Spice Giant Orkla Navigates Price Drop Despite Volume Surge

Orkla Foods India, owner of MTR and Eastern brands, is navigating an unusual commodity deflation cycle that has compressed realisations over the past two years. CEO and Managing Director Sanjay Sharma noted a significant drop in input prices, with commodity costs falling by nearly 30% and chilli prices by approximately 50%. This deflationary environment has weighed on value growth, even as volumes in spices increased by 10.1% in the recent quarter, while value growth was only 3.1%.

Convenience foods continue to be a strong performer, with breakfast and meals showing robust double-digit growth. Digital commerce has become a crucial growth engine, especially for the breakfast category, which saw approximately 45% increase in e-commerce sales. Geographically, growth is widespread, with North and West India outperforming traditional southern markets, indicating successful expansion.

The company's international business remains strong, with the GCC region contributing significantly to overseas revenue and growing by 16.4% in the quarter. Efforts to reach Arab consumers through an Arabic spices portfolio are gaining traction, complementing the core Malayali diaspora base. Eastern has established itself as the leading Indian spice brand in household reach across the GCC.

Orkla Foods India reported a 3.8% rise in net profit to ₹68 crore and a revenue increase to ₹636 crore for the quarter, with a 5.4% volume growth. Future investments will focus on scaling convenience foods, strengthening digital channels, and further expanding the consumer base in international markets.