Friday, June 14, 2024
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How the Spice Market is Blending Tradition with Innovation

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India’s spice market is undergoing a remarkable transformation, bridging the timeless allure of classic blends and traditional masalas with contemporary creations. Fueled by the spirit of experimentation and inspired by global culinary trends, spice brands and manufacturers are at the vanguard of innovation, pushing the boundaries of creativity to create bold new blends and avant-garde seasonings. This dynamic evolution reflects a concerted effort to cater to the discerning tastes of modern consumers who seek not only tradition but also novelty and sophistication in their culinary experiences.

In the universe of Indian cuisine, spices hold a position of paramount importance, akin to the role of sauces and dressings in global gastronomy. Just as sauces and dressings enhance and define the flavors of dishes worldwide, spices play an important role in shaping the taste, aroma, and character of Indian culinary creations.

India, known as the home of spices, is the largest producer, consumer and exporter of spices and spice products in the world. Indian cuisine is renowned for its delicious flavors, and these flavors come from a wide variety of spices. “The diversity of spices used in Indian cooking reflects the country’s rich culinary heritage and cultural diversity.

Traditional spices like chilli, turmeric, cumin, coriander, cardamom, and cloves have been staples in Indian cuisine for centuries,” says Shikha Prakash, Co-founder, Valley Culture, a one-stop online store specializing in ethically sourced local Himalayan Food.

From chilli and turmeric to coriander, whole spices, and blended curry masalas, these aromatic ingredients are the soul of Indian gastronomy, infusing dishes with flavor, color, and cultural richness.

Beyond these primary spices, Indian cuisine boasts an extensive repertoire of whole spices, including cumin, mustard seeds, fenugreek, and cloves, each contributing unique flavors and aromas to dishes. These whole spices are often tempered in hot oil to release their essential oils and unlock their full flavor potential, creating the aromatic base known as “tadka” or “tempering.”

Blended curry masalas represent the essence of Indian spice blends, combining a harmonious medley of ground spices to create complex flavor profiles. These masalas vary widely in composition, with regional variations reflecting the diverse culinary traditions across the Indian subcontinent. “Each state within India offers its unique culinary heritage. Many snacking brands have adeptly capitalized on this diversity through a regional mix strategy. Similarly, spices and condiments brands have the opportunity to embrace this approach, catering to the discerning tastes of consumers by offering a range of ethnic and region-specific offerings,” says Sameer Shaikh, Regional Head-Buying & Merchandising, bigbasket.com.

Discovering Regional Riches

  • India produces about 75 of the 109 varieties of spices that are listed by the International Organization for Standardization (ISO).
  • The most produced and exported spices are pepper, cardamom, chilli, ginger, turmeric, coriander, cumin, celery, fennel, fenugreek, garlic, nutmeg & mace, curry powder, spice oils and oleoresins.
  • The production of different spices in India has been growing rapidly over the last few years. Production in 2021-22 stood at 10.87 million tonnes. In terms of production volume, chilli, garlic, ginger and turmeric constitute 75% of the total spice production.
  • The largest spices-producing states in India are Madhya Pradesh, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Karnataka, Maharashtra, Assam, Orissa, Uttar Pradesh, West Bengal, Tamil Nadu and Kerala.
  • The southern region of the country plays a significant role in the spices market. It is not only the largest market but also its average monthly per capita consumption is the highest among all regions. That makes south India a major market for spice manufacturers.
  • South India dominates the Indian spices market, due to their ideal tropical climate conditions for cultivating several spices. The region’s unique geographical features, including fertile soils and abundant rainfall, contribute to the cultivation of key spices such as black pepper, cardamom, turmeric, cloves, and cinnamon.
  • Additionally, the traditional knowledge and expertise passed down through generations allow farmers in South India to produce high-quality spices that cater to various culinary preferences and applications. The region’s spices are valued not only for their distinctive taste and aroma but also for their medicinal properties, which add to their allure.
  • Furthermore, south India’s dominance in the Indian spices market is further strengthened by efficient processing facilities, state-of-the-art spice parks, and well-established supply chains that ensure a steady fl ow of spices to consumers across India and around the world. The region’s robust infrastructure and reputation for producing premium-quality spices reinforce its leading position in the Indian spice industry.

Market Size and Growth

The spice market in India is quite large, with different estimates putting its total value around Rs. 80,000-90,000 crore annually. Of this, the branded spice market is estimated to be around Rs. 30,000-35,000 crore.

The market is also highly regional and segmented with the top 5 players constituting only about 45% of the branded spice market. The market is dominated by regional brands, as Indian palate varies by region, unlike other F&B categories where global MNCs have significant share. Global MNCs have a significant share in a few packaged F&B categories, whereas spices comprise only local Indian players due to its regional/local nature.

According to financial advisory firm Avendus Capital, the overall spice market in India was pegged at Rs. 67,500 crore as of 2020 and is expected to cross Rs. 1 lakh crore by 2025. Despite a current low branded penetration at 36% of the overall spice market in India, there has been a noticeable shift from traditional home-ground masalas to branded spice mixes, which is estimated to be growing at 16% CAGR. The shift from unbranded to branded spices is due to improved quality, introduction of smaller (Re.1/ Rs.5) pack sizes, multiple SKUs, and increased shelf life.

As per Avendus, within the overall spice market in India, the organized spices segment accounted for Rs. 24,000 crore or 24% of the total share in the year 2020. This is expected to touch Rs. 50,000 crore or 50% of the market share by 2025. Branded spices constitute about 35% of the overall spices market in the country currently.

Anil Kankariya, Managing Director, Navjeevan Plus in Jalgaon, North Maharashtra, notes that the branded spices category is experiencing a steady 15% annual growth rate and despite rising prices, there hasn’t been any impact on demand.

Spices stand out as a particularly appealing segment within the food industry. Among spices, Avendus reports that blended spices offer even greater potential, boasting a higher 40%+ gross margin and displaying a robust growth rate of 24% CAGR. This growth outpaces other high-growth food categories such as sweet biscuits, snack bars, fruit snacks, savory snacks, confectionery, and baked goods, all of which also boast gross margins exceeding 20%.

Avendus estimates that by FY2030, 15 spice companies are estimated to exceed Rs. 10,000 crore in revenue. Of this, four spice companies will become Rs. 5,000 crore in annual turnover. The conversion from loose to branded spices, increasing demand for spice mixes or blends to ease the cooking process, and a distribution push by regional companies are the key growth drivers for the spices category.

According to research from Mintel, the spice market in India is dominated by the unorganized sector, with 56% of Indians stating that they currently purchase unpackaged single spices and 44% purchasing unpackaged masala mixes. However, factors such as convenience, competitive pricing and rapid urbanisation are propelling consumers towards the packaged format of spices and masala mixes.

Additionally, a significant growth in the food processing industry along with hectic work schedules and sedentary lifestyles of the consumers are also propelling the demand for more convenient food options in the form of more innovative blends and ready spice mixes. As a result, there is a growing utilization of spices in processed and ready-to-eat food products, which is further driving the market growth in the country.

What is also augmenting the market for spices in India is the increasing demand for innovative flavors, authentic cuisines, and ethnic tastes in foods and snacks. At the same time, rising consumer concerns towards the negative health impact of synthetic additives in spices are augmenting the demand for natural and organic spices in the country.

The expanding HoReCa sector in India is also bolstering the market growth of the spice category. Additionally, the increasing penetration of western food trends is further catalyzing the demand for a variety of newer spices. “The growing trend of global cuisine appreciation has led to increased interest in spices from other cultures, such as Italian and

Mexican, among Indian consumers. This cross-cultural exchange in culinary preferences has created a dynamic market for exotic spices in India,” notes Valley Culture’s Prakash.

Consumer Preference and Consumption Patterns

Spices represent one of the fastest-growing segments in the food industry, driven by increasing demand for high-quality spices that are safely packaged and free from artificial colors. According to data from the National Sample Survey (NSS), the average Indian consumes about 3.25 kilograms of spices per year, accounting for approximately 4.40 percent of total food expenses.

However, spice consumption patterns differ significantly across different regions of India due to varying dietary habits. For instance, in the northeastern region, spices make up around 3.21 percent of total food expenses, while in the southern region, this figure rises to 5.34 percent. Similarly, spice consumption ranges from 2.15 kilograms per person in the northeast to 4.92 kilograms per person in the south.

With spices becoming increasingly important in the Indian diet, their share of total food consumption has been rising, increasing from 3.65 percent to 4.40 percent. Additionally, the average annual consumption of spices per person has also increased, growing from 2.88 kilograms to 3.25 kilograms. Notably, the northeastern and eastern regions, where spice consumption traditionally tends to be lower, have experienced the greatest increases in consumption.

In India, spices are mostly consumed as whole spice or mixed spices. According to NSS data, mixed spices constitute 39 per cent of total spices budget of Indian households. Among whole spices, dry chilli occupies a predominant share of 18 per cent share in total spices expenditure. Dry chilli is followed by turmeric, garlic, ginger, tamarind and black pepper with their respective share of 15 per cent, 12 per cent, 7 per cent, 5 per cent and 4 per cent.

As Indian households evolve in their food preferences, the significance of various spices is shifting. Recent trends reveal a decline in the budget allocation for dry chili and tamarind, while there’s been an uptick in the consumption of garlic, ginger, and turmeric. Moreover, there’s a noticeable increase in expenditure on mixed spices, reflecting a growing preference for ready-to-cook and processed  foods. This presents an opportunity for the spice industry to capitalize on the rising demand for value-added spice products by enhancing processing infrastructure and services. The average Indian consumes about 543 grams of dry chili per year, with significant regional variations ranging from 165 grams in the northeast to 926 grams in the south. However, recent trends show a decline in per capita consumption of dry chili, particularly noticeable in the southern region, indicating a shifting preference among Indian households.

Turmeric consumption averages at 343 grams per capita annually, with the highest consumption in the eastern region and the lowest in the south. While there has been a slight decrease in turmeric consumption overall, it’s rising in south India, contrasting with reductions in the north, west, and northeast.

Garlic consumption has seen a notable 45% increase, averaging at 586 grams per capita annually. Consumption varies across regions, with the highest in the south and the lowest in the east. This upward trend is consistent across all regions, signaling a growing preference for garlic. Ginger has experienced the most significant rise in consumption, increasing from 206 grams in 1993-94 to 460 grams recently. The northeast region leads in ginger consumption.

Tamarind consumption is concentrated in the south, averaging at 10-14 grams per capita annually, significantly higher than the national average. However, there’s been a decline in tamarind consumption over the years, indicative of changing preferences.

Black pepper consumption stands at around 52 grams per capita annually, with variations from 18 grams in the northeast to 99 grams in the south. Recent trends show an increase in consumption across regions except the north, where it has decreased.

Overall, there’s a noticeable shift in spice consumption patterns in the Indian diet, with preferences moving away from dry chili and tamarind towards ginger, garlic, and mixed spices. “There’s a noticeable shift in preference from whole spices like chili, turmeric, and coriander to their ground counterparts. This trend is expected to persist, with chili powder and branded spices projected to experience higher growth rates compared to traditional whole spices,” says Navjeevan’s Kankariya, adding that the rise in the demand for CTC combos (red chilli, coriander, and turmeric powder) and ready spice mixes is prompting manufacturers to come up with newer products at regular intervals.

This shift underscores the rising domestic  market for value-added spice products. However, these changes vary across regions, highlighting the need for region-specific marketing strategies to meet diverse household demands.

The rising importance of mixed spices is consistent with peoples’ inclination towards ready-to-cook, ready-to-eat and processed food products. This offers a great scope to tap the rising market of value-added spices products by improving the processing infrastructure and services in the spice sector.

Retail Play in Spices

Modern trade, including both offline and online supermarkets, have emerged as the primary channel for spice and seasoning sales, particularly among urban and educated shoppers. These establishments serve as hubs where consumers seeking unique and specialized spice products can readily find them. “Traditionally, spices occupy approximately 3-4% of the total shelf space within a typical supermarket and contribute a similar proportion of our overall sales,” say Navjeevan’s Kankariya.

At bigbasket, an omnichannel food and grocery retailer, signifi cant growth and demand is seen in several segments within the spices category. “Our maximum growth segments within spices and condiments include sauces, cooking pastes, honey, powdered spices, and blended masalas,” shares bigbasket’s Shaikh.

Masala spices, organic spices, cooking and baking essentials, as well as sauces, spreads, and dips, also stand out as popular categories within Bigbasket’s offerings. These categories are witnessing significant contributions from Bigbasket’s own brands such as BB Royal, BB Popular, Good Diet, Happy Chef, and Tasties. “These are our private label brands that focus on offering premium, niche, or mass varieties in the condiments segment. This strategic approach is based on analyzing consumer buying behavior and identifying gaps in the assortment,” says Shaikh.

At the recently inaugurated Foodstories gourmet store in Delhi, patrons can peruse an exquisite selection of spices, ranging from the traditional to the uniquely local. Rakesh Kumar, Category Head for Spices, Foodstories, highlights his store’s diverse array of spice offerings. To begin with, Foodstories stocks five distinct varieties of chilli: Chipotle chilli, Habanero chilli, Bhujalakia, Mathana chilli, and Kashmiri chilli. Complementing the chilli selection are tomato flakes, premium-quality organic ajwain and fennel seeds, and also the traditional Calcutta Chai masala.

Some of the unique spice products that shoppers can find at Foodstories include pink pepper, Himalayan salts, rose petal masala, and a rich selection of 24 blends. Besides, the store sells the best quality organic spices and ensures that it sources them directly from top organic farmers.

“We have established our own production facility where we press and blend these spices. Unlike other places where the origin and processing of spices may be uncertain, we ensure that our blends are freshly made every day, guaranteeing quality and freshness,” says Kumar.

“In addition to the well-known Indian spices, there has been a resurgence of interest in native indigenous spices, driven by factors like increased awareness of traditional ingredients, health consciousness, and a desire for authentic flavors,” says Robin Nagar, CEO and Co-Founder, Valley Culture.

His company provides a range of authentic Himalayan spices, such as Himalayan Turmeric Powder, Himalayan Red Chili Salt, Himalayan Jakhiya, Himalayan Faran, Himalayan Curry Powder, and Yellow Chilli Powder. These spices offer consumers the opportunity to experience the distinctive flavors of the region.

By highlighting native ingredients, Valley Culture and similar brands are not only catering to the growing demand for authentic and natural products but also promoting sustainable sourcing practices and supporting local communities. “The market for native indigenous spices is likely to see sustained growth. This presents exciting opportunities for brands to innovate, expand their product offerings, and captures a larger share of the market,” notes Nagar.

Trade experts say that sales of spices and seasonings will continue to show an uptick and growth will be faster in gourmet, organic and natural spices and seasonings. Dry seasonings are expected to perform well and sales of salt substitutes will rise amid the ongoing attack on sodium.

“While the overall spices category continues to experience incremental growth, a new segment is emerging, offering greater potential for increased volume and market expansion – seasonings,” says Sunil Sanklecha, Founder & Managing Partner, Nuts n Spices.

With more folks looking to jazz up their everyday meals along with the rise in the ‘eating in’ trend, growth in the spice and seasonings market is also being driven by a growing interest in gourmet cooking and ethnic cuisines, which often requires an investment in new varieties of seasonings, according to market researcher Mintel.

“A diverse range of seasoning options has emerged to align with evolving consumer eating habits, encompassing a variety of culinary influences such as Italian, Japanese, and Thai cuisines. Additionally, there has been notable innovation within the snacking category to cater to changing consumer preferences and behaviors,” informs Sanklecha.

Among new seasoning products, which represent a veritable United Nations of flavors, are line extensions of Perfect Pinch Salt-free Seasonings, including Southwest Sweet ‘n Smoky; Gourmet Collection Blends in Cuban, Moroccan, Tuscan and Southwest varieties; and Perfect Pinch Bread Dipping Seasonings in Sicilian Crushed Red Pepper & Garlic and Tuscan Rosemary & Sun-Dried Tomato varieties, as well as the introduction of authentic Mexican seasoning mixes.

With more rubs and blends being introduced into the market, people are really customizing what they are using, and there’s a definite trend toward fresh seasonings. Retailers aver that there is a growing demand for spicy dry and liquid rubs and other seasoning blends that can help busy home cooks imitate the recipes they enjoy in restaurants or see created by famous chefs on television. It offers an opportunity for retailers to cross-merchandise these spices with their meat, poultry and fish counters for increased sales and volume movements.

When it comes to spice buying decisions, health and wellness considerations act as big influencers. Consumers are seeking spices known for their health benefits, such as turmeric, ginger, and cinnamon. Spices with antioxidant properties, anti-inflammatory properties, or digestive benefits are particularly in demand as consumers strive for a healthier lifestyle. Shaikh of bigbasket notes that several emerging categories are attracting numerous brands, leading to the entry or expansion of product extensions.

“These categories include products featuring 100% natural ingredients, devoid of artificial flavors, nature identical, and free from preservatives and GMOs. These trends have already gained significant traction in international markets and are fast catching on in India.”

Sanklecha of Nuts n Spices notes that with modern eating habits evolving, there is a noticeable shift in consumption patterns. “However, traditional spices and condiments continue to experience growth. Additionally, convenience packs such as sprinklers and jars are becoming increasingly popular in this category.”

Conclusion

Industry experts recognize the vast potential for growth among branded spice players. However, the challenge lies in fostering collaborative growth and increasing the conversion rate from the unorganized market to the organized sector. This concerted effort is crucial for sustaining a healthy growth rate within the category, thereby boosting demand in both domestic and export markets. The spice industry presents significant opportunities for quality products and brands to thrive.

According to Mintel Research, nearly a quarter of Indians (22%) state that they currently buy unpackaged single spices and intend to switch to packaged formats in the next 12 months, and this goes further to 27% for masala mixes. The report indicates a potential for brands to enter/expand the market by swaying the current unpackaged purchasers to buy packaged formats.

Mintel research indicates that about three in 10 consumers, particularly younger ones, are interested in a value-for-money proposition. This proposition aims to retain price-conscious consumers who plan to switch from packaged to unpackaged formats while also attracting loyal packaged consumers with organic or all-natural spices and masala mixes.”

Retailers, brands, and marketers must adapt to evolving consumption trends by evaluating and promoting products that align with consumer preferences. Beyond taste and price, factors such as convenience, nutritional value, ingredient sourcing, origin, packaging, and communication play pivotal roles in product selection and promotion strategies. By prioritizing these considerations, stakeholders can effectively cater to shifting consumer demands and drive growth in the dynamic spice market.

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