Incense startups sniff better opportunity abroad as local market, dominated by legacy players, limits prospects

As they struggle to compete against legacy companies in the domestic market, startups in this space are experimenting with new blends and fragrances and tapping e-commerce platforms and international retail chains to make their products available globally.

Startups including Phool, Hoovu, Kalyanamm, Nirmalaya and Nytarra have created clean and sustainable religious and lifestyle aromatherapy products such as incense sticks, particularly targeting the urban consumer. Many of these startups use recycled floral waste generated by temples or other natural ingredients to make their products, which are more expensive than traditional incense products, positioning them as premium brands.

However, growth in the domestic market is slow and lack of awareness in a price-sensitive market make it a challenge to sustain their businesses in the country. The startups told Mint that anything beyond ₹50 is a hard sell in India.

Kalyanamm, a two-year-old incense focussed startup, plans to start selling its products in the US and Canada on online marketplaces eBay and Amazon.

“Every week, we are getting international orders on our website, which prompted the decision to expand internationally. People are ready to spend on the extra shipping cost, but they want something clean and organic," said Nidhi Sabbarwal, founder of Kalyanamm.

Focus on ingredients

Sabbarwal explained that a pack of about 30 regular non-organic incense sticks made of charcoal costs ₹50-70, whereas Kalyanamm’s incense sticks would cost about ₹300.

“In India, about 70% of the customers are price sensitive and won’t look at the ingredients, whereas in the international market, 70% of customers look at the ingredients rather than the cost, making it a better business opportunity," she said.

It’s not just non-resident Indians (NRIs) but citizens of other countries that these companies see as the larger opportunity. In India, the majority of their customers are in the mid-20s to mid-40s, and most sales come from the metros. Gen Z and millennials are driving demand as they increasingly perceive incense as a lifestyle product and not just a religious product.

New Delhi-based Nirmalaya, which sells its products in the US, the UK, Mauritius and the UAE on a small scale, has prioritised exports.

“In FY25 and FY26, we are betting big on exports. I am going to spend a significant time focusing on how to crack and scale up internationally," Bharat Bansal, CEO and cofounder of Nirmalaya, told Mint. “In India, customers switch brands very easily, depending on the price. The actual money you can make in this category for the value of the product is only in the international business as people are willing to pay a price for a quality product."

He added that the aim is for exports to contribute about 30% of the company’s business and in the long run, he expects it to become bigger than the India business.

About 60-70% of the ₹13,000 crore Indian incense market is dominated by traditional large companies such as Cycle Pure and Hem Incense.

Organic incense company Phool, backed by Bollywood actor Alia Bhatt, Sixth Sense Ventures, and Indian Angel Network, is one of the larger startups in the space. The company, founded in 2017, has raised about $13 million so far. Phool did not respond to Mint's request for an interaction.

Phool reported revenue of ₹49 crore in FY24, up from ₹26 crore in FY23, according to data sourced from Tofler. The company’s losses widened to ₹5 crore in FY24 from ₹3.5 crore.

Nirmalaya’s revenue increased to ₹10 crore in FY24 from ₹7 crore in FY23, helping it swing to a profit of ₹60 lakh from a loss of ₹2 crore in the year before.

Entrenched brands

Padmaja Ruparel, co-founder of the IAN Group, an investor in Phool, pointed out that the market is dramatically competitive because of its well-known legacy brands with very extended distribution networks and significant brand recognition, along with economies of scale that enable them to set aggressive prices.

“For the startup business looking to stand out from the fray, massive investments in marketing and innovation and customer education are required," she said.

Adheer Awasthi, co-founder of luxury aromatherapy company Nytarra, agreed that the evolution in terms of education and awareness has been slow for the category.

“There are consumers who have been buying traditional agarbattis for years and they require those strong fragrances. Consumer behaviour, unfortunately, is taking a while to change," Awasthi said.

Another startup, Help Us Green, started its international operations last year. Currently, the overseas market contributes 10% of the company’s business and the founder plans to take it to 90%.

“International is where I can see the acceptance, where people are appreciating the cause. That is where we can easily scale up," founder Karan Rastogi said.

There is a high probability of success for these startups in the international market, according to Ruparel.

“The momentum is fuelled by multiple tailwinds such as the rising demand for ethically and sustainably made goods globally, particularly in the wellness, home décor, and lifestyle sectors where incense products fit perfectly… Foreign markets usually offer bigger profit margins and a greater demand for ethical, artisanal goods, something in line with the reasons many of them are going global."

Challenges galore

Infrastructure that requires significant capital, inventory planning and differentiated products are challenges that these startups face as they navigate the global market. The main hurdle is to craft the product and packaging as per the requirement in destinations overseas, according to Bansal.

Help Us Green, based in Kanpur, is experimenting with new variants to match global quality standards.

“We are launching incense which are bamboo-less, and Japanese incense of multiple types," Rastogi said.

The main issue is the complex regulatory environment – each country has different packaging, environmental compliance, and product safety requirements, Ruparel told Mint. According to her, robust tech enablement and supply chain reliability are the two key challenges that young startups need to solve.

“Logistics, shipping costs, and managing international partnerships require strategic planning and capital. Cultural nuances and consumer preferences must also be understood and adapted – what works in India may need to be fine-tuned to resonate with the global market," she said.

 

Correction: An earlier version had incorrectly stated that Nirmalaya had narrowed its loss to ₹60 lakh in FY24 from a loss of ₹2 crore in FY23.