The organic food market in India is projected to experience a Compound Annual Growth Rate (CAGR) of 20.5% from 2021 to 2026, reaching a market size of $2.6 Billion, according to industry estimates. The increasing demand for organic food in India can be attributed to several factors, including a growing awareness of the harmful impact of chemically-grown food.
But the very definitions of organic food have limited its appeal to affluent urban families. Considering the effects of farming practices on the environment and people, it’s crucial that organic farming and the consumption of organic foods should progress at a much faster pace. Nevertheless, for this transformation to be both effective (in terms of environment) and sustainable, it’s necessary for organic food to be more accessible and affordable to a wider group of Indian consumers.
Why Organic is expensive?
Retailers, in India and abroad alike, have struggled with understanding why consumers tend to avoid making organic markets their go-to shopping destination. The main reason lies in its perception as costly and it is considered a luxury reserved only for affluent urban families.
However, the emergence of expensive organic food can also be attributed to excessive marketing spending utilized by brands and retailers. The preference for stocking foreign foods that incur high logistics costs, and a focus on exotic superfoods to create hype and attract high profits have limited their reach to only upper-class Indians. But they are missing the huge potential of the Indian middle class.
To address this issue, it’s crucial to analyze the reasons behind the relatively higher price tags associated with organic food, which is currently priced at around 1.7 times the cost of non-organic food. Although limited supply or small-batch production, which is typical of organic farming, is one reason, it only marginally increases the cost of produce compared to standard production methods.
How can it be more affordable?
Well, the answer lies in the supply chain! To make organic food more affordable, brands and retailers need to rethink the supply chain by direct sourcing, predictive technology-based optimization to reduce costs, etc. (Read… How OrganicoHarvest is reinventing the supply chain to make organic food accessible for everyone?)
In addition, it’s crucial to restore the appeal of locally-grown and seasonal produce, which are highly nutritious and have low logistics and cold storage costs. This can help address supply volume concerns, and cost issues, and promote a healthier farming ecosystem.
Implementing technology-based operations, omnichannel store networks, plastic-free packaging, and eco-friendly delivery methods are essential to reduce costs at all stages of operations. These measures are also crucial for sustaining growth in a consumer-led economy.
Changing consumer perceptions
Making organic food more affordable requires active participation from all stakeholders, including consumers. It’s crucial for consumers to support “responsible” sellers who prioritize the interests of all stakeholders within the ecosystem, including farmers.
By purchasing from grocers who offer transparent choices at an affordable price point, consumers can encourage purpose-driven businesses.
Retailers have a responsibility to educate and encourage consumers to change their perspective on organic food. Consumers don’t necessarily need to replace everyday favorites with exotic alternatives. Opting for traditional, locally-grown, and seasonal organic foods is a better choice financially, environmentally, and health-wise.
How consumers can help?
To make organic food more accessible in terms of cost, it’s essential for all parties involved to participate actively. Consumers, in particular, should consider purchasing from ethical and accountable vendors, instead of brands and retailers solely focused on their financial gain.
These responsible sellers prioritize creating a positive impact for everyone involved, including farmers, by adopting a business approach that prioritizes the well-being of all stakeholders within the ecosystem and not just financial gains.
Educating the Farmers
The traditional definition of mass supply in organic farming is not feasible due to the nature of the process. However, businesses can change the potential of the organic food market by adopting sustainable practices, building transparent supply chains, and leveraging technology for optimization at all stages. This can lead to growth, variety, accessibility, and impact. As demand increases, supply will have to keep pace, which will encourage more players to come into the organic space and increase production volumes, thereby lowering costs.
At the grassroots level, we need to educate and align a greater number of farmers with organic farming through integrated contracts. Their enrollment is key to higher production and optimally-priced produce.
As consumers continue to change their behavior and the food industry adopts more sustainable practices, organic food will become the norm rather than the exception. Consumers will no longer shy away from making organic-first markets their regular point of purchase.
Organic food is not a passing trend. It’s the better choice for our health, the environment, and the well-being of farmers and all stakeholders in the ecosystem.