India’s Largest Saffron Supplier Plans To Take On Patanjali, Dabur

For 57 years, USMS Saffron Co. has supplied the world’s most expensive and delicate spice in the domestic and overseas markets. Now, it wants to build a bigger, diversified health-centric business.

The company will launch health-oriented food and beverages, including saffron drinks and supplements such as ‘kesar’ flavoured whey protein, targeting the youth and Gen-Z, Chief Executive Officer Avneesh Chhabra told BQ Prime.

The Rajasthan-based firm also plans to launch ayurvedic products, directly competing with Patanjali Ayurved, Dabur India Ltd. and Himalaya Wellness Co.

Over the last decade, USMS has built a robust distribution network across the country—from Kashmir to Kanyakumari. It now plans to leverage this network to increase the share of its value-added products—the health-oriented food and beverages—to about 20% of sales.

India’s largest supplier of saffron, which retails under the brand ‘Baby’, has an 80% share and produces 20 million packs a year. It will be able to make 26 million packs by the end of FY24, Chhabra said.

The sixth-generation entrepreneur has drawn up plans to scale the family-owned business. Other than widening its portfolio with value-added products, USMS is adding capacities as saffron consumption surges.

“People have become more immunity-focused, thanks to Covid-19, and we see a need to expand capacities to meet demand,” said Chhabra.

The company has been growing at an annualised rate of 30% in the last five years and now has an annual turnover of Rs 150 crore. It also exports saffron to Vietnam, the U.S., China, Kuwait, Israel and Australia.

The global saffron market size, according to Grand View Research, was valued at $374 million in 2020 and is expected to expand at a CAGR of 8.5% from 2020 to 2028. Growing awareness among consumers about the medicinal properties and health benefits of saffron is a key factor driving demand, the U.S. based market research and consulting firm said in a report.

USMS started as a cottage-scale business in 1965 and took nearly a decade to make a name for itself in the highly unorganised saffron market.

“There was a time when my grandfather, who started the business, completely gave up because there were so many other brands that were selling saffron of inferior quality at cheaper rates,” recalled Chhabra. “Even consumers were not able to understand the value of what we were selling.”

Touted as red gold, saffron is an extremely labour-intensive crop. Its costs is linked to harvesting. “The flowers are so delicate that it must be plucked by hand, and it is backbreaking labour.”

“Every flower has three strands of saffron and in 1 gm there are 300 strands... so that’s like a hundred flowers for 1 gm of the spice,” said Chhabra. The crop, he said, is harvested only once a year in October and takes 8–10 man-hours to process a kilo of saffron—used in food, perfume, dyes, skin creams to shampoos and even for medicinal purposes.

“We did automate parts of the process but that too at a semi-automatic level and not fully automatic. We still need people at all levels.”

Kashmir is the only place in India where saffron can grow. Iran, Afghanistan and Spain are some other places where the company sources saffron from.

A 1-gm retail pack of these tiny pieces of slightly fraying dark red sewing thread costs Rs 200, and comprises 50% of the company’s sales. It has also unveiled small stock-keeping units of 50 milligram to offset inflation and increase penetration beyond the metros and tier-1 cities.

Because the spice bestows premium status, the demand is restricted to premium dishes and is not a common household item like turmeric or cinnamon. It also makes it a must for the most expensive Diwali mithai (sweets).

As Chhabra said, saffron’s high price tag is the root cause of the problem: it makes it extremely tempting for counterfeiters, like all other luxury goods.

But it is not as expensive if you think like Chhabra.

“A 1 gm pack could last about 10 days. So, you are actually spending Rs 20 a day which is not very expensive,” he explained.

USMS produces 30 tonnes of saffron annually and employs 120 workers at its factory. “Ours is the country’s only factory where the entire process, beginning from buying the stigma of the flower from farmers till packaging is done at one place,” said Chhabra. The company aspires to become “a large-scale consumer goods entity driven by technology and innovation”.

USMS also has big plans for advertising and promotion and wants to onboard celebrities as brand ambassadors for the first time.

It will also collaborate with influencers to launch youth-targeted social media campaigns and is working on a tagline, said Chhabra. “All of these initiatives will come to effect by April 2023.”