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Land of Opportunities: Indian Food Industry
IFE 09, London15th March, 2009
Sanjay Sethi, Vice President, Technopak Advisors
Table of Contents
I. Indian Food Industry: An Overview
II. Indian Consumer
III.Business Opportunities
IV.Key Growth Drivers
V. Government Regulations
VI.Challenges
2
Indian Food Industry: An OverviewI.
An Overview
Indian Agriculture sector contributes 17% to the GDP and provides 60% of employment.
World leaders in various food items like cereals, fruits & vegetables and dairy products.
Diverse agro-climatic conditions - production of a wide range of crops.
Value addition to agricultural products is < 7% and low processing levels of F&V i.e. < 2%.
Shifting food habits from basic food items towards high value crops and processed food items.
Lower investment / capital formation.
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5
Indian Food Industry
Huge Production Base Large Consumer Market
Rising income Change in food habits
with experimentation on cuisines
Need for convenience
Huge population of 1.13 Billion
Increased spending on food
219 mn tons (2007-08) Growth of 4% over
previous year World leader of F&V,
milk and cereals etc.
Changing Consumer
Food Industry is slated to rise by about £176 billion by 2015
The organized food processing sector is slated to increase to 40% by 2015 from current level of 27%.
Size of Indian Food Industry is £117 billion.
Food Processing Industry contributes a major share of about 43%(£ 50 billion).
Main Segments - Staples Dairy Fruits & Vegetables Meat and Poultry Fish and Marine Beverages Packaged Foods Other foods (like sugar, edible oils,
pulses, spices)
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Source: Technopak Analysis, * Projections
Share of processing is slated to increase from 43% to 50% by 2015.
Indian Food Industry (contd…)
Potential for International Players
Low level of food processing.
Only 1.6% share in world food trade.
India is an agrarian economy, provides opportunities to explore options as:
Sourcing Hub• Strong footing in agriculture provides a large
and varied raw material base for food processing
• Leading food supplier to the world
Consumption Centre• 1 billion+ consumers, increasing incomes• Increase in awareness and spending on
processed food items
Demand for value added food products is rising at 13% p.a.
Growth Rate % across Key Sectors
7
Indian ConsumerII.
A Huge Consumer Class
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5-7 million
Super Rich
70 – 80 million
Afford Cars, Private Healthcare & Foreign travel
250 - 300 million
Afford goods like Refrigerators , Scooters & Colour TVs
600-700 million (Generally Rural)Afford simple industrial products
e.g. bicycles , radios , textilesPoverty Line = income less than £0.7- £ 1/day
A population of 1.13 billion(1/6th of total world population) with rapidly increasing middle class (~ 350 million).
60 % of India’s population are under 24 years.
Changing Consumer
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Changing demographics• Younger earning population - 60% below 24 years• 81% population below 45 years• Brand conscious• More acceptance of new concepts• Changing aspirations
More nuclear families with dual income• 75 million households, called ‘consuming classes’ with annual
income between £ 650 to £ 60,000• Convenience overriding price consideration• Higher disposable income and easier financing options• 1 mn households in creamy layer with income at par with
International
Lifestyle values• Awareness of global lifestyle: media exposure and overseas
travel• Look at me (LAM) the most important criteria
New Trends of Food Sector
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Consumer Spending
12
More than 60% share in consumer spending in Food & Grocery
Source: Technopak Analysis
13
Consumption Pattern
Source: Food & Grocery Shopping Trends 2008 – Technopak Publication
Business Opportunities: UnlimitedIII.
15
Business Opportunities
16
Business Opportunities (Contd…)
Business Opportunities (Contd…)
17
Retailer No. of Outlets
Locations % of shelf space to imported food
Foodworld 55 Majorly in south India Bangalore, Mysore
10%
Nilgiris 27 South India 12 %Vitan 9 Chennai and Bangalore (South India) 5%
ABG -More 26 Bangalore 4%Nuts n Spices 5 Chennai (South India ) 40%Food Bazaar 19 Across India 3%
D-Mart 2 Mumbai 7%Crossroads 4 NCR- Delhi 25%
Market for the imported food products and fresh fruits currently stands at £660 million p.a. and is growing steadily
Retailers associated with imported food
Business Opportunities: Dairy Industry
Yoghurt
Pascuals (Spain) entered the Indian market 3 years ago and enjoys a monopoly.
Opportunity: 3-4 other yoghurt brands – in fat free variants & different flavors (mango, peach, strawberry, pineapple, passion fruit flavors).
Cheese
Currently, imported cheese has 5% market share in the overall cheese market.
Happy Cow (Austria), Laughing cow (France) and Kraft (Australia) are prominent selling imported brands.
Opportunity: Low fat cheese for healthy food category.
Soft cheese incorporating fruits and herbs.
Popular flavors: Pepper, Paprika, creamy, cheddar.
Butter:
Dominated by local brands: Amul, Britannia.
Imported Brands: Lebon, Meadow Lee.
Opportunity: Low cholesterol, reduced salt / fat butter for healthy food category.
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Domestic Brands
Nestle India Ltd., Amul, Godrej, Mother Dairy, Nandani, Britannia, Thackers
Imported Brands
Charlie’s, Happy cow, Pascual, Elle & vire, Swan Blue, Pilgrims Choice, Arla
Major Importers Siganporia Bros, Max Foods Pvt Ltd., Rai and Sons Pvt. Ltd., Fortune Gourmet Specialities Pvt. Ltd., Shirin Foods Limited, Suresh Kumar & Co. (Impex) Pvt. Ltd., Epicure Frozen Foods & beverages Pvt. Ltd., L Comps, Taurus International, India Hut Pvt. Ltd.
Business Opportunity: Dairy Industry
Business Opportunity: Pasta Products
Consumption of pasta doubled in past couple of years, more popular amongst vegetarians
Pasta imports crossed £3.3million
Current market size for imported pasta is 5200 tons with growth rate of 26% p.a.
Top two largest selling pasta brands are Australian (125 Mt) and Barilla (250-300 Mt)
Total 10 pasta brands are available in the market
Domestic: ITC – Sunfeast
Imported: Loyd Grosssman, San Remo, Barilla, Agnesi and Voiello
Opportunity: Wheat pasta (good health alternative)
Major Importers: Labh Group of Companies, Prayag Food International, Arun International, Prakya Group, Shiva International and Sangeeta foods
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Business Opportunity: Sauces & Dressings
Opportunities for flavors like chilli, soya, garlic, pasta, chinese sauces
Market for imported honey growing at 150% p.a.
Wescobee honey (WA), Airborne honey (NZ) are popular imported brands
Imported brands: Remia (Holland), Kraft (Philippines), Barilla (Australia), Prego (US), Tabasco (US), Heinz
Domestic Brands: Hindustan Unilever Ltd(HUL), The Global Green Company, Nestlé India Ltd., Fun Foods, Shelf mate, Kilban Foods, Wimm – Prem Foods
Major Importers: J. D. Corporation, ABC International, Evergreen Exports, Home Made Foods, Paramount Nourishments Pvt. Ltd., Tipsy-Topsy Exports, Hart Foods, Sangeeta Foods
21
Business Opportunity: Confectionery
Chocolate imports have been increasing steadily ( about £ 6.35 million)
Market is flooded with locally manufactured MNC brands such as Cadbury & Nestle
Alpenliebe is the single largest selling sugar confectionery brand in India
Domestic brands: Cadbury, Perfetti, Hindustan Unilever Ltd(HUL), ITC Ltd., Nestlé India Ltd., Candico , Ravalgaon Sugar Farm
Imported brands: Kraft Foods, Lotte, Ferrero, Mars, Lindt, Toblerone, Dagoba
Major Importers: Siganporia Bros., Prakhya Group, Rai & Sons Pvt. Ltd., Woodland products, L Comps, S.K. Enterprises, Shell Overseas, Pranav Corporation
Opportunity: Fruit based / flavored confectionery – Jelly, puddings, fruit gummies & candies
22
Business Opportunity: Wine Industry
India's wine market at £ 4.25 million, makes up less than 1% of India's £1.06 billion alcohol beverages market.
Wine consumption growing @30% p.a. and expected to grow @40%.
India consumes ~8 mn bottles of wine annually.
Out of which, 1.2 mn are imported.
Target market is expected to grow to 100 million people in next 5 yrs.
Domestic Brands: Chateau Indulge, CreeGrovers Vineyards, Sula Selections, Chateau D’ori, Nine hills, Big Banyan, Zinzi - UB group.
Imported Brands: Jasons Creek, Gato Negro, Mateaus Rosea, Bodega Nortan, Rupert & Rothschild, Heidsieck Monopole, Moet & Chandon.
23
Routes to Market
India is amongst the least saturated of all major global markets in terms of penetration of modern retailing formats.
Many strong regional and national players emerging across formats and product categories.
Players are now gearing up to expand rapidly after having gone through their respective learning curves.
The Shopping Mall formats are fast evolving.
Partnering among Brands, retailers, franchisees, investors and malls.
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Distribution Channel – Imported Products
25
Food Supplies
Indian Food Processing Industry
Import Agent
Distributor/Wholesaler
Retail Outlet/ Food Services
t e c h n o p a k
26
F&G enjoys the largest ‘share-of-wallet’ across retail categories accounting for 62% of urban consumer spending.
Valued at £14,000, making it the 6th largest grocery market in the world.
Significant potential for organized formats to increase penetration levels to cater to the consumer spending.
Opportunities: wet groceries (fruits, vegetables, meat products, etc.) where organized retailers have not yet capitalized on the large consumer spend.
Food & Grocery (F&G)
Food Services
27
More than 200 food chains
McDonald’s remains the leading consumer food service player with a 13% share of total chained consumer foodservices
Expected revenues from Indian Hotel and Restaurant industry is > £ 80 million, an increase of nearly 22% over the previous year
Fast food units grew by >20 % in 2006 which is the highest across Asia
Growing @ CAGR of 8%
Major Players offering Food Services
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Major Players No. of Outlets* Major Players No. of Outlets*
Pizza hut 137 Mocha – coffees 20
Mc donalds 200 Jumboking foods pvt. 80
KFC 30 Minimelts icecream 45
Barista coffee 206 Pizza corner india 36
Café coffee day 520 Haldiram Marketing 27
Baskin31robbins 300 Yo China 25
Chawla’s 80 Domino's Pizza 220
Monginis 400 Nirula's 60
Subway restaurants 540 Nathus 18
Donut king 180 Costa coffee 45
Corn Club 5 Star one fast food 17
*Still counting
Key Growth DriversIII.
30
Key Growth Drivers
Food RegulationsIV.
Regulatory Mechanism for Food Trade in India
Regulations to be considered before importing a packaged food product to India:
Customs Act Customs duty and import formality
Prevention of Food Adulteration Act & Rules (PFA) Specifies standards & quality levels for food articles Prohibits imports of adulterated, misbranded food products
Fruits Products Order (FPO) Sanitary and hygiene conditions of manufacturing, product
standards Maximum limits on preservatives, additives and contaminants
Labeling & Regulatory Act Information on the label of food products
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Key ChallengesVI.
Key Challenges
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Meeting Global Standards of Quality
Inadequate Infrastructure and Supply Chain
Skill Gap
Food Regulations Research & Development Market Linkage
Thank You!
sethi100@gmail.com
+91-9004389012
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