How to start Lemongrass oil making business – Investment, Requirements | StartupYo

How to Start Lemon Grass Oil Making Business

Overview

The application of plants being manufactured into oils and aids for medicines was common in the early 19th century when people relied on the naturally grown flora and fauna to help them with any internal or external anomalies they’d faced.

But today, despite of the advent of technology, artificially developed chemicals and medicines , people seem to choose the Ayurvedic and organic plant and flower infused oils and remedies as healers, more than ever

This is what has contributed to rising market share and demand of lemongrass oil, of whose India is the largest producer. There are approximately 55 species of this plant which is a perennial grass thriving in tropical climates, like in India.

Out of these 55, two of its species

Cymbopogen Citratus ( West Indian Grass )
Cymbopogen flexuosus ( East Indian Grass )

Are used in cultivating a Lemongrass oil, which is extracted from these fresh and partly dried lemongrass stems and grass through steam distillation.

This oil extraction has opened a market to many niches of consumers and here’s every reason why you should get your hands on this business.

Market potential and uses

The market for lemongrass has been widening ever since the awareness about its healing and curing properties for skin, hair, health, digestion have been spreading among the consumers.

The potential for lemongrass oil is not limited to cater to the domestic Indian demand but has instilled a global demand indeed. India, because of its soil properties and a suitable tropical climate produces fresh and vibrantly lemony lemongrass yielding a very fruitful extraction to produce essential oils.

This capability of Indian has caused many nations to hoard on their imports of lemongrass to take advantage of that freshness and efficiency of lemongrass oil. The major importers being nations from Western Europe and North America.

The primary reason behind this demand for lemongrass oil can be explained through its

Uses

Used for skin

For curing acne
As an oil controlling toner
As a gentle face scrub
Used for hair
In shampoos and conditioner
As an anti-dandruff hair rinse
Lemongrass hair oil

Used for health benefits

Reduce fever
Release headache
Soothe digestion
Ease muscle pain

Used as a repellent

Used as a mosquito spray
Insect repellent diffuser blend
Flea killing carpet powder

Used in essential oils

Relaxing blend
Claiming blend
Refreshing blend
Clean breathing blend

Licenses required

The licenses required to run a lemongrass oil making business:

Factory licence
Trade license
Udyog Aadhar MSME registration
GST Registration
NOC by the state pollution control board

Investment required

The investment required to set up a lemongrass oils making business would be between ₹5 lakhs – ₹10 lakhs

Profit made

The profits made from a lemongrass oil making business would be ₹ 40000-₹50000 per month

Target consumers

The consumer market for a lemongrass oil making business is huge depending on the utility it is likely to provide to the end consumer because of its numerous applications

Spas and massage centers : They make use of lemongrass oil as essential oil for the purpose of aromatherapy for g their body and also makes use of it for customers with needs like hair spa and facials to give them a rejuvenating experience with the refreshing and hydrating benefits of lemon grass after

Pharmaceutical and Ayurvedic industry: They make use of lemon grass oil to be infused in modern medicines because of its healing properties like soothes digestion, releases tension in muscle pain, reduces headaches etc

Tea industries : The tea making industries also make use of lemongrass oil in their tea bags for the purposes of proving variety to the organic green tea drinkers and also to ensure calm and relaxed blend

Meditative and retreat centers : They make use of lemongrass oil as a prerequisite in meditative massages because of the calming, relaxing, refreshing and clean breathing properties of lemongrass oil

Cleaning industry: They make use of lemongrass oil in disinfectants, mosquitoes repellent and flea repellents as a cleaning adhesive for carpet cleaning and sanitizing are houses, offices, hospitals etc

Food and beverage industry: Make use of lemon grass oil infusion in their beverages like smoothies and salad dressing to benefit from the diverting consumption patterns to health conscious diet.

Fragrance industry: The use of lemon grass oil in perfumes, scented candles, mists, moisturizers and also in incense sticks have been common

Area required

The area required to set up a lemongrass oil making business would be 1000 sq ft

Raw material required

The raw material required to star a lemongrass oil making business :

Lemon grass ( 90%-98% ) citral
Oil ( 1%-2% )
Water
Bottles and caps
Chemicals

Machinery required

The machinery required to run a lemongrass oil making business:

Evaporator vessel
Florentine flask
Steam boiler
Cooling tower
Condenser

Manpower required

The manpower required to run a lemongrass oil making business would be:

1-production manager
1-accountant
2-skilled workers
3-unskilled workers

Moreover proper training to these workers in terms of machinery usage, equipment handling, safety and precautions measures etc must also be provided with

Business model and growth

The business model for a lemongrass oil making business can be defined using 4 variants

Value proposition: The unique selling point (USP) and the value which a lemongrass oil making business is likely to bring to you is :

Diverting consumption patterns of consumers to organic and herbal products for their body is likely to keep the demand for lemongrass oil up
The low cost of production because of lemongrass being a home grown products

Target consumers : The targets consumers to your lemongrass oil making business are:

Spas and facial spaces
Meditative and retreat centres
Cleaning and sanitising industry
Pharmaceutical and Ayurvedic industry
Food and beverage industry

Competitor review: The main competitors to your lemongrass oil making business would be:

The good scents company
Plant therapy essential oils
Aura Cacia essential oils
Katyani exports
Edens gardens essential oils

Marketing strategy: The marketing strategy to make most of the lemongrass oil making business to be adapted:

Highlighting the manufacturing and extracting process through blogs to attract the retailers: pharmas and spas
Highlighting the cost efficiency, benefits and clinical proves in the social media ads and health blogs to attract the consumers who are skin conscious

Growth

The lemongrass oil making business has the potential and has witnessed the growth prospects which as follows

The global market for lemongrass oil is expected to reach to the value of $232 million throughout ( 2019-2025) at a CAGR of 8.4%
The demand for lemongrass oil has been plush on a global scale as well, of which India is the largest producer having said that 10% of the lemongrass oil comes from Japan, one of the largest consumer markets

Profit margin

One is likely to yield a profit margin of 10% From a lemongrass oil making business

Also read :

Suggestions

Why don’t you relax yourself with some scalp massage using that lemongrass oil while we help you make a decision

Firstly, The shifting consumption patterns to rely on natural remedies than modern medicines among the Gen Z consumers especially is likely to keep up the demand for lemongrass oil
Secondly, the cost of production is minimal with abundance of lemongrass in nation, easy supply chain management and lower investment
Thirdly, the in-discovery applications of lemongrass oil had opened a a market to global and local consumers who use them in candles, perfumes etc