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SPICING IT UP

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, Chairman, and Vice Chairman of Allied Blenders, makers of Officer’s Choice whisky, speaks to Indiaretailing about trends and challenges in the spices category and his plans to enhance Surji Agro’s flagship brand Shelly’s distribution through modern trade

Share some background on consumption trends for your spice products — key trends and growth patterns.

Well, at present, we produce and market four different generic spices: red chilli, coriander, turmeric and cumin as well as six diff erent mixed pickles for cooking popular Bengali fare.

Besides these, we also have two diff erent blended spices.

Our products have been very well received by the consumers and they have been very strongly supported by the trade. Th e uniqueness of our mixed spices and the purity of our generic spices backed up by attractive packaging has, in our opinion, spurred the growth. Though our sales have grown at a flattering rate of over 500% over last year, we are not getting carried away by such numbers. We started off with a low base and, secondly, considering the market size, our sales need to grow much more to have some share of the market.

How is the demand for spice changing beyond the traditional offerings in India?
There is an increasing shift from loose spices to packaged spices resulting in these products being sold through not only kirana stores but also through modern supermarkets. The most important development in relation to spice has been the advent of blended spices, which help in the preparation of popular dishes conveniently and fast.

What percentage of the Indian spice market is branded, and how large is the opportunity for branding?

As per a study available with us, 17% of the total spice market is reported to be branded, which is increaing by a 10% mostly on account of conversion from the unorganised segment to branded segment on an yearly basis. Th e size of the market and the shift towards branded products is extremely encouraging for a company like ours since we only deal with branded spices. Our commitment to ensuring quality and pure products has been beneficial for our products being accepted by the consumers and trade. Consequently, we have been experiencing significant growth in our sales, which is much higher than the prevailing market rate.

Adulteration is a major concern for consumers in the spices category. How do you tackle the quality control issue?
It is true that the quality and authenticity of the ingredients have been an issue with the consumers. We feel that there is still a huge need for creating further awareness among the consumers about the quality and purity of these ingredients. Th ere is a need to educate consumers about first being sure of the purity of the products and not be tempted only by the price advantage.

We strongly support all the moves to educate consumers and to ensure strict compliance with quality guidelines for all products. We have, in our production centre, already taken various steps to ensure quality and authenticity and we strictly adhere to them through our quality control department.

What is your view on demand shifting from traditional sell-by-volume markets to  branded products and private label options?

We welcome the trend of buying branded products over buying spices by weight from the traditional market primarily because it ensures purity of the products and thereby avoids health hazards.

How do you compare the growth trends for your products in urban areas vis-a-vis rural catchments?
We have been marketing our products primarily in eastern India and that too so far only in Bengal, Bihar and Odisha. In our marketing, we have covered both rural and urban areas and have enjoyed the same experiences from both segments.

Sampling of spices remains a challenge for manufacturers. How do you overcome this difficulty?
In our marketing plan, we spend a lot of effort in generating trial through sampling. We use various opportunities including special events where consumers get to test our products.

Tell us about the importance of packaging in the spices category. What have been the latest innovations on this front?

Packaging is extremely important in relation to spices and there has been a tremendous amount of innovation and development on this front, especially in view of the increasing marketing of spices through modern trade and up-market retail outlets. Innovative packaging creates a feel-good visual contact between the consumer and the product, which is an essential step for generating trial for the product.

What is the typical profit margin for producers of spice products?

Well, the profit margin in the spices category varies from item to item. But on average, a well-packaged pure spice generates anything between 40-50% of the gross contribution.

Going forward, there will be an increasing demand for organic seasonings and spices. How is your company geared for this shift?

While we accept that there will be an increasing demand for organic spices, it will continue to remain, in our opinion, a very small percentage of the total spices market. We have not yet ventured into organic spices but have been minutely following the developments so far.

Growth of the spices market in India is also linked to the setting up of quality evaluation laboratories to ensure the quality of the final product. Do you think that we have made sufficient headway in this direction?

We totally agree that the growth of the spices market in India is linked to quality evaluation by laboratories. In our factory, we have a very well-equipped laboratory besides R&D facilities to ensure that all our spices are processed in strict compliance with the specifications.

What are the challenges and opportunities facing the spices category in India?
According to me, the biggest challenge for the Indian spice industry is from the entities who for increasing their margin, compromise with the purity of products. We feel that there should be strict monitoring to stop and punish such entities.

The spice market has grown from 2009 to 2014 by 9% and is projected to grow by 17% between now till 2019- 2020. The total market size of the pice industry as of today is Rs. 54,958,000 crore. As per our information, by 2019- 20, national sales of spices will be around Rs. 140,000 crore. The demand in the domestic market as well as the export potential of spices provides tremendous opportunity for quality products like ours and we are quite optimistic about the industry and its growth prospects.