What is one common thing among the founders of famous companies like Google, Ford and Facebook that allows them to have complete control over the decision-making of their companies? The answer to this question is dual-class shares.
I know you are very confused about what dual-class shares are and what advantages and disadvantages they offer to the founders. Don’t worry I will explain to you about dual-class voting shares in great detail without technical jargon. We will also talk about companies with dual-class stock structures.
In dual-class shares, the founders own a small portion of the company’s total stock but they have the maximum voting power. For example, a company may issue class A and class B shares. Both these shares may have different voting power and dividend payments.
In this scenario, class A shares which have limited or no voting rights are offered to the general public while class B shares which have the maximum voting power are offered to the founders, executives, and family.
Why Dual-Class Voting Shares are Used?
Founders who want to enter the public equity markets for financing but want to gain full control over their company opt for dual-class stocks. Using this strategy founders can focus on their long-term vision. They don’t have to worry about their investors who just want profits.
Famous Examples of Companies That Use Dual Class Structure
Google
Alphabet subsidiary Google issued two classes of shares in 2004. Here, class A was offered to the general public which carried one vote per share. Although Class B which was offered to the founders carried 10 votes. Later, the company issued class C shares that had zero voting rights.
Ford
The Ford family has also issued two classes of shares: Class A and Class B. The family owns the class B shares which gives them 40% of voting power with just 5.0% of the total equity in the company.
Facebook
Facebook also follows a dual-class common stock structure. Mark Zuckerberg and his close executives possess class B shares which carry 10 votes. Zuckerberg owns 75% of class B shares which allows him to control 58% of Facebook’s votes.
Advantages of Dual Class Shares
The biggest advantage of dual-class voting shares is that the founders have complete control over the decision-making and functioning of the company.
The company can still get public financing without worrying about giving too much voting power to its investors.
Founders can focus on long-term growth. It protects the company from investors who only want to gain profits.
Disadvantages of Dual Class Shares
Dual-class voting shares give unfair voting rights to their investors.
Super voting rights in the hands of the founders and executives weaken the structure of the company.
The structure of the company cannot be easily transformed into a single class.
A study from the National Bureau of Economic Research provided strong evidence that the company which follow a dual-class structure face more debt than single-class shares.
Shareholders can make bad decisions with few consequences.
Conclusion
As you can see dual-class voting shares allow the founders and insiders of the company to have complete control over the company with limited shares.
Almost every other founder wants to focus on the company’s long-term goals and doesn’t want to allow investors to control the decision-making of the company. That’s why well-known founders are implementing a dual-class structure in their respective companies.
Although dual-class voting shares do have their own cons. The founders and investors should understand the benefits and consequences of dual-class voting shares.
FAQs
What is a dual-class share?
In a dual-class stock structure, a company issues two classes of shares: Class A and Class B where one of the shares have more voting rights than the other one. For example, class A shares which are offered to the general public have one vote per share. While class B shares which are offered to the founders and insiders of the company can have 10 voting rights.
What are the benefits of Dual-class shares?
Since the founders have higher voting rights with a limited amount of stock they can have complete control over the decision-making of the company. They can focus on long-term goals. This protects the company investors who only aim to make profits.
Is it unfair or unethical for corporations to create classes of stock with unequal voting rights?
No, it is not unfair to issue stock with unequal voting right since the company before issuing its shares tells the general public and investors that they will be following the dual-class structure. Investors know all the terms and conditions and are under no obligation to buy the shares.
Red Bull is an Austrian beverage giant known for its unique marketing strategies and campaigns. The company is a marketing powerhouse that is equally popular for its daring and widespread campaigns as for its main products. Red Bull is a company that started the energy drink market continues to dominate the market with more than 40% market share. For Red Bull the marketing efforts always focuses on the audience first, and then comes their selling their products.
Red Bull now leads with 24.9% share of the US energy drink market in 2019, selling more than 7.5 billion cans globally. They are able to achieve these numbers because they produce content which can be considered on par with the major publishers and also pulling off mind-blowing events making them one of the most talked about brands in the world. Red Bull is active on various social media platforms and different channels and use out of the box approaches and tactics in order to create content that is would give people the experience they would be interested in.
Instead of following a traditional approach to mass market, Red Bull has generated awareness and created a brand identity by using extreme sport event series or campaigns such as Red Bull Cliff Diving World Series, Red Bull Air Race, Red Bull Crashed Ice and stunts like stratos space diving project and stand out on its own. The company marketing also includes multiple sports team ownership from Formula One teams like Scudera Alphatauri, Red Bull Racing; Fooball clubs like FC Red Bull Salzburg, New York Red Bulls, etc. It also has many celebrity endorsements through its record label Red Bull Records.
Red Bull is an Austrian energy drink company created in 1987, when the Austrian entrepreneur Dietrich Mateschitsz was inspired by an already existing local energy drink which was sold in Thailand. The local energy drink was meant to help keep drinkers awake and alert. He took this idea, modified its ingredients to match the westerner’s taste buds, partnered with Chaleo Yoovidhya and together founded the Red Bull company in 1987 in Chakkapong, Thailand.
The product was later taken to Austria where it had its first ground breaking success in no time and soon went international after it blew up in Hungary. When the company originally started it only had only a single flavor and regular or Sugar free formulas, a line of different fruit flavors were added by 2013. The company’s slogan is “Red Bull gives you wings.” Red Bull is currently in more than 170 countries energizing the population and raising the competition along the way. According to Forbes it is also the 61stmost valuable brand in the world.
When Red Bull first came out, it was the first and only as back then energy drinks dint exist. And since traditional means of advertising was expensive, Red Bull had to come up with a different marketing strategy. They simply targeted their target audience which is 18 to 35 years old in different college parties, bars, coffee shops and even libraries. At these events and places the people were given free samples, which lead to the people talking and spreading the word about the product for free. Red Bull started sponsoring music festivals and sport event, campaigns and also created good quality content which got the company its fame.
The Target Audience of Red Bull
In order to understand the company’s market strategy and campaigns one must understand the company’s target audience, the important role it plays and how it reaches that target audience. According to Numerator, the target audience of Red Bull is predominantly between the ages of 18 to 34 year old, both male and female, who have an average to high income, likes sports, extreme sports and athletic events. Their customers can be defined as young, independent professional with big dreams and aspirations.
Relevant information is also collected through customer surveys, field trials and focus groups, with the company ensuring that its buyer profile is consistently updated. This ensures that their strategies continue to be both relevant and effective at all times. Red Bull focuses on three significant tactics to attract its target audience:
Publishing quality content that is created by the marketing team in different media outlets that is consumed by their target audience.
Red Bull produces large scale publicity stunts that grabs attention of its audience and spreads the message of the products or company.
One of the most important tactic used by Red Bull is to sponsor and create events in various countries so it attracts its young audience.
The Marketing Strategy of Red Bull
Red Bull marketing strategy
Red Bull has control of over 70% of the $1.6 billion market, and owes its success to the company’s intensive unconventional marketing strategies. The company bases its marketing approach on promoting a high energy philosophy for the lives of its customers, by its advertisements and campaigns it promotes a way of life more than selling its product. Red Bull also has a young target audience which consists of the millennials, gen y and gen z, know what their target audience wants and utilize it in their marketing strategy.
Red Bull sponsors a lot of events in various countries such as Red Bull music academy in the USA, parachutes in South Africa, Go-karting events in Kuwait, and many more from different countries in an effort to attract more target audiences as they usually attend events like these. It also works with influencers in the field and shares captivating content that inspires the young audience to be more active and adventurous. By doing all of this, Red Bull captivates authentic and loyal consumers as they are usually into athletics and sport events.
Because of this effort everybody knows its slogan “Red Bull gives you wings”, as it is used across online and offline campaigns, televisions advertisements, newspapers and billboard ads. Some of their well-known strategies used for marketing are: using pickup trucks as mobile displays which were painted blue and silver with a giant can of the giant mounted on top of the vehicle. The products were designed to be eye-catching and were aimed at promoting the red bull brand as youthful and slightly off the wall.
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The Red Bull is known for its content marketing as it is exceptionally planned. They started it with covering topics that interest their target audience which is sponsoring and advertising extreme sports, concerts and music festivals. The second is to sell their brands but not force the audience to buy their energy drink.
Their content is designed to make sure the reader enjoys the content not sells Red Bull. By doing this their audience will associate their product with the content that they love to consume. The third part of content marketing is to publish videos, blog post, pages and other types of content at different social media networking sites and channels that their target audience consumes content from.
The Analysis of Red Bull’s Marketing Campaigns
Earlier Campaigns
Red Bull first gained a lot of attention because of its “Red Bull gives you wings campaign” which initially began in the 90’s. Because of this campaign the company sold 300 million cans between the years 1996 to 2006. After this the company began to sponsor sports events of mountain biking, wind surfing, snowboarding, skateboarding, kayaking, rowing, Formula 1 racing to even parkour, surfing, skating and break dancing the options were limitless and the company made use of it in campaigning its product.
Red Bull also uses music concert, programs and videogames, commercial with famed celebrities, such as Eminem and sponsoring events like Red Bull “EmSee Battle Rap championships”. The company has also made history by just being the backing power to football and Formula 1 racing teams and events. For example, Sebastian Vettel’s four Formula 1 championships will be combined with Red Bull Racing.
Stratos Space Diving Project
Red Bull Stratos space diving project
In the year of 2012, Red Bull hit the global headlines when it decided to try and break the record which at that time stood for 62 years. The company sponsored an event where an Austrian skydiver Felix Baumgartner to free fall jump from the Earth stratosphere in a helium balloon. This project was known as the stratos project, because Baumgartner had to fly approximately 39 kilometers (24 miles) into the stratosphere over New Mexico in a helium balloon before free falling in a pressure suit and then parachuting to Earth.
After it became successful Baumgartner broke three records including being the first person to break the speed of sound during a captivating freefall that lasted for four minutes and 19 seconds. This event was live streamed through YouTube with the help of GoPro cameras and became the most viewed live stream and a mainstream media platform at that time. This event embodied the company’s slogan, the brand vision and supplied Red Bull with unique photography that would be used in its marketing campaign for years.
Red Bull Campaigns in India
Red Bull launched a limited festival edition in 2019 which elevated the company’s marketing strategy. The festival edition can came with a new flavor of the orange, while the company also created a contest #SpotTheCans. Where the customers had to go to their website and spot four hidden Red Bull Festival Edition cans in an impressive piece of artwork. After finding them, one could redeem the vouchers and gift cards at the Reliance Fresh and Reliance Smart stores. The energy drink giant will hosted an engaging on ground, in store and on campus activations with the help of campus interns/ambassadors to increase the marketing of the company.
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The stratos project generated a huge number of media attention and a media coverage worth an estimation of tens of million, which would not be possible to reach just using the traditional marketing strategy. After this project the company increased 7% of its sales in just six months generating $1.6 billion and selling 5.2 billion cans in the following year.
This project was successful because the company put science, engineering and a huge budget which was 1/10th of its annual global marketing budget which was $330 million to fund the project. This led the company to win a Sports Emmy in the category of an outstanding new approach to sports event coverage. The point of this project was to inspire the youth to use their wings and try doing what they taught was impossible and push the human boundaries.
The total broadcast was over 3 hours long and the Red Bull’s logo was in every shot. The Stratos campaign is an extreme but excellent example of creative marketing, and the company’s commitment to the values and aesthetic that the brand created when they first got their start that makes their marketing work. Everything they create relates back to the idea of giving people and ideas wings to fly.
FAQs
What marketing strategy did Red Bull use?
The marketing strategy used by Red Bull are:
Content Marketing
Sponsorships of Sports Events to drive brand awareness
Humoristic Advertising Approach
What made Red Bull so popular?
Red Bull’s sponsorships and participation in extreme sporting events have played a key role in making it so popular.
Who Are Red Bull’s target customers?
Red Bull’s main target customers are young urban males.
When was Red Bull founded?
Dietrich Mateschitz founded Red Bull in 1987.
Which is the most successful marketing campaign of Red Bull?
The Red Bull Stratos campaign may be the most successful marketing campaign of all time.
The intrinsic need of every human is to live a comfortable life. Leading a comfortable life is not easy if you don’t have some resources. It is important to note here that peace and comfort are not googleable. You need to do something to make your life a smooth sail. So that you have enough resources.
Speaking of resources, one of the most important resources is money. It is a battery for storing value. The more you have it, the more free you will(feel) be. And mark my words, “freedom” is the ultimate flex.
So to amass more of it, we people do many sorts of things. Some do business and others work for other businesses. If you look into the recent past you will notice how ‘investing’ as a domain has risen many folds. How people all over the internet are making portfolios. How stock market participants are rising. How everyone is hoping to get that IPO allotment. All these are examples of people trying to create some more income. Income leads to freedom. Not to mention how the “financial freedom” phrase gained momentum recently.
Getting into stock markets has been a fad for more than a year now. Chasing IPOs is another fad for some young investors. There is an intrinsic trait of IPOs that interests everyone. The hype of listing gains. Quick profits and the first come badge. A recent hot chase was the huge Paytm IPO. Which didn’t go well. This is the article about that failure and the behemoth PayTM. Read on to see through.
Have you heard this term before? Fin-tech is a word derived from amalgamation of finance and technology. This could be named as the word of the decade. You won’t ask the reason for this, because you probably know it already.
As the technology sector is rising, lines between companies are blurring. So much so that I would say that every company is a technological company now. With gaps blurring between sectors, the financial sector is the next most diffusing sector. It is hugely automated and also supported by countries’ governments. For example, in India the government is promoting digital payments after the demonetisation. This is a good boost for online digital payments companies, UPI (unified payments methods) and the like.
A Brief about Paytm
Paytm is a name that needs no introduction. The name is just enough. It is a leading digital payments company that is digitalizing India. Not to mention the immense support that the company is being provided by the government. Not only this, Paytm started the digital revolution in India.
From that, they became the leading payments app in the second most populous country in the world. Today, to the north of the 20 Million mark, merchants & businesses are powered by Paytm to Accept Payments digitally. This is because more than 300 million Indians use Paytm to pay at daily stores. That’s not all, the Paytm app is used to pay bills, Send money, do Recharges to friends & family, Travel tickets & Book movies.
The goal as the company mentions is to get unregulated businesses in the economy to the mainstream economy. Taking most of all the transactions happening in the country and enabling them digitally is an almost impossible thought. This is such a behemoth task but the digital payments provider is not looking backwards.
It recently was listed in the stock market. It was a huge IPO. Investors all around the world were excited. It is now the biggest IPO ever in the history of the stock market in India. Previously it was Coal India which raised about 15,000 crores. Paytm is now listing to raise 18,000 crores rupees.
Paytm has been a loss making startup for a long time now. It is not earning at all. The startup has losses of about 4000 crore in FY 2019. That went to 3000 in FY 2020 and then to 7000 crore.
Even though the losses are declining, this doesn’t hide the fact that the company is not earning at all. So why is that? Why a loss making company is valued so much. It is valued at over 16 billion dollars. Moreover it is able to raise money from big VCs. Asset management companies are pumping money into this loss making startup.
The reason why the company is left with such abundance of money is that it is a startup. An immensely successful startup. Which tries to get customers first, that is to capture a large market share.
After getting a good chunk of the market, they will monetise themselves and earn ridiculous amounts of real cash. This is how most startups model work. They hack growth and become big organisations. They try to establish a strong company and reduce the time that is required to build a strong company.
The startup has also already raised 8000 crores in its anchor round. Its initial public offering of Rs 18,300 crore. Top sovereign wealth funds around the world, financial investors such as Canada’s CPPIB, Singapore’s GIC, Alkeon Capital, BlackRock, Abu Dhabi Investment Authority are among those to have picked up stakes in this fintech.
The parent organisation of Paytm is One97 communications. Other than recent fundraising rounds, One97 communications has shareholdings by top capitalists and Asset management companies. It has a 2.8 percent stake by Berkshire Hathaway, the company of world’s best known investor Warren Buffet. It has Ant group as a shareholder, that is as a subsidiary of Alibaba, founded by China’s richest man, Jack Ma.
The promoter or the Chief executive officer of the company Vijay Shekhar Sharma has a stake of around 14 percent of the whole mammoth organisation. Other notable shareholders include Alibaba itself, Softbank, Elevation Capital. With all these big supporters this company recently filed for an IPO.
The IPO was huge and reportedly the biggest that Indian markets have ever seen. Unfortunately, The public offering of Paytm fell down immediately after the listing. In fact today is the second day of the shares trading in the market. They went as low as 37% since the IPO.
Let us discuss the whole public offering scenario in minute detail.
Paytm Initial Public Offering (IPO)
Initial public offering is the offering of shares to the general public. General public here means retail investors and big investors as well. When it happens for the first time, we call it the initial public offering. Accordingly it can happen second or third time also, in that case we will call it FPO or further public offering.
IPO or any public offering happens when a company decides to take money from general people and not raise more rounds of funding. The money is needed to fuel growth. It is needed to scale the enterprise and thus the money becomes the new capital.
In Paytm’s case, the company wanted to raise a little over 18,000 crores. This is the biggest amount ever raised in India. So the Paytm IPO is expected to be the biggest offering in Indian markets yet. The breakdown of the total money is that, 8000 something crores were new offering of shares. So, they were a fresh issue. And the remaining 10,000 crores were offered for sale, that is existing shareholders selling their share of stake. The price band of the shares ranged from 2080 to 2150 rupees per share. The valuation of the company at the time was about 1.5 lakh crores.
The RHP is a legal prospectus for every new listing company. The red herring prospectus (RHP) of this company said that it expects to incur losses for more years before it starts making profits. The opening IPO date was 8th of November and the last date to apply was 10th of November. Face value of the share was One rupee. So it was going to be listed at a premium.
Paytm Share Price
Paytm Listing Losses
The Paytm IPO was subscribed only 1.89 times on Nov 10, 2021 17:00. The public issue subscribed 1.66 in the retail category, 2.79 in the QIB category, and 0.24 in the NII category. It shows that investors weren’t much interested in it or the IPO was so big that it just covers up all the demand.
Paytm shares fell down by about 10.35% to Rs 1,402 against previous close of Rs 1,564.15 on BSE. Market cap of the company, which remained above the Rs 1 lakh crore mark on the listing day, faced down to about Rs 93,490 crore on the first listed day. This loss making startup is acting like a money guzzler.
Paytm IPO Reviews
Here are some reviews of the IPO from major and big fund coordinators and Asset management companies.
International Brokerage firm Macquarie published a report on Monday. A second report on Paytm, maintaining its earlier target price of Rs 1,200 and an ‘underperform’ rating after its first one on listing day, ruffled the feathers of investors. This means that they concluded that the price of the share should be Rs1200 and the listed price is well overvalued.
On the second day it went down to 40 percent. Exactly to the price what Macquarie anticipated but they released it after Paytm was listed on the stock market.
After the first day listing loss, investors panicked and tried selling this. This is a huge reminder that if you pick up a stock or an IPO to invest, do your own research. After an honest report only should you consider investing.
Mobikwik whose IPO was in the turn later in time also postponed their listing. Witnessing huge losses that investors incurred in Paytm’s IPO. Let us see some of the anticipated reasons that we all can see which led to the downfall of Paytm on the very first day of being listed.
Anticipated Reasons for the Downfall of Paytm IPO
Some of the most common seen and anticipated reasons for Paytm losing value are listed here. Let us figure out why this mega IPO is seen as a loser in the race for listing gains.
Overall Market Conditions
The current market conditions are also somewhat affecting the IPO listing. The current market trends show a downward trend. Today, you can see news of the market falling down 1170 marks. The day’s loss was the biggest for the index in over six months.
This downward trend of Sensex is mainly due to Reliance sliding down 4.4% after it announced reviewing of a recent deal. Outside India and around the globe, inflation tension is rising and so are the Covid cases in Europe. All these activities have also in some sense affected Paytm’s downward trend. It is at about 37% down now from the listing day.
Paytm’s Financial Situation
If you have invested in Paytm looking at the fundamentals then you know for a fact that Paytm is not going to make profit anytime soon the profitability game is slightly a long way ahead. We still don’t know when Paytm will become profitable.
Another fact is that the newly listed companies right now are also trying to be very smart because they know that there’s heavy retail participation in the market. A lot of people like me and you will go for listing gains so Paytm came out and did a mega IPO which was 18,000 crores.
Size of the IPO
Listing gains comes when supply is short and the demand is quite big. In layman language, when the offering is small, listing gains are expected. In Paytm’s case, the IPO is so big that it covers the overall demand and it leaves no space left for a force to push the price up.
The Paytm IPO was subscribed 1.89 times on Nov 10, 2021, 17:00. The public issue subscribed 1.66 in the retail category, 2.79 in the QIB category, and 0.24 in the NII category. So you see all the demand was covered with the hugeness of the IPO and less space was left to pump the price up.
What should you do if you have bought Paytm’s Share?
If you are someone or you know someone who is stuck with this stock. I would suggest two options. First is to just get rid of this stock as quickly as possible. Second, if you are an investor with a long term horizon then you can consider holding this stock. But keep this in mind that this stock will take a good amount of time to go profitable.
The reason is as we discussed earlier is that the company is making consistent losses for now. It also is forecasted that the company will only scale for now and it has no immediate plans to bring the profit perspective to the table.
As of now, the company is down to 30-40% and it is going to take time to take back these percentages of losses, only then one can expect some profits. Again if you are looking for quick listing gains, then maybe this might not be the probable right stock and time to stay invested in this stock.
For all the inventors who didn’t apply for this IPO this is the right moment to be aware of such scary situations. It is always best to research before you invest your money. It is really a scary situation when you invest in a big loss making startup, and you are stuck in it. Startups can be a blackhole for money for a very long time.
Conclusion
The reason for such a hype of this fintech company being listed is that, India is the second most populous country in the world. China, the top populous has already had their share of the fintech revolution. They are also harsh on regulations. Now it is India’s turn. India is the next hub for investors that may be domestic or foreign.
Digital payments are expected to grow up to 5% in the next five years. Digital commerce will likely move up to 3.3%. With these things in store, India becomes the next hot spot for investments.
Jio and digital revolution boosted the Paytm business. Demonetisation skyrocketed it. Their tagline “Paytm karo” became a household thing during these times. With the government promoting digital economy and cashless transactions, hope is high for fintech revolutionaries like Paytm.
The listing losses taught many people to do their own research before investing anywhere. The company is expected to take a long time to jump to profits.
Whether Paytm will change Indian payments face or it will dissolve, this is to be seen and only time will tell. One thing is for sure, it has massively added to the cashless economy that the world is striving towards.
FAQ
What is Paytm IPO?
Paytm is a digital payment system, the company lunched its IPO in Bombay Stock Exchange with largest initial public offering (IPO) with the value of Rs 18,300 crores.
Why did Paytm IPO flopped?
Some of the common reasons why Paytm IPO flopped was Overall Market Conditions, Size of the IPO, and Paytm’s Financial Situation.
The Organic food industry in India commenced to increase in a decade within the past and there was no searching again ever because of the fact then. Rising focus among humans regarding the facet outcomes of synthetic chemical substances in organic meals manufacturing has similarly boosted the future of the organic food industry in India.
Given the type of innovation coupled with this growing name for, the organic food market in India 2020 is but to witness a full-fledged evolution. But it is simple to accurately remember that the organic food industry in India is proper here to stay. Growth in e-trade has acted as a catalyst for the enterprise to attain out to consumers, and the numbers are best displaying an upward fashion. Here are a few probable motives why the organic food industry in India is anticipated to peer an expanded name for in years to come.
India’s GDP boom of 6.5% in 2017 became sturdy in spite of annoying situations similar to the implementation of GST. The forecast for GDP boom in FY2019 is expected to be greater than 7%. This will truly enhance the normal performance of various industries like Organic Foods, Pharmaceuticals, and FMCG.
The global organic food market stood at $110.25 billion in 2016 and is projected to develop at a CAGR of 16.15%, in cost terms, throughout 2017 – 2022, to reach $262.80 five billion with the resource of using 2022.With the Indian Organic Food enterprise developing in double-digit throughout 2013-2017, it might now no longer be incorrect to mention that the enterprise will deliver out nicely in 2019. There are many elements that have contributed to this boom till now.
The Impact of Covid19 on the Organic Food Industry in India
The marketplace for Organics worldwide, similarly to in India, has grown steadily. The Indian Organic Industry specialists agree that the resurgence withinside the name for organic meals isn’t always any flash withinside the pan phenomena with the aim to subside as quickly as the virus scare recedes. It is proper here to live even if we develop to be corona-free. In that sense, the purchaser conduct in choice of natural meals seems to have developed to be greater deeply entrenched and ingrained and an element of the purchaser buying for dependency over a long-lasting time horizon.
There may also be an opportunity of at least a 20-25 % compounded growth of the organic food industry in India for the 12 months 2020-21. Taking this estimate into consideration, the Indian marketplace can be foreseen at approximately Rs3,000 crore and the International natural marketplace over $100 billion although the worldwide monetary system guidelines proper into a depression.
With the possibilities of the sector doing away with the Covid pandemic in advance than September this 12 months looking increasingly slimmer, mankind and humanity will want to learn the way to stay with this virus. Under the circumstances, the worries for fitness and the surroundings will stay a priority, and it is going to maintain the name for natural meals in an excessive orbit for the instances to come.
As in accordance with the Agricultural and Processed Food Products Export Development Authority (APEDA), India exported organic food truly properly worth Rs. 30 billion (over $440 million) in 2017-18, from Rs. 24.77 billion in 2016-17. More recognition and an upward thrust in the name of natural meals have helped in growing sales. Now customers are greater conscious of the dangerous results of chemical compounds and pesticides. People have commenced looking out for organic food for themselves and in particular for his or her kids. Also, due to a growth in disposable earnings and recognition now households are spending a growing wide variety on their child’s health and are equipped to pay a higher/pinnacle class rate in phrases of best of the product.
The Global Market Share of Organic Packaged Food
The Growth of the Organic Food Industry in India
According to the Agricultural and Processed Food Products Export Development Authority (APEDA), the name for Indian organic industry merchandise is at steady growth internationally as India exported organic food worth $515 million within the economic 12 months 2017-18, from $370 million in 2016-17. This fashion will in addition increase in 2019.
India’s organic meals intake has grown in current years due to the fact of its superior demographic dividend, progressed shopping power, and accelerated hobby withinside the perceived fitness and properly-being blessings of positive natural merchandise. In the marketplace 12 months (MY) 2019, the organic food industry in India retail income reached $69 million and is predicted to in addition upward thrust with the resource of using 12 % to $67 million in MY 2020.The organic food industry in India additionally analyzed the aggressive panorama of the marketplace with a number of of the essential thing gamers being Suminter India Organics Private Limited.
The Indian organic food industry stood at over Rs 1,200 crore ultimate 12 months and this 12 months the marketplace is predicted to move Rs 2,000 crore. With the resource of using a surge of name for withinside the wake of the COVID-19 pandemic, India is still a rising marketplace for growth of the organic food market with sturdy prospects. With anticipated favorable climate patterns, monsoons and a robust cognizance with the resource of using the Indian authorities toward exports to fill the U.S., European Union (EU), and South Asia name for India’s licensed natural cropland will probably grow.
Organic Food Industry Statistics India
Demographically, India is domestic to over 100million infants contributing around 11% of the sector population with an excessive beginning fee of 19.3 births in accordance to a 1000 in 12 months. Parents continually want to provide the high-satisfactory to their infants, without compromising on the best and protection elements of the product. We can assume greater manufacturers with natural merchandise to reach withinside the coming years withinside the child care category.
Online availability of organic food and moving patron desire nearer to organic meals are lots of the foremost elements anticipated to reinforce the name for the organic food industry in India for the length of the forecast period. Expanding advertising and distribution channels coupled with increasingly more fitness-conscious human beings is likewise predicted to light up the intake of organic food in India till 2022. While the organic food market is developing steadily, it is miles nonetheless away from turning into a mass product. Currently, the natural marketplace is likewise no longer patron-pushed and the best oldsters who can afford/inclined to pay the pinnacle class rate are the customers which ends up in a totally small percentage.
One of the predominant annoying situations that are available promoting natural culmination & veggies is the mismanagement of the delivery chain. It turns tough to satisfy the name as in step with requirement. There are diverse expenses associated with the procurement of natural FMV from a natural farm of different states in phrases of logistics, damages, and inventory which now no longer get a pinnacle rate charge.
High charge markups for the organic food industry than traditional merchandise additionally are one in every of the predominant elements affecting the sale of organic merchandise. While the excessive charge is due to the price associated with the product like shopping in bulk, the logistic price concerned withinside the procurement of natural merchandise from licensed natural farms and the distribution withinside the metropolis will increase the price of the product.
Other elements like perishable gadgets and their low shelf existence additionally pose a problem. In the case of natural culmination and veggies and comparable perishable gadgets having low shelf existence makes it tough to deliver the product withinside the time body in their shelf existence and which finally ends up in damages, returns, and last inventory. Also, the non-availability of wholesale Mandis like Azadpur marketplace inside metropolis limits reasons buyers/buyers you obtain it from the farm only.
Future of Organic Food Industry
India’s GDP growth of 6.5per cent in 2017 was strong despite challenges like the implementation of GST. The forecast for GDP growth in FY2019 is predicted to be more than 7per cent. This will certainly improve the performance of different industries like Organic Foods, Pharmaceuticals and FMCG.
According to TechSci Research report, Global organic food market stood at $ 110.25 billion in 2016 and is projected to grow at a CAGR of 16.15per cent, in value terms, during 2017 – 2022, to reach $ 262.85 billion by 2022. With Indian Organic Food industry growing in double-digit during 2013-2017, it would not be wrong to say that the industry will perform well in 2019. There are many factors that have contributed to this growth until now.
Firstly, growth in e-commerce sector has acted like a facilitator for the organic food industry to reach out to the potential consumers in Tier II and Tier III cities. Secondly, with free/low-cost access to the Internet, more and more people are getting to learn about the benefits of organic food. Therefore, the demand has gone up during 2018. Lastly, the industry landscape is becoming competitive with more and more players entering the industry.
FAQ’s
1. Is the organic food industry growing?
Ans- Organic is the fastest growing sector of the U.S. food industry. Organic food sales increase by double digits annually, far outstripping the growth rate for the overall food market. Now, an unprecedented and conclusive study links economic health to organic agriculture.
2. Why is organic food high in demand?
Ans- Organic food items are gaining popularity for pretty straightforward reasons i.e. GMO-free content, nutrient richness, zero growth hormones, zero antibiotics, fewer pesticides, improved freshness levels, and better environmental stability.
3. Why is organic food more expensive?
Ans- Organic food often costs more than conventional food. … If the demand for organic food continues to grow, the supply could be scaled up, and organic food could subsequently go down in price (your basic supply and demand). Another reason organic food costs more is because the production process is more expensive.
4. Do you live longer if you eat organic?
Ans- More than just produce, organic foods can be meat, dairy foods and grains. … The researchers assumed the health benefits that would result and calculated that if you ate the same amount of produce but switched to all organic varieties, your life expectancy would increase by 17 days for women and 25 days for men.
5. Are organic foods actually healthier?
Ans- Organic foods are not healthier, per se, in terms of nutrients. You are still getting the same benefits in conventionally grown foods as you are in organic foods.
6. Can you lose weight by eating organic?
Ans- Consuming more fresh produce, organic or conventional, such as fruits and vegetables has been a consistent link to weight-loss because they are high in fiber and nutrients, which can help control appetite.
