Organic Food Market in India - Challenges and Way Out

Photo Courtesy - Business Today

News can be bewildering sometimes.

Two reports on the same subject but vehemently polarized, caught my attention recently. It was about Organic food market in India. While one of the piece spoke about how the organic food category has been unable to mint money for the producers as well as retailers, the other story was all gaga about how organic food market is racing away with a remarkable growth.

To start, Organic food products are those agri-produce that are cultivated without the use of pesticides and chemical fertilizers (process is called - Organic farming). Obviously, when these products do not grow on pesticides and chemicals, the chances of being affected by harmful chemicals are diluted to none (almost!).

This benefit, however, do not come for nothing. Organic food products are priced at approximately 40-70% (a few are priced doubled!) higher than the conventionally grown products. But the story isn’t as simple.

Much to the dismay of organic produce propagators, British economist Roger Cohen dismissed organic food as a fable and an "effective form of premium branding". Then a four-year Stanford University study found that “organic products have no significant advantage over conventional foods".

Photo Courtesy - Business Today

A Nielsan survey showed that 53% of the people are willing to pay the premium on organic food, if it meant that they could avoid toxins and chemical to enter their bodies. So, as Philip Kotler would have said, the need, want and desire are all available. Why did the product not bell the cash registers then? Multiple reasons –

•  Inconsistency in availability of the products (Missing effective supply chain)
• Premium charged on these product acts as a deterrent for customers to buy and hence they remain more talked-about than purchased products (Costs not ‘sold’(convinced) to the consumers)
• It is claimed that Indian consumers do not find the organic food palatable or fulfilling to their taste
• Skepticism about the real benefits of organic food which hinders the justification for its high cost & primary agenda of being eco-friendly

What needs to be done to establish organic products/food in the Indian market is easier said than done, especially in a 500 words blog post. But I will try to put in a macro strategy with step-by-step approach.

Reemphasizing the importance of organic food, building trust around the food category and justifying premium pricing are three major challenges for this product to settle-in.

Three levels of a Product: Applied to Organic food products

As the figure shows, the core product or benefit is good health. Actual product to achieve this core benefit is chemical or pesticide-free food products (Organic food). The Augmented product that the consumer expects is the palatable nature of the products. Hence to establish organic food in the Indian market following must be done –

Category building:

• How pesticide affected food is harming people (Negative state of consumer in absence of the marketed product)
• How Organic food is the answer to all the worries about contaminated and chemically-affected food (Positive state on acquiring the product). Females who are the influencer as well as buyers must be the TG.
• Marketing wrapped in a social message showing roping credible personalities (Activists who believe in the cause, chefs etc) and housewives.

 Market Bursting

• Targeting very tightly-focused segments which creates a special equity for the category and bran(Utilizing the 4Ps accordingly)
• This segment in turn(while traversing through the brand pyramid and reaching on top) advocates for the category as well as the product (word-of-mouth and segment-leasing tactics) (Consumer advocated branding)
• Justifying the costs by certain packaging or labeling (A small label with a sign to differentiate it from the other products) (Building brand differentiation and equity)
• Working around the researches which have showed positives of organic food products(Confidence building measures moving away from defending the stance to propagating it)

These are some of the steps that must be taken in order to rejuvenate this product category. However, as I said, the task is easier said than done and there are lot of other factors that must be considered while devising a comprehensive strategy for it to succeed. How does the fore-runners and loyalists of organic food take it forward from here, that would be interesting to watch.

 Cheers,