the economy to drive further.

Given such growth potential in the industry, Organic India, which majorly exports to Western

Market especially Germany where QC norms are highly stringent, undeniably has a great brand value

among its Customers. It has to take leverage its focus on Quality and develop more products to thrive in

the Organic Market. Having a small product portfolio is a barrier for both sustainability and marketing

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of present products. To increase growth, Organic India has to improve focus on Marketing in the same

tune as of Growth potential. Also, it has to divide this investment equally on Customers and Farmers.

REFERENCES
1. YES BANK, Ingenus Strategy and Creative Research (2016, Jan) Indian Organic Sector:
Vision 2025Retrieved from
https://commerce.gov.in/writereaddata/uploadedfile/MOC_636016030908099515_
Indian_Organic_Sector_Vision_2025_15-6-2016.pdf
2. Manaloor, Varghese & Srivastava, Divyanshu & Islam, Shahidul. (2016, Dec). GROWTH
OF ORGANIC FOOD INDUSTRY IN INDIA. Agrofor International Journal. 1. 69 -76.
10.7251/AGRENG1602069M.
3. ASSOCHAM, EY. The Indian Organic Market. Retrieved from
https://www.ey.com/Publication/vwLUAssets/ey-the-Indian-organic-market-report-
online-version-21-march-2018/$File/ey-the-indian-organic-market-report-online-
version-21-march-2018.pdf
4. Deshmukh, Mahadeo & Babar, Nitin. (2015). Present Status and prospects of Organic
Farming in India. EUROPEAN ACADEMIC RESEARCH. Vol. III.

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