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How to Start Spice Business in India – Guide by LocalBuyX

Start Spice Business in India

Indians are crazy when it comes to food, our every festival, events and even day to day lifestyle is highly influenced by spices. We divide by states, but one thing which keeps us connected is “Spices”. India is known as “home of spices”, an Indian spice is sought after globally due to its texture, aroma, taste and medicinal properties. India is the world’s largest consumer, producer and exporter of spices. India produce around 75 of the 109 varieties listed by the International Organization for Standardization and accounts for almost half of the global trading in spices.

TABLE OF CONTENTS

Spice Business Introduction

Spice Business History and Statistics

Spice Market Opportunity in India

Spice Business Profitability in India

Spice Business Costing in India

Spice Business Licensing Requirements

Spice Business Space Required

Spice Business Raw Materials Required

Spice Business Machinery Usage

Spice Business Manufacturing Process

Spice Business Targeting of Sale

Spice Business Challenges Which May Come

Spice Business Product Branding

Spice Business Introduction

Spices business in India almost all of the spices that are known. The country is the largest exporter of this commodity. As the spice is a mass consumption item mostly used in culinary planning or loaf of food products, its internal demand is increasing quite steadily.

With changing lifestyles and especially with changes in food habits and the boost in income level, the use of powdered spices has improved. Naturally, the marketplace for ready-to-mix of spices has increased significantly.

Spices are fast-moving consumable things and have large potential. There needs to be a social network of dealers or retailers backed up by advertisements in local media The export market for Indian spices can be growing.

Spice Business History and Statistics

From various ages, spices have always been a crucial component of India’s external trade with foreign countries unlike Arabia, Sumeria, Mesopotamia, China, Egypt and, along with textiles and perfumes.

The giant history of spices includes in its place in each holy book. The Ramayana also in the writings dating back to the Roman Empire in the first century AD. The caravans of camels moved regularly from Calicut, Goa and the Orient. They even transport these spices to distant destinations such as Carthage, Alexandria, and Rome.

Today, Indian spices are available everywhere, but there was a time when people have to risk their existence to gain access to Indian spices. From the Indian point of view, it brought in traders and invaders alike – a century after century.

In the fiscal year 2019, the export value of spices from India amounted to over 231 billion rupees. Top 10 importers of spices in India between Apr-Oct 2018 were the US, Vietnam, China, Hong Kong, Thailand, UK, UAE, Malaysia, Bangladesh and Sri Lanka. The top 10 exported spices and spice products in terms of value were Mint products, Chilli, Spice Oils & Oleoresins, Turmeric, Cumin, Pepper, Curry powders/paste, Cardamom seeds, other spices (Tamarind, Asafoetida, and Cassia) and Garlic. The total export of various spices in 2017-18 stood at US$ 3.11 billion.

Consumption of spices in an Indian household is massive; hence the market is growing with the 40000 crores annually. When one can see so much potential in spice business which ensures good returns with low investment, then any individual can start a business even home-based spice making business is turn out profitable.

Indian spices exports have been able to record strident gains in value as well as volume wise. Higher demand for immunity boosting spices like turmeric has helped the nation in reporting a 19% growth in export of spices and spice products during the first half of the year

Exports of spices and other value-added products during six months of FY21 stand at 7 lakh tonne, valued at Rs 12,273.81 crore as against the shipment of 586,090 tonne worth Rs 10,588.97 crore in the year-ago period

Chilli retained its position of being the largest exported spice from India with a shipment of 2,64,500 tonne, fetching Rs 3,605 crore. Cumin followed next with a shipment of 1,53,000 tonne valued at Rs 2167.70 crore, registering a 33% and 22% increase in quantitative and value terms respectively.

The spice which recorded the maximum growth in terms of quantity and value was small cardamom. It contributed to the overall exports during the period, rising 483% in value terms and 369% in quantity. During the period, 1,900 tonne of small cardamom valued at Rs 329.50 crore were exported as against 405 tonne valued at Rs 56.52 crore during the same period last year.

Turmeric registered a remarkable growth of 42% in quantity with total shipment of 99,000 tonne globally valued at Rs 858.10 crore, marking an increase of 35% in value terms as compared to the same period in the last fiscal. A total of 23,700 tonne of ginger was exported all over the world, which was 86% more than last year.

The export of fenugreek, coriander and other seed spices such as mustard, aniseed, dill seed, etc, grew substantially contributing to the spices export basket in the period. Value added spices such as curry powders and pastes remained popular in many countries resulting in their increased exports with a shipment of 19,500 tonne valued at Rs 462.12 crore.

Spice oils and oleoresins along with spices such as tamarind, saffron and others shared a significant part in the spices export basket during April-September 2020

Chilli, cumin, turmeric, coriander and ginger were the top five most-exported spices from India

Source of info: Spice Board India

Spice Market Opportunity in India

India produces almost all the known spices. The country is the highest exporter of this commodity. As the spice is a mass consumption item mostly used in culinary product or seasoning of food products, its internal demand is increasing quite steadily.

Growing urbanization paired with a rise in the amount of working women has decreased the time of cooking. This has augmented industry earnings in masala business in India.

Indian can’t imagine the food without spice, every Indian food is having base ingredient is spices. Spices are the huge consumable household item, Indian spices market is growing with the 40000 cores annually.

India is the largest spice producing country, India produces 50 different types of spices, people are looking for ready-made food and spice powder makes the cooking easier, therefore the use of the spice powder is increasing consistently. Powder spices are easy to use and it saves time and physical efforts for preparing different delicious food. Every commercial food services like hotels, restaurants etc are using powder spices.

With varying lifestyles and especially with changes in food habits and the increase in income level, the use of powdered spices has risen. Also, there is a requirement of various certificate or license to start a spice business in India.

Spice Business Profitability in India

As we know, the spice appears under the basic goods segment. Also, it is a vital food item for kitchens. And in a country like India where the population frequency is so high, the consumption is also very high.

The spice mixes and branded spices require greater profit margins, as compared to straight and unbranded spices. We can also initiate a small scale home-based spice business is a profitable investment opportunity for new entrepreneurs in India.

Spice powder making it is an easy and profitable business to start, on can start this business with small-scale investment.

Spice Business Costing in India

The Indian spices market is projected to reach approximately USD 18 billion by 2020, with growth in the sector expects to be led by branded spices and spice mixes. India being the largest spice producing country producing 50 different types of spices people are looking for ready-made food, and spice powder makes their cooking more accessible. Hence the usage of the spice powder is increasing consistently and futuristic.

Powdered spices are convenient to use, and it saves time and physical efforts for preparing different delicious cuisine. Every commercial food industry like hotels, restaurants, catering business and many more are using powder spices on a daily basis.

Spice powder makes it an easy and profitable business to start, and one can start this business with small-scale investment.

INVESTMENT OF BUSINESSRS 50,000 to 1 lac
PROFIT MARGIN OF BUSINESSAROUND 50% to 70%
AREAHOME OR ANY PLACE
(Min 250 sq ft)
EMPLOYE1 TO 10 NUMBER
EARNING (IF SELLING 100 kg PER DAY WITH PROFIT MARGIN OF 60% per KG )RS 60,000 TO 1.5 LAC PER MONTH

Other additional expenses will include equipment maintenance, ad-hoc employee salaries and marketing costs

Spice Business Licensing Requirements

As spice powder is part of the food category hence, it has to satisfy a lot of regulations from state governments.

Registration of firm should be done depending upon the scale of business if its Pvt. Ltd. or partnership or single person company, the firm is registered accordingly.

Regardless you commence a small scale or large scale spice business, you have to get these registrations and licenses

Registration of Firm:

You may start the small to medium Spice Powder unit either a Proprietorship or Partnership Firm. If you are starting this business as One Person Company, then you have to register your firm as a proprietorship. For partnership operation, you have to register as a limited liability partnership (LLP) or Pvt. Ltd. Company with Registrar of Companies (ROC).

Also, the brand name and logo can be registered.

GST Registration:

It is mandatory to take GST Registration for every business. Also, GST registration helps you in getting your business recognized and also opens a number of opportunities for your business.

Trade License:

It is necessary to Obtain Trade license from local authorities. A trade license is a document/certificate that gives permission to the applicant to commence a particular trade or business in a particular area.

Udyam / MSME Registration:

Register your business with Udyam registration/ MSME Registration, it will help you to get the facility and subsidy from the state government.

Trade Mark Registration:

It is become very necessary to preserve your brand logo from misuse or duplication by others. So Secure your brand you need to apply for a trademark and obtain a Trademark Registration number

Food Safety and Standard Authority of India (FSSAI) Registration:

Spice powder is a food item so you require to get a food operation license or FSSAI Registration which is compulsory for every food industry.

IEC Code:

IEC is the first registration needed for the business entities who are dealing in Importing or exporting of goods and services from India. So it is necessary to apply for IEC code for those who are planning to Export products.

BIS Certification:

You require applying for BIS certification, ISI specification for ground spices are

Blackhole and ground ISI-1798-1961

Chilli powder ISI-2445-1963

Coriander powder ISI-2444-1963

Curry powder ISI-1909-1961

Ways of sampling and test of Spices and condiment ISI-1997-1961

Turmeric powder ISI-2446-1963

ISO Certification:

ISO 9001 ensure company product & services meets customer expectations and better customer satisfaction. So it is required for a business to obtain ISO Certification.

It is advisable to obtain AGMARK certification as well.

Spice Business Space Required

No massive space is required when it comes to starting a business with spices, The ideal area space for spice powder making business is around 500 sq ft where you can divide it into two sections one is for processing of pieces (25 sq ft) another is for the packaging of the spices (25 sq ft). Check commercial space where basic amenities are available such as water, electricity, etc.

The state government have restriction to start the food business from home hence ensure that the location is obeying the law of the government decided.

You can start spice powder making the business from your home, but while starting the business from your home ensure that the location is having sufficient space for the business.

The state government having some restriction to start the food business from home ensure that the location is obeyed the law of the government decided.

Some state government restriction for the home-based business that is they have a rule that is of the manufacturing does not allow to the cook other food also the pet is not allowed in the location, therefore if you have the pet in your house then it will be a trouble for your business.

Make sure that they are located must be accessible by the transportation and the target market is also near to the locations complete all the paperwork related to the land/space with the help of property owner.

Spice Business Raw Materials Required

The basic material for the spice powder is ungrounded spice; the raw material for the spice powder is dependent upon the type of the spice that you want to process.

The ungrounded spices include chili, turmeric, clove, coriander, cumin etc

Apart from the raw material for the spice powder you need packaging material for a packaging purpose which is very essential for the strong and protecting the process spice powder. You can use the packaging material to promote brand by printing personalized branding content on it also you can print the product information that will help the customer.

To start production you need to buy raw materials in bulk like,

  • Chilly
  • Coriander
  • Corrugated Cartons
  • Cumin
  • Fennel Seeds
  • Methi Leaves
  • Mixed Powder
  • Mustard
  • Pepper
  • Permitted Food Colour And Preservative
  • Poppy Seeds
  • Turmeric
  • Packaging Materials Including PET, MET-PET, PP, PPFP

Spice Business Machinery Usage

Grinding machine is necessary machinery required in spice business depending upon the scale of industries the equipment is used. Large scale industries use Impact Pulverizer machine while small scale industries use Double stage Pulverizer.

Impact Pulverizer: Impact Pulverizer is suitable for the rock salt and turmeric this machine is generally used for large-scale manufacturing.

Double stage Pulverizer: this machine is also suitable for turmeric and rock salt but this machine is used in small-scale manufacturing.

Hammermill: this is suitable for the chili, ajowan, coriander, tejpat, curry leaves, hyssop, cumin, black cumin, mustard, basil leaves etc.

Spice mill: spice mill is suitable for fennel, fenugreek, mustard, poppy seed, basil leaves, tejpat (bay leaf), curry leaves, hyssop, marjoram, thyme leaves, mint, parsley, sage, lesser cardamom, greater cardamom, juniper, kokam, etc.

Pounding Machine: Pounding Machine is suitable for black cumin, dill, fennel, fenugreek, mustard, poppy seed coriander, ajowan, anardana, aniseed, caraway, celery juniper, kokam, mace, star anise, tamarind, vanilla, black pepper, long pepper etc

List of few machinery required for the spice powder making,

  • Compressor
  • Disintegrator
  • Heat Sealing Machine
  • Packaging machine
  • Roster
  • Sieves
  • Spice Grinder
  • Weighing Scale

Spice Business Manufacturing Process

Step 1: Cleaning 

The 1st step in spice making is Cleaning in which the ungrounded spices are sorted, cleaned manually by removing impurities like stone, dust, and dirt.

Step 2: Drying 

Immediately after cleaning and washing, the drying of spices is carried out and put them in sunlight so that they dry completely. The quality of the spice powder will depend on the well-dried spice. If proper cleaning and washing do not take place, it may lead to the growth of bacteria, which may poison the food when used spice.

Step 3: Roasting 

Once spices are dried well, roasting process will initiate and which is essential step because it will help to give the aroma, colour and good taste to spice powder.

Step 4: Grinding 

After roasting the spices are grinded (pulverizing) to convert the spices into powder form with grinding machine. Also this is the base for the required grading of spices.

With the manual grinder in the small-scale manufacturing unit; 100 kg of spice powder per day can be produced.

Automatic grinding Machine can produce 20 to 25 kg of spice powder per hour; but well ventilated room is required for the grinding process to avoid dust.

Step 5: Grading 

The grading is a process which is the basis of the inclusion and proportion of spices mix with their raw material used, also depends on the type of spices (flavour), size, shape, density, and colour.

Step 6: Sieving 

The powdered spices are sieved to ensure that spice powder is having a uniform mesh size.

Step 7: Packaging

Seasoning and spices add massive flavour to your favourite dishes, but to work their magic, they must be fresh; hence Packaging of spices is mandatory to Protect and preserve your spices and such packaging bags will renders you the flexibility to choose the best size, style, and features for your spices.

Spice Business Targeting of Sale

The grocery store / super market is not the only option for this business because they always demand the popular brands, so small-scale manufactures cannot afford to accommodate in initial phase of business.

You can choose the option of the sell in food shows, and farmer market or you can sell your product online.

The following strategies can be used for the marketing and promoting the spice business

Local market (retail market):

Hotel and restaurant: Contact and inform the neighbourhood chefs and restaurants regarding your product.

Farmers Market: Promote the product in local  farmer’s market

Cooking Classes: Promote product with help of nearby cooking schools. Also, free cooking class can be arranged to demonstrate to best utilize your flavors.

Wholesale Market For spices (FMCG):

You can sale your spice products in your own city wholesale market. Which is known as Market yard

Online market for spices:

Own Website: You can develop a website and mobile apps to inform customers about various flavors and make products available for them to buy it on the web and mobile apps.

B2B Websites: Register your Spice Powder Business on B2B websites to sell your product on bulk orders like,

LocalBuyX, Indiamart, Tradeindia, Exportersindia

B2C Websites: Register your Spice Powder Business on B2C websites to sell your product directly to the customer like,

LocalBuyX, Amazon, Flipkart, Bigbasket

Digital Marketing: The digital media platforms such as Facebook, Twitter, Instagram and LinkedIn are in trends for spice campaigning and targeting sale. In spice industry, the brand has become a pioneer in involving digital media and leveraging various activities, events and various festivals which are ongoing in our country to gain traction and keep users engaged with brand across all platforms

Export market:

Indian Spice powder has a huge demand in foreign countries. If you are looking for export market then you need IEC code.

Brand Promotion and Uniqueness:

Cooking Magazines and Books: You can promote in strength cooking magazines and books.

Promoting material: These might be used once your business has extended. Leave promotion material in various areas in the location where you are working.

Newspaper: This is beneficial once your business has expanded you can post the advertising in the local newspaper.

Spice Business Challenges Which May Come

Market Credit

The credit market risk with distributers or mediators in the spice industry is always at high, and hence this leads as a significant challenge.

Packaging Leakage

There are many small scale industries in India where still hand-made packaging is done due to budget constraint, which results some times in packaging leakage. If they plan to opt hi-tech types of machinery, then costing is increased; hence this has always been the point of concern.

Working Labour Issue

The pungent odour of spices which gives sharp sensation is not suitable for health if exposed for a more extended period. Hence there is always a significant issue of discovering working labour in the Indian spice industry.

Difficulty in expansion

Each day innovation is introduced, to keep updated and in trend, companies have to adapt to each change. For SME’s, it is challenging to expand themselves due to the introduction of new technology and this act as a challenge for brands.

A lot of competition 

The spice industry faces intense competition since the concentration of suppliers is more Its competition is often at the regional level. There are also many small local companies often operating in a specific location, and as the demand for authentic organic spices increased the demand for maintaining the quality of the product raised.

Spice Business Product Branding

Branding helps to develop a memorable impression on consumers and allow customers to know what to expect from your brand. It is a way of distinguishing yourself from the competitors and clarifying what it is you offer that makes you the better choice.

Below are soe of elements in product branding,

Brand Identity

In spice industry brand identity is the way audience recognize the brand which can be through brand logo, punch-lines, stationary identities such as business cards, envelop, letterheads and other associated visuals.

Brand Image

The process of creating the idea of brand in the minds of customers as it also dictates what they expect from the brand. We all know its universal that saffron is premium spice hence it cannot be presented with budget environment.

Brand positioning

Spice brands carry their own brand story along with value added elements such as home-made, no preservatives, on basis of taste or flavours and many more. It is very important to create competitive advantage and occupy the space in the minds of customers and branding does this effectively.

Brand personality

Brand personality is just like the personality of human beings. It is certain emotional or personal qualities that we associate with a particular brand.

Packaging Design

It takes 7 second for customers to make purchasing decision and hence spice packaging design plays very crucial role in deciding. The colour, font style, text placement, content, tagline, and illustrations all together reflect the brand story. Packaging design agency are experts who ensure your packaging design acts as marketing tool.

Marketing collaterals

Posters, brochures, websites, banners every collection of media used to support the sales of service or product is considered in marketing collaterals.

Good Luck for the new Spice Business.

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