Indian spices are one of the most used household items in India and also around the world. In fact, the Indian Spice Market is growing with more than Rs.40 Thousand Crores per year. So, if you are thinking about how to start spices business in India and the masala business profit margin, here are the details.
The spice industry is divided into three following kinds that have different profit margins:
Therefore, one thing is obvious the masala business is one of the most profitable businesses that require low investment and ensures high returns in less time.
The profit margin in the masala business is 40%-50%.
Suppose your expected sales per day are 100 kg with a profit margin of 40%, and the cost of goods purchased is Rs.100/kg.
i.e. 100 kg x Rs. 100 + 40% profit margin
= Rs. 10,000 + Rs. 4,000 (Profit) per day
The cost of goods sold will be Rs.140/kg after adding the profit margin.
Accordingly, your monthly masala business profit will be Rs. 4000 x 30 Rs. = Rs. 1,20,000.
Firstly, to start the basic business process, you need to secure funds. Either you already have personal savings or, you can look for external fundings.
With this in mind, you can get the investments from the following sources:
The minimum working capital required for a masala business is Rs. 1 lac - Rs. 5 lacs, and the minimum fixed capital required is Rs. 6 lacs to Rs. 10 lacs.
If you plan to manufacture the masala yourself, read in detail about Masala Factory Project Cost to determine the gross funds you need.
However, the funding requirement will mostly depend on the scale of your business.*
The most important thing you should invest in when starting a business is protecting your brand identity and registering your business.
With this in mind, go for company registration and trademark registration online.
Trademark Class for Spices: Class 30
Considering the above as the initial investment, the minimum area required for the masala business is 700 sq ft.
If you rent the land, it would cost a minimum of Rs. 15,000 per month, depending on the area.
But, if you plan to buy the space, the prices will differ from city to city.
Therefore, it is advisable to consult a property dealer for this decision.
Get a layout map made by a professional for your masala business accordingly.
Also, you will need some mandatory permits. Therefore, find out the license required for spice business.
Accordingly, you will need 10- 12 employees initially to start the business operations. You can find out the current salaries for each position on Glassdoor.
You will need around Rs. 1,70,000 as an initial average investment in human resources.
You can sell even more than 100 kg per day. All you have to do is find and get dealerships from the market.
For example, you are trading in Delhi, there are more than a thousand shops and grocery stores selling spices. If you get a dealership from even 30 shops of 10 kg masala per day, you can easily make a sale of 300 kg per day.
Also, target the nearby villages, societies and supermarkets. Moreover, you can increase your sales by sponsoring events to create brand awareness.
The speedy urbanization, improving incomes and growing financial stability have raised the demand for processed foods. Moreover, the increasing popularity of Indian culture and cuisines has led to a rise in demand for spices for the special preparation of Indian food.
The global spice industry was valued at USD 15.44 billion in FY20. According to the forecast, it is estimated to reach around 22.46 billion in FY27. In other words, it is about to experience a rise of 6.3% CAGR from 2021-2027.