Wondering how to start a spice business in India? Now is the perfect time to do so. Despite the impacts caused by the pandemic, you have the opportunity to carve out a niche in the marketplace.
India is considered the Spice Bowl of the World and is home to spices that are valued for their:
- Medicinal value
According to the India Brand Equity Foundation (IBEF), India is also the largest consumer, producer, and exporter of spices across the globe.
Below, you’ll find a quick reference guide to the ins-and-outs of how to start a spice business in India.
9-step guide to starting a spice business
The road to becoming a successful business owner has more bumps and curves than you can imagine. If you’re wondering about hot new business ideas that could be the next big thing, start with homework and research of the industry.
Things get much easier when you have the know-how of business operations and a well-defined game plan.
Here are the nine steps you can follow to build a spice business in India from scratch.
1. Understanding spices and spice products
As an aspiring spice business owner, the first step is to understand the types of spices and spice-related products.
Spice products can be categorized into three types – whole spice, spice powder, and recipe-specific spices.
- Whole spices: Cloves, chili, cumin, cinnamon, mustard, poppy, saffron, turmeric, bay leaf, coriander and thyme are among the well-known ones.
- Spice powder: Pepper powder, cardamom powder, chili powder, ginger powder, turmeric powder, fennel powder, tamarind powder, coriander powder and fenugreek powder are the common ones.
- Recipe-specific spices: Curry masala, meat masala, fish curry masala, sambar, rasam, and instant pickles are widely used.
Understanding the buying habits of your likely customers will help you decide the category of spices you want to deal with. Additionally, you can also consider including organic spices.
2. Create a business budget
Once you decide the category of spices, the next step is to create a business budget plan. It’s best to lay out the costs required to get a spice business up and running.
A business budget plan usually includes two types of costs — fixed capital cost and working capital cost.
Fixed capital cost: This includes the cost for purchasing machinery, licensing, registrations, and buildings.
Working capital costs: These vary depending on the amount and the types of spices you want to produce.
For example, working capital costs for a spice business can include the cost of:
- Raw materials
- Tax liabilities
There are also government subsidy schemes to help you get your business off the ground. Here are some of the more popular ones:
- National Horticulture Board (NHB)
- National Horticulture Mission (NHM)
- Small Farmer Agri-Business Consortium (SFAC) Assistance
- Agricultural and Processed Food Products Export Development Authority (APEDA) Assistance
- Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)
- Venture Capital by Small Farmer Agri-Business Consortium (SFAC)
Having a budget in place will help you get a better idea of whether you need to apply for government subsidies related to your business needs.
Related: How to create a go-to-market plan
3. Lay out a written roadmap with a business plan
Writing a business plan is one of the crucial tasks as you start the spice business. Having one in place will help you:
- Lay out business goals
- Track progress
- Decide whether you are on the right path
- Make wise decisions
- Avoid mistakes
- Apply for grants or loans
Furthermore, a roadmap defines the goals and desired outcomes for your business. It’ll also help you recognize the major milestones needed to reach them.
Here are a few key elements that your spice business plan should include:
- Market analysis
- Competitive analysis
- Marketing plan
- Social media strategy
- Sales strategy
- Financial projections
Planning ahead and doing your research will better prepare you for success.
4. Registration and licensing
Running a spice business in India requires you to have business registration and multiple licenses from government bodies.
Obtaining a license from the Food Safety and Standard Authority of India (FSSAI) is compulsory for every food item in India.
Some of the most common registrations and licenses for a spice business are:
Company formation: Depending on the business model, you may want to choose from different company formations such as: private limited company, one person company, limited liability partnership, partnership firm, and sole proprietor.
GST registration: Getting a GST registration will establish the business as a legal supplier of spices and help in tax accounting.
Trade license: Obtaining a trade license from local authorities is mandatory for commencing your business.
MSME registration: Having the MSME registration is vital in availing different schemes from the central or state governments.
IEC code: Whether you decide to import or export goods and services from India, you will need to obtain an IEC code.
You may also need other licenses, subject to the federal law of the state where you will be running the business from.
5. Procuring the machinery
Based on the products you plan to offer, you will need to procure the right machinery. At this stage, identify the kind of machinery that your business needs.
Some of the most common tools used in a spice business include:
- Spice grinder
- Packaging machine
- Pouch sealing machine
- Weighing machine
Investing in the right tools early on will help your business run smoothly and more efficiently in the long run.
6. Sourcing raw materials and manufacturing
Once you have the machinery ready, it’s time to locate a source of raw materials. These materials could include:
- Unground spices
- Pouches for packaging consumables
- Corrugated cartons for bulk packaging
The key steps involved in manufacturing of the spices are:
Cleaning: The process starts with cleaning whole spices manually and removing impurities like dust, dirt, and stone.
Drying: During this phase, you’ll have to dry the spices. Lack of proper cleaning may lead to the growth of bacteria.
Roasting: The dried spices are roasted for flavor, aroma, and color.
Grinding: At this stage, the spices are ground using the pulverizer machine.
Sieving: This step ensures that the spice powder comes with a uniform mesh size.
Using good-quality raw materials and understanding the steps involved in manufacturing will help equip your business for success in the future.
7. Naming the business
Finding the right name is crucial to the success of any business and the spice industry is no different.
Look for easy-to-spell names that are catchy and can be easily remembered. The benefits of the right brand name extend to helping in sales and marketing.
Read Brand names suggestions for the non-creative for help choosing a good name for your spice business.
8. Use branding to connect with your audience
When it comes to branding a spice business, you may want to begin by sharing your brand story. This could include:
- The story behind how you started the business
- Where you get your ingredients
- Your manufacturing process
Consider them to be your unique selling points which will ultimately set your spice business apart from other similar businesses.
A great way to get the word out is to build a WordPress website through GoDaddy. You can share your brand story and sell your products directly to businesses or consumers.
9. Finding the first customers
Finding your first customers (also known as lead generation) can feel like a daunting task. But when you do it right, these early customers share the goodness of your products with their network, family and peers.
The marketing strategies you can use to find the initial consumers are:
- Social media posts on Facebook, Instagram, Twitter and WhatsApp
- Television ads
- Vocal for local marketing campaigns
- Pay-per-click advertising on Google
- Email marketing
- Print advertising
- Radio ads
- Tying up with local Kirana shops
- Registering on B2B websites including Alibaba, Indiamart and Udaan
- Selling on marketplaces such as Amazon
To get a pulse on your customers, try collaborating with local megastores. You can also distribute free samples and spread the word by networking with other businesses, too.
How to start a spice business: in closing
Starting a spice business in India can be profitable because ready-to-eat spices are immensely popular among consumers around the world. From a consumer’s viewpoint, pre-blended packages offer consistent food flavors and are convenient to use.
Following these nine steps will help your spice business become a recognized brand among the target audience.