An apple a day may do more than just keep the doctor away! Be it a bite of the Fuji apple from Japan, a slice of the green Granny Smith from Washington or a mouthful of the Royal Gala from New Zealand – the world can certainly be your oyster here. Or to be more apt, the apple of your wallet’s eye

Neha Dewan | @TheDollarBiz

  Whether you are an importer in the apple trade or a curious customer, chances are that you would have been privy to those rich and round red apple varieties sourced from all over the world for the Indian market. But is importing apple really a lucrative business, despite the taste and price of the imported varieties being in sharp contrast with the local ones?

Feeding a billion souls

India is the world’s fifth biggest producer of apples, with almost all of its apples produced in just the three hilly states of Jammu & Kashmir, Himachal Pradesh and Uttarakhand. What’s interesting though is productivity. While the area under apple cultivation in both J&K and Himachal Pradesh is roughly the same, the former produces more than five times of that of the latter. In fact, J&K accounts for almost 80% of India’s apple production. The question that remains though is why does the world’s fifth largest producer of apple, import $200 million worth of the fruit every year? The answer to this question is very obvious. The fifth biggest producer also has the second highest population. Then there’s also the case of the upwardly mobile, who prefer the exotic varieties grown in the distant corners of the world. Vijay Kshirsagar of Kshirsagar Cold Storage, though, has an altogether different theory for India’s rising love for imported apples. “Imported apples catch consumers’ attention as their colour is deep red and the packaging is attractive. It is an instant pull,” he told The Dollar Business. Prices of international varieties of apple in India can go as high as Rs.250-Rs.260 per kg, more than double that of the Indian varieties. Ministry of Commerce, GoI, data reveals that India imported apples worth over $200 million (1,75,355.70 MT) in FY2014, with China and US together accounting for close to 80% of the total imports. While globally, Italy, Chile and France are also major exporters of apple, not much of their exports find its way to India. One of the main reasons for increasing imports from China is that its apple season lasts very long and, hence, supplies are available almost all through the year, unlike India.

No pushover

Despite the interest and intrigue for imported apples, the domestic market is still dominated by the Indian varieties. “Indian apples have much higher demand in the market because of factors like their low price, freshness and high quality,” said the retail salesperson at a Reliance Fresh outlet in Tardeo, Mumbai, which stocks both varieties of apples. Amongst the imported lot, the outlet had stocks of the Apple Fuji from Japan and Apple Red Delicious from New Zealand, as well as the Turban Apple Royal Gala imported from California. As a part of its sales strategy, the retail chain places imported apples in the bottom shelf, just below other exotic products such as broccoli, which are placed at eye level. And it’s a strategy that does gets the desired attention. Ask housewife Reena Patel who does her grocery shopping at the same outlet every month. Quiz her if she has ever noticed the ‘different’ rack of apples, and her response comes swiftly. “We, as a family, are avid lovers of veggies and fruits. Though, most of the time, I pick up Indian apples, quite a few times I ended up buying the imported ones stocked here, since they look so ripe and exotic,” Reena told The Dollar Business.

Paradise lost

Besides China and US, other exporting nations are also looking at capitalising on the India opportunity. Polish apple growers, for instance, are now looking at India as the next big market, after Russia banned import of fruits and vegetables for Poland. Moreover, according to a study done by ASSOCHAM, the recent floods in Kashmir have devastated its apple crop. The report claims that the main apple producing districts of Baramulla, Kupwara and Sopore have also been the worst hit by the floods, and losses are expected to be north of Rs.1,000 crore. This means India will have to import more apples this year.

Despite being the fifth biggest producer of apple, India is one of the top importers of it

Here to stay Despite being attractive, imported apples don’t appeal to Indian taste buds as much as the local varieties. Similarly, price fluctuation in the local market, much higher prices, high duties, volatility in the rupee and a clash with the Indian apple season, are some of the other challenges that they face in India. Summing up the apple import business, Kshirsagar said, “Indian apple’s peak season is between August and December. During the off season, apples are imported. While the profit margins vary from 10-15%, losses can be unlimited.” But these minor concerns notwithstanding, rising health awareness and disposable income, higher aspirations, and the unfortunate floods in J&K means that India’s apple imports are set to continue rising in the foreseeable future. And that’s a very ‘healthy’ way to make some dough.  

Interview with Sunil Sachdev, CEO, Aayush Impex next page...

“Imported apples have to be sold in less than 30 days, else their quality gets affected” - Sunil Sachdev, CEO, Aayush Impex

To better understand the apple import business, The Dollar Business caught up with Sunil Sachdev, CEO, Aayush Impex

Sunil Sachdev, CEO, Aayush Impex

TDB: India’s apple’s imports have grown at a CAGR of 32.91% in the last 10 years. Do you expect this trend to continue?

Sunil Sachdev (SS): India’s apple imports have grown at a CAGR of 32.91% in the last 10 years because domestic production has failed to keep pace with the demand of a rising population. The buying power of the Indian consumer has also increased considerably in this period, which means that more and more people are buying apples.

TDB: India mostly imports apple from China and US. Do you expect other major exporters like Chile and Italy to emerge in a big way in the near future?

SS: Other than China and US, we also import apple from Chile, Italy, France, New Zealand and Brazil. But the volume of imports from these countries is much less. The problem with Chile is that their apple season starts just four months before the Indian apple season starts. Out of these four months, 45 days go away in transit. Therefore, the scope for Chile to emerge in big way is very less. In case of other countries like France, Italy and Brazil, if they maintain the quality of the apple they produce, they can emerge as major apple exporters to India.

TDB: India has one of the highest import duties (50%) in the world when it comes to apple. How has this impacted the volume of trade? Do you expect any reduction in the near future?

SS: Our high import duty on apple has played a major role in the volume of trade. Because of higher duty, the cost of importing apple increases significantly, which means the buying capacity of the Indian consumer gets reduced. To protect the interest of local apple growers in India, I don’t think the government is going to reduce the import duty anytime soon.

TDB: Apple production in India has barely been growing at 1% per annum. Will we continue to import apple in large quantities or do you expect local production to play catch up?

SS: Like most other things, our apple economy too depends on demand and supply. At present, the demand for apple is more but supply of local apple is less. Therefore, we will continue to import apple in large quantities until local apple production improves.  

 TDB: Which varieties of imported apples are the most sought after in India?

SS: If I can give just one name, it has to be Red Delicious – by far, India’s favourite apple.

TDB: Which port(s) do you use for importing apples? Since it’s a perishable item, is lack of storage facilities in India a major concern?

SS: We use Nhava Sheva for importing apples, since our wholesale fruit market is located in Navi Mumbai.

TDB: What kind of margins are available to apple importers in India?

SS: Most Indian apple importers like us operate at single digit margins. But sometime, if the market is not in our favour, we end up losing money.

TDB: What are the main challenges in the apple import business?

SS: The main challenge in this business is to maintain the quality of the apples. Since apple is perishable, we have to sell them within one month. Else, they start rotting. When the demand is high, selling doesn’t take time, but when demand is low, selling them before their quality starts getting affected is a challenge.