Number-crunching perhaps didn’t pump his adrenaline as much as entrepreneurship did. A trained chartered accountant, Rahul Agarwal worked at Ernst & Young for five years before taking the entrepreneurial plunge in 2007, and since then there’s been no looking back! He launched ‘Organic Harvest’, an organic personal care brand, in 2013. Come today, the brand is already present in several overseas markets and is targetting a dozen more by 2017.
Neha Dewan | September 2016 Issue | The Dollar Business
“We have disrupted the Indian personal care industry. In a short span of time, we have become the market leader in terms of introducing disruptive innovations,” avers 33-year-old Rahul Agarwal, Founder and CEO of Organic Harvest, an organic personal care brand launched three years ago.
To substantiate his statement, Agarwal goes on to describe the company’s penchant for innovation. “We started by launching the organic range, and eventually stepped up the game by bringing in highly innovative products. For instance, we are coming up with a new product – a face wash which has a massager attached to it. So now, you can wash your face and massage it simultaneously. We will also soon be introducing a sanitiser minus any alcohol which will again be a first-of-its-kind product. Our innovations have been highly disruptive to the industry and broken straitjacketed perceptions,” he says with a beaming smile.
Organic Harvest essentially specialises in skin, hair and body care products that are conceived using eco-friendly practices and are safe to use. The products range from daily day creams, anti-wrinkle creams, sunscreen lotions, toners to face wash and shampoos. There are also 24 varieties of essential oils on offer! These products are formulated using natural elements devoid of any parabens, phthalates, petrolatum, mineral oil or animal ingredients.
A chartered accountant by qualification, Agarwal worked at Ernst & Young for five years before finally taking the entrepreneurial plunge in 2007. His maiden entrepreneurial venture was Innovadia LLC, an education platform that imparts training on legislature financed programmes under the US Federal Government to over 20,000 students. In 2011, he decided to venture into the consumer space. “We zeroed down on the personal care category. Through an in-depth research, we came across an intriguing fact that the personal care products consumption in India was among the lowest in the world. Hence, we decided to do something revolutionary in this industry,” he reminisces.
So, was it lucrative enough to invest in a market where the consumption was not that high? Agarwal resorts to a narrative for an answer: “There are two ways to look at it. There is this famous story about two Bata salesmen who were sent to Africa. One said that there is no market because nobody wears shoes, while the other came back to report that there is actually a huge market as nobody wears any shoes! That’s how we approached this space – we never wanted to do any run-of-the-mill product.”
And his belief has paid off. Within just three years of its launch, Organic Harvest has come up with over 100 SKUs and is retailing its products across geographies. Sold through more than 5,000 outlets in India, Organic Harvest also has 11 exclusive brand outlets spread across cities like Delhi, Mumbai and Dehradun. What's more? The company has forayed into international markets as well. It has made its debut in UAE this year and is gunning for phenomenal growth in GCC countries in the forthcoming months. “Our first export order came from Nepal after which we forayed into Bangladesh. Now we have entrenched our presence in UAE. Next month, we have plans to expand into Singapore, Malaysia and Saudi Arabia, and thereafter, we will tap the GCC countries primarily Kuwait and Qatar, followed by Sri Lanka and Indonesia. Last year, exports accounted for 20% of our revenues, which we plan to scale up to 40% by the end of this financial year,” says Agarwal.
All things considered, the brand is currently on a steady growth path. In FY2016, the company clocked a revenue of Rs.25 crore, and is targeting a revenue of Rs.100 crore in FY2017.
But isn’t that an ambitious target? Not one to be deterred by challenges, Agarwal says fairly nonchalantly, “It does seem like a tough target to achieve, but with the kind of growth that we are seeing and the kind of new markets that we are adding to our kitty it is not unrealistic either. Our products will be available in almost 10 countries by the end of FY2017. Out of targetted revenue of Rs.100 crore, Rs.60 crore will come from the domestic market and Rs.40 crore is expected from export markets.”
Agarwal recalls that the company started out with a revenue of Rs.2.5 crore in the first year, amidst voices of dissent and skepticism. He also remembers how some industry stalwarts had warned him of the existing organic personal care brands’ clout in the market. “They had professed that ‘Organic Harvest’, as a new entrant, will be unable to sustain itself. But, we still went ahead because we believed in our concept. We started off with 20 SKUs for few products such as face wash, scrubs, anti-ageing creams. The initial response was outstanding. Delhi and Punjab were our first markets, and within three months of the launch, we realised that we had something as good as gold in our hands,” he recalls.
Interestingly, they also discovered that some of their clients immediately shifted from chemical-based to organic products. This is when they started expanding and forayed into Mumbai, Uttar Pradesh and Gujarat. Today, the brand has a presence across retail stores in almost the whole of India.
Agarwal, however, also concedes that making people aware of the differences between ayurvedic, herbal and organic products was an uphill task. The entire industry, as he describes, can be classified into four broad categories: synthetic products which are 100% chemical based; herbal products constituting 99% chemical(s) and 1% herb(s); natural or ayurvedic products made from plants, trees or leaves extracts and natural minerals; and the organic category which is an extension of natural products – the difference here is that pesticides are not used in organic farming.
Agarwal quickly understood that merely keeping the product on the shelves would not lead to awareness or recall value among the consumers, especially because the category was niche. He started deputing trained beauty advisors in select outlets who would interact with consumers and explain the concept of organic products. This interaction was essentially a precursor to introducing the Harvest Organic range. In the words of Agarwal, “whenever we launch our product in any state or city, we identify A+ category outlets and place our beauty advisors there. This model has really helped in building consumer awareness for us.” Agarwal states that today the brand has been able to reach out to more than half a million customers and about 200,000 of them are regular customers. This figure in itself implies a very huge percentage in terms of the total share of the personal care products market.
Elaborating on the model, Agarwal says, “The idea is to initially let the consumers try the product through the assistance of beauty advisors. This way, our initial sale is guaranteed; so for every beauty advisor outlet that we employ, a certain number of sales are guaranteed to the retailer or the distributor and once we reach that level, our next logical step is to take that level to the non-beauty advisor stores as well.”
While initially there were 30 beauty advisors on board, today the company boasts of more than 650 such advisors posted in outlets across India. On an average, each one of them interacts with at least 20 to 30 customers every day. Agarwal says, “Till now, we have engaged with more than 500,000 customers. So, we can say, at least half a million people now know the difference between the organic and the supposedly ‘green’
The model has indeed worked in company’s favour. In the beginning, the average sale from such advisor outlets used to be Rs.15,000 to Rs.16,000 per month, which as of now has reached about Rs.50,000 per month.
It is an easy guess that with a plethora of international and home-grown personal care brands already present in the market, the going might not have been all that easy for this ambitious
entrepreneur. Unfazed by the competition, Agarwal feels that while brands such as Kama Ayurveda and Forest Essentials are the perceived competitors, Organic Harvest primarily competes with Olay, L’Oreal and Neutrogena in terms of the price point. He, however, maintains that there is no competition as far as the concept is concerned.
Keeping the consumer price consciousness in mind, the company as of now has priced its product in the price range of Rs.300 to Rs.1,100. It imports most of the raw materials from countries such as US, Brazil and France. They are natural ingredients that are certified by global organisations such as EcoCert, OneCert and Natrue. “The raw materials are not easily available in the Indian market and hence we have to import them. We have four manufacturing facilities in Parwanoo and Baddi,” apprises Agarwal.
Talking about some early challenges Agarwal says, “Being a chartered accountant this was a completely different field for me. Everything – from the product mix to the market, from packaging to product combinations – was a massive challenge for me.”
[ The state-of-art research lab at the company's production plant (above) and the manufacturing facility (below) at Parwanoo in Himachal Pradesh. ]
Initially, even the stores were apprehensive about the product, but he managed to convince them. “Their primary concern was about the effectiveness of an organic product. There is a general perception that if a beauty or personal care product is chemical-free and is organic, it will either be not effective or will be too slow for a consumer to get noticed. But when we showed them on-the-spot results, they were convinced. We asked them to try us out for three months and said that they could terminate the association if we failed to generate adequate sales. Luckily for us and them, this never happened and we are only going stronger by each day,” Agarwal shares.
"The paperwork Required for exports and FDA approvals are a challenge"
Looking to expand its horizon, the brand now plans to further scale up in the domestic market by introducing an exclusive range for salons besides launching an exclusive range for babies and men. Importantly, Agarwal states that they always sell under their brand name, as the idea is to make Organic Harvest a truly global and iconic brand. This is also one of the key reasons behind the company’s significant spending in the export markets.
“All beauty advisors are appointed by us and the capital expenditure is also borne by us. The export markets are primarily driven by modern trade, and in order to get in there, one has to pay hefty listing fees. Even the beauty advisor salary is exorbitant, which is typically 5000 dirhams or about Rs.1,00,000 a month in Dubai, while in India, it’s around Rs.20,000 only. In addition, we also do a lot of BTL marketing activities to engage with the consumers, which is yet another investment,” he clarifies.
As an exporter, Agarwal however feels that certain things can really help streamline India’s trade ecosystem. “There is too much paperwork involved while exporting to another country. Another big challenge is to get past the approvals of the Food & Drug Administration since every country has a different set of rules. Moreover, it’ll be great if the number of days to start a business can be reduced. For instance, today, if I want to start my company in US, I will have the company up and running tomorrow itself, with a bank account as well – it takes only a day to complete all formalities. But here in India, it takes at least one month,” he shares.
Agarwal believes in creating a uniform ‘entrepreneurial’ spirit and vision in his company as well. “We want everybody to think and act like an entrepreneur. Who knows, five years from now, someone from our team might be doing something on their own. I would love to see that, and will encourage them,” he says enthusiastically.
[ Raw materials stacked at the company's Parwanoo (HP) facility. Organic Harvest imports raw materials from US, France and Brazil as they are not easily available in India. ]
An eternal optimist by his own admission, Agarwal is of the view that it’s their painstaking belief in the product which held them in good stead despite the discouragement they experienced from the industry experts and competitors. “We were focussed on our target like Mahabharata's ace archer Arjuna and therefore just like he saw only the fish's eye we too just saw our goal and nothing else! We were never deterred by roadblocks and always strived to find ways to transcend them,” says Agarwal. And not to say, his conviction has paid off with the market absorbing this new concept really well. “We see a new India emerging in the next 10 years, and believe that we are on the right track. About 15 years ago herbal products were trending and the market was flooded with herbal brands. Five years ago natural products were a rage, and now it's the time for organic products. It's definitely the next big thing and we are confident about catering to the growing demand for organic products in a formidable position of leadership,” Agarwal signs off with