Downturn to Upswing Exports: Assessing India’s Red Pepper Industry

Red Peppercorn

India

Market & Price Trends

Published Jan 26, 2024

India is renowned as the world's largest exporter of dried red pepper, experienced a 31.5% YoY decline in exports amounting to 320,231 mt in 2022. This was driven by a corresponding decrease in production by 10.4% YoY to 1.84 mmt in 2022 due to adverse weather conditions. The Indian dried red pepper production setback led to a restricted supply for global markets. However, the scenario improved in 2023, witnessing a substantial 49% YoY increase in exports to 276,426 mt from Jan-23 to Jul-23, fueled by rising demand and a projected 12.2% YoY increase in Indian red pepper production. Simultaneously, India also known as the second-largest global exporter of powdered red pepper, faced a 10.22% YoY decrease in 2022, exporting 85,830 mt due to a limited supply of dried red pepper. Despite a 9.8% YoY export volume drop in Jan-Jul 2023, export revenue rose by 7.18% YoY to USD 151 million, showcasing importers' willingness to pay higher prices for Indian red pepper powder quality. The versatile red pepper industry, commonly used to add vibrant color, flavor, and heat to a variety of dishes demonstrates significant growth potential in the global market.

India is known as the world's largest exporter of dried red pepper (HS Code: 090421), with positive export trends from 2018 to 2021. However, a significant turning point occurred in 2022, marked by a notable decline in export figures. In 2022, India exported 320,231 metric tons (mt) of dried red pepper, reflecting a decrease of 31.5% year-on-year (YoY) compared to the previous year. This downturn in export performance can be attributed to a corresponding decline in production during the same year. According to the Indian Ministry of Commerce and Industry, the production of dried red pepper in India experienced a 10.4% YoY decrease, reaching 1.84 million metric tons (mmt) in 2022. This was driven by weather anomalies that hampered production. Consequently, the reduced production output in 2022 left India with a constrained supply for the global market, explaining the sharp decline in export volumes.

Figure 1. Export Trends of Indian Dried Red Pepper and Its Top Destination Countries

Key markets for Indian dried red pepper include the United States (US) and Asian countries, notably China, Thailand, Sri Lanka, Bangladesh, Indonesia, and Malaysia. Widely used for its versatile culinary applications, dried red pepper has become a staple in diverse cuisines.

In a positive turn of events, the export landscape for Indian dried red pepper rebounded in 2023. From Jan-23 to Jul-23, India exported 276,426 mt, marking a significant 49% YoY increase, as illustrated in Figure 2. The current market conditions for dried red pepper are favorable, driven by heightened demand from both domestic and international markets. The surge in popularity of spicy and flavorful foods, coupled with the expansion of the food service industry, is propelling the demand for dried red pepper. Additionally, the production of red pepper was projected to surge by 12.2% YoY, reaching 2.06 mmt in 2023, further contributing to the increase in export volumes in 2023. This dynamic between production and export volumes underscores the critical role that domestic production plays in solidifying India's position as a leading exporter of dried red pepper.

Figure 2. Monthly Trends of Indian Dried Red Pepper Exports from 2022 to 2023

Looking ahead, the future of the dried red pepper market appears promising. The projected market size for dried red peppers is estimated to be USD 1.61 billion in 2024 and is expected to reach USD 2.16 billion by 2029. This represents a compound annual growth rate (CAGR) of 6.11% during the forecast period from 2024 to 2029. The anticipated increase in market size can be attributed to the rising demand for spicy culinary and ethnic foods, which is expected to contribute to the overall market growth.

Indian Red Pepper Powder Exports

In addition to being the largest exporter of dried red pepper, India is also known as the second-largest exporter of powdered red pepper (HS Code: 090422) globally, following China. Red pepper powder is produced by grinding dried red pepper into a fine powder, which can range in heat intensity depending on the type of red pepper used. Similar to dried red pepper, Indian powdered red pepper exports demonstrated an upward trend from 2018 to 2021. However, India experienced a 10.22% YoY decrease in 2022, exporting only 85,830 mt of powdered red pepper. This decline resulted from a diminished supply of dried red pepper available for processing into powder in 2022.

Figure 3. Export Trends of Indian Red Pepper Powder and Its Top Destination Countries

The US is the key destination for Indian powder red pepper, followed by Indonesia, the United Arab Emirates (UAE), Saudi Arabia, the United Kingdom (UK), Nepal, and Russia. Despite a continued 9.8% YoY decline in exports from Jan-23 to Jul-23, totaling 54,321 mt, there was a 7.18% YoY increase in export revenue, reaching USD 151 million. This suggests that the international market is willing to pay higher prices for the quality of Indian powdered red pepper.

Figure 4. Monthly Trends of Indian Red Pepper Powder Export Volume and Value from 2022 to 2023

The red pepper powder market is projected to be valued at USD 1.52 billion in 2023 and is expected to reach USD 2.04 billion by 2028, growing at a CAGR of 6.11% during the forecast period (2023-2028). In the food and beverage industry, powdered red pepper is a versatile spice commonly used to add vibrant color, flavor, and heat to a variety of dishes. In addition, red pepper powder as a condiment continues to fuel demand in the market. With these positive trends, India's red pepper market showcases the significant potential for growth in the global market.