2020 has delivered a VUCA disruption like never before. Since the pandemic hit, the entire retail industry has been evolving by the day. Just like the shifts in societal and economic order, the COVID-19 pandemic has brought about significant changes in consumer behavior. Consumers across the world have changed in massive proportions and are continually developing newer habits, compelling brands and retailers to continually bank on innovation and new age technology to explore newer business models.
While it is true that the food and grocery industry was spared of the horrors that non-essential retailers were faced with during the crisis, this industry too was influenced by the pandemic and the subsequent lockdown. Even though things have stabilized now, the fear of the contagion continues and businesses across the FMCG segment are compelled to make major overhauls both in the way they manufacture and retail their products.
Just like other FMCG segments, the Indian spice industry was no exception to this reality, and has witnessed significant disruption over the past few months. As a result, businesses operating in this segment have been compelled to streamlined their brand portfolio, and continually innovate in all aspects of their operations – right from product development and in-store services to marketing strategies, so as to appeal to consumers, who have now become more discerning than ever before.
India is synonymous with spices and boasts of a long history of trading with the ancient civilisations of Rome and China. India is the world’s largest producer, consumer and exporter of spices; the country produces about 75 of the 109 varieties listed by the International Organization for Standardization (ISO) and accounts for half of the global trading in spices.
According to the India Brand Equity Foundation, spices worth US$ 3.65 billion were exported in FY20, witnessing a growth of 10% Y-O-Y. During FY19, a total of 1.10 million tonnes of spices and spice products valued US$ 2.80 billion was exported from the country as against 1.02 million tonnes valued US$ 2.78 billion in FY18, registering an increase of 7% in volume.
After the outbreak of the coronavirus pandemic, there was a huge uptick in the use of Indian spices across the world. According to ASSOCHAM dipstick, export of spices were up by 34 percent in rupee terms and 23 percent in dollar terms in June 2020. The study further reveals, “Spices exports from India went up (by 23 percent) to USD 359 million in June, 2020 from USD 292 million in the same month last year, contrary to a decline of 12.41 percent in the country’s overall merchandise export basket during this period. In domestic currency, thanks to forex advantage, spices exporters raked in even better realisations which rose (up 34 percent) to Rs. 2,721 crore in June, 2020 from Rs. 2,030 crore in the comparative month a year ago, as per the official data.”
Just as opportunities are exploding in this segment, the challenges are following suit too. Manufacturers and retailers in this segment were posed with a slew of challenges like raw material & labour shortages, infrastructure & support structure disruptions, marketing issues, etc. Small scale manufacturers and processors have been affected the most.
Moreover, post the COVID-19 pandemic, manufactures and retailers as well were forced to abide by new rules of operations, just like players from other retail segments. Leveraging technology and introducing procedural changes have now become paramount to adjusting operations to these new rules.
Among other concerns, the importance of food safety has been pronounced post the pandemic and players across this segment were compelled to implement rigorous measures and guidelines to ensure this. As in other industries, manufacturers from the spice industry are now increasingly relying on automated processes both as a measure to enhance food safety and to address labour issues.
“To keep up with the modern demand for safety and hygiene, we have implemented a 100 percent contact-less packaging system in our spice plant at Kanpur. A new mezzanine floor has been designed with ultra modern packaging machines for smooth, contact-less operations. A new conveying system, labeling, weighing, bagging and scanning system from Armstrong have also been installed. We also have installed computerised tracking system for finished goods,” states Vivek Pathak, CEO, Rakesh Group.
Consumers around the world are trying out new products and the onus lies on brands and retailers to understand the specific requirements of their TG and serve them accordingly. CPG companies and retailers that accommodate changing consumer behaviors as such will probably emerge from the crisis stronger, putting pressure on competitors to keep pace. Today, leading spice manufacturers too have been working their way to come with innovative products that find relevance in the new normal.
“To cater to this growing demand for immunity based products, we launched a range of Healthy Muesli. We are the first Indian company to launch muesli with turmeric, ginger and honey. Apart from this, we have also launched a range of muesli with no added sugar,” says Dheeraj Jain, Director, Kwality Foods.
Brands and retailers are also compelled to ramp up their marketing efforts and leverage on new age digital platforms to connect to the consumer. “We are banking heavily on social media platforms like Facebook, Instagram, Twitter and LinkedIn to communicate with our consumer base. In addition, we are also tying up with various food influencers and are educating consumers through recipe videos in our YouTube channel,” says Raman Khanna, CEO, UVR Natural Foods Pvt Ltd.
To sum it, just like other industries across the world, the spice industry in India is compelled to make rigorous innovations in their existing template of doing business to adopt to the guidelines of the new normal. Increasing reliance on technology and creative innovations across manufacturing, product conceptualizing, marketing, and optimized business management protocols have become the new norm of the industry.