India has always been an agrarian nation. With the expanse of time, the Indian agriculture sector has grown manifold after Independence. One of the major factors responsible for this growth has been the Green Revolution, which changed the circumstances of early India from a “ship-to-mouth” nation to being one of the major centres of agricultural production globally.
India was the second largest producer of fruits (81.285 million tonne) and vegetables (162.19 million tonne) in the world in 2016, contributing around 12.6 percent and 14 percent of the world’s total production of fruits and vegetables, respectively.
However, with the high-yielding varieties of crops such as wheat and rice, which were developed through breeding with Mexican varieties, there were many problems which emerged over the last few decades.
Since these crops were water, fertiliser and pesticide-intensive, it led to the slow degradation of the fragile farming ecosystem. Moreover, these chemicals accumulated in organic life forms, which led to the emergence of many diseases, such as cancers and other chronic diseases in humans. This has led to an emergence of non-invasive farming techniques in India such as organic agriculture.
Organic beverages consist of beverages either produced directly or extracted through organic sources. One of the most important organic beverages which holds a significant share of the organic beverage market in India is organic tea and coffee, which are produced directly through organic farming.
Moreover, a very important part of the organic beverage category is dairy products, which are produced through organic methods. Thus, the fodder consumed by livestock is grown through organic methods. These animals are then used to procure natural milk, which is processed to produce organic dairy products.
Similarly, another important category is that of juices, which are produced through fruits grown with organic methods. The total amount of organic beverages sold in 2015 was worth $26.1 million and this is expected to progress to $108.9 million by 2021 with a CAGR (compound annual growth rate) of approximately 27 per cent during the forecast period.
Factors supporting growth of organic beverage industry in India
Major consumers of organic beverages in India are people living in metropolitan cities as the market for organic products in India is in growing phase.
Some of the important factors include:
Through these media, information is disseminated rather quickly, and word of mouth becomes an important factor. Thus, there is a growing consciousness about the health benefits of organic beverages and even people in smaller towns are becoming increasingly aware about these benefits.
Thus, the market for organic beverages holds tremendous potential in the future. Moreover, growing awareness about the dangers of non-organic beverages and growing incidence of critical diseases in India is also promoting growth.
There is a strong perception among urban consumers that organic products are healthier, and consequently, they do not hesitate to spend more on such products.
Manufacturers are targeting quality- seeking consumers, especially middle-aged consumers who are highly health-conscious.
Support and promotion by the government
The Government of India is actively promoting organic farming through various schemes which include:
National Project on Organic Farming
Under the National Project on Organic Farming (NPOF) scheme, assistance of up to 25 per cent and 33 per cent of financial outlay, up to a ceiling of $59,701 and $89,553 is provided as back-ended subsidy through NABARD (the National Bank for Agriculture and Rural Development) for establishment of bio-pesticide/bio-fertiliser production units and agro-waste compost production units, respectively. The government has been advocating integrating use of chemical fertilisers and organic manures, including biofertilisers, for increasing production of major crops.
National Horticulture Mission
Under the National Horticulture Mission (NHM) and the Horticulture Mission for North-East and Himalayan States (HMNEH), financial assistance is provided for setting up vermi-compost production units at the rate of 50 per cent of the cost subject to a maximum of $448 per beneficiary, for adoption of organic farming $449 per hectare for maximum area of four hectare per beneficiary and for organic farming certification $7467 for a group of farmers covering an area of 50 hectare.
Rashtriya Krishi Vikas Yojna
Assistance for promotion of organic farming on different components is also available under Rashtriya Krishi Vikas Yojana (RKVY) with the approval of State Level Sanctioning Committee.
National Food Security Mission
Under the National Food Security Mission (NFSM) on Pulses, including Accelerated Pulses Production Programme (A3P), assistance for popularising rhizobium culture/phosphate-solubilising Bacteria is provided to the farmers under cluster demonstrations.
Promoting the Use of Biofertilizer
The Central Government has notified bio-fertilisers like rhizobium, azotobacter, azospirillum, acetobacter, PSB, KMB and zinc-solubilising bacteria under the Fertiliser Control Order (FCO). Similarly, under the Initiative for Nutritional Security through Intensive Millets Promotion (INSIMP) programme, phosphate-solubilising bacteria/azotobacter culture is provided to the farmers as part of technology demonstration. Further, under the National Project on Management of Soil Health and Fertility (NPMSH&F), financial assistance of around $7.5 per hectare is provided to promote use of organic manure.
Rising product innovations
An increasing number of companies are coming out with new innovations targeted the country’s youth.
For instance, Little Miracles Drink Limited has launched an organic energy drink with a fusion of a unique tea, superfruit and ginseng under the brand of Little Miracles. This drink is made up of natural ingredients and with fashionable packaging.
PepsiCo, a global beverage giant, has launched an organic version of its classic Gatorade called G Organic. The new product contains no artificial colours and flavouring, and it is also sweetened with organic sugar. G Organic is available in lemon, strawberry and mixed berry flavours. It is made up of seven ingredients and acts as an instant energy revitaliser. G Organic is USDA-certified organic energy drink.
BluePrint, a brand of The Hain Celestial Group Inc, a leading company in developing juice drinks and cold-pressed juices, has launched a new line of tea infused organic energy drinks. The drinks are an evolution of traditional ready-to-drink teas. The BluePrint organic energy drinks are infused with high-performance tea ingredients like matcha, yerba, and guayusa mixed to provide a dual energy source from superfood ingredients coupled with caffeine.
There are many other instances of incumbent companies coming out with new innovations.
Impediments to the growth of organic beverages
High input cost
The price of organic beverages is 10 to 20 times higher than conventional beverages, owing to high input cost of organic beverages. Conventional farmers use chemical and synthetic pesticides, to reduce their production costs, while organic farmers need to hire extra workers for removing weed, remediation of pesticide contamination and cleaning of polluted water at regular intervals, thus increasing the overall cost of organic product.
Organic farming practices tend to produce less than conventional farming practices and are not able to meet growing demand for organic products. Thus, to increase their production capacity, organic farmers hire extra labour and resources to maintain the quality and quantity of organic products.
India being a highly value-conscious market, the high price of organic beverages serves as a major impediment to growth of this market.
However, as competition around the world grows and supporting technologies develop, the input costs are expected to come down, which will help in bridging the gap between the prices of organic and inorganic beverages.
Highly-fragmented market
The Indian organic food and beverages market is highly fragmented due to presence of a number of small and large vendors in the market. These vendors compete based on price, innovation, reputation, distribution network, product quality and promotion.
Besides this, private labels offer a wide range of products in the market and are targeting high-end retailers, supermarkets, discount stores, health food stores, and club stores.
Thus, the demand for private label products along with other recognised brands is further expected to rise in the coming years. Presently, Sresta Natural Bioproducts is the market leader, followed by Organic India.
