How Organic Foods Franchise Is A Growing Business Opportunity?
Opportunity India Desk
Feb 23, 2021 -
5 min read
After the COVID scenario, consumers today have become more concerned about fitness and health. A consumer now watches the food they eat, its quality, and where it comes from. This is where the organic food market is evolving.
The retail segment as well as the health and fitness retail is growing in India. As a result, organic food consumption is also increasing, giving scope for development in the organic food market.
The organic products market in India was an $850 million market in 2019. Its expected CAGR is 30% in 2020. The expected value of the retail market in India is $65-75 billion and the retail sector in health and organic food has an estimated value of 2.6 billion by 2025.
There are a large number of local organic food manufacturers. There is also a huge market that is looking for healthy and organic products. But, there is a lack of a platform that connects these two. The Green station is one such company that gives a platform to these producers as well as the consumers.
The Green Station is backed by a ten-year-old company, the Terragreen Organic Pvt Ltd. Terragreen works with 12000 farmers from across the nation to get organic food.
Green Station focuses on addressing the problems the customer is facing. It is placed in a sweet spot where it acts as a bridge between the healthy food market and an essential food market.
It’s a retail venture started by the Terragreen Company in the year 2019. It is a multi-brand platform and has 1,350 SKUs from 80+ brands. The products are sourced from 12 cities and it has tied up with 100 plus farmers.
Green Station has both stores and shop-in-shop formats. Its products include grocery, fruits and vegetables, dairy products, and snacks and beverages that are available both online and offline. All its products are Indian manufactured.
Within 14 months, it has achieved revenue of $180,000 which is a remarkable growth. It was started with a retail truck and then moved to small format retail outlets.
There are several challenges that this industry faces. The target market for these products is niche and scattered. It is a new sector with limited awareness amongst the target segment. It is difficult to get a range of products in this category. Green station is the right brand to partner with where it will take up the responsibility of dealing with these challenges.
Green station has a strong supply chain. Its omnichannel presence helps to increase accessibility for the customer. Green Station has over 1700 unique customers. These customers find it a one-stop-shop for a healthier lifestyle. The repeat customer’s rate is high in these products because they are healthier and organic. The company focuses on customer experience.
The company is looking for a franchise-owned and company-operated (FOCO) business model. The store is expected to be of an area of 800 sq ft, but anything from 500 to 1,000 sq ft should also work out.
CAPEX is the one-time investment that includes the interiors, digital hardware etc. that comes up to Rs 20-25 lakhs. OPEX to be borne by the franchisee and managed by the brand includes the salaries, utilities, and rent. It is expected to cost around Rs 2.5-2.8 lakhs considering the highest costs possible.
The partner is expected to achieve the break-even in four months. The ROI will be greater in two or more years. The partners share a margin on the total revenue.
The hiring and training of the staff will be done by the company. The inventory management is managed by the brand. The listing of products and supply chain is all done by the franchisor. There is a good inventory management team that supports the vendors in inventory management and even takes care of the products with low shelf life and still in stock. In the case of marketing, the brand supports both offline and online modes.
The brand has a mix of products that are manufacture in-house and other brands that have futuristic market products like protein ice-cream and plant-based milk. These products draw more customers as well as more margins to the partner.
Green station wants to set offline stores across India, focusing on Hyderabad, Bangalore, and Chennai and then the tier 2 cities.
Currently, it has a single centralised warehouse. It aims at setting up a centralised warehouse where there are multi-unit franchisees with more than five outlets. It is also looking to partnering with existing retailers as a shop-in-shop store.
Green station is an Indian brand that can give support to the producer and give access to the customer to healthy food. They support a lot of small local businesses that need a platform to reach the right customers. This is the time for expansion for the company and a great opportunity for investors to enter a futuristic industry.
Edited By: Vaishnavi Gupta
