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DOI: 10.1177/097215090700800207 2007; 8; 283 Global Business Review

Neena Sondhi and Vina Vani An Empirical Analysis of the Organic Retail Market in the NCR

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Introduction

Despite the huge spending on food, foodretailing in India is largely unorganized.Only in the last few years, has organized foodretailing emerged as an alternative channelfor food purchase. Traditionally, Indianconsumer used to spend 90 per cent of hisfood spending on home food which hasfallen to 80 per cent. This is largely due tochanges in the attitude and lifestyle of the

Neena Sondhi is Professor in the Marketing area at the International Management Institute, New Delhi.Vina Vani is Professor in the Operations area at the FORE School of Management, New Delhi.

An Empirical Analysis of the Organic Retail Market in the NCR

Neena Sondhi

Vina Vani

A major change observed worldwide, is the growing concern over health risk associated with consumptionof food with residues of agro-chemicals used in production. This heightened awareness about health and en-vironmental issues has generated interest in alternative farming techniques—one of which is organic farming.

However, a major conversion of conventional agriculture to organic agriculture will depend on severalreasons-first and foremost being whether the consumers are interested in organic foods, and whether theyare willing to pay price premiums for these goods. Second, foreseeing the customer demand is the retailerwilling to venture into organic retailing and provide shelf space. A very interesting and a highly lucrativepotential market exists in the country itself and there is an urgent need to explore the current organicmarket and assess its growth potential. The present study focuses on this as well as assessing the potentialof marketing organically grown agricultural produce and products in the domestic market. The organicawareness and market is predominantly in the urban metros, Delhi being one of them thus the research isconfined to the NCR region.

Indian consumer, where eating out is becom-ing more prevalent. This phenomenon is inline with the Economic theory (Ernst Engel’sLaw 1857), which also states that as incomerises a smaller proportion is devoted to foodand other basic products.

However, contrarily, the consumer doesnot mind paying a premium now for innov-ative, as well as low calorie and fortified foodproducts, which provide benefits of bothfood and health products. This is related to

GLOBAL BUSINESS REVIEW, 8:2 (2007): 283–302

SAGE Publications Los Angeles/London/New Delhi/Singapore

DOI: 10.1177/097215090700800207



284 � Neena Sondhi and Vina Vani

Global Business Review, 8:2 (2007): 283–302

another attitudinal change observed in recenttimes, which are the growing health concernsof the consumers at large. ‘Nutrition density-based intake is the key’ says Delhi basedhealth counsellor Ishi Khosla. Health activistVijaya Venkat further emphasizes ‘A nation’ssecurity is not food security, it is healthsecurity’.

This heightened awareness about healthhazards has also instigated certain environ-mental concerns. Research studies havewidely indicated evidence of deteriorationof soil and water pollution due to chemicalinputs in agriculture, which in turn areresponsible for alarming levels of agro-chemical residues in food, milk and poultryproducts. The 1980s was an era that saw theemergence of environmental issues. Theywere no longer the preserve of the socialactivist or the rigid revolutionist, environ-mentalism ‘has become a competitive issuein the market place’. The growing concernfor health and environmental issues in Indiaand other countries, has generated an interestin alternative farming methods—one ofwhich is organic farming.

Many consumers, worldwide, exhibit pre-ferences for environmental amenities, eitherthrough polls and surveys or indirectly byparticipating in outdoor activities, environ-mental organizations or causes undertakingconservation, recycling and other stalwartactivities. Consumption of organic foodproducts is one of such active participationin a movement of Green Consumerism. De-mand for organic food as a product categoryis increasing and is expected to grow. Moreconsumers are searching for a healthieralternative; and since the singular force driv-ing the retailing revolution happens to be the

consumer, it is only a matter of time beforethe retailers wake up and grasp the niche butlucrative opportunity in the organic market.

Organic Farming

The phrase ‘organic farming’ first appearedin Lord Northbourne’s book Look to the Land,published in 1940. However, the oldest formof agriculture man discovered was organicin nature. Interestingly enough after WorldWar II, the technologies discovered duringthe war were found to be useful for agri-cultural production. The Green Revolutionround the world observed a boom in agri-culture produce following this. In fact, even10 years ago the agricultural pundits of theold school considered ‘organic farming’something of a joke. Its status was best con-veyed by an oft-repeated quote by Nixon eraAgricultural Secretary, Earl Butz: ‘When youhear the word organic think starvation’.

The Oxford English Dictionary defines‘organic’ as ‘produced without artificial fer-tilizers or pesticides’. A widely accepted de-finition of organic farming is the one providedby the United States Department of Agricul-ture (USDA), which defines it as

...a production system which avoids orlargely excludes the use of syntheticallycompounded fertilizers, pesticides, growthregulators and livestock feed additives. Tothe maximum extent feasible, organicfarming systems rely on green manures,off-farm organic wastes and aspects of bio-logical pest control to maintain soil pro-ductivity and to supply plant nutrientsand control insects, weeds and other pests.



An Empirical Analysis of the Organic Retail Market in the NCR � 285


Research indicate organic is better qualityfood. The pesticide residue in conventionalfood is almost three times the amount foundin organic food. Baker et al. (2002) found thaton an average conventional food is more thanfive times likely to have chemical residue thanorganic samples. Pesticides toxicity has beenfound to have detrimental effects on infants,pregnant women and general public (Guilleteet al. 1998; Mae et al. 2002; National ResearchCouncil 1993).

The most compelling new study to appearon pesticides dietary risks was published on-line in the highly respected journal, Environ-mental Health Perspectives (2002). The teamfound that two to five year olds consumingmostly organic foods had 8.5 times loweraverage level of organophosphate insecticidemetabolites in their urine. Studies like theseare of serious concern and though furtherproof is required organic food seems to bedefinitely a healthier alternative.

The international market for organic foodproducts has shown dynamic growth in therecent years with an increased demandbetween 20 to 30 per cent in some countries.Currently the worldwide sales of organic

food products are estimated to be aboutUS $17.5 billion. The ITC overview of worldmarkets for organic food and beverages(2002) predicts a world average growth rateof 20–25 per cent. Major factors that promotegrowth in organic market include consumerawareness of health environmental issuesand food scandals (Yussefi and Willer 2002).

Organic Food Market—National

Estimating area under organic agriculture inIndia is a difficult task as there is no centralagency that collects and compiles this infor-mation. Different agencies have estimated thearea under organic agriculture differently. Forinstance, the study undertaken by FIBL andORG-MARG (Garibay and Jyoti 2003) esti-mate the area under organic agriculture to be2,775 hectares (0.0015 per cent of gross culti-vated area in India). The estimates by APEDAfor the year 2003–04 are presented inTable 1.

The domestic market for organic productsis not as well developed as the export marketand it is difficult to estimate the magnitudeand trends in this growing market. In general,

Table 1

Total Production—Organic Food Products (2003–04)

S.No. Items Data

1. Total production 1,15,238 tons + 16,57,000 numbers of seedlings and cuttings+ 2,64,000 litres effective micro organisms

2. Total Quantity exported 6,472 tons3. Total export value Rs. 6,406 lakhs4. Total area under certified organic cultivation 25,01,825 Ha (this includes wild herbs from forest area of

MP and UP of 24,32,500 Ha)5. Number of items exported 357. Number of farmers involved 12,728

Source: (APEDA-New Delhi).





the major market for organic products remainthe large metros—Delhi, Mumbai, Chennai,Bangalore, Hyderabad and Kolkata. Accord-ing to the ORG-MARG (2002) survey, the do-mestic sales accounts for a meagre 7.5 percent of the total organic production. Majorreasons cited for this are lack of awareness,lack of availability and convenience as wellas substantial price differentials. The majorselling products in the Indian market are: tea,coffee, spices, rice, wheat, pulses, fruits andvegetables. Wholesalers/traders, supermar-kets, producers and NGOs are the distribu-tion channels for the end consumer.

Recognizing the future growth prospectsof the product category a number of organicmanufacturers have already establishedtheir marketing strategy in place and haveregistered their brands, some of which areavailable in select retail outlets. This relativelyinconspicuous but fast growing movementmakes organic food retailing an intriguingand important area of exploration. This wasthe imperative behind the present study.

Research Objectives and Methodology

The basic issues that the research focused onwere:

• An insight into existing market oper-ations of some key organic players (theresearch has been confined to onlyDelhi and the NCR region).

• To understand the existing organicretail operations through a representa-tive retailer analysis. Their insightswould also be useful in identifying cur-rent marketing operations as well asfuture growth opportunities.

• To assess the future potentials of or-ganic retailing, the marketing probabil-ity of some potential retailers wasassessed. This was considered essentialbecause if the organic producer/manu-facturer is to look at the domestic mar-ket, the initiative cannot take off withoutconsiderable support by the retailerwho provides him with the show win-dow or the shelf space.

Data collection was triangulated throughthe use of secondary data, unstructuredinterviews and structured questionnaire sur-vey. Secondary data sources included vari-ous government publications, journals andcompany brochures. The purpose of the un-structured interviews (retailers, suppliers,wholesalers) was to develop an insight intoorganic retailing, understand the markettrends—current and future, and use the inputsto prepare a structured format for capturinginformation from the key players of the or-ganic arena—the retailer(existing and poten-tial). The details of the designed question-naires are given below:

Retailer’s (existing) questionnaire: Thequestionnaire consisted of 20 questions.The questionnaire began with identificationdetails of the respondent. Questions 2–13relate to marketing of organic products–procurement, stocking, supplier appraisal tosales estimates. Questions 14–16 were relatedto consumer profile. Questions 17–19 were re-lated to market growth estimates and strat-egic alternatives. Questions 9 was on a 5 pointLikert scale. Questions 1, 4, 7, 8, 10, 11, 14, 16,17, 18 and 20 were multiple-choice questions.Question 5 and 13 were tabled responses and6 and 19 were open-ended questions.





Retailer’s (potential) questionnaire: Thequestionnaire consisted of 10 questions. Thequestionnaire began with identificationdetails of the respondent which included–Question 1 related to location, Questions 2–5related to floor area in square feet, numberof customers (transactions positive) in a day,store personnel and what does he stock.Question 6 on a 5-point Likert scale rangingfrom strongly agree to strongly disagree.There were five questions under this relatedto the retailers attitude, his perception aboutthe shop’s typical customer and his foresightabout tomorrow’s Indian consumer. Ques-tion 7 had multiple reasons (10 statementsas well as any other was an option) for notstocking. Question 8 was related to his likeli-hood about selling organic food products.Questions 9–10 were optional, related to hisname and contact number. The survey wasconducted on 17 retailers who stock organicproducts and one hundred and fifty potentialretailers.

The Organic Market—Delhi and NCR

The organic market in the NCR comprises ofboth organized sector which is largely com-posed of the certified branded players, andthe unorganized sector. Thus it has thecertified players who might operate throughthe traditional standardized distributionchannels or others who might solely be re-lying on fairs and meets, on the other handis the non-certified unbranded players whooperate more on faith. The various productcategories selling in the Delhi market are:cereal, rice, pulses, snack, tea, preserves andpickles, herbs, fruits and vegetables. Thougha number of brands exist countrywide and

some regional brands also coexist, the studyis limited to the brands operating in the NCR.

The Organic Market Players

The organic market currently is not well-structured. There are the government andcooperative bodies like KVIC (Khadi andVillage Industries Commission) and TRIFED(The Tribal Co-operative Marketing Devel-opment Federation of India Ltd.) which havemade an effort to provide a platform for or-ganic pulses, spices, tea and so on. There areself- proclaimed organic market players like‘Dubden’. ‘Dubden’ is located in the heartof South Delhi–Shahpur Jat. It was started15 years ago by Jayshree and Ganesh EeshwarDubden. The store stocks all kinds of organicand ‘healthier ’ food options. To ensuresteady supply, they not only keep their own‘Dubden’ brand, but also stock ‘Navdanya’,‘Grewals’, ‘Healthfields’ and natural un-branded products of ‘Aarohi’, ‘Bhuira’ and‘Kumaon’. ‘Whole Foods’ operates on linessimilar to Dubden. Started by Ishi Khosla, aformer senior nutritionist at the Escort HeartInstitute, she launched ‘Whole Foods’ tomake healthier alternatives available to theconsumer. Brahm Arpan Organic Ltd. is anorganization located in West Delhi (KarolBagh) that sells organic products certified byECOCERT. They claim that the product theysell is not only organic but it is affordabletoo. The products are priced at least 10–20 percent below the price level of other brands.Branded as ‘Healthfields’, they write the ad-vantages of adopting an organic product onevery packet of their organic product to cre-ate awareness among the ill-informed po-tential customers. The organization makes





the products available to the customerthrough a chain of dealers in order to caterto the organic demand of Delhi consumers.A strong proponent and player in the or-ganic market is ‘Navdanya’, founded byDr Vandana Shiva in 1987, and since then ithas been actively involved in saving seeds,promoting chemical-free organic agriculture,creating awareness on the hazards of geneticengineering, defending people’s knowledgefrom bio piracy, and defending people’s foodrights and food sovereignty in the face ofglobalization. The NGO is into selling every-thing from fruits and vegetables to cerealsand breads and buns and also operate a ‘slowcafé’ where they sell all food offerings madewith organic produce. They have a loyaltyprogramme running with over 400 membersand a number of outlets, the most visiblebeing at Dilli Haat.

Last but not the least is the most organ-ized of the marketers–Fabindia Organics.Fabindia was established in 1960, subse-quently extending their partnership to thefarmers in rural areas, Fabindia launched its

organic food products range in 2004. Fabindiahas a whole range of certified organic prod-ucts as well as herbal and Ayurvedic formu-lations. The price range of the products is thehighest amongst all the organic product of-ferings which accounts for its relativelysmaller share of the organic market.

The organic market has a mixed bag ofoffering, some certified and authenticatedofferings like Healthfields while othersrelying more on trust. The price is double tothree times the non-organic offering. Thesupply is extremely organized as at Fabindiaand sporadic and irregular at the NGOs’ end.The market seems to be surviving more onbuzz and word of mouth rather than anyactive and aggressive effort by any of theplayers.

Market Structure—Category-wise Sales

On the basis of the analysis done on retailersand experts, the following market structureemerged (Figure 1). In terms of the category-wise sales, pulses emerged to be the maxi-mum selling item followed by spices and

Figure 1

Sale for Product Categories





then cereals. Least sales were found for pre-serves and vegetables and fruits. The majorreasons cited for this were problems of avail-ability and accessibility. Fruits and veget-ables, whether they were from Navdanya,Dubden or Health farm (a French farmlocated 60 km from Delhi) were available tothe customer only on advance notificationand bookings, and that too once a week. Thusthe customers were forced to look at non-organic alternatives even when they had apreference for organic produce.

Market Structure—Brand-wise Sales

The maximum selling brand was Navdanyafollowed by Grewals, Dubden and Wholefood (Figure 2). There are a few brands likeFabindia-organics, Chetna, Herbal planet,Conscious foods, CIS Dehradun which to-gether contribute to about 2.8 per cent of theorganic sales. Fabindia is the most expensiveamongst the organic offerings. Another rea-son for the low presence could also be because

of sampling errors of lack of representationof Fabindia customers. The other brands col-lectively keep a low profile in terms of mar-keting of their products.

The Organic Channel: Existing Retailers

With growing awareness about the benefitsof organic food products, the demand isgrowing and thus retailers in grocery busi-ness have started stocking the product;though they remain a very small fraction ofthe total grocery business. All the marketplayers discussed earlier have limited one ortwo outlets of their own, except for Navdanyaand Fabindia, and for the rest they use localretailers for selling their products. Forexample, Dubden sells many other brandssuch as Conscious, Grewals and Navadanyaincluding their own. Whole Food uses life-style stores like Life Spring, Food Plus andother grocery stores. Complete informationof these stores including their existence in the

Figure 2

Brand Wise Sale





market and the category and brand of or-ganic food product sold is presented in atabular in Appendix III.

As can be observed, except Navdanya andDivine Organic, all are relatively new in theorganic business. Most of the organic outletswere in the more upscale South Delhi mar-kets. Another significant fact that emerges isthat processed organic products like snacks,beverages and spices are also becomingpopular alongside pulses, rice and varietiesof cereals–especially atta.

Target Segment

According to retailers, more than 10 per centof customers coming for general grocerypurchase pick up organic items where as onlyfour retailers have 50 per cent of customerswho do organic purchase regularly. The re-tailers perception about people who buyorganic food product were that the organiccustomers are more educated, rich and healthconscious, irrespective of age or gender(Table 2). Thus, the general perception wasthat it is a more upmarket product.

Product Portfolio

The data from the above table is summarizedand presented in Figure 3. As can be seenfrom the retail details above majority of thestores, are selling groceries and snacks andherbs. As stated earlier it is not that the or-ganic consumer is unwilling to buy freshfruits and vegetables. The problem is avail-ability of the product, a typical case of a mis-match between demand and supply.

Product Certification

During the course of personal conversationwith the retailers it became apparent thatmany times they trust the suppliers based ontheir relationship and personal visits andthus they sell uncertified organic food prod-ucts also. Thus all the products sold in themarket are not certified and many times it isdifficult to convince quality of products toconsumers. As can be observed (Appendix I)many brands of organic products sold inNCR are not certified.

Table 2

Customer Profile for Organic Food Purchase

Any Consumers Regular O C Identification

Percentage No. of Stores Percentage No. of Stores Types of Customers No. of Stores

0–1 2 0–5 7 Men 150–5 1 6–25 4 Women 166 to 10 1 26–50 2 Young 7>10 13 >50 4 Old 4

Rich 16 Health Conscious 15 Doctors 5 Dieticians 3





Pricing

A major source of conflict between theproducer-retailer-consumer is the fact that inorder to sustain conversion to organic farm-ing (the produce per hectare would be lessas compared to non-organic farming), andjustify stocking and selling the product, it hasto be premium pricing that the organic pro-ducers and marketers have to opt for. To givean indication of the price range amongst themajor brands, a comparison was carried outfor cereals and spices. Table 3 gives the com-parative data. As can be seen in Table 3,Grewals and Divine are on the lower end andFabindia is on the higher end. This is espe-cially observed in the spices category. Thereason for more expensive offerings atFabindia is also because of the brand imageof the range of products under the umbrellabrand, all of which enjoy premium pricing.

Another reason could perhaps be a likely ex-pansion in the international market wherethe prices would then need to be comparable.

Place: Distribution Strategies

Considering the nascent nature of the prod-uct category as well as premium pricingstrategies of organic players, it became im-perative to understand the stocking anddemand pattern of the product options in thecategory under consideration. The retailerswere asked about the products they stockand the demand trends. As they were notable to reveal exact figures, their perceptionsabout demand was recorded.

Maximum stocked products were wheatatta and Basmati Dehradun. Demand forthese items was also high. Honey, thoughstocked by four stores, revealed a high de-mand. Tea also was stocked by a numberof stores and revealed a high to medium

Figure 3

Product Portfolio





demand. Another popular product wasunpolished rice. Similarly moong dal, kabulichana, moong sabut, masoor dal werepopular categories. However demand forthese items varied from high to medium inmost of the cases. Stocking pattern alsoreflected partly the items which are more indemand. The less stocked and lower demandproducts were squashes, ragi and jhangaraatta and oils.

Satisfaction with Channel Members

The efficacy of distribution cannot be estab-lished unless the retailers’ satisfaction levelis explicitly assessed. In order to attempt this,

as stated earlier, a set of 11 items broadlycovering attitude towards organic selling,product satisfaction, price and commissionsand supplier satisfaction were analysed. Themean values obtained for the eleven vari-ables are presented in Table 4.

In the area of product satisfaction, the re-tailer is reasonably satisfied with the productquality and freshness of the product (meanvalue = 2.118 and 2.647). Cleanliness andpackaging however are clearly areas of con-cern (mean value = 4.235 and 3.824) and theretailer is especially concerned about these,as the products have a lower than averageshelf life. In terms of reliability of quantitypacked (mean = 2.000), the retailer clearly

Table 3

Price List of Products of Various Brands (Rs/Kg)

Navadanya Dubden Whole Food Grewal Fab India Divine

Pulses 45–70 � � � � �

71–8485–120 �

Rice & Flour 20–40 �

41–60 � �

61–80 �

81–90 � �

Spices 50–100 �

101–200 � � �

200–600 �

Table 4

Key Determiners of Organic Distribution

SupplierWorthy Product Quantity Meets Supplier SupplierCause Quality Cleanliness Freshness Packaging Correct Demand Trustworhty Price Commission

1.411 2.118 4.235 2.647 3.824 2.000 3.177 2.235 2.941 3.765





demonstrates more trust and satisfaction. Interms of supplier trustworthiness, the retailerexpressed his satisfaction, however onefficiency in meeting demand the retailer wasnon committal (mean value = 3.177). Anotherkey area—sales commissions and incentivesemerged as areas of dissatisfaction (meanvalue = 3.765). Considering the fact that thereis low level of awareness about organic prod-ucts, the retailers push takes on considerablesignificance and is an important parameterfor increasing the expanse of the organicmarket.

Advertising and Sales Promotions

The retailers were queried on methods forpromotion of organic food products. Major-ity of retailers think mega ads are necessaryfor promoting organic consumption. Theyalso believe that the consumer needs to be

demonstrated how the product is beneficialso that they can understand the productbenefits. Quite a few retailers were of theopinion that better customer service (this hasto be at servicing both the retailer as well asthe end user) is definitely required, as a lotof the retailers complained of an inadequateand erratic supply. However, there were afew who felt that there was no need for pro-motion and that word of mouth or buzz mar-keting should be the strategy for the nicheproduct category. A few however wantedoutside support from the government as wellas NGOs, especially in terms of procurementand certification (Figure 4).

Perceived Demand

More than 50 per cent of the retailers takean optimistic perspective and perceive

Figure 4

Suggestions for Increasing Organic Awareness





the demand to be between 10–40 per cent.23.5 per cent perceive that it will grow by50 per cent and 12.5 per cent believe that itwill remain the same. This clearly indicatesa growing faith in the organic demand andopportunity (Figure 5).

Organic Channel: Potential Retailers

Consuming organic products not only meansmanaging health of individuals and societybut also managing soil and environment ingeneral. Thus, even if they are premium prod-ucts today and there are a limited number oforganic consumers, with growing health con-cerns and awareness about environmentalhazards and depletion of natural resources,it is only a matter of time before people startlooking for healthier and chemical free alter-natives; organic food products being one ofthem. As stated earlier, with the market ex-pected to grow between 10–50 per cent in the

coming years, more and more food retailerswill be eyeing this lucrative and fast growingmarket. Considering this possibility, somekey upscale markets were identified in Delhiand the NCR; and to estimate potential or-ganic retailing, a representative survey wasconducted on 150 retailers who were identi-fied as probable organic retailers on the basisof their clientele and location, as well as na-ture of operations (the sample details in termsof location, floor area, store personnel andnumber of customers is given in Appendix II).

The retailers were queried on their futureplans for selling organic food. The five responseoptions were clubbed into two groups—probable (maybe, probably in the near future,definitely in the near future) and non-probable (absolutely never + never). Then, atwo group discriminant analysis was con-ducted using the five statements listed inQuestion 5 as the discriminating variables.The resulting output is presented in Table 5.

Figure 5

Perceived Demand





Table 5

Discriminant Analysis for the Potential Group of Retailers (N = 150)Test of the Function

Function Eigen Value Canonical Correlation Wilks’ Lambda Chi-square df Sig.

1 5.981 0.926 0.143 282.736 5 .000

Table 6

Discriminant analysis for the potential group of retailers (N = 150)Structure Matrix and Test of Equality of Means

Structure Matrix Wilks’ Lambda F df Sig.

todays customer health conscious 0.309 .637 84.521 149 .000my customer does not bother price 0.723 .242 462.994 149 .000my customer looks for premium quality 0.850 .188 639.751 149 .000like to experiment with n-products 0.650 .284 373.543 149 .000indian customer is ready to experiment 0.493 .408 215.077 149 .000

As can be observed, by considering theWilk’s lambda, Eigen value and the Chi-square, the discrimination function wasrobust and stable and could clearly discrim-inate the probables from the non-probables(refer group centroids Table 7). Structurematrix and F-values (Table 6) demonstratethat all the five variables selected for the studywere significant. This indicates that the twogroups had diversely different views on thestatements. Even though as the functiondemonstrates the opinion on ‘today’s cus-tomer is health conscious’, it was more or lesssimilar as the weight for this variable in thefunction is low.

[The obtained discrimination function wasas follows: D = (–) 0.4380 + (–) 0.084 healthconscious + 0.479 price + 0.597 quality + 0.517newproducts + 0.215 indian consumer]. Themost important variable as can be seen is thetypical customer of the retailer is looking forquality and for this is willing to compromise

on price. Another very important variablewas the retailers own business attitude ofwillingness to experiment with new products.

Demographic Analysis

(Probable vs Non-Probables)

As can be seen from the classification sum-mary (Table 8) almost two third of the samplewas willing to look at organic as an optionin the foreseeable future. The discriminantfunction had clearly demonstrated a dif-ference in the attitude of the retailer which

Table 7

Functions at Group Centroids

Function

Stocking grps 1

non-probables 3.961probables –1.490

Unstandardized canonical discriminant functionsevaluated at group means.





seemed to have a clear bearing on whetherhe was willing to stock organic or not. A crosstabulation analysis was run between thegroup membership and demographic vari-ables of location, floor area, store personneland number of transacting customers in aday. The results were plotted as bar chart

and are presented in Figures 6–10. The poten-tial retailers outnumbered the laggardgroup in areas like South Delhi and Gurgaon.The retailers of north, east and west alsodemonstrated a positive response to organicretailing. Surprisingly however the retailerslocated in Noida were not really open to the

Table 8

Classification Results

Predicted Group Membership

Stocking grps Non-Probables Probables Total

Original Count non-probables 36 5 41probables 18 91 109

% non-probables 87.8 12.2 100.0probables 16.5 83.5 100.0

84.67% of original grouped cases correctly classified.

Figure 6

Bar Chart





Figure 7

Bar Chart

Figure 8

Bar Chart

Figure 10

Reasons for not Stoching Organic Products

Figure 9

Bar Chart

idea and preferred to be cautious and reticent.The product seem to be currently customerdriven and is recognized predominantly asan upmarket product which could be the rea-son for the retailers in the more affluent zones





seem to want healthier and premium prod-ucts for which they might be willingly toforego price. The astute retailer recognizes thisand could be easily persuaded to considerthe organic option.

Looking at the other parameters it seemsthat a shop area of 200–500 square foot arealocated in any of the above localities with afootfall of at least 50–100 customers in a dayand having at least on an average 5–6 storepersonnel would be ideal for the organicmanufacturer/wholesaler to target.

Reasons for not Stocking Organic Food Products

To understand the reasons for the potentialretailers not stocking organic options cur-rently, a frequency analysis of the reasonsthey had marked as reasons for non stockingwere looked at (Figure 9). Lack of interest andnon-awareness as reasons were not con-sidered by any of the probable retailers (infact only 15 out of the sample of 150 werenot aware of organic). As can be seen fromthe percentage figures, the retailers knowhow to procure the product and think that itwould be a profitable venture, as it is not tooexpensive for their typical customer. How-ever they are extremely concerned about ir-regular supply and which could harm ratherthan improve their organic stocking. A majorconcern of the retailers seems to be withthe packaging and the poor shelf life of theproduct.

Implications of the findings

The research, even though conducted on amoderate scale, threw up some interesting

findings. Both secondary and primary analy-sis clearly pointed out that despite consider-able disparity in prices demand for organicfood is on an upward swing. Bernward Geierstates, ‘nobody can deny that organic tradeis ... heading towards what can be called atlast a boom’.

The current research conducted in the NCRconveyed some significant findings. Despiteenvironmental concerns and healthier op-tions, the size of organic market remains abys-mally small. Even though the product hasbeen there for more than a decade in the do-mestic retail market it has only picked uplargely in the last four or five years. Inter-estingly enough the leading organic playeris not an organized marketer but a socialactivist and NGO, Navdanya, followed byDubden and others. Fabindia , a more estab-lished brand is still a small player in the or-ganic market. The reason being that unlikeNavdanya their main product category is notfood or grocery.

However, notwithstanding the market size,a number of astute and far sighted retailershave recognized organic as a lucrative oppor-tunity; every year new entrants are joiningthe organic bandwagon. A case in point being,Fabindia, an apparel and home solutions re-tailer in Delhi has started selling organicproducts from their Indian outlets. A lot oflifestyle stores like Life Springs, Good Things,CRS (chemist stores) and Food Plus recogn-izing the future trends have created shelfspace for organic products.

This has resulted in competition amongfew leading players and thus managing or-ganic market has become important for everyone. Present marketing strategies used by the





marketers are based upon market demandand customer relations. Stocking and sellingof the item depends upon demand. Customerrelationship is build up by making themmember of the organization or registrationfor required services. Considering the size ofthe market, it is an appropriate approach formanaging the market. However, the scenariois changing very fast and the organic playerneeds to develop strategic competitivenessby providing value to the customer.

The analysis demonstrated a healthy trustof the retailer with his organic supplier. How-ever the product in terms of packaging andcleanliness has to be more professionallyhandled, especially if the brands need tocompete with international quality brands,whether in the domestic or the internationalmarket. The quality standards have to beadhered to in order to sustain competitionin the premium and niche market of organicproduce. Another area of concern is the mar-gins offered to the retailer. Dealer incentivesfor stocking and promotional materials aswell as membership options would ensurebetter shelf space for the brand.

Amongst the potential retailer group, awhopping two third of the sample was opento stocking organic in the near future. Andinterestingly enough it was not only thelocality (South Delhi and Gurgaon) but alsothe innovating attitude of the retailer whowas willing to experiment with new productsbecause he understood the significance of acustomer driven market. The customer hadfinally come of age and is looking for quality,is more health conscious and is willing tocompromise on price.

Thus, based on the secondary and primaryinformation, to promote organic purchase theorganic suppliers need to do the following:

• Aggressive marketing is required topromote the product amongst retailers.Based on the analysis of different areas,locations serving the organic or prob-able consumers the probable retailersneed to be visited frequently and offeredincentives for providing shelf space.

• More visibility with retailers, betterfollow-up and better incentive schemeslike free lifetime membership withsuppliers, invites to organic talks andprogrammes, information on the bene-fits of organic food, leaflets and bro-chures of supplier and his offering, aswell as organic information, with theretailer for any consumer who is inter-ested in knowing more about organicfood.

• As revealed by retailers and expertsboth, word of mouth is a very powerfultool in educating the consumer aboutthe product benefits. Thus the retailerhas to be an important link in the deci-sion making process, thus motivatingand enthusing him is a very crucial area.

• The demand pattern demonstrates atta,pulses and spices are the fast movingitems and also generally purchaseditems in the organic basket. Thus, thestock inventory and supply of theseitems should be foolproof, otherwisethe organic retailer and consumer bothwould be lost.

• The existing and potential retailers areequally concerned about the packaging





and shelf life of the product. Consider-ing that these are not likely to be fastmoving goods a longer shelf life wouldneed to be ensured with vacuum orother packaging option.

• Home delivery and e-transactionsshould be service options which thesupplier must adopt. The reason beingthe educated and upper class nature ofthe buyer who accepts these as essentialparts of a grocery transaction.

• Lastly study best practices across theglobe on marketing organic food prod-ucts and benchmark against them.

Once the availability is increased theawareness to purchase would definitely hap-pen. To cater to the demand the supplierwould then need to escalate the supply. Themaintenance and growth of the cycle and

volume sales would automatically bringdown the prices. The product has tremend-ous market and growth potential howeverthe extent to which it can grow is directlyproportional to the efforts that will be madeby the proponents of the organic movement.

The study though comprehensive, did notcover the total domestic market and con-sidering the diverse nature of the country, theretail scene may be different and wouldrequire different kind of marketing strategies.Thus, a more wide scale study would throwlight on the nuances of the organic marketin India. Second, the most important bene-ficiary of the movement–the consumer andhis/her perception, purchase and consump-tion of the product needs to be monitored,as only that can reveal the true gaps and areasof improvement in order for organic retailingto become a more wide spread lucrative busi-ness opportunity.

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Certification Details

Brand Agency

Dubden not anyHerbal Planet not anyTribes not anyVeda not anyDevine Organic UOCBHealthfield EcocertNavdhanya SGSGoldern Corn Amcorn IndiaFab India Organics not anyGrewal SQF2002Desi Ahar ISI

APPENDIX–I





Sample Details of Potential Retailers (N = 150)

Location Number Floor Area Sq Feet Number Number of Customers/Day Number Store Personnel Number

South Delhi 43 Upto 100 17 Upto 30 3 Upto 2 4Central Delhi 8 101–200 36 31–50 55 3–5 59North Delhi 17 201–500 63 51–75 55 6–10 53West Delhi 14 500+ 34 76–100 35 10+ 34East Delhi 17 100+ 2Gurgaon 25Noida 26

APPENDIX–III

Profile of Organic Retailers (Demographic)

Store Name Experience Brands Products

Food Plus, Noida 2 Yrs Dubden Groceries, teaHerbal Planet, Krishna Mall, Dwarka 2 months Herbal Planet Groceries, beverages, preserves, spicesTribes, Mahadev Road, ND 3 Yrs Tribes Preserves, spices & herbsFull Circle, Khan Mkt. 1 Yrs Veda Jams, honey, preservesFood Plus, Vasant Vihar 3 months Dubden Groceries, snacks, spices & herbDevine Organic, Uttam Nagar 8 Yrs Devine Organic Groceries, snacks, spices & herbBrahamarpan, Karol bagh 3 months Healthfields groceriesNavdanya, Dillihaat 6 Yrs Navdanya Groceries, snacks, beverages,and Hauzkhas preserves, spices & herbCorn World, Kamla Nagar 1 Yrs Golden Corn snacksFab India, G K 8 months Organic India Groceries, snacks, beverages, preserves, spices & herbSteak House, Jorbagh 1 Yrs Grewal Groceries, snacks, beverages, spices98.4 Gurgaon 2 Yrs Grewal Groceries, snacks, beverages, spicesFull Circle, GK-1 3 months Grewal groceriesDubden Green, Shapur Jet 2 Yrs Dubden groceries Healthfields snacks Grewal beverages Concious Food preserves HIM.Fresh Spices & herb Navdanya KVIC, C P 2 Yrs Desi Ahaar Groceries, snacks, preserves, spicesWhole food, New Friends Colony 1 Yr Grewal, navdanya, Groceries, snacks, beverages

Divine organics

APPENDIX–II



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