India has emerged as one of the world’s leading producers and suppliers.
IT and pharma are the business equivalents of what are known as charismatic megafauna in the world of wildlife conservation. They grab all the attention. But just as even the tiniest bugs can reveal novel secrets of the natural world, there are a host of less “sexy” products that are fundamental to understanding the new global economic architecture and India’s role in it. One such candidate is the gherkin, a relative of the mundane ‘kheera’.
From virtually zero in the early 1990s India today grows some 250,000 tonnes of gherkins a year and has emerged as one of the world’s leading producers and suppliers of the vegetable. Pickled gherkins are consumed in large quantities in Europe and the United States as condiments that find their way into an array of sandwiches and burgers.
Gherkins grown and pickled in India are almost wholly exported, there being no domestic market for them. For farmers they have spelt a silent revolution. Tens of thousands of small and medium sized farms across Karnataka, Tamil Nadu and Andhra Pradesh have been converted to growing gherkins, a cash crop that has emerged as possibly the biggest success in India’s agro-export story.
One major road the gherkin travels from India leads to the Flemish town of Aalst, 30-odd kilometers to the northwest of Brussels. Here millions of jars of pickled condiments, the contents of many of which were produced and packaged in India, sit in a warehouse that belongs to Intergaarden, a Belgian company that in 2006 was bought over by the Indian food major, Global Green.
Part of the Thapar’s Avantha Group, Global Green is the largest global supplier of gherkins outside the United States and the third biggest gherkin processor in the world. Accounting for about 35 per cent of gherkin exports from India, the company produced 65,000 tonnes of the vegetable last year, 55,000 tonnes of which were grown in India alone.
With seven processing facilities in India, Hungary, Belgium and Turkey, the company has emerged as a multinational to be reckoned with. Almost 50 per cent of its revenues come from its operations abroad and its customer base extends to 50 countries.
When a consumer reaches for a can of pickled vegetables in supermarkets across Europe be it Tesco in the UK or Carrefour in France there is a more than even chance that these would have been grown and bottled in India by Global Green or one of its competitors.
Aalst is Global Green’s European hub and it is symbolic of the truly international nature of the business. In the Aalst warehouse capers grown in Turkey, silver-skin onions produced in Holland, and sour cherries and sweet corn from Hungary rub shoulders with gherkins from India. From this nerve centre they then spread out all across Europe to over 27 countries. The labeling on a single bottle of pickled cornichons (the French word for gherkins) here reveals its global destiny. The ingredients are listed in no less than 17 different languages
“We have shown that Indian farming can be competitive against Western European and North American suppliers. Our growth has been such that we have displaced suppliers in these markets,” says Vineet Chhabra, Global Green’s Managing Director. What favours India when it comes to the agri business is its climate and its surplus labour. Thus for example while gherkins can only be harvested in Europe during the short summer season, in India, year-long harvesting is possible. Moreover as a labour-intensive activity, gherkin production is far more cost effective in India than in the labour-deficit West.
Indian exports in agriculture have however been hampered by the lack of infrastructure, in particular cold-storage facilities, as well as by its agricultural products being unable to meet the phytosanitary requirements of many export markets.
Gherkins have overcome these factors because they are pickled. They thus travel well and don’t require cold-storage over long distances. Unlike fresh foods, pickled vegetables also have an easier time meeting international food standards.
Gherkins are not only a growth industry they have also been recession proof. Global Green’s Chhabra reveals that the company’s revenues in 2008 touched $130 million. Over the last five years Global Green has in fact grown 53 per cent CAGR. The company is now planning to go public within the next three years and has a stated goal of earning $300 million in revenue by 2012.
There is certainly room for expansion in the gherkin business. Global Green comprises only 4 per cent of the world-wide market. “There is a tremendous growth opportunity in this country (India) and more resources to be tapped in the local agriculture arena,” says Chhabra.
Gherkins might not grab the headlines unlike the $3 billion Avantha group’s other interests in power and paper, but they are a sunrise sector.
In Aalst high speed lines buzz along packaging up to 450 jars of pickled vegetables a minute. The sound may not be thunderous but it is the hum of new directions in India’s globalisation trajectory.
