Online groceries vie for bigger share in organic food market

PUNE: With more and more people preferring to consume chemical- and fertiliser-free produce, India has seen the launch of at least half a dozen online retail ventures that sell organic products in the past couple of years.


“The number of people looking at organic goods — be it food, haircare, home care or clothing — has increased significantly in the past four years,” said Anand Agarwal, chief executive of Natural Mantra, a Mumbai-based online grocery portal where over half the orders placed are for organic foods.

Agarwal, 42, who earlier worked with software services firms Infosys and Accenture, turned to the organic sector six months ago when he bought a partial stake in the Mumbai-based startup that was founded in 2011.

Agarwal said that sales were rising 40% every month. He expects the company, backed by early-stage investor Freemont Partners, to earn a profit in two years and touch revenue of Rs 50 crore by 2016.

Grocery portals, including Farm2Kitchen, MyGreenKart, GreenNGood, Down2Earth and GrocBay, are vying for a share in the organic food market that industry body Assocham estimates will grow to Rs 6,000 crore by 2015.

The demand for organic food is also rising in smaller cities and towns. Morarka Rural Research Foundation surveyed 1,000 consumers in 10 cities, including Nagpur, Allahabad and Gorakhpur, and found that about 30% preferred organic products. They were also willing to pay up to 20% more for it.

“This (the demand for organic products) is driven by higher awareness and health concerns,” said Pragya Singh, associate director of retail at Technopak, a consultancy.

“Online groceries are helping to expand customer base and target young couples or those with young children,” said Mukesh Gupta, director-operations at Morarka Organic Foods. At the Jaipurbased company, about a tenth of the total Rs 70 crore sales last year were through online orders. Gupta expects this to rise significantly as the company targets revenue of Rs 150 crore by 2014.

Entrepreneurs said while demand is growing they are facing a challenge with supply. Gupta, 58, said the company sources produce from an organic farmers network formed through its corporate social arm, Morarka Foundation.

“We have increased efforts in this direction by tying up with organic brands and farms,” said Hari Menon, 51, chief executive and cofounder of BigBasket-.com, an online grocery portal where a little over a quarter of current sales of Rs 20 crore comes from organic produce.

But by 2015, the company expects organic food to contribute Rs 35 crore in sales, according to Menon, an alumnus of Birla Institute of Technology and Science in Pilani.

Big Basket, which has raised $10 million (about Rs 63 crore) from Ascent Capital, said it will use future rounds of capital to reach customers in smaller cities.

With Inputs From Biswarup Gooptu.