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14

Jan, 2018

The business opportunity in dehydrated fruits and vegetables

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Food drying / Dehydration of food is a method of food preservation that works by removing water from the food, which inhibits the growth of bacteria. Water is traditionally removed through evaporation (air drying, sun drying, smoking or wind drying), although today electric food dehydrators or freeze-drying can be used to speed the drying process and ensure more consistent results. Dehydrated fruits are a good and healthy option to snack on for people who lead a busy life and don’t get proper time for meals. It contains high nutrients and good calories that are required in one’s daily diet. This also increases the shelf life of the fruits and vegetables.

Dehydrated fruits & vegetables are majorly used in ready to eat foods, fruit bars, soup, energy drinks, beauty products, aromatherapy oils, bakeries, organic paints, etc. It can also be sold individually like raisins, dried figs (Anjeer), banana chips dried mangoes, dried oranges, dates, coconut, sun-dried tomatoes, dried potato chips, amchur powder, chili powder, food flavoring etc. It is also used as flavoring by many kinds of manufacturers.

Dehydrated fruits and vegetables are mostly used by space stations, hikers, campers, hotels, restaurants, organic food retail stores, herbal tea manufacturers. It is a life saver in areas that are affected by disasters like earthquakes, flood, etc. as most of dehydrated products do not require any cooking or refrigeration.

It can be done at household level as well as at a large scale. At a small level, ladies in house make pickles, amchur powder, chili flakes, snacks, spices, etc. by sun drying it and preserving it with the help of salt, oil and preservatives. It is a good business option for household ladies and people who have small amount of capital to work with.

Market:

According to IBEF (India Brand Equity Foundation), the Indian food and grocery market is the world’s sixth largest, with retail contributing 70 per cent of the sales. The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s exports and six per cent of total industrial investment. The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate (CAGR) of 20 per cent. India’s organic food market is expected to increase 3X by 2020.

Benefits of Dehydration:

  1. Cooking food often leads to loss of nutrients. Dehydrating food, it is easy to get all the nutrients from vegetables and fruits.
  2. As the dehydrated food contains less moisture or water content, it prolongs shelf life of the fruits and vegetables.
  3. It is easy to carry along. It is a good option for people who like to snack on the go or do not have much time for important meals of the day as it is portable.
  4. It is a healthy snack for people who are looking to gain weight or mass in body in a healthy way. Dehydrated fruits and vegetables are high in good calories and nutrients.
  5. Fruits and vegetables shrink after the dehydration process. They are small in size and become easy to store in small places.
  6. Dehydrated foods have no hidden ingredients like harmful chemicals.
  7. It has a number of uses in different kinds of products.

What types of businesses can be done in the dehydrated fruits and vegetables industry?

  1. Manufacturing:

The entrepreneur can dehydrate the fruits and vegetables in an open factory or with a help of an indoor dehydrator and sell it in the market with the help of distributors, malls, retail shops or websites. The dried fruits can also be sold online to various e-Commerce websites like Flipkart, Amazon, Propshop24, etc. or the entrepreneur can launch his own website.

  1. Trading / Distributorship:

If the entrepreneur does not wish to start a manufacturing plant but still want to do business in this industry, they can take up distributorship or trade dehydrated fruits and vegetables. The dehydrated fruits and vegetables manufacturing companies need distributors and traders to further their business.

  1. Retail:

If the entrepreneur wants to step into this particular industry but does not have the required resources to set up a manufacturing plant or be a distributor, they can even start a retail shop of dehydrated fruits and vegetables.

Licenses required:

  1. Registration under Shop establishment act (known as Gumatsa in Maharashtra) from Municipal Authority / NOC from local authorities.
  2. Udyog Aadhar MSME online registration Certificate.
  3. GST
  4. FSSAI License (The processing units should follow the Food Safety and Standard Authority of India (FSSAI) act 2006. FSSAI Act is the applicable pan India for all food products. It prescribes minimum standard operating procedures, food safety norms, packaging & labeling norms.)
  5. FDA license.
  6. Fire Control license (in case of manufacturing business)
  7. Permission from pollution control board (in case of manufacturing business)

Dehydrating Methods / Process:

The dehydration process depends on the different dehydration methods the entrepreneur decides to use and products they want to dehydrate. Dehydration process differs by products.

There are various methods of dehydrating fruits and vegetable all around the globe. Few of them are mentioned below:

  • Sun drying:

It requires enough open land for drying fruits in sun. Vegetables should not be dried in sun as they require constant temperature and airflow. This method is mostly used to dry fruits like orange, pineapple, apples, banana, spices, figs, dried seeds, dates etc.

No particular equipment is required for sun drying, the entrepreneur will need an open land with enough space and sunlight for the drying process.

  • Solar drying:

It can be done by constructing a dryer with solar panels. The entrepreneur will be required to stir and turn the food several times a day. It also needs several days to dry. It can be used in relation with other processes mentioned in this list.

The equipment required for solar drying are solar panels which can be connected to any kind of dehydrating equipment. It will cost minimum INR 20,000 for the solar panels.

  • Room temperature drying:

It is mostly used for herbs, garlic and hot peppers / chillies. Chillies, garlics and herbs are strung on a string or tied in bundles and suspended from overhead racks in air until dry. It can also be done by enclosing the herbs or pepper in paper bags with openings for air circulation.

Room temperature drying requires no equipment except a hygienic room with proper air ventilation.

  • Freeze drying:

It is done by freezing the product and reducing the pressure in the surrounding. It prolongs the shelf life of the products. This method is mostly used for Ice creams, peas after being peeled, chocolate, bacon, instant coffee, ready to eat frozen dishes that can be reheated and consumed like frozen pizza etc.

A freeze-drying equipment is required to perform the process which costs minimum INR 1.5 lakhs.

  • Drum drying:

This method is used for drying out liquids from the product by the help of a drying drum. In this method, the products are pureed and dried in the rotating, high capacity drying drum at relatively low temperature which produces sheets of drum dried products. The product is then grinded in flakes or powder. This method is mainly used for low value products such as baby food, starch, corn flakes / cereals, etc. Other alternatives for drum drying are freeze drying and spray drying.

A rotary drum drying machine is required to use this process which will cost minimum INR 2 lakhs.

  • Spray drying:

It is a method of producing a dry powder from a liquid product by rapidly drying with a hot gas. It is mainly used for drying heat sensitive materials such as foods and pharmaceuticals. If the liquid is a flammable solvent such as ethanol or the product is oxygen sensitive, then nitrogen is used instead of hot air.

A spray dryer is required to perform the procedure whose minimum cost is approx. 3-5 lakhs.

  • Osmotic drying:

Osmotic drying is a process where the removal of water from the product is preserved by immersing it in a concentrated solution for several hours. It is carried out at constant concentration of solution and temperature leading to moisture loss and solid gain by the product over time. This process is useful improving the product by softening the texture and enhancing the natural flavor and color. The concentrated solution mainly has sugar / sucrose (for fruits) and salt / sodium (for vegetables, fish and meats). It is mainly used for raisins, berries, mushroom, olives, mushrooms, etc. The equipment required for osmotic drying is a big container to immerse the products in the liquid for a certain period of time.

  • Foam mat drying:

Foam mat drying is a cheaper alternative to drum drying, spray drying and freeze drying for the production of food powders. The product is turned into liquid form and whipped to form a stable foam. It is then dehydrated by applying heat. A high-quality food powder can be obtained by selecting proper foaming method, foaming agents, foam stabilizers, suitable drying method, temperature and time. It is mainly used to make food powders like powder of fruits and vegetables, cocoa powder, milk powder, instant coffee etc.

In foam drying process, the foam is placed on a stainless-steel tray and put in a drying chamber to dry. The drying chamber’s minimum cost is approx. INR 30,000.

Customers:

The dehydrated products can be sold to various sources such as:

B2B (Business to Business):

The dehydrated fruits and vegetables can be sold to various companies like protein bar / energy bar manufacturers, bakeries, pet food manufacturers, essential oil manufacturers, chocolate bar manufacturers, beauty product manufacturers, spices and condiments manufacturers, ready to eat food manufacturers, chocolate powder and hot chocolates, etc.

The entrepreneur can also tie-up with gyms, hospitals, office canteens, schools, and colleges to sell certain healthy products.

B2C (Business to Customer):

  • In B2C, the entrepreneur sells their products to the consumer. It can be sold to retail shops, departmental stores, online websites like Amazon, Flipkart, etc.
  • The entrepreneur can also launch their own website and retail shop.
  • The entrepreneur must have a proper expertise end to end business plan including procuring raw materials, manufacturing, packing, branding, marketing, storing, transportation to the concerned departmental stores, retail shops or online company’s warehouse.

 

Branding & Marketing:

Branding and marketing of the products is the most important factor for the business to be a success. The entrepreneur must build the brand creatively, strategically and also make it attractive to the consumers, as it can make or break the product. The entrepreneur also needs to promote their brand in the market strategically. It can be easily marketed to health-conscious people, gyms, office-going people, etc.

Entrepreneur’s Qualification:

  • The entrepreneur will be required to do proper research in the market and find suitable buyers for their products.
  • The entrepreneur should also be aware of the market and its competitors in the market.
  • They will also have to hire few skilled employees (in case of manufacturing unit) who know how to handle and maintain the machines in a proper manner.
  • There is a lot of science involved in dehydration of certain products. The entrepreneur must have knowledge about the process and science related to it.

Investment & Funding:

The entrepreneur will need to invest around INR 5-20 lakhs of capital, depending on the scale of business they wish to do. It can also be done with even lower capital and at home. Many women make home-made pickles, chips, snacks etc. by dehydration and using preservatives with even less capital than INR 2 lakhs.

The entrepreneur will be required to purchase dehydration equipment, raw material, factory, etc.  The machines cost starts from approx. 2 lakhs for capacity of 10 tons. It changes depending upon the capacity and features of the machine.

One can get finance through various sources like nationalized banks, private banks, and financial institutions. You can even contact us at info@udyogcredit.com, if you require help with financing.

A snapshot of the typical formal financing terms and conditions is given below:

Particulars Contribution by Bank Contribution by Entrepreneur
Capital Investment 75% 25%
Working Capital Gap (Raw Materials / Stock + Debtors – Creditors) 75% 25%
Tenure of Loan 5-7 years
Moratorium 6 months to 1 year
Can be funded by Scheduled Commercial Banks, Co-Operative Banks.
One can also enjoy the Mudra Yojana Scheme & Standup Scheme launched by the Government of India.

 

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