Is Starting an Organic Food Business Profitable for You?

An organic food business is one of the most profitable at the present time, which is why you can find lots of players investing in this field. The term organic food business refers to the business idea that revolves around purchasing, selling, and labelling Organic Food. Moreover, the term organic food is used under Section 22 of the FSS Act 2006. 

In this blog, we will discuss the factors to keep in mind while starting the organic food business in India and how it can be profitable.

What is an Organic Food Business? 
 

According to Section 22 of the FSS ACT, 2006^[1], foods that were produced in accordance with a set of organic production standards are referred to as organic foods. Businesses in  

the food industry that deals with the purchase, sale, and labelling of food products fall under the category of organic food businesses.  

Why Should You Start an Organic Food Business? 
 

Here are some valid reasons why you should start an organic food business in India. 

1. Technological facility
 

The growth of consumers who have access to smartphones and the internet has greatly benefited the organic food sector. You have access to a big customer base because it is practically possible to reach any location in the country. 

E-commerce companies have also made it easier for people to buy organic products on a greater scale. You can virtually reach potential customers if your organic food store business has an internet presence and a well-managed delivery system. 

2. Growing demand for Organic food
 

You will see a spike in consumption if you follow the trends in organic food. You can see this spike not only in India but also in other countries. Additionally, India is exporting more organic food than before. 

India is able to produce high-quality organic goods due to the traditional methods of organic farming and the tropical climate. You need to strategically establish your organic food store, acquire the proper export licence, and have a healthy profit margin to take full advantage of this opportunity. 

3. Government facilitation 
 

The industry for organic products and organic food stores has received substantial government support. In 2000, the Government introduced the National Program for Organic Production (NPOP), which sparked a number of subsequent initiatives. 

To evaluate the quality and identify genuine organic food items, the government has 24 approved certifying agencies. The Government supports the organic food sector. As a result, many people desire to open an organic food business in India, but understanding government programmes are essential for success in this market.   

4. Environmentally friendly
 

Producing organic food is proven to be environmentally friendly by science. Artificial fertilizers and other hazardous chemicals are not used in the production of organic food. This reduces the likelihood of long-term health problems brought on by contaminated soil, water, and air. As a result, the demand for organic products increases as the risk of pollution is less. 

5. Healthier option
 

Consumers have started switching to healthier options after the outbreak to strengthen their immune systems. People have been searching for an effective alternative, and organic food items provide it. Although they take longer to grow, organic food items improve the consumer’s health and immunity.     

How Can You Start an Organic Food Business? 
 

You must consider the following factors mentioned below to start an organic food business. 

Step 1 - Prepare a business plan
 

Create a strong business plan that encompasses all the advantages and tactics, from execution to exit strategy.

Step 2 - Find a good place for business 
 

Finding a perfect location for establishing an organic business is the first and most time-consuming step to starting an organic food business in India. Additionally, the business owner needs to choose a place with a huge population and customers interested in purchasing organic food products but less competition.        

Step 3 - Decide about the products to be sold
 

This is another important step. In light of this, the entrepreneur must determine which food products to stock. Furthermore, it is important to mention that before choosing the products, the owner must conduct a thorough market analysis and research study because this determines the profitability of the entire company. 

Step 4 - Apply for the necessary registration 
 

There are some important formalities or legal conditions that you must fulfil in order to establish an organic food business in India successfully. 

• The proprietor of the organic food business is required to obtain a trade license from the Health Department;
• Obtain an Organic Trade Association Certificate for your Organic food store;
• Apply for the FSSAI license under the Food Safety and Standardization Authority of India;
• You must submit an Employer Identification Number (EIN) application;
• You must also decide on the type of company or business structure that they intend to start. Additionally, the term “Business Format” encompasses a partnership or sole proprietorship;
• If the annual income of your business is more than 20 lakhs during the previous fiscal year, he or she must also submit an application for GST Registration.
• You must also apply for a PAN number
• You must open a current bank account for the business. 

Step 5 - Set Prices for the products 
 

There is a lot of calculation involved in determining the prices of the products. Accordingly, if prices are too low, even while volume is strong, the business’s profitability will and it won’t be able to pay its fixed and variable costs. 

On the other hand, if the prices chosen are excessively expensive, it can lead to a decrease in clients. The prices of each sort of product must therefore be accurately calculated.   

Step 6 - Hire manpower for your business
 

Every company needs to have skilled and qualified workers in addition to the highest-quality food goods. An experienced person will manage finances, sales, operations, marketing, purchasing, and stores more readily and successfully than a typical person.     

Additionally, the size and number of the workforce will depend on how the organization is operated. 

Step 7 - Marketing of organic food business
 

There are two types of marketing techniques. you can use to promote and market your business.

1. Online Marketing - Online marketing is the process of using digital marketing techniques to promote any form of good or service to potential customers on Google, Twitter, YouTube, Facebook and WhatsApp. 

2. Offline Marketing - Offline marketing is a kind of advertising or promotional practice that uses traditional offline media. This includes channels such as television, radio, billboards, print, and in-person events where you can promote your organic business effectively

Step 8 - Investment required
 

You need to invest approximately Rs.10 lakhs to Rs.11 lakhs to launch an organic food business in India. Other than this, there are other factors included in the number of investments, such as the cost of land where you will set up your business, salaries to be paid to workers, operating costs, Inventory for Organic Food Products, and furnishing and interior decoration.

Documents Necessary to Submit for the Business
 

The documents you need to submit for starting your organic food business are as follows:

• Business Certificate;
• ID Proof, such as PAN Card, Voter ID, Aadhar Card, or Driving License;
• MOA (Memorandum of Association);
• AOA (Articles of Association);
• NOC (No Objection Certificate);
• Permissions and Approval from State Health Department; and
• India Organic Certificate.

Conclusion 
 

In India, starting an organic food business is an expensive endeavour. To manage an organic food business, however, it is necessary for proprietors to obtain an FSSAI licence, registration, certificates, an India organic certificate, etc. Additionally, the government is taking the necessary actions to ensure the success of this sector. Businesses that sell organic foods can rely on our Online Legal India experts for legal assistance.