How To Start A Masala Business
Spices and masala have always been indigenous to India and a vital component of Indian cuisine. It is difficult to imagine any of the Indian dishes, whether a thalipeeth or a sambar or the fafda and dhoklas or even the numerous sabjis, whether paneer tikka masala or any of the koftas and curries prepared without any of the masalas. The importance of spices and masalas can be judged from the presence of a masala box in every Indian household and even those Indians residing abroad.
Apart from being an integral part of Indian cooking, spices and masalas have always been the trump cards of Indian export too. Right from the early 1800s when traders (such as the Portuguese and English) used to visit Indian shores for its spices and textile, to even now, spices and masalas have been the most crucial and in-demand item to be exported, thus justifying the increased popularity of starting a masala business.
Growth Of The Masala Business
Out of the 109 varieties of spices listed by the International Organization for Standardization, 75 varieties are produced in India, making the country one of the largest producers of spices and masalas. In the financial year 2017-18 India exported 1.08 billion kgs of various spices to several countries in the world, valued at a massive $3.11 billion dollars.
In 2019 too the production and export of masalas and spices to various parts of the world continued strongly, so much that seeing the demand and the fast paced expanding urbanisation, the growth of the masala and spice Market for the year 2019-24 was forecasted at 4.80% standard CAGR (compound annual growth rate).
In 2020 however the COVID-19 pandemic struck and disrupted the export markets and economics of countries across the globe. However, even when India’s overall merchandise export had suffered and declined, the masala and spice export saw an increase of 23% in June 2020 as compared to the previous year, with the United States alone importing spices worth approximately 37 billion Indian rupees. Further the spice market is expected to expand at a CAGR of 6.5% from 2020 to 2027.
These figures and statistics point out that the spice and masala business continued to grow, despite a global pandemic, will continue to do so in the future, scaling new heights of success.
Apart from the potential scope for growth seen in the masala business (especially from an export point of view) and the increasing demand, starting a masala business has several other advantages too.
- The masala business, processing and distribution, can be carried out from home too.
- The business can be started on a limited budget too.
- The business is not labour intensive and can even be started single-handedly.
- Entrepreneurs do not require special educational qualifications in order to start the business.
Considering the benefits as well as demand for the products aspiring entrepreneurs can definitely start a masala business. The masala and spices can include chillies, turmeric, cloves, cardamom, fennel seeds, mustard seeds, garam masala, dhana-jeera masala, goda masala, or even ready to cook spices such as biryani masala, misal masala, pav bhaji masala, etc. There are several options and varieties that entrepreneurs can choose to specialise in.
How To Start A Masala Business
Now that we know that the masala business has a huge market and scope for growth too, the next obvious question is how to start a masala business.
The steps below explained in detail will help understand the nitty gritty of the masala business and how to start the masala business.
- Step 1- Understand The Process
The first step for any business is to understand the workings and process of the business. For the masala business too aspiring entrepreneurs need to first understand the market as well as the exact process of manufacturing the masalas.
A market research will help understand where there is a greater demand for the masalas, whether the entrepreneur must target households for the products or restaurants and catering businesses, what is the average pricing of the masalas, whether they should be sold out of a standalone shop or distributed to various retailers. The market analysis thus needs to be done to finalize the business model and operations.
Also, the exact process of manufacturing masalas must also be known. The steps for masala making include-
- Cleaning of the unground spices
- Drying of the unground spices
- Roasting of the spices
- Grinding or pulverizing the spices
- Sieving the spices
- Packaging the ready masala and spices
In case of preparing ready masalas such as pav bhaji masala or biryani masala then the process also includes mixing of the right proportion of various masalas and spices before packaging the ready madali.
An understanding of the basic process of masala making will help entrepreneurs start the business effectively and efficiently.
- Step 2- Choose Appropriate Location And Space
One of the biggest advantages of the masala business is that it can be operated from any location, whether within a home or from a garage space or from a separate unit designated especially for the manufacturing and packaging of spices. The area requirements for the business are not much and a space of 500 to 1000 sq ft is sufficient to place the equipment and start the masala business.
If choosing a location other than one’s home the location and availability of resources such as water, electricity must be checked. The location must also be easily accessed for transportation of material to and from the unit and also for customers to access if entrepreneurs are going to sell their products from the manufacturing unit too. Also, renting a commercial space is more feasible for the entrepreneurs than purchasing it.
- Step 3- Purchase The Equipment And Raw Material
The raw material and equipment are an integral part of the masala business and need to be purchased in order to start the business. The raw material includes the unground spices bought in bulk such as chili, cumin, turmeric, coriander, clove, pepper, fennel, etc.
The equipment required for starting a masala business include-
- Grinding machine such as
- Hammer mill
- Spice mill and grinder
- Pounding machine
- Weighing machine
- Packaging machine
- Roasting machine or stove top with gas connection with vessels for roasting
- Heat sealing machine
- Packaging pouches
These are the essential raw materials and equipment required for the masala business.
- Step 4- Obtain Necessary Licences
The main concern entrepreneurs are looking for answers for when wondering how to start a masala business is regarding the licences and registrations necessary for the business. It is important to know the compliances required for new businesses while starting a new business. These compliances include-
- GST Registration- every business mandatorily requires GST registration to be compliant with the taxation norms of the country.
- FSSAI Registration- the masala business consists of several food and related items and therefore needs a licence from the Food Safety And Standard Authority of India, which is mandatory for all food and food related businesses. Entrepreneurs can get FSSAI registration done by opting for services such as those offered by deAsra Foundation.
- Business Entity Registration- when starting, every business, including the masala business, needs to have an identity of its own which is obtained via business entity registration. A business can incorporate itself either as a sole proprietorship or a partnership or even a one person company or a company or limited liability partnership.
- Udyam Registration- since the masala business deals with manufacturing process, the business will require an Udyam Registration which recognises micro, small, and medium businesses.
- Step 5- Create A Brand Name
The next step that entrepreneurs need to consider while learning how to start a masala business is to create a brand for the business and for the products. The brand name is how customers will identify the products and help establish an image for the business and the products. Along with a catchy and simple brand name the product name must also be trademarked so as to avoid duplication in the market and to retain the unique identity of the masalas.
Next, the packaging of the masalas needs to be considered such that the masala and its aroma remains intact while the packaging label gives out all the information regarding the product. The packaging must include the brand name as well as the trademark. This will help create a recall value among the customers regarding the brand and the product.
- Step 6- Decide Where To Sell
The next step to consider when starting a masala business is to decide where to sell the products. Either the entrepreneur can only handle the manufacturing of the masalas and distribute the products to various shops and retailers to sell the products. Or they could have their own shop where customers can exclusively purchase the product.
Also entrepreneurs must decide whether they want to sell the masalas to households and individual buyers or to large scale purchasers such as restaurants and catering businesses, even cooking schools, that require the products in bulk.
Additionally entrepreneurs must decide whether they want to target only the local market with their products or supply it to other locations too, within as well as outside the State. In fact, entrepreneurs can even consider exporting the masalas various countries where there is a huge demand for Indian spices.
Online mediums can also be explored to sell the masalas such as through e-commerce platforms like Amazon, Big Basket, Grofers etc or on B2B sites such as IndiaMART, TradeIndia, etc.
Given the numerous options, where to sell the products is an important consideration that entrepreneurs need to decide seriously when starting a masala business.
- Step 7- Acquire Capital By Creating A Funding Proposal
The next important step that entrepreneurs worry about when considering how to start a masala business is how much capital is required and where to acquire it from in order to start the business.
The capital required can be calculated by taking into account all the expenses such as the cost of raw materials, the cost of the equipment, the rent of the processing unit space, the salaries of the labourers and other employees (if hiring any), the packaging cost, the cost of transportation as well as of resources such as electricity and water that is required, the advertising cost as well as other miscellaneous expenses. Approximately the masala business requires Rs 5 to 10 lakh to start and operate the business on a large scale, considering all the expenses.
This capital can be acquired via loans from banks or from non banking financial companies (NBFCs) or from personal savings or borrowings. The loan is a recommended option and in order to apply for a loan entrepreneurs need to submit a funding proposal. The proposal is crucial for the approval of the loan and must be prepared carefully. Entrepreneurs can always Get help with Funding proposal via deAsra’s services and ensure that the chances of their loan approval are brighter.
- Step 8- Market The Products
The final step to consider when starting a masala business is to create a marketing plan for the products and the business. Traditional advertising methods can be used such as print ads about the masalas in newspapers and magazines, especially cookery magazines and through pamphlets in the newspaper.
Additionally entrepreneurs can market the products in food festivals, cooking shows and related events.
Digital marketing methods can also be explored such as via Facebook marketplace or through an Instagram account that talks of the products and the recipes that can be made using it. If entrepreneurs are planning to sell via online mediums then they must consider creating a website and selling or just advertising via their website too.
These are the essential steps that will help entrepreneurs understand the process of starting a masala business and aid them in starting kickstarting it successfully. For any business related queries such as business plan creation or acquiring licences and registrations, etc entrepreneurs can always approach deAsra Foundation for the services and assistance.