From food to cosmetics, home-grown brands belt up for the organic ride

The success of ayurvedic brands in 2017 is fueling hope and enthusiasm among the producers of organic fare

If 2017 was the year of herbal-ayurvedic brands, could 2018 be the breakthrough year for India’s organic labels? A group of new brands in hair care, cosmetics, food and apparel is betting on just such a possibility; they are designing premium offerings, tying up with large retail chains, advertising heavily and running innovative consumer awareness initiatives to push through their organic credentials. While the market is still small and largely urban-centric, the ayurveda story is fueling hope and enthusiasm among the producers of organic fare.

Among those flaunting the organic label are personal care brands such as Azafran, Iraya, food brands such as Organic India, Vedic India and apparel brands such as Bhu:sattva. These brands believe that the Indian consumer has become more discerning and would be more willing to look at organic as a brand differentiator than she was a couple of years ago. 

On the flip side, as much as organic acts as a ‘differentiator’, it also adds to the brands’ list of challenges, the first being lack of awareness. “Consumers tend to confuse between herbal and organic products easily. While all organic products are herbal, the opposite is not true,” says Elkana Ezekiel, non-executive director of Azafran Innovacion, an Ahmedabad-based company that offers organic personal care products, and home care under the brand Azafran Organics. Azafran is promoted by the daughters of Dishman Pharmaceuticals’ chairman Janmejay Vyas, Aditi and Mansi Vyas. 

The difference between herbal-ayurvedic and organic is simple but significant. Herbal products are those that are prepared from plants and use natural raw materials. The plants, however, can be grown naturally or by using chemical pesticides and fertilisers. Organic, on the other hand, refers to a process of cultivation where no chemicals are used. 

According to several market research studies, organic is the choice of millennial consumers as it addresses one of the big concerns of this generation: environmental degradation. And that is where the new brand owners see their biggest target group.  However,  organic labelling requires special certification and that takes time. “It takes three years to get the land on which cultivation would happen to become free of residual fertilisers and pesticides,” says Jainam Kumarpal, director of Rising Tradelink (RTL) that owns Bhu:sattva, an organic fashion brand. 

Also the organic segment is very small. Former managing director at Zydus Wellness (that owns brands like Everyuth) Ezekiel who knows the personal care industry well says that in his domain, such products wouldn’t be even 5 per cent of the total market. Even so, the numbers are significant, given that the total face-wash market in India is estimated to be around Rs 20 billion while the hair care market is around Rs 70-80 billion.  

Also the new brand owners, many of whom are breaking away from their parents or grandparents’ businesses, are not going for scale, nor are they focused solely on the local market. Besides they are drawing hope from the numerous surveys about the organic market.  In a survey carried out by Euromonitor International in 2016, around 71 per cent consumers surveyed had said that they would pick up a face cream or lotion (personal care item) if it claimed to be ‘natural’  while another 38 per cent felt that they would buy a shampoo or hair oil if it had ‘botanical’ ingredients.

Moving from natural to organic is just a step away according to the new brands. Also organic helps carve an identity that is distinct from the big brands in the game such as Hindustan Unilever’s Ayush, Colgate’s new sub brands and of course, Patanjali. Besides many big brands stay away from the organic market, given the huge procurement challenges that govern the space, thereby leaving it open for smaller players. “This is the reason why start-ups have chosen to dabble into the ‘organic’ space. With smaller scale, it is possible for them to have control over procurement, while for bigger players the task gets increasingly difficult,” said a Mumbai-based analyst. 

Azafran has its farms near Sanand in Gujarat and Bhu:Sattva works with around 2,000 farmers to procure organic cotton.  Organic cotton comes at a 20-25 per cent premium over conventional cotton and has tremendous global appeal. Bhu:Sattva exports nearly 70 per cent of its fabric production and plans to start its first standalone store in 2018. So far it has been selling at over 100 multi-brand retail stores in 38 cities. Azafran has scaled up faster; it is already in 1,500 stores within a year of its launch. 

Kumarpal believes that organic can go mainstream in India and is working towards the same. However, there is some unevenness in the way consumer preference plays out. Southern India, for example, is the largest market for ‘natural’ and ‘organic’ products. “While Gujarat is a major cotton producer, consumers here do not understand the concept of organic cotton fabric. In South the story is completely different,” Kumarpal says.

Fashion and personal care apart, start-ups in the organic food space are also thriving. Players like Organic India and Vedic Cow make and sell ‘organic ghee’ that costs at least 40-50 per cent more than conventional ghee.