A review of the spices & condiments industry in India

Branding, growth, exports, and consolidation

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India is not only the biggest spice cultivator but is also said to be the largest exporter. Though the export of Indian spices has an illustrious centuries-old history, the premium branding phenomenon is relatively recent with several brands tracing their history to the partition era. Photo Tamil Shutter Dreams on Unsplash

The Indian spice industry has grown by leaps and bounds in the last two pandemic years as home chefs have come up in every nook and cranny thanks to the work-from-home model made popular by the Covid-19 crisis. These amateur cooks demand contaminant-free premium spice quality that can add a subtle gustatory perception to their culinary creations. 

The pandemic has accelerated the pace for the switch-over from buying separate and whole spices to branded retail packs of cleaned, ground and mixed spices by Indian households in tier 2 and tier 3 towns and cities as well. Coronavirus contamination also discouraged in-person shopping. The immunity-boosting power of Indian spices such as turmeric, ginger, cumin, chili, and black pepper added to the upsurge in the spice curve following the Covid-19 outbreak.

The last few decades have seen a conspicuous rise in the working demographic across all sections of the Indian population. As DINK (double-income no-kids) households steadily rise across the urban landscape and even retired seniors explore the internet and exotic cuisines, the pandemic became an opportune time for learning and sharing recipes and ingredients. Even home gardens and verandahs were planted with seeds of habanero chilies. 

Millennials have steadily shifted to picking up ingeniously crafted spice pouches and sprinklers off the rack. They are slowly displacing generations who painstakingly spent hours sweating it out on the sil batta (the grinding stone) or flexing their arm muscles on the hamam dasta (the humble mortar and pestle) that occupied pride of place in traditional Indian pantries, to produce a handful of unadulterated wholesome goodness for their rasoi.

The Indian condiment industry is currently pegged at Rs 80,000 crore (approximately US$ 10.5 billion), according to recent industry estimates with spice exports reported between US$ 2 and 3 billion. The branded spice segment makes for a huge chunk of this masala dani (spice box) at Rs 30,000 crore (approximately US$ 4 billion) with an estimated annual growth rate between 10 to 15%. According to market insiders, the branded condiments and seasonings segment is set to capture more than half of the market share in the next few years, owing to its current astronomical rate of growth.

India is not only the biggest spice cultivator but is also said to be the largest exporter. Though the export of Indian spices has an illustrious centuries-old history, the premium branding phenomenon is relatively recent with several brands tracing their history to the partition era. 

India is a producer of a staggering 75 out of a total of 109 spices and condiments listed by the International Organization for Standardization. However, the country is an amalgamation of several diverse regions, each with its set of cultural and topographical quirks that make it arduous to incorporate a one-size-fits-all approach, and hence extremely difficult for brands to capture the taste buds of its 137-crore (1.37 billion) population. 

The backwaters beyond the tier 2 and tier 3 cities pose a grueling challenge to niche brands such as Orika and Orco. Local brands like the Podi Company which cater to the cooking aesthetics and culinary preferences of specific zones have mushroomed lately and are doing well.

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The Indian spice market experiences recurrent spells of consolidation with multiple mergers and acquisitions in the past. Recently, there were numerous reports of Hindustan Unilever (HUL) taking over Mahashian Di Hatti (MDH) in the leading financial dailies that have so far turned out to be rumors generated by the gossip mills. Our team got a chance to interact with the MDH team at their manufacturing plants in Delhi and Gurgaon. Last month, we received news of Vasant Masala commissioning an ultra-modern manufacturing plant in Dehgam in Gujarat.

The higher margins in the modern spice trade have attracted the attention of international firms just as they did of seafaring traders centuries ago. Last year, Norwegian food major Orkla acquired a majority stake of 68% in Kerala-based Eastern Condiments for Rs 2,000 crore (approximately US$ 262 million). Eastern is further to be merged with MTR Foods, which has been with Orkla since 2007. 

In July of the pandemic year, ITC acquired Kolkata-based Indian spice enterprise Sunrise Foods for a valuation of Rs 2,150 crore (approximately US$ 282 million). Indore-based spice brand Pushp has also attracted high-value investments from financial firms like A91 Partners during the pandemic. Both Eastern Condiments and Pushp are now looking at expansion to neighboring territories and conquering the Indian masala dan in the long run!

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