Spice processing and packaging are considered profitable businesses across the world. Any individual can start a spice business on a small, medium, and large scale basis as per his or her investment capacity.
Even a home-based spice business is also profitable. Additionally, you can start with one or two varieties of spice. As your business grows, you can shift to a full-fledged spice processing company.
Here in this article, we intend to explore how to start a home-based spice business with relevant information. Spices play an important role in enhancing the flavor and taste of processed foods. Also, the medical industry is a major consumer of spices. Because spices have carminative stimulating and digestive properties.
Is Spice Business Profitable?
As spice is a mass-consumption item mostly used in culinary preparation or seasoning of food products, its internal demand is increasing quite steadily. It is without saying, spice making is one of the most profitable food businesses that can be started with little money.
With changing lifestyles and especially with changes in food habits and the increase in income level, the use of powdered spices has increased. Of late, the market for ready-to-mix of spices has grown significantly.
Spices are fast-moving consumable items and have large potential. There has to be a widespread network of dealers or retailers backed up by advertisements in local media The export market for Indian spices is also growing.
Increasing urbanization paired with a rise in the number of working women has reduced the time of cooking. Consequently, home-makers have started demanding readymade spice mixes such as sabzi masala, garam masala, chicken masala, etc. This has augmented industry revenues.
First of all, spice comes under the essential goods segment. Also, it is an important food item for kitchens. And in a country like India where the population density is so high, consumption is also very high.
The spice mixes and branded spices entail greater profit margins, as compared to straight and unbranded spices. We can conclude, that initiating a small-scale home-based spice business is a profitable investment opportunity for new entrepreneurs in India.
Here are the 11 Steps to Start Spice Making Business
Powdered spices are convenient to use and also save time and energy in preparing different delicious dishes. Besides their everyday use in households, spices are used in significant quantities in processed foods and commercial food service businesses such as hotels, restaurants, etc.
1. Understand the Local Market
The first toward launching your small spice company is to gather market information regarding the trend and volume of your immediate locality. Do market research and know more about the competition from other existing spice suppliers, their pricing, and the types of spices that are in demand.
When you have a complete picture of the local spice industry, it will be easier to exploit the market in a better shape. Furthermore, you will be able to explore the gaps to your advantage.
2. Create a Business Plan
Based on the information received from market research, start drafting a business project plan. It is advised to hire a competent professional to write your spice manufacturing project business plan for launching a large-scale manufacturing unit. Because for a large-scale business, you might need funding from financial institutions.
However, if you are planning to start a small spice-making unit, a 2 to 3-page plan document Below we list down some of the important chapters to be included in your plan document:
- Market Potential
- Basis and Assumptions
- Implementation schedule
- Technical Aspects
- Manufacturing Process
- Quality Control
- Addresses of Machinery Suppliers
- How do you plan to sell your finished spice products
3. Name Your Spice Business
It is extremely important to choose a catchy and attractive name for your spice manufacturing business. The name selected must easily convey to customers about your products. You can check our complete guide on how to name a business to learn more.
4. Select the Types of Spices
The first step is to decide on the kinds of spices you are going to manufacture. As per the local demand and availability of raw spices, you need to finalize the items to manufacture.
Some of the popular and widely used spices are Turmeric, Chilli, Cumin, Coriander, Black Pepper, Cardamom, and Cloves. Apart from these straight segments, Curry Masala, Sabji Masala, Sambar Masala, Chana Masala, Garam masala, Chicken masala, and Meat masala are the popular blends in India.
5. Registration & License For Spice Business
Regardless you start a small-scale or large-scale spice business, you have to obtain these registrations and licenses.
- Registration with ROC. For a micro or tiny-scale operation, you can go with Person Company registration.
- Trade License from local Municipal authority.
- Udyog Aadhar MSME Registration is optional. However, obtaining the registration will help you in getting subsidies and grants from Govt.
- Food Operator License.
- Compliance with FPO regulations is a must.
- It is advisable to obtain AGMARK certification.
- Apply for the GST Registration number.
6. Cost of Starting a Spice-Making Business
The major investment in starting a spice manufacturing unit will be in buying machinery, space, and hiring personnel. The cost of a standard automatic masala plant will start from 5 lac onwards. It may increase with added features and increased production capacity. On average, you will need a minimum of Rs. 25 lacs to launch spice manufacturing on a small scale.
7. Arrange Funds
If you have the investment capacity, there will not be any need of taking a term loan. However, if you are short in budget, visit local banks or financial institutions and pitch for a business loan.
Presently there are a number of reputed online apps that provide small loans. You can install and apply.
Also, do not forget to apply for a credit card. For small expenses, a credit card is a handy tool to get money.
8. Spice Business Machinery
Land measuring around 150 sq. meters. is adequate with a built-up area of about 75 sq. meters. consisting of the main production area, packing section, and go down. Spice grinding and processing generally demand simple machinery and equipment.
You will need to install a disintegrator, spice grinder, pouch sealing machine, and weighing scale. In a fully-automatic operation, the entire system is interconnected with a bucket elevator and conveyor belt.
Additionally, you will need to provide electricity up to 10 HP. Also, you must arrange an adequate amount of water. However, water is required in small quantities to clean ungrounded spices and for potable purposes.
9. Buy Raw Materials
The major raw materials are unground turmeric, black pepper red chilies, cumin, coriander, etc. Additionally, you will need to arrange the pouch as the main required packaging consumables. Also, you must procure corrugated cartons for bulk packaging.
5. Spice Manufacturing Process
The process of manufacture involves cleaning, drying, pulverizing, sieving, and packaging spices such as chili, pepper, turmeric, coriander, etc. either individually or in combination with other spices. The manufacturing process is very well established and does not involve technicalities.
First of all, clean the unground spices manually to remove impurities like mud and stones. And then, wash them with clean water. After drying them in sunlight, grade and grind them with the help of a grinding machine to convert them into powder form.
Generally, you can find various formulations for curry powder. However, ingredients like red chili, black pepper, cloves, coriander seed, cumin seed, fenugreek seed, ginger, and turmeric are typically common. The proportion and the inclusion of spices in a particular mix depend on individual manufacturers.
You can use a disintegrator in the case of solid material like turmeric to obtain uniform mesh size. Spices in powder form are then weighed as per the contemplated packing quantities. Finally, pack them in printed polyethylene bags and then seal these bags on an automatic sealing machine.
10. Have the Plan to Sell your Spice Items
Often ignored, most startups do not give much importance to the matter of selling goods. Unless you have a detailed marketing plan, the desired success will not come.
The other important factor is to develop an effective sales team and establish a robust distribution mechanism. You must create a network of hard-working retailers, dealers, and distributors to become successful in this business.
Also, make an online presence. The first step in going online is to create your own spice business website. These days, creating a website is very easy and can be done yourself. Check our guide on how to create a website to know more.
11. Have the Plan to Export Spices
India is a big exporter of spices. The items include cumin, red chili, pepper, turmeric, green cardamom, etc. The United States of America, Vietnam, UAE, Thailand, and Malaysia are the biggest importers of Indian spices.
As there is a big demand for Indian spices abroad, you must consider export potential if you have decided to enter the spice business.
Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.