This is one of my favorite easy home businesses article I have written. Though the business is proposed for the NRI but can also be started in India, have given both the scenerios.
Read this article about a home-based organic spice business which will serve the Indian subcontinent origin nationals living in USA. If you are an Indian or Pakistan origin USA national (or any origin) living in USA and looking for a home business idea, then you have landed at the right place.
Introduction to spice business.
Before we start building the spice business model let us understand what is organic. The word “organic” is now quite common in urban households, people synonym the term “organic” with natural and freshness. To a considerable extent, it is correct, but here, we will know what the “organic” term stands for in the context of edible things. Organic is a process, when we grow edible plants, vegetables, and fruits in a natural process by using natural manure is called organic. In the organic production process, chemicals or pesticides are never used.
Organic spice has a sound identity in the market and a distinct niche. Hence, we will take this as a business opportunity. We will also see the current trends of organic spice in the USA market.
What will we learn from this article?
To understand the model of an organic spice business idea we will learn the following things.
- Source
- Processing [We are into powder and whole form]
- Packaging
- Pricing
- Distribution
- Marketing
Also, we will understand the investment required for this spice business and how the business can be scaled up.
Why the organic spice business?
As I wrote above organic spice has a distinct niche which eventually resulted in a sharp increase in demand, if you surf the internet or go to any departmental store you can see an array of organic products. This is because of increasing health consciousness and a strong belief that the easily available vegetables, fruits, and other bio veg products are grown with the help of chemicals and medicines which are not good for human health. (I am not debating this perception here).
The Indian subcontinent origin population in USA is almost 21 million, among them the Indians, Pakistani, Bangladeshi, Nepali together contributes more than 25% (These set of people has the identical food habits and gastronomy)
These five million inhabitants hold a little more than two million households across the cities in USA, the New York, Chicago, Washington, and Los Angeles cities are top contributor having little more than 0.8 million households. Hence, these 800,000 households who have identical food habits and gastronomy make a strong business case for a small home-based business.
What organic spices businesses are in demand in the market?
- Black pepper
- Turmeric
- Cumin
- Cardamom
- Kasuri Methi
- Red Chili
- Clove
- Fenugreek
- Ajwain
Interestingly, Indian spices are to be considered to have a medicinal value which further results in an additional demand.
Sources of organic spices.
Now the biggest question is how to get these products in bulk and maintain a regular supply. For your information, in USA there are B2B platform who will deliver the stock at your doorstep, check internet with these keywords “b2b spice in usa”
In case you have an export and import license may venture below sources.
You may or may not hear about the NATIONAL PROGRAMME FOR ORGANIC PRODUCTION (NPOP), an Indian government organization that promotes and supports organic cultivation. Madhya Pradesh, Rajasthan, Maharastra, Chattisgarh are the major producing states. Apart from this the spice board of India also promotes organic spices business, good news is that they are mostly into export. During 20-21 FY they exported 4717.36 MT of organic spices.
As we are into small business ideation and majorly ideate home-based businesses, for this spice business we will consider low investment hence small-size sourcing will come into consideration.
To source in small quantities and with variety you can depend on the B2B online sourcing platforms like TradeIndia (I am not engaged in commercial promotion of these two organizations) as an importer, or you can contact B2B online platforms like Z natural Foods. (I am not a beneficiary and engaged in any commercial promotion of these two organizations)
How do you process spices at home or in a small workshop?
Processing spices is a lengthy process and needs more space and investment. As we will be into home-based business hence will procure ready to pack ingredients only, for that only I have given reference to B2B platforms. Apart from this, you might find white-label spice business wholesalers in your local market too, if not, check any big city’s bulk market.
How will you do packaging?
This is not a very heavy task, as, you are procuring in small quantities. But the most important part of your business. Please be more attentive here, you are creating a brand, and may have to compete with the established brand hence your packaging need to have three important things,
- By look and packaging material it should be distinct.
- Artwork and color context must convey “Organic”
- The brand name, logo, and tagline should be easy to remember and relevant with spice.
For packaging material, you can contact online B2B platforms like Vistaprint. The advantage here is they supply in small quantities, hence for piloting the products you can go with them. Once you get success in pilot, you may go for bulk procurement that comes cheap.
How will you set the Pricing?
For pricing, please research the existing brands, their SKU, price, and margins. The best way to decide pricing is equal to competition but with a greater margin for retail.
Visit our homepage for more ideas, click here.
Distribution
As you will be starting small (home based), you must pilot the products by targeting the local Asian inhabitants and direct to retail where Asian edible stuffs are sold. I have mentioned nine spices in this article, you select the spices basis the food habit of the geography you belong (The Asian stuff selling shopkeepers can help you find that).
While placing the products in retail please do it in an innovative way, how? Refer to the image and make five such pieces wrapped with your brand then place the products.
Marketing for spice business
Though the FMCG (Spice business Category) products are not keen on digital marketing, you will do it. Because you are placing the products in a distinct niche where you will emphasize more on health and medicinal values.
Do digital marketing (Facebook, YouTube, Instagram) targeting Asian households and on the periphery where your products are placed. (Hope you know that we can select interest groups and geography on most of the digital marketing platforms)
Apart from this the merchandising on the retail premises itself will be a marketing medium for you.
Check home based business ideas here.
Check online business ideas here.
Check small business ideas here.
Investment required to start the spice business.
For investment, I propose to pick up five spices (Apt to the geography you live in). To pilot in 10 retail shops (Departmental store) you need to be ready with 500 SKU (5 Spices X 10 Packet each X 10 Retail Shops) + 500 SKU for refilling with 500 units as reorder point.
- For inventory, I think you can budget 5.5K USD. (Consider USD 8 to 9 average cost of goods sold for 1 Lb of an organic spices packet.)
- Keep a budget of 1K USD per month for 3 months for digital marketing. Source the service from Asian market (India/Pakistan) as it will be much cheaper than doing it from USA.
- Buying promotion stuff like standee, shelves may cost you 0.5K USD.
- You may have to keep a few dollars aside for licensing, permits, travel, rent etc. (Calculate the basis of the stretch of your pilot market and locality)
The target investment to start with a small spice business can go up around 10,000 to 12,000 USD.
Scale up
Once you get a green signal after piloting the project for 90 days, jump into it and just double your investment (At this time you can easily get a business loan up to 50K USD) Take a bigger space, just double your production and distribution, and continue for another 90 days.
Please go on repeating the same every 90 days. You may go for full distribution (Distributorship model) after a year or two.
People looking for any consumer goods business can build up their idea with this spice business format.
Conclusion
In conclusion, this home-based organic spice business will serve the Indian subcontinent origin nationals living in the USA. The business has the potential to grow rapidly till 2030. The business will have to be registered as an LLC to maintain the legal status in the USA. The company will have to get the Federal and State tax ID numbers. The company will also have to get a business license to operate the business. The company will need to get a physical address for the business. The company will also need to get a business bank account.
Hope you have liked this spice business idea article; in case you want to know more can write to me.
All the best.
