Courting organic growth

Courting organic growth

In the coming years, Organic India aims to keep pace with its current revenue growth rate of 40 per cent by banking on its strong business model where it ensures everyone in its chain gains and a marketing strategy that involves consumer education

POORNIMA KAVLEKAR

KRISHAN GUPTAA, MD AND GLOBAL CEO, ORGANIC INDIA
KRISHAN GUPTAA, MD AND GLOBAL CEO, ORGANIC INDIA

Organic India is a company that produces and retails organically grown products – mainly herbs and related formulations.  We last wrote about Organic India in March 2011 when it was a Rs. 60 crore company. Since then, it has grown at a rate of around 40 per cent and has closed the March 2013 fiscal at Rs. 100 crore.  Going forward, the company expects to grow at the same pace. Krishan Guptaa, MD and global CEO, Organic India says, “The reason for this growth is that people’s interest and usage, be it in India, the U.S. or other countries, are aligning very well with the India’s traditional products which is where our focus is.”  The team has also been able to build Organic India as a credible brand in India as well as in other countries, which will benefit its long-term growth. The company’s products (which are sold through retail chains, pharmacies and so on) is present in about 10,000 stores pan-India including smaller cities. It has 300 direct employees and 200 indirect sales people who help with promotional and other activities.

Its export business contributes almost 60 per cent of its business. It is currently present in about 33 counties starting with the U.S., where it has its own office.  Apart from that, the company’s products are also sold in Canada, France, Italy, Germany, U.K., Australia, Singapore, Dubai, Sweden, Finland, to name a few. Recently, it entered the Middle East, Malaysia, Nigeria, Nairobi and Luxemburg markets. “Our model is to work with distributors and work very closely with them,” says Guptaa.

What’s in store for the consumer?

The company has a few flagship products like tulsi tea, medicinal supplements for liver, kidney, bowel care and so on. While these are lead products, it does not have any one product driving its sales. “We have a basket of successful products,” states Guptaa. It has expanded into products like desi ghee from tension free cows and organic chyawanprash, to name a few.

When consumers are looking for organic products, apart from doing their own research, they should look for different certifications. Organic India’s facilities and processing centers have been awarded SQF, HACCP, GMP, ISO-9001 and Kosher certifications, and are EU, Skal, ECO-Cert and USDA certified for organic production. The company has designed and developed its unique processing methods and advanced dehydration technologies to ensure maximum retention of potency and nutritional values.

Organic India has four ways of distributing its products – one, retail chains or modern retail outlets. Two, through doctors where its team speaks to the doctors explaining the benefits of organic products. Third, through e-commerce or the Internet. “It is an effective medium to connect with the consumers,” shares Guptaa. Lastly, it also has a team of customer care executives who educate consumers directly so that they are aware of the benefits of organic products.

Source does matter

Organic India works with marginalised farmers – farmers with a land holding of one to five acres of land. And it ensures that everyone in the chain is in a win-win situation. “In our business model everyone in the chain wins – starting with mother Earth as we do not use any abusive objects or chemicals while producing,” says Guptaa. Farmers gain as the company does not work with them on a contract basis but treats them more as a family, assures them of support in all aspects and wants to make a difference in their lives. In Azamgadh, its foundation has a free medical clinic for all the villagers in the area, not just the farmers that it works with. In Bundelkandh, it runs a similar clinic. “We directly interact with the farmers bringing in genuine affinity to the whole partnership,” says Guptaa.

The consumers gain as they get authentic organic products and use recyclable or biodegradable packaging. “Thus everyone in the chain wins, including the company because we make sure our employees are happy and they work more as partners,” adds Guptaa.

It works with farmers in U.P., Rajasthan and has recently started working with farmers in Chithoor, Andhra Pradhesh, who supply mangoes in a small way.  “Our focus at the moment will stay in these areas. Our target is to make sure that we make a difference in the current areas we work in and not just spread out as it requires a lot of focus, commitment and energy and investment in creating new projects,” says Guptaa. Talking about the experience of working with the farmers, he says that, “If one is honest and pays them their prices, they are the best set of people to work with. The trust deficit is there when you start working with them for the first time as many companies have taken them for a ride. Now we have a few thousand farmers and if you are able to honour your commitments I don’t see any issues working with the farmers.”

Aligning the team

The major challenge that Organic India faces is to ensure that its team understands the principles and the basics of operating such a unique business. “The challenge lies in getting the right set of people who can embrace the vision of the company,” says Guptaa. Another challenge it faces is in educating the consumer. “Organic is nothing but clean food. The concept of organic appears like it is for the rich. It is not true. When you buy desi ghee from tension free cows, it is a desi ghee which is pure compared to the product that is available in the market. It is not a comparable product at all.  The real challenge lies in educating the consumer of these benefits,” he explains.

Today, there is much more awareness about organic products thanks to the media and the entry of health magazines. “But I would say there is a long way to go.  India was always organic. We never had plastic bags or cups. Unfortunately, we started aping the West. And, now, again we are aping the West,” says Guptaa.

Growth strategy

Recently, Fab India acquired 40 per cent stake in Organic India.   “Organic India and Fab India always had a great relationship. We were dating earlier and got engaged now!” says Guptaa. The companies have similar business models. It plans to use the synergies and leverage each other’s strengths to its advantage. “Fab India has stores present across the country and with this partnership, we will be able to widen our reach,” adds Guptaa.

To increase awareness on organic products and as a result improve its growth, the company believes in working directly with consumers by following a guerilla marketing strategy. “We have a team of people talking to doctors. We talk to joggers in the parks and give them free tulsi tea samples. We do a few interactive sessions with schools, colleges and different organisations across the world,” says Guptaa. Organic India has newsletters going to a few hundred thousand people every month. “Our consumers become loyal to us forever as the effort by the company to bring them in is huge. They realise that they are with a company that is authentic not only with respect to the product but also the business model as everyone in the chain is gaining,” states Guptaa.

Going forward, the company is focusing on introducing products which are good for health and happiness and is researching further options. It is looking at educating consumers to consume organic products.  “Normally, we are not driven by numbers. The moment you are driven by numbers, the chances are, you could be taking short cuts,” concludes Guptaa.

2011 2013
Rs. 60 crore turnover Rs. 100 crore turnover
400 direct employees 300 direct employees and 200 indirect sales
No formal stake by Fab India. Only distributed its products Recently, Fab India acquired 40 per cent stake in Organic India.
Exports contribute 60 per cent of its business Exports contribute 60 per cent of its business