‘Organic’ retailers are big on small outlets

Mantra 24, the Hyderabad-based organic brand of pulses, cereals and spices, sources produce from 17,000 farmers, each having four-five acres spread across 14 States.

It now plans to diversify into personal care products under a new brand, Pure Nature, with soaps, shampoos and oils in the offing. The company will sell its brands across established retailers rather than expanding its own stores (it has just two outlets in Hyderabad).

On the other hand, Delhi-based Organic Harvest is in a hurry to expand its retail presence with 50 outlets across India. These would range from 64 sq.ft. kiosks to 200 sq.ft. outlets in malls.

Keeping it small is what seems to work for most ‘organic’ retailers, as volume uptake may not compensate for rentals immediately in big metros. In fact, some of the more successful retailers such as EcoNut, Dhanyam, Enfield Agro-Base and ReStore, all based out of Chennai, have been able to sustain their businesses due to their smaller size, local sourcing and business models.

Categories such as food and grocery, though, are more challenging than personal care.

“The organic story is going strong, but some of the players may have been ahead of their time. Paying huge rentals at high-street locations may not have worked for players focusing on perishables as margins are thin in this category,” observes N Balasubramanian, CEO, Srestha Natural Bio Products, that makes 24-Mantra Organic products.

Recently, Organic Garden, a fruit and vegetable retail format that launched a couple of stores in Mumbai, closed its outlets.

It is now an online grocery format, as logistics and rentals did not enable profitability in Mumbai. Today, it has set up a warehouse in Navi Mumbai to service a handful of online customers. Going upwards at the more premium end of the ‘organic’ category can also prove to be detrimental.

In 2012, Dilip Doshi, former national-level cricketer, launched Organic Haus, a retail format with imported organic goods (ranging from soups to health supplements) from Germany at Mumbai’s upmarket Peddar Road locality thinking there would be a ready clientele (Mukesh Ambani stays in the same vicinity).

The store has now shut down, barely a year after its launch.

Affordability is also the key to making the ‘organic’ category more acceptable to price-conscious Indians. Delhi-based Organic Harvest, with its range of personal care products, has decided to specifically cater to the ‘middle class’ with its pricing.

“Our skincare and hair care products will be just about 20 per cent higher than the regular brands. The Indian mindset towards organics products will change and prices will decrease gradually. We will target the Indian middle-class with our products,” said Suresh Sood, Chief Operating Officer, Organic Harvest. Meanwhile, there are more players waiting to enter the segment.

“The US is the only country where we market our organic ‘Botanique’ brand. At present, there are no economies of scale and the cost of manufacturing the product is prohibitive, but we do have the technology and range ready to enter India once the market expands,” said Philipe Haydon, CEO, The Himalaya Drug Company.

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