Scouting for mall locations, Organic Harvest has aggressive expansion plans for PAN India and global market presence. In an exclusive conversation with WI Bureau, Rahul Agarwal, CEO, Organic Harvest has shared undisclosed business plans of his brand in organic products market
What change do you see in personal care products market with the entry of organic products?
The use of beauty and personal care products is no longer limited to urban India. Awareness of such products has strongly increased due to television commercials, celebrity endorsements, social media campaigns and print media. With the introduction of organic products, the concept of organic living is fast catching up with consumers and they have started opting for organic products in their daily life. The consumers today are becoming increasingly aware of following a good skin care regimen with beauty products that promise to benefit their skin in more than one way. Also, the media and internet is educating and sensitizing the consumers about the ill-effects caused by long term use of chemicals contained in some of the other beauty products.
How your format is different from the existing organic products brands in wellness industry?
Organic Harvest is the first Indian home grown brand, which has an entire range of organic skin care, body care and hair care product line on offer to the consumers. We’ve launched the brand in June 2013 after a thorough R&D of over two years. Global organizations like EcoCert, OneCert and Natrue have certified the ingredients and raw materials that we use to manufacture our products, which are free from any harsh chemicals, Parabens, Phthalates, mineral oil, PABA, petrolatum, paraffin or animal ingredients. This is what makes Organic Harvest stand apart from other brands in the personal care segment.
How are you planning to take this format to the other markets? What challenges did you face in positioning your brand in personal care segment?
My biggest challenge was lack of prior experience in the personal care products market. When I thought of starting this venture, I was strongly discouraged by several industry stalwarts, owing to the hugely competitive nature of the beauty segment in India. However, I was determined to develop a good quality product with a reasonable pricing. We had to do a thorough research about the organic beauty segment in India and abroad for two years, before venturing into this category. Our problems did not just end here. Being a small start-up enterprise, we had limited funds for marketing that could help in creating brand awareness. We had to rely on our convincing skills. It was a tough task to persuade the retailers about our product to reach out to our target consumers. By god’s grace, our product managed to satisfy the consumers and today, when we see our brand being accepted and referred by regular customers, it’s all because of what our products have offered.
What are your growth plans and investments you are looking at to scale your current business?
Organic Harvest is already enjoying its fair share of clientele across India. We initially concentrated on the traditional retail channel, but will now be looking at modern trade and malls as well. We already have four exclusive stores in Delhi, Mumbai, Surat and scouting for locations in other leading malls and high street markets for opening more exclusive Organic Harvest stores across India. In next three to six months, our products will be available PAN India and around 10 countries internationally. We will have 12 elite stores. We are looking to achieve a turnover of 200 crores in FY17. We are looking to invest around 10 million dollars i.e., 60-65 crores in next one year.
Is it a boot strapped company or you raised funds? Elaborate on the funding rounds.
The company has been self funded till now. The group is funding the company out of its earning from the other organizations under the same group.
Do you have plans to franchise your business? What’s could be the royalty fee?
Not in near future but, we will consider franchising our business in the long run.
How did you define your consumers? What is the average ticket size of your consumers?
Our consumers are someone who believes in preserving the nature, does not mind going against the herd. Our consumer could be a working woman, a housewife or a student. The average ticket size is Rs. 1,000.
Which are the new markets you are looking at? What kind of business opportunities did you witness in these locations?
Domestically, we are expanding our operations in the eastern part of the country mainly Bihar and Northeast. Internationally, we have already GCC countries including Saudi Arabia, UAE, Bangladesh, Malaysia and Singapore.
In which areas do you face challenges; Hr, finance, PR or marketing? What procedures do you take to overcome these challenges and smooth functioning of your business?
Challenges are always there, but there is a great challenge in the HR department in terms of attracting a talent because we are a new brand and people are always skeptical about joining a start-up. Also, positioning the brand amongst the target audience is a major challenge which comes under the marketing department. Till now, we have been very careful in hiring people for our team. We prefer to hire someone for our organization who shares a common vision with us.
How you bring standardization in your business in terms of:
Brands and products: We have a team of R&D and Quality control (QC) which takes care of product standardization. Each and every product of ours is tested on stringent quality norms before it goes to the customers
Suppliers: We’ve got distributors in all the states where we bare the difference in the taxation, so everyone gets the products at the same price. Thus, the standardization is maintained well.
Tech & software installation: We have installed software named - Shopper’s, both at the backend and at the front to ensure standardization.
Furniture & equipment: We have got our material board set and we ensure that every vendor follows this material board stringently.
What is the scope and future of Organic Personal Care products in India? How does the future look like?
According to a KPMG Study, the organic personal care product segment in India is growing at a rate of 15-20 per cent a year, which is much faster than the overall cosmetics industry. Indian consumers are nowadays quite conscious of the link between beauty and health. It all started with organic food and now organic skin care products. Consequently, there is a growing demand for chemical free skin care products. Our brand caters to the needs of this health conscious segment. Consumers have started appreciating the Organic Harvest products and we have been receiving tremendous response from the end consumers with both repeat and referral customers. This clearly shows our potential of growth in near future. Global industry of Organic personal care products is expected to touch $13 billion by 2018.
Your brand has a strong market position across the globe and in India as well. With the growing rage of natural ingredients based products, the demand of these products is growing, how much percentage of shares does your brand have in Indian beauty space?
Since Organic Harvest has just started operations in the Indian market, at the moment, the percentage is bare minimum. However, with the marketing strategies and opening of exclusive retail stores across India, we will soon be holding the major market share in the personal care segment.
How does you revenue model look like? Any plans to foray into the market with any new product?
We work with 3 distribution channels:
• General trade: For general retail stores, we have a super stockiest at the state level, distributor at the city level and retail channel partners. We reach out to over 5,000 retail stores in general trade.
• Modern trade: We have started tying up with the organized retail chains. We have recently signed up with a prominent beauty products chain of southern region called Health & Glow, which operates around 100 stores in Bangalore, Hyderabad and Mumbai. Other than this, we are also present in Auchan and Pothy's.
• Own stores: We have started opening up Organic Harvest EBOs in prominent malls and high streets. Currently, we are operating three stores in Delhi, and have plans to open another 10-12 stores in a year.
How much year-on-year growth does the brand is seeing in Indian beauty and wellness industry?
Our growth for this financial year (2014-2015) should be more than 200 per cent in comparison with previous year.
Which is the biggest distribution market for your brand's product out of North, South, East and Western region in India and with how much percentage of growth annually?
We have been creating a buzz in all the distribution markets across India, but if we had to choose one, then it would be the northern part of India, and Delhi-NCR is the biggest distribution market. It has been making a growth of around 200 per cent annually.
