“India needs to tap EU to increase its honey exports”
In an interaction with TPCI, Mr. Arshdeep Singh talks about how he expanded his father’s organic honey business from being an importer to being a manufacturer & exporter of the product and on how Indian players need to align to enhance their competitiveness and penetrate new markets.
TPCI: How did you come up with the idea of starting a business in this sector? Did you diversify into flavours like eucalyptus, mustard & lychee since the beginning or did that happen later?
Mr. Arshdeep Singh (AS): My father was into this business since 2011. Back then, we were not operating out of India. So, we were an import-based company in the US, wherein we were importing from India and supplying to the West. When I joined the business in 2014, we conceived this idea of putting up our own plant to double our revenue and increase our profits. So, we established our unit in Sonepat, India in 2014 and it took us about 4-5 months to get the unit up and running.
When we started exporting, our primary market happened to be US, especially for mustard. As we started generating bigger volumes and exploring newer markets, it forced us to add new flavours of organic honey into our portfolio and to market them to new areas like Middle East where there’s a demand for these distinct flavours. When we market these products, we educate the consumers about their benefits. For example, the Sidr honey which is really popular in the Middle East has beautiful anti-bacterial properties. It is similar to Manuka honey which comes from New Zealand. Rich in anti-biotic properties, it is also very good for the body and strengthens immunity.
TPCI: What were the initial challenges you faced, and how did you overcome them?
AS: The biggest challenge was to create a direct relation with the beekeepers & the farmers themselves so that there are no intermediaries & we can pay them a fair price. So, supply chain integration was a major challenge for us.
There were some initial failures when we were trying to overcome this. When you join hands with a lot of people, you come across people some nice people and some people who are not willing to support the growth of the company. So, it was a trial & error experience. We used to procure honey from a set of beekeepers; we used to test it and that would help us understand the mindset of the beekeeper. So, that’s how we started building up a supply chain. Today, we are associated with thousands of beekeepers from Haryana, Punjab, Bengal, Bihar, UP, MP and Jammu & Kashmir and it has become a pan-India network. We have a team to make sure that we get the best quality of honey from the country. Once the lorries bring it to our factory, it is tested as per National and International standards (FSSAI, USFDA, EUCODEX, SASO, BIS). We maintain a farm-to-fork traceability – any batch of honey dispatched by us can be traced back to the beekeeper.
TPCI: Which markets did you tap for your product and why? What market penetration/promotion strategy did you follow?
AS: We started our business with US in 2014, which had more than 90% market share of India’s exports. That’s why we thought of starting with US for our honey exports. They have flexibility too; they don’t mind going for newer products & trying out different vendors because they know about the quality of honey from a particular source. So, that gave us a boost. Also, at that time there was not as stiff competition as there is now; back then there were about 8/9 players, now there are plenty. That helped us a lot.
We built an in-house lab; we expanded from being a 45,000 sq ft facility to being a 150,000 sq ft facility. We integrated a beautiful supply chain. We have a dedicated team which makes sure that we get the best quality of honey. In fact, every batch that comes into our factory is tested twice. We used to send samples to Germany as well; they have some of the biggest labs in the world. Once the honey was processed by us, we used to test it in Germany and furnish those tests to our buyers, which were really appreciated by them. We never compromised with the quality.
While this drove up the cost of the product, we did manage to fetch a decent price since in the international markets, the consumers are willing to pay for their product. Moreover, in markets like US where there are stringent tests to check the quality, you never know when newer tests could be imposed on your product. So, it is better to be sure about the product.
Moreover, we ensured that our products are delivered on time. This is a big challenge for importing countries since there are certain transit/operational delays. It takes 45-60 days for a shipment to reach the US. We streamlined their purchases throughout the year. One of the biggest factors that we tapped upon is service. What we believe is that manufacturing industries are no more just about manufacturing; it is a service industry now. We came with a newer approach for the buyer – it is about the product, the quality and the market. We have partnered with the big companies in the importing countries to conduct research to introduce products like flavoured honey to inform the consumers that these are the different products which you can enjoy. It is about being prepared for the challenges that are expected to come in the future.
TPCI: Who are your key competitor countries and what unique competitive advantages have helped you establish your business presence?
AS: From top to bottom, our key competitors are Argentina, Vietnam, Ukraine & Brazil. When we are talking about exporting, it is never about a particular company; it is about the entire origin.
India is an agricultural economy and the government has really promoted the agro sector as a whole, which has increased production in the last decade and helped the exporters in India. Earlier it was only the US which received a major chunk of our exports. Now it is divided into Canada, UAE, Saudi Arabia, Oman, Morocco, Kuwait & Libya.
One big comparative advantage that India has is that majority of our crops are non-genetically modified. This gives us a boost in the international markets because of the less use of pesticides. Moreover, the aroma of Indian honey is really enticing, which attracts you to consume more of this honey.
TPCI: What are the major tariff/non-tariff barriers that you have experienced in the international markets? What should be the roadmap to overcome these challenges?
AS: If you are contributing substantially to the world exports, you might face quite a few NTBs as a country due to factors like the rising dependence of importing countries or diplomatic ties between the countries. Then, the federal agencies of the importing nations may send your product for testing. So, if it takes 60 days for a product to reach the importing nation, it might take 100/110 days to do so.
The only way to deal with such challenges is that you have to continue on the path of providing good quality honey. Whenever these kinds of problems come, Indian exporters show unity. The entire fraternity comes together & trade promotion bodies like EIC or APEDA play an amazing role in educating the federal agencies of the importing nations that what they are doing is simply out of the book. They invite them to come to India, to interact with the beekeepers, to see how the product is being manufactured, etc. That’s how we overcome these challenges.
TPCI: What are the expansion opportunities you envision for yourself in the global market at present? How do you plan to tap them further?
AS: Right now, we are primarily exporting to US, Canada & some MENA countries. In the future, we would like to tap the markets of EU. This has to be a collective effort of all the exporters along with trade promotion bodies. We should partner with exhibitors from different parts of the globe and educate them by holding seminars & discussions about Indian honey. I’m pretty optimistic that with these measures, we’ll be able to export honey to EU. There’ll be a dearth of Indian honey then. So, the revenues will start growing & the beekeepers will get a higher price for their efforts.
TPCI: What is your view on the general competitiveness of Indian exporters in this sector? Why has China managed to catapult itself as the top honey exporter?
AS: Competition stimulates growth. If there is no competition, people will not strive to introduce newer products or to go for innovations. There are companies which try to innovate to earn revenue or to create a niche product. This definitely creates value for your product. In West Bengal, companies are sending their products to Sunderbans & promoting their product in a different way.
In terms of competitive challenges, the honey from all the above mentioned countries is differently priced. For instance, while Argentina’s honey is costlier than honey from India; the honey from Vietnam is cheaper. If the difference arises, the consumer might choose the honey which enables them to save more money.
When it comes to China, US does not import from China due to anti-dumping duties. But the EU is one of the largest consumers of honey. They are buying honey from China, which offers better prices & quality. This has helped China in establishing its presence in the international honey market. EU, therefore, is a target market for us too. APEDA is trying to promote honey. We try to participate in the exhibitions that take place & educate consumers about our product. Sometimes people have this mindset that if honey is coming from India, it is of a substandard quality. That is why EU needs to be educated.
TPCI: If we look at the 5-year export trend in organic honey, there have been many highs & lows, with 2015 being the year when India earned the maximum revenue. Plus, our exports of honey declined in 2018 compared to 2017. Why is this so?
AS: There are two ways to look at it. The data that you have pertains to the revenue garnered through these exports. If, on the other hand, you look at the quantity of honey exports, there has been a steady increase in the last few years.
In 2015, the prices of honey in the world (& that of Indian honey), were at a historical high. So, what happened was that Argentinean Peso devalued. It was fetching 7 Pesos for a dollar in 2015; while now it fetches 55 Pesos for a dollar. About 70-80% Pesos are devalued every year. So, they sold their stocks at a cheaper price. So, the value of the product came down; not the quantity of the product. In the last 4-5 years, India’s exports grew by 10-15% in terms of quantity every year. Since the prices of honey came down, the revenue graph appears to have a really volatile image in front of you.
TPCI: What are your expectations from the new foreign trade policy? What can the government do to boost honey exports?
AS: We have certain expectations as an industry. I would really like to stress on 2 things. First, the incentives to the industry must increase so that the benefits can reach the Indian beekeepers and farmers. Second, the government should increase the incentives on exports and provide subsidies as a cushion against internationally subdued prices. This will also give us a competitive advantage in the market and support our earnings, thereby helping us to transmit these benefits to the beekeepers.
Mr. Arshdeep Singh is the Managing Director of Allied Natural Product. Allied Natural Honey is a manufacturer and exporter of organic raw honey in India. It has a plant in Sonepat, Haryana.