Delhi-based Earthy Goods provides marketing, branding and distribution services and other business skills to rural agri-based industries
How many of us have wanted to mix social commitments with commercial success, yet were daunted by the enormity of the task and beat a hasty retreat?
Social commitments don’t make good business, certainly not for a startup, say the elders. For some, however, business is the way to meet social goals.
“Social good—providing jobs and improving the local economy—is one of the intended consequences, but our primary aim is to make our partner businesses strong,” says Reshma Anand, CEO of Earthy Goods & Services Pvt Ltd. The company imparts business skills to rural, agri-based units and helps them brand, market and distribute their products across the country. It is part of the Chennai-based ICICI Foundation’s efforts to increase livelihoods of low-income households by getting them to engage with the market.
“There are a large number of small- and mid-sized entrepreneurs in remote areas, facing similar challenges. The number of buyers of their products restricts the scale of their operations, which in turn restricts the income they can generate,” the 33-year-old alumna of IIM-Bangalore points out. “If we do our work well and support our partners and they become healthy companies, this will create employment and benefit the local economy.”
Started a year ago, Earthy Goods provides modern business skills, marketing and distribution services to traditional Indian agri-based industries, preparing them for financial investment. It started operations in August last year with around 12 manufacturing partners. “Most of them have doubled their revenues since we started working with them,” Reshma, a former innovation manager with HLL, adds proudly.
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| Social good—providing jobs and improving the local economy—is one of the intended consequences, but our primary aim is to make our partner businesses strong.” Reshma Anand, |
At the core of Earthy Goods’ business philosophy lies the belief that traditional businesses in villages can carve out their own niche in today’s hyper competitive market. “Our partners should play on a level playing field. On the one hand, they must understand that the market will not pay for any inefficiencies at the backend. At the same time, they should enjoy the same quality of marketing inputs that any large producer would,” she explains.
Rural units often face bottlenecks such as unreliable power supply and poor roads. However, Reshma points out that for farm-based products, the units can make up for the downside by being close to the source of their raw materials. In addition, Reshma points out, such units have the advantage of having direct links with farmers and understanding local tastes and preferences better.
It is therefore not surprising that the partners of Earthy Goods are small, rural, farm-produce-based units that manufacture everyday products such as jams, preserves, honey and cosmetics. Most of the existing partners have an annual turnover in the range of Rs 25 to 100 lacs.
“Often, the first two months with a partner are purely about turning around that business and making the products marketable,” Reshma points out. “The starting point is to see what is required to compete in the mainstream market and enable the company to deliver it in a sustained way. We identify where the big leakages are in their business model. They could be in procurement, production, technology, quality of inputs, external vendors or capacity.”
Besides playing management consultant, Earthy Goods also brings in practical benefits, such as improving the branding strategy and more efficient logistics. If the rural units already have brands, the goods are marketed under the same brand. If not, Earthy Goods develops a shared identity. The company has set up a network of distributors, currently in the three north Indian states of Punjab, Uttaranchal and Himachal Pradesh, besides the National Capital Region. The entire logistical and distribution network is operated by Earthy Goods, including despatching the product from the units to etching distribution and marketing deals. The company is setting up its own warehouses, with one already operational in Delhi and is expanding to Haryana and Rajasthan. It also sells its products through the Future Group, the owner of the Big Bazaar chain.
Over time, Reshma expects the Earthy Goods label to be a guarantee—not just for the product, but also of the producer. “We spend a lot of time on the ground conducting site visits. We ensure that all the legal formalities are complied with, all the labor and quality practices are adhered to. All the products are tested through approved labs,” she points out.
Earthy Goods, however, is more than a marketing and distribution company. Once the partners become stable and can profitably scale up, Earthy Goods also brings in investment into the company. “Investment is very much part of the overall goals of the engagement,” Reshma points out.
Earthy Goods is part of the Chennai based ICICI Foundation’s efforts to increase the incomes of economically backward households in a sustainable manner. But the exact business model of Earthy Goods owes a lot to the experiences and expertise of its CEO.
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| Earthy Goods team visiting a unit at Bhuira in Himachal Pradesh | Earthy Goods team visiting a unit at Bhuira in Himachal Pradesh | If we do our work well and support our partners and they become healthy companies, this will create employment and benefit the local economy. |
Though her first job after passing out of the IIM was with Hindustan Unilever, after six years, she decided to go back to her original love of developmental economics. “At Levers, I worked extensively in rural markets and I realized that I wanted to do something a little more hands-on.”
Having decided to quit, Reshma explored her options for four months. Having met many organizations, she finally joined the Delhi-based NGO Development Alternatives that explored possibilities of combining good business with good social objectives. “One of the key things was that there are ways to combine good business and good development,” she points out. Three years on, she met Dr Nachiket, ex-deputy managing director of ICICI Bank.
“He was looking at what could be done to create a large scale impact in the rural area across a large number of products, to educate a large number of producers... I got involved, traveled for three months and met entrepreneurs, NGOs, government, self-help groups and farmer cooperatives. Soon, I realized that each set of organization is only addressing a part of the problem.”
Having realized that the challenges faced by small producers in the rural areas across the country were very similar, Reshma set upon the task of addressing the same. “It was challenging to get the right people. We don’t want to dilute the fact that this is a business or let them feel that joining us is a sacrifice. We pay standard salaries, plus the upside as and when it happens,” she points out. After less than a year of operations, the Earthy Goods team has grown to 15 people.
For the future, Earthy Goods wants to have a nationwide footprint. “We would like to show that you can do good and do good business at the same time.,” says Reshma, who expects the firm to take four or five years to hit the Rs 100 crore revenue mark.
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written by seema, October 09, 2008
written by Fay Hodza, September 14, 2008
Thank you
Fay, PhD Student
written by dayanand, September 02, 2008
dayanand
econ_daya@yahoo.co.in
written by Shelly Gandhi, August 16, 2008
written by Yashwant Ramesh Sharma , July 21, 2008
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