Spice Story Sees Offline Stores Contributing to Two-thirds of its Sales

Spice Story, an ethnic food firm, said offline stores now account for two-thirds of its sales, a sharp reversal for the company that started as a direct-to-consumer brand and was largely dependent on e-commerce.

The company partnered with Jayanti Herbs and Spice for its offline expansion in August when online sales contributed 60 percent. The company said fill rates in modern trade have gone up to 91 percent from the average 76 percent post-the tie-up, resulting in business volume growth of 30 percent. A shift from unorganized to packaged goods also helped, it said.

Soumyadeep Mukherjee, Founder, and CEO of Spice Story said, "While the packaged foods industry has been growing regularly ever since, it saw an exponential rise when covid stuck. With online grocery gaining momentum, the shift to branded packaged foods and spices was evident. Consumers are very clearly now moving to branded products rather than the next-door kirana stuff." 

The company said its store footprint in organized modern will go up to about 600 stores this year, up from 450 they had in August. In addition, their tie-up with OmniAccess, a boutique distribution house for emerging D2C brands in Mumbai, has helped the brand get into 700 stores already. The company intends to scale up to 6,000 stores in the top six cities, where they have a modern trade presence by March 2023 to fuel their plan of growing by four times in the next fiscal.

A recent report by Kantar said demand for beverages, convenience foods, snacking and premium personal care products have surged significantly from a year ago, bucking the trend of the overall fast-moving consumer goods (FMCG) market, which has fallen.

"Hygiene is a big driver. The overall branded packaged foods segment is expected to grow to $3.4 billion by 2027 and the new age D2C brands are leading from the front here with their innovative products and flavors," added Mukherjee.

Backed by VC firms such as venture catalysts, Agility Ventures, and marquee industry professionals, Spice Story has been growing at over 50 percent annually. Founded in the year 2019 by Mukherjee, the brand is mulling plans to enter new categories over the next 3-4 quarters and grow its business 25 times by 2025.