Andrea Lucia Biswas-Tortajada and Asit K. Biswas
Sanchar Express | October 7, 2014
For times immemorial, spices have been a source of riches, status and power. Securing their supply once motivated the scramble for the world and its seas, making civilisations clash, mingle and merge to control trade routes. The Greeks and Romans made their way to India as early as 3000 BC to purchase, plunder and fight over the incense and spices that scented their temples and gave flavour to their foods.
Since then, spices have become an indispensable part of the food chain, with India, the world’s largest producer, at its heart. So, could anyone believe that the now biggest Indian supplier to the world’s leading food companies in that country used to be a corner-store sized family business in Punjab? Paras Spices Private Limited grew from being just another spices shop to operating one of the most advanced spices units in India. Its story is a tale of corporate success and above all, of finding the right partners to work with.
A window of opportunity
From 1958 and for 24 years, Nestlé focused on consolidating a milk district in Moga. By 1982, the company had grown big enough to set up a culinary unit to spice up its food recipes to suit local tastes. Nestlé’s move opened a huge window of opportunity for spice producers, processors and suppliers. And Paras jumped right in. The small family-owned grocery shop sold Nestlé 2 kg of turmeric on an urgent basis. The quality of that initial batch of turmeric proved to be good enough for the Swiss company to forge a long-term relationship with the then tiny business.
Closing skill gaps
Nestlé knew from its efforts in building a milk district in Moga that success not only needed the right partners but also partners with the right skills. Nestlé thus trained Paras’ workers in quality-enhancing practices in spices sourcing and processing, lab testing, calibration, good hygiene standards and power-saving technologies.
Paras then committed to consistently meet strict quality standards, a trait that set it apart from domestic competitors and has fuelled its growth into a multinational. With an annual production capacity of 12,000 tonnes and a procurement network, today Paras is one of the largest and most advanced spice processors in the country. In only 30 years, the once small mom-and-pop grocery shop has grown into a global company. It now employs 250 people directly and has an annual turnover of more than INR 1,000 million.
Do as you know
Given the close Nestlé-Paras relationship, the spices producer has followed similar business practices of its business mentor. Like Nestlé, Paras does not own land or produce spices itself. Instead, these are bought from the farmers to whom it gives free of cost technical assistance several times during the crop cycle to increase yields, introduce innovative crops and agricultural practices, improve productivity and minimise wastage. This Nestlé-conceived model has allowed Paras to streamline an otherwise fragmented, geographically scattered and quality heterogeneous spices supply chain. It currently employs over 250 people from the region and procures its spices from some 35,000–40,000, with over 5,000 farmers growing chilli alone.
Sharing the success
Nestlé has benefitted from this mentorship by having a continuous, reliable and good quality spices supplier for its culinary products in India and beyond. In turn, Paras sells per cent of its products to Nestlé, supplies all spice ingredients used in the Moga factory and exports them to 12 Nestlé factories in South Africa. Recently, Paras doubled the capacity of its spices branch, employing 100 more people and establishing another factory at Pantnagar, India, where Nestlé had opened a manufacturing facility in 2006.
Together, Paras and Nestlé have also ventured into new enterprises. Responding to a mounting demand for chicory in 2007, Paras experimented with farming the crop in 2 acres of land. Since 2011, 400 farmers have been producing chicory commercially in 500 acres. That year alone Paras sold 1,000 tonnes to Nestlé, including its factories in South Africa. Nestlé has also introduced Paras to cattle-feed and starch-drying, a plant that will employ some 100 workers, procure agro-commodities from 8-10,ooo farmers and produce 200 tonnes daily.
This three decade-long mutually beneficial and symbiotic relationship with Nestlé has brought Paras’ employees a competitive income, training, medical plan, safety and security package. In turn, Paras has gained national and international recognition and quality certifications. The Government of Punjab gave it an award for being the safest factory in Punjab.
The company has successfully become a benchmark for the global food processing industry in terms of quality, technology, innovation and servicing. It can boast of having a seal of approval and finding itself in the high quality bracket. Thus, when Pepsico and Del Monte wanted to source spices in India, they went to Paras.
Nestlé India and Paras have grown together. Their relationship is based on reliability, shared risks, technical support, collaboration and unwavering commitment to quality. Their partnership is an example of how to spice up an activity, who you work with, and how, can make all the difference.
Andrea Lucia Biswas-Tortajada is a Senior Research Fellow at the Third World Centre of Water Management, Mexico. Asit K. Biswas is a Distinguished Professor at Lee Kuan Yew School of Public Policy. Their latest book is “Creating Shared Value: Impacts of Nestlé at Moga” Springer, Berlin, 2014.