Sometimes this tomato becomes ₹20 per kg and sometimes ₹200 per kg. But do you know that India’s market worth Rs 12,000 crore is made up of this tomato business, in which many companies are doing business worth Rs 2000 crore. Does it feel shocking? This is the same tomato whose price increases and makes headlines across the country. But you’ve always looked at it as a consumer. Not like an entrepreneur. You must have heard that the farmer’s crop gets destroyed. But how much? Many people say 30 to 40%. But data from the Government of India and ICAR shows that post-harvest loss in tomatoes is 12 to 15%. But this is also a very big number and this is where a billion dollar opportunity is hidden for you.
After reading this blog, you will start seeing the gold hidden behind this tomato business and you will understand how you can build your empire with this simple thing. From the process to financial requirements, legal requirements, government schemes, how to export, how to find an even buyer and where to sell? All these things will become clear.
Opportunity in Tomato Business
So how big is the opportunity? Let’s talk about updated numbers. If we talk about India only, the processed tomato market i.e. the market of products made from tomatoes is worth Rs 12,000 crore today. And according to IMARC Group, this market is going to grow at a CAGR of 5.1% in the next 5 years. This means that every year new business worth more than Rs 600 crore is being added to it. Out of this, the market of ketchup and sauce alone is worth Rs 5500 crore. This is about India.
Now if we talk about the global picture, every year around 48.5 million metric tons of tomatoes go for processing only in the world. The global ketchup market alone is worth over US$20 billion. Countries such as USA, Germany, UK, Japan and UAE are its biggest importers. So the market size is huge.
Products You Can Make from Tomato
But what is there to sell in such a big market? Let us see what money making products you can convert this one tomato into. One tomato but many products. You can make tomato ketchup and sauce, tomato puree and paste which is a gold mine for B to Bb. Canned tomatoes, tomato powder which is in demand in spice companies. Ready to cook, makhani and curry gravies.
Tomato Ketchup: Process and Machinery
Let’s do a complete breakdown of tomato ketchup. The process will remain the same – sorting, pulping, cooking, homogenizing and packaging. The FSA standard for ketchup states that the TSS (Total Soluble Solids) should be a minimum of 25% and the acidity should be a minimum of 1%. It is compulsory to meet these standards.
If we talk about machinery and cost, then you need a fruit pulper of 100 kg per hour which will cost between Rs 60,000 to Rs 1 lakh. If you want a steam jacketed kettle up to 100 litres, it will cost between Rs 80,000 to Rs 1.5 lakh. You need a pouch or bottle filling machine, semi-automatic, which will cost between ₹70,000 to ₹1.5 lakh. The total initial machine cost will be between ₹5 lakh to ₹4 lakh. Let me give you a pro tip. Initially, pouch packaging will be cheaper than glass bottles. It earns both capex and packaging cost.
Profit Calculation
Now let’s come to profit calculation. The industry thumb rule is that it takes two to two and a half kg of fresh tomatoes to make 1 kg of ketchup. Let’s calculate cost per kg of ketchup pouch pack. If you procure raw material tomatoes i.e. 2.2 kg at ₹20 per kg then it will cost ₹44, other ingredients like sugar, spices, vinegar, stabilizer approximately ₹20, packaging pouch plus outer carton approximately ₹6, processing and overheads i.e. labor, electricity, depreciation, everything together approximately ₹15, so the total ex-factory cost will come to 44 + 20 + 6 + 15 i.e. ₹85 per kg.
Now this happens when you are making pure tomato ketchup, but today you know that many cheap ingredients are added in the industry. Like pumpkin paste. So let’s now see how to sell it. Wholesale price to distributor you will give ₹110 to ₹130 per kg. In the remaining sales, the distributor will sell by keeping his margin of 8 to 12% and the retailer will sell by keeping his margin of 20 to 25%. Your net profit margin is approximately between 10 and 20%. People make a direct profit of 35 to 45% because they add cheap ingredients and thickeners to it. So what can you do? You can sell tomato puree to such players in B2B. In this the margin is low but the volume is high so you can build a big business.
Funding and Government Schemes
Now let us talk about funds and government schemes. Investment depends on your scale. Where will the funds come from? So for this you can arrange from your funds or from your relatives. Plus there are government schemes too which will support you. So let us first know about the government schemes in some detail.
PMFME scheme is perfect for this business. Credit linked capital subsidy of 35% of the project cost up to Rs. 10 lakh is available. PMEGP: Under this, you get a subsidy of 15% to 35% on the project cost depending on the location and category. For this, a good DPR i.e. detailed project report has to be prepared. Then there is Mudra loan also. You can get a loan up to ₹1 lakh without guarantee. Small factory under youth category. You can apply in the youth category. There are many such success stories on official government portals where people have set up their own food processing units through this scheme.
Legal and Regulatory Requirements
So let’s move ahead and talk about legality and regulatory requirements. Read this section very carefully. First of all you need a fishing license. Initially, crop registration on a small scale will suffice. As the turnover increases, state and then central license will also be required. Apart from this you need GST registration. It is recommended that you take it initially but it becomes necessary when your annual turnover crosses Rs 40 lakh. But yes, if you want to sell online on Amazon and Flipkart, then you will have to enter the GST number from the very first day because they do not allow sellers to register without GST number.
Apart from this, you will need MSME enterprise registration, this will be required to apply for all the schemes and to avail subsidy. Then you will also have to get trade license and pollution NOC. Plus labelling requirement is also compulsory here. Whatever package or bottle you make, it should have your label on it. Which should have the FSSAI license number. There should be a Vij logo. Meaning that green dot plus net quantity, MRP, batch number, manufacturing, expiry date, ingredient list in order from highest to lowest. Then the HSN code which is for ketchup is 2103. All these details build trust in your brand. And this must be on your packet.
Sales and Marketing
So the product is ready, now let’s talk about selling it. For that you have an option called B2B Hours. 1 kg to cloud kitchens, restaurants, caterers in your city. You can start supplying tomato puree or paste in pouches. This is study business. Then you can also lunch your own government sausage. Such as peri-peri ketchup or roasted, tomato, makhani, base, schezwan sauce. Cut them into small sausages.
Apart from this, there is also the option of tomato powder. Start selling this to spice and soup making companies. Now if you pay B2B and supply to those companies in bulk, then your logistics cost will be reduced. Now for this you will have to find out their contact number and contact them. You can also approach them through Lindin. Plus, you can also personally meet the restaurants and pitch them by giving them samples of your product. Also list your product on B2 platforms like Indamar. You will get inquiries from there also.
Now the question arises how to do marketing? So add trust visual cues with storytelling. Show the hygiene of your factory. Show your process in videos, show the packaging process. Show how hygienically you are doing it. Show how to check the quality of ketchup using a Brix meter. Show the lab test report. Seeing all this, the customer’s trust in you will increase and will also feel connected to you.
Export Opportunities
And the opportunity is simply not there in the Indian market. There is a huge opportunity in export also. For export you will need IEC code which you will get from DGFT. Apart from this, register on Appid also. Start looking for buyers on platforms like Alibaba, Gulf Food, Anuga. If the question arises as to which country to sell it in, then according to the latest data i.e. data of 23 and 24, the top importers of ketchup and sauce from India are USA, Philippines, Nepal, UK, Spain and UAE. The government also gives you a benefit of 0.8% on the export of ketchup under the Road DTEP scheme.
And there are many brands that are making a great business out of it. Capricorn Food Products is a great example. It is an export focused company that ships tomato paste and fruit pulps across the world. Their main focus is international quality standards due to which their business is doing very well today. If you want, you can also do a detailed case study of them.
Future Potential and Innovations
Let us now talk a little about future potential and innovations. The future of this industry is clean label, no preservatives, low sugar, sustainable packaging, gourmet and regional flavours, ready to cook gravies. There is money in these spaces. But you can start with the strategy of B2B plus niche Gaur sausage. It is better to sell the right format to the right people than to sell ketchup to everyone.
Seven-Day Action Plan
Let me give you a seven-day action plan.
- Day One and Two: Go to your local Monday and track tomato prices over the past year. Then buy tomatoes at the price of ₹15 to ₹20 per kg.
- Day Three Make ketchup at home using three different recipes. Have 15 friends and family do a blind test. Day Five Give 1 kg pouch sample to 20 Cloud Kitchens and Caterers in your city.
- Prepare for Day Six compliance. Apply for FSA registration and also check GST threshold.
- Day Seven: Start sampling in your local area and make connections with people. Create a page and channel on WhatsApp and Instagram, connect with them and start getting orders there.
- In this seven-day plan, your entire business model will be tested with very little investment. If it seems feasible then start the work.
Conclusion
I hope you got a clear picture about the hidden opportunities in tomato business and understand all factors required to start this business journey. Keep in mind that great things takes time and before jumping into this market study the market and act accordingly initially to get deeper sense of this business.
So what will you choose? Excuses for life or solid results in the next few years. The choice is yours.
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