Global Spice Trade Indian Panorama

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Global Spice Trade-Indian Panorama

• Presented by Sibi K Thomas
• AVT McCormick Ingredients Pvt Ltd
• Cochin

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AVT McCormick Factory
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AVT McCormick

• Certified Vendor of McCormick USA since 2000
• Certified Vendor of 8 MNCs with minimum of 15
  customer visits to our plant per year
• A.I.B, USA audited food safety systems since
  1999 Superior rating 2003 -06
• AIBI, USA Guelph Food Technology Center HACCP
  Certified
• Kosher certification from Circle U, USA
• Halal Certification from Islamic Services of
  America, USA
• ISO90012000 new standards certification

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Contents

• Global Spice trade-
• A Historic Overview
• Ancient History
• Arab/Chinese Spice routes
• European Colonial Invasion
• British /Dutch Corporate Companies
• Cast/Creed/Community Trade
• Post Colonial -
• Communist blocks
• Broker / MNC traders
• 20th Century
• Consumerism
• Globalisation
• Information/Communication Explosion
• Focus on India
• New Era
• Future

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Global Spice Trade - Historic Overview

• He who controls the spice, controls the
  universe.
• Frank Herbert in his science fiction "Dune".
• In the story, the spice was the lifeblood of a
  vast empire.
• For the leaders of this empire, it was essential
  that at all times the spice must flow.

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Global Spice Trade - Ancient

• Known Historic reference dates back to Pharaohs
  (Egyptian hieroglyphic inscriptions during the
  New Kingdom period about 3,600 years ago)
• Biblical story of Solomon and Hirams joint trade
  mission to the distant land of Ophir.
• Antiquities of the Jews - according to the Old
  Testament account , 3 Year voyage from the Red
  Sea port of Ezion-geber ( Israel ) to island of
  Chryse , far to the east in the Indian Ocean -
  Suvarnadvipa. mean Gold Island. - The East
  Indies .
• First Historic reference of a Spice - Lignum
  aloe Aloes wood. or Ud from Suvarnadiva or
  Sumatra Island

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Global Spice Trade - Spice routes
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Global Spice Trade 1st Century- Medieval

• Nomadic spice traders
• The route from Gilead to Egypt -"golden road to
  Samarqand" - thousands of years old, bringing
  pepper, cloves from India, cinnamon, nutmeg from
  the Spice Islands , ginger from China
• Roman Trade fleets
• Discovered monsoon trade winds
• Arabs, Chinese traders
• Arabs introduced Spices to Europe
• Caliphate trade dominance -
• Destroyed the old trade route and Blocked the
  European trade routes
• Invasion of Ghengis Khan opened up Europe trade

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Global Spice Trade Discovery of Continents
1450-1550 AD

• Voyages of Portuguese( Vasco da gama)
• Discovery of India
• Voyages of Spanish ( Magellan, Columbus)
• Discovery of South Americas, Australia
• Discovery of North America
• Voyages of Dutch, English and French

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Global Spice Trade - Discovery of Continents
1450-1550 AD

• 15th century saying No man should die who can
  afford cinnamon"
• "Pope Alexander VI. had bestowed one-half of the
  undiscovered world upon the Spanish, and the
  other upon the Portuguese, charging each nation
  with the conversion of the heathen within its
  prospective domains. "

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Global Spice Trade - Colonisation 1600-1800AD

• Spice Wars- Between Spanish forces ,Dutch Forces
• Dutch Monopoly in Spice trade
• First Corporate in Spice Trade - Dutch East India
  Company
• The Dutch ruled the market with a rod of iron ,
  If the price of cinnamon fell too low in
  Amsterdam, they burned the spice.
• English Invasion and Colonisation
• English East India Company - Monopolised the
  entire trade in Spice
• First Backward Integration project- Plantations
  in Malacca, India
• Emergence of India as a major Spice force

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Global Spice Trade 20-21 st Century

• Emergence of Cast and Creed or Community based
  traders , Brokers
• US dominance , Communist block
• European US trade behemoths- Man/Cargill
• Emergence of US as a the biggest spice importer
  - 40 Spices- 200000 Mt Imports
• Consumerism, Super markets ,
• Globalisation ,
• Information explosion, Communication revolution
• Closed trade net works to Open trade networks

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Global Spice Trade - Focus on India
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Global Spice Trade - Focus on India

• Trade of Queen and King of Spice - Cardamom and
  Black pepper since the pre historic times
• Introduction of new Exotic Spices by various
  invading Forces - Chilly from Mexico by
  Portuguese
• Plantations build by British - First Back ward
  Integration Projects
• Organised trade through brokers , Corporate
  companies
• Raw Material trade
• Trading Communities and trading skill.
• 50-60 years of Futures Trading in Spices IPSTA
  Kochi
• Raw Material trade

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Global Spice Trade - Focus on India - New Era

• India Emerged as the Spice Hub with 2 Mio Mt
  production! 1.8 Mio Mt consumption! and 200000
  Mt Exports
• Future
• Raw Material to Value added Products
• Food Safety
• Back ward integration projects ,Post harvest
  control
• BPO Operation in Food Segment

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What is Value Addition?

• Value addition is any step taken to increase the
  value of raw product any time between harvesting
  and sale of the final product.
• Adding value means that the consumers are willing
  to pay more than they would for a raw product

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Keys to success

• Quality Products
• Consider whether your product is unique enough to
  survive in market
• Market research test marketing at a small
  level
• Get assistance with product development from
  local resources
• Be consistent in quality, supply, delivery and
  service

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Qualities for Success of BPO In Food Segment

• Unique product
• Strong agricultural knowledge
• Ability to cater to customers
• The right kind of labeling packaging
• An enthusiastic promoter of product
• Aggressive marketing

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AVT McCormick Farms
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Causes of Failure of BPO/Value Addition projects

• Undercapitalization
• Inadequate homework
• Lack of a project champion
• Mediocre management
• Short Term Focus

These factors account for 90 of business
failures.
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The Planning Process Implementing a
Value-Added Venture

• A series of plans, with increasing detail and
  complexity, documents the beginnings of a new
  value-added business

Feasibility Study
Business Plan
Strategic Plan
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Creating a Sustainable Competitive Advantage

• DO NOT
• Pursue too many opportunities
• With little prioritization
• Too little resources
• Poor execution
• Low profitability

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Creating a Sustainable Competitive Advantage
Successful Value-Added Initiatives
Low Processing Costs
Low Production Costs
Marketing Strategy
Differentiated Products
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Creating a Sustainable Competitive advantage

• Quality control at source to offer Quality from
  Source
• Global Quality requirements differ
• How can we achieve quality needs?
• Thru processing using state of the art equipment
  to clean test certify
• Thru control of quality of raw material
• Lot selection
• Backward integration
• Quality Mind Set

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Creating a Sustainable Competitive advantage

• Understand the customer quality requirements
• Study the current agricultural practices
• Identify agri practices that lead to quality
  issues
• Develop a agricultural practices to balance
  quality issues and farmers concerns

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Basis of Competition
The Present
The Past
Product Vs. Product
Supply Chain Vs. Supply Chain
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A Traditional cost chain comparison

• Activities
• Delivery at port
• Receiving Palletizing
• QC Check Rejections
• Warehousing
• Processing
• Cleaning Process loss
• Treating Process Loss
• In Process Storing
• QC Checks Rejections
• Rework
• Further processing
• Final Release
• Distribution

• Associated costs
• Included in Price

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A cost chain comparison Value added Product

• Associated costs
• Included in Price

• Activities
• Delivery at port, ready to use, Palletized
• With QC Analysis counter sample
• Warehousing
• Processing
• Packing into small jars
• Blending into final product

The product is ready to use and the cost of
rejections, rework and wastages and the wait for
product releases at each stage is reduced
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Facts we need to InternalizeCategory A

• Do What You Promised You Would Do
• Planning Detail Orientation is a must
• Every body is in business to make a profit.
• All people we deal with are equally or more
  intelligent than us

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Facts we need to InternalizeCategory B

• Speed of response is a must.
• the very survival of the company depends on
  moving fast
• Bad news travels fast
• All individuals in the supply chain should work
  with the same information.
• Ability to Confront Reality
• of changes in the external world of markets,
  customers competitors

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3 keys to success

• Quality Products
• Good Marketing
• Food safety Total Liability
• Sufficient capital

Have Vision, take Risks and Believe in Yourself
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Thank You!!
Sibi K Thomas AVT McCormick Ingredients Pvt
Ltd Kochi