As the ongoing pandemic crisis continues to shed light on the need to embrace health foods, nutraceuticals and organic foods in India, startups and farmers are also increasingly looking to cater to the growing demand. Many industry experts believe that this trend is here to stay even after Covid-19 is over, with organic produce and food products in particular expected to take the Indian market by storm in the next couple of years as the urban markets gravitate towards this high-end trend.
For instance, Mumbai-based organic foods startup Zama Organics, which was primarily into the farm-to-restaurant business during the pre-Covid times, claimed to have witnessed a 5x spike in consumer order volume. During these stressful times, the company has also seen consumers shifting their preference to healthier food options, witnessing a 20% MoM increase in their consumer home delivery business.
In fact, in the last eight months, several agritech startups which were catering organic and fresh foods to businesses and restaurants have shifted their focus towards consumer segments, including Aker Foods, Ninjacart, WayCool Foods among others.
Zama Organics, on the other hand, has not only shifted its focus towards B2C, but it has also ventured into setting up its own private labels, with about 100+ SKUs available on ecommerce marketplace and 15+ retail outlets. And now it’s focussing on its native sales by adding an ecommerce app to go with its website for ordering.
Will Organic Private Labels Win Against Ecommerce Giants?
The upcoming app is a D2C play by Zama to supplement those who were anyway purchasing organic fruits and vegetables from its website. The app is envisioned as more than just an ecommerce app.
“Previously, a large majority of our customers were already accessing our website on smartphones to buy products so we wanted to develop this app to bring convenience to our customers, and create a seamless shopping experience. More than anything, the app will further help us in forecasting the harvest schedule, manage inventory seamlessly and deliver fresh produce to our customers faster,” Shriya Naheta, founder of the three-year-old startup said.
The company said that delivery through the app will initially be available in all metro cities, including Mumbai, Bengaluru, Pune, Delhi, Hyderabad and Gurugram among others. In terms of private labels, Naheta said that the effort just started two months back and besides trying to develop the app, it’s also expanding its distribution to retail outlets and Amazon.
However, with its focus on private labels, Zama Organics is stepping into the arena with mega-funded players such as Bigbasket, Amazon and others, who have surplus capital to venture into organic private labels in a jiffy.
But Naheta believes that the mixed focus of these companies positions Zama in a unique territory. She highlighted that while Zama is making its own products and getting produce directly from the farmers, others are using middlemen to ease distribution, which is a key differentiating factor for both ends of the value chain. “These delivery apps are just selling other brand products that exist in the market. We, on the other hand, are selling 100% organic produce of our own, fresh from farm to table,” said Naheta.
For Zama Organics, Covid-19 helped identify some of the pain points in streamlining the organic foods supply chain. According to industry experts, there are about 8.42 lakh organic farmers in the country. Out of which, 2,462 are organic farming groups, and about 4,600 companies are operating in the space across the value chain.
Some of the startups in the organic foods space include Zama Organics, Organic Mandya, MeraKisan, UrbanKisaan and Beforest among others, who have been focusing on catering to the growing demand for organic foods in the urban regions in recent times. On the back of these startups, the Indian organic food market is expected to grow at a compound annual growth rate (CARG) of 20.5% in the next five years, touching close to $2.6 Bn by 2025, as per Expert Market Research.
For instance, Mahindra-backed agritech startup MeraKisan which has about 147 SKUs in organic foods category and present in almost 22 cities, which includes Pune, Mumbai, Delhi NCR, Chennai and Hyderabad among others, through its ‘MeraKisan Daily’ app drove nearly 90% sales in Pune. Further, the company looks to touch INR 150 Cr in the next five years.
Similarly, Y-Combinator backed UrbanKisaan, which is working towards bringing farms closer to home via hydroponics technique, during the lockdown, the company claimed to have witnessed 10x growth in terms of demand for its fresh produce. It is now expanding into other cities, including Bengaluru and Chennai among others.
Looking at the trend, for organic foods startups to scale, funding becomes essential to cover large parts of India, and cater to the evolving consumer needs and requirements. Startups trying to bring naturally derived foods and products to the marketplace should continue to benefit as consumers’ demand is only said to increase in the coming times.
Zama Organics, which is currently bootstrapped, said that it is planning to raise external funds in the coming months, particularly strategic investors to scale the business besides raising capital.
The Journey Of Zama Organics
Founded by Naheta, a University of Southern California alumnus in 2017, the company works closely with farmers around the home base of Mumbai and Pune. “Initially, I was exploring the opportunity because even I didn’t understand entirely about organic farming or how certification, storage or perishability of the food produce works,” the founder said.
With no experience in agriculture prior venturing into Zama Organics, a lot of effort went into building a farmers network. “I spent a lot of time in the villages. I think that’s what a lot of corporations probably don’t give farmers is time. That’s a very natural way of building trust,” Naheta added.
Over the span of three years, Zama Organics claims to have built a network of 50K certified organic farmers, which includes a mix of individual farmers and farmer organisations across the country.
On the consumer front, Neheta said that the demand for organic produce was always there, and a lot of customers came from Instagram, very early on, even before its official launch of the website. Zama said that it is currently growing organically through word of mouth and claimed to have a customer base of 2,500 customers.
“While at times our produce may not look perfect, but we try to keep it as real as possible and ensure freshness and authenticity of produce. Most importantly, we celebrate the foods from different regions,” she added.
At present, Zama Organics sources directly from existing certified organic farmers and FPOs, but in the coming days it looks to start a social division to assist more farmers to be able to switch to organic farming, depending on the increase in the demand across its business, which includes B2B (restaurants and cafes), private labels (ecommerce) and B2C (doorstep delivery via mobile app and website). “Over time, as the foundation gets developed, we will have the objective set in place,” said Naheta, commenting on organic farm certification.