Startups with clean label FMCG brands seek free listing in retail chains

Many new-age FMCG startups are founded by customers, who were once discontent with the lack of quality products available in the market. These businesses, built on the principles of conscious capitalism, prioritise quality of ingredients and social responsibility

New labeling rules on packaged food as envisaged by the Food Safety and Standards Authority of India’s (FSSAI) direct attention towards a segment of clean labels started by startup founders, who not long ago were consumers battling against falsely marketed and labeled products that were available in the fast-moving consumer goods (FMCG) category. This segment of startups, upholding conscious capitalism, needs relief from marketing and distribution cost, hindering prospects of scalability, state founders of many startups.

“Scalability is a challenge that startups with clean labels face, restraining them to be a boutique business while trying to compete with heavy capital-infused companies. Moreover, FMCG brands promoted by celebrities are able to attract consumers faster compared to startups who rely on customer feedback for promoting their product. I have urged Niti Aayog to come up with guidelines that instruct corporates and government bodies to reserve a certain percentage of their product procurement to certified startups. Alas, they havenot responded,as yet,” Vishala Reddy, the founder of Millet Bank told Bizz Buzz.

Vishala is currently running a campaign ‘Decode Millet’ at campuses of big corporates to educate their workforce about the benefits of millet.

She elaborates, “The number of corporates willing to support startups is meagre. There should be a mandate for corporates to include millet in their campus cafeteria or give millet vendors space to sell in their campus. Corporates can also go for gift hampers consisting of clean label products made by startups. Such outreach programmes will cut down our marketing cost and mediator fee. It will also be a health-conscious move.”

Due to increase in awareness among consumers and FSSAI’s rules against false marketing, Hindustan Unilever has been forced to categorise Horlicks and Boost as functional nutritional drinks. The company has also reduced palm oil and its derivatives by 25 per cent in its soaps.

On the other hand, there are startups that are producing clean labels of home-made spices, millet-based drinks and soaps made by using coconut oil, and others. However, these products that are available widely online, lack access to retail stores due to the high listing cost.

“Initially, retail chains charged negligible listing fee from brands, which has now become one of the revenue earning sources for retailers that only big FMCG brands can afford. As high distribution and marketing cost are discouraging startups from stepping out of the online market space, the government should frame guidelines directing retail chains to reserve space for display of certified sustainable FMCG products. Free listing of these products will create awareness about its presence, and make it accessible to a larger consumer base,” the founder and CEO of Emusa Sustainable Pvt Ltd, Pallavi Krishna, said.

The Hyderabad-based e-commerce marketplace, Emusa Sustainable, has listed more than 200 brands, and is heading towards onboarding 1,000 more over the next few years.

Many new-age FMCG startups are founded by customers, who were once discontentwith the lack of quality products available in the market. These businesses, built on the principles of conscious capitalism, prioritise quality of ingredients and social responsibility.

Falling in this category is the ready-to-cook food brand Gourmet Craft. The Hyderabad-based brand has partnered with a NGO, KEATS Women Empowerment Center, to manufacture their products in a completely women-run facility. From a sustainability angle, the brand is working with The Disposal Company to offset the plastic used by removing it from landfills and recycling it.

“Today, the ready-to-cook convenience sector is cluttered with foods that do more harm than good. Packaged food is dominated by brands loaded with refined flour, preservatives and palm oil. Ordering food online is often a gamble due to questionable quality of ingredients and kitchen spaces. Gourmet Craft offers a wholesome and healthier alternative by offering easy to cook home-style meals made with cleaner alternatives,” said Arpita Soma, co-founder of Gourmet Craft.

Today’s consumers are demanding big brands and startups to follow conscious capitalism. They are also quite vocal in expressing their opinion, be it against Horlicks or wellness brand Mama Earth, which recently faced backlash for claiming to be natural.

“Today’s consumers have a voice and are demanding more from brands, big or small. They question companies that make questionable health claims. There are new-age brands that focus on quality, sustainability and long-term success, rather than making a quick buck. Such clean labels and committed entrepreneurs should be provided a platform,” Soma asserts.