The Fragrance Export Market of Incense Sticks in India - Current Scenario, Growth, and Predictions 2022
The Fragrance Export Market of Incense Sticks
In India, incense sticks are a commodity found in almost every home whether it is for religious purposes, medicinal value, or simply for its pleasant fragrance.
A wide variety of incense sticks are available in different shapes, colors, and fragrances at very competitive prices. But, the market for incense sticks is not limited to India. There is a demand for this product across the world thereby opening up a global fragrance market for exporters. The contribution of incense sticks may be a mere 0.04% of India’s total export, but it is considered a niche export product with huge earning potential. Today, India exports incense sticks to more than 150 countries including the USA, Nigeria, Malaysia, and the UK, and UAE. This is significant considering this is a part of the small-scale cottage industry. As far as the product is concerned there is no quality difference between products made for the domestic and international market. But products have to be made keeping in mind different customer preferences. Different regions of the world have different preferences for fragrances. France has a preference for floral fragrances while people from the Middle East like more oriental type fragrances. South America has a choice of sandalwood and cedarwood fragrances. Again the demand pattern changes according to the season also. The style of packaging also needs to be changed as per customer requirements. In the Middle East, packing with bright colors is preferred whereas customers of France and South America prefer to have packaging with subtle and soft colors.
The SWOT Analysis for the industry
The production of incense sticks in India constitutes a significant part of the small-scale cottage industry and people from various sections of society are involved in this activity across India. The demand for incense sticks is increasing among global customers so there is a huge scope to expand the market and develop the industry. The incense stick manufacturing industry in India has utilized its strength while dealing with various threats from competitors and has been able to overcome the weakness or limitations by taking advantage of the opportunities available. We will discuss this in detail in the following sections and make a SWOT (strength, weakness, opportunity, threat) analysis of this manufacturing sector.
Strength
Incense sticks are mostly a handmade product in India and are considered to be one of the best in quality. There has been an increase in demand for fragrance sticks in overseas countries. It may be due to the growing influence of Ayurveda, yoga, aromatherapy, or simple interest in Indian culture and traditions. The mystic and organic fragrance of incense sticks build an atmosphere that helps to connect with Indian culture and spirituality. This is one of the few products from India that is considered premium and faces little competition in the international market. Indian incense sticks have started becoming popular in others parts of the world due to the opening of global markets and new opportunities. Exporters have also been able to find new markets that help them scale up and expand the business successfully. More countries have started importing incense sticks from India. To differentiate and make the products more attractive, Indian manufacturers are preparing new variants of incense sticks in terms of new fragrances. Natural and organic fragrances like jasmine, lavender, rose and sandalwood are quite popular among foreign customers. Manufacturers are experimenting with innovative fragrances such as strawberry, green apple, and even chocolate. They are also coming up with a combination of fragrances, unique shapes, sizes, and packaging to boost sales and increase market share. The consumption of Indian incense sticks is rapidly increasing in other countries resulting in better import trends. Such an increase in demand and revenue earning encourages the incense stick manufacturers to raise the production volume and improve quality, allowing more and more countries to think of importing this product from India. It is a profitable business model considering the prevailing demand patterns, and the small-scale manufacturers can reap good profit from it.
Weakness
The fragrance industry of incense sticks remains largely as a cottage-based small-scale industry and decentralized in nature, leading to issues with further expansion. This is a very labor-intensive industry involving a lot of people from rural and semi-urban areas. They have to be compensated properly for their skills and efforts so that the industry can sustain and grow. The industry often struggles to meet the demand of voluminous production, with limited capacity and resources. The industry has not been able to take advantage of technology to scale up production. The industry needs to adopt machine-made incense sticks manufacturing methods to remain stable in the competitive edge. This will give an advantage in local markets by producing products in larger volumes to cater to the demands. However, for export purposes, handmade incense sticks are in high demand in overseas markets. Indian incense sticks have created a brand worldwide but a lot more is required to be done to promote exports. The incense stick industry is still facing various challenges in terms of inadequate infrastructure, low capital, lack of organized identity, and overall absence of knowledge about marketing strategies. Marketing is a big challenge and there are gaps between manufacturers’ efforts and customer response. the manufacturers of incense sticks in India have to be ready to compete with other manufacturers of Southeast Asia with the application of advanced technology both in the manufacturing and marketing fields.
Opportunity
Indian incense sticks have created a brand worldwide but a lot more can be done to promote exports. The industry must focus on expanding the customer base by suitable marketing and promotion strategies. Participation in trade fairs and expo could help the industry move forward and gain a stronger foothold in the international market. The use of e-commerce platforms helps in the export of products all over the world conveniently. One of the best online trade platforms for handmade products is Craftezy, which helps showcase the products online and allows potential customers to select the desired product and give purchase orders. Also according to industry experts, export margins of incense sticks can improve further with little value additions in the product. Manufacturers are now considering innovations in terms of shape, size, and fragrance that can create a niche in the market. Packaging is another way to add value to the product, which can be done within the country or in the export destination. Indian manufacturers are competent enough to provide customized value-added products to their customers by redesigning the packaging for color, size, and material that meets the requirements of customers.
There have been initiatives from the Indian government to support the industry with cost-effective solutions. Incense sticks were classified as a handicraft product in 2009 and the industry became eligible for duty waiving. It is also entitled to an incentive under the Merchandise Exports from India Scheme (MEIS). Moreover, schemes such as Market Access Initiative (MAI) and Market Development Assistance (MDA) have helped exporters in marketing their products to a wide customer base across the globe. The industry has also started expanding with the introduction of entrepreneurs because of the low initial investment required for this business.
Threats
The fragrance export market of incense sticks is highly competitive which also affects the margins. The volume is more but the margin is less in export business. The Indian exports are facing competition from China and Vietnam, which are amongst the largest exporters of incense sticks in the world. Vietnamese and Chinese products have started entering markets by offering lower prices and more quantity. Earlier, the Vietnamese incense sticks were costlier than Indian products, but now the gap between both is decreasing. The Indian-made incense stick is slightly heavier so there were fewer sticks in a pack. Even if there are some numbers of sticks as the Chinese product, some buyers still do not prefer Indian incense sticks as they have the old mindset that imported products are better quality than those produced in India. Again balancing quality with competitive pricing is also a big challenge. This becomes a threat as manufacturers in some areas are compromising on quality to reduce overall prices. Earlier, Additionally, the industry has not changed much and remains largely a cottage-based industry, leading to issues with production, promotion, and marketing. This is a very labor-intensive industry when compared to Chinese and Vietnamese products. According to manufacturers of this industry, allowing international manufacturers to set up facilities in India has increased the competition for local manufacturers on both domestic and international fronts.
Predictions 2022
Incense sticks have started gaining popularity in western countries because it creates an ambiance that is suitable for meditation, yoga, and aromatherapy. Incense sticks are not only considered as a source of fragrance, it is now connected to décor, fashion, and style. It is satisfying the diverse requirements of customers in the global arena. Indian incense sticks have created a benchmark in terms of quality and traditions that make it difficult for other countries to compete. More countries have started importing incense sticks from India. The demand from Europe and North America has been steady, while new markets in Africa and the Middle East will help the industry grow significantly. It is estimated that by the end of 2021, Indian incense stick export will grow by 15%. The incense stick industry is expected to experience steady growth in future days to come.
