Amazon buys Whole Foods: Unfolding of Opportunities for India

There seems to be no stopping for Amazon. To boost their grocery delivery ambitions, it has acquired Whole Foods for a banging $13.7 billion. Whole Foods is American supermarket chain which is famous for natural and organic foods and is also the first National Certified Organic grocer in the US. This luxurious organic foods store, with 460 stores has overwhelming presence in the US, Canada and the UK. Whole Foods, like Amazon is stronger in urban areas and bigger cities. This top- dog strategy will help Amazon to enter the unexplored natural and organic food segment. Amazon has significant presence across EU whereas Whole Foods has existence only in the UK. Coming together of these two is expected to expand the market and consumer base for organic food products especially in the EU. The fact that Whole Foods is a trusted brand known for its high quality products, and Amazon will get to share and enjoy its credibility; will make consumer base augmentation and expansion of global footprints a cake walk for Amazon.

SNAPSHOT OF GLOBAL ORGANIC FOOD MARKET

The global organic food market was worth $ 90 billion in 2015 has been growing at a CAGR of 12% for more than a decade now. Europe and America together generate about 90% of the global organic food sales. US, Germany, France and Italy are global leaders in consumption of packaged organic food. Denmark, Spain, UK, Switzerland and Canada are also important markets for organic food.

The major commodities imported by US include coffee, soybean, olive oil, bananas, wine, mangoes, ginger, almonds and apples. India has been a major supplier to USA for tea, rice, ginger and soybean. Germany is heavily dependent on imports and imported Dairy products, cereals, fruits & vegetable like banana, soybeans etc. France is EU’s second largest market for organic food and roughly 25% of all consumed organic products are imported. Main imported products include dairy products, fruits and vegetables, both fresh & processed, wine, meat, eggs & beverages. Italy is the fourth largest market for organic food in the EU and imported products include soybean, wheat, rice, sugar, maize, tea, coffee and nuts.

INDIA’S POSITION

India is bestowed with lot of potential to produce all varieties of organic products due to its various agro- climatic regions. Its rank in terms of World’s Organic Agriculture land was 15 in 2015. India produced around 1.35 million metric tonnes of certified organic products in 2015- 16 which includes varieties of food products- Sugarcane, Oil Seeds, Cereals & Millets, Cotton, Pulses, Medicinal Plants, Tea, Fruits, Spices, Dry Fruits, Vegetables, Coffee and organic cotton fiber. It also exported $ 298 million worth of organic food in the year 2015-16. The major import destinations are- European Union, US, Canada, Switzerland, Korea, Australia, New Zealand, South East Asian countries, Middle East and South Africa.

EXPORT POTENTIAL

Acquisition of Whole Foods by Amazon has opened up new avenues for export of organic food from India. It is very much likely that with spread of Amazon- Whole Foods chain, the demand for organic foods will also go up. India should be prepared to strike while the iron is hot.

Based on the market potential, size, growth rate and exporter’s confidence levels, North America and EU should be the focus markets. Along with concentration on its heritage products like- rice, spices, condiments, tea, pulses, soyabeans, sesame and sugar, India should also direct its attention towards untapped stars like- fruits and fruit products, nuts, dry fruits, processed and packaged foods.
In order to reap the benefits of this golden opportunity, it is imperative for India to fix its structural complications. A right set of policy framework, supply chain management, proper infrastructure including food testing infrastructure and technology are pre- requisites for any enhancement in India’s export competitiveness.