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An Overview ofIndias Cold-chain Infrastructure

Keith Sunderlal

IARW/WFLO

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Outline

Cold-chain A Historical Perspective Indias Food Economy

Cold-chain in India

Fast Changing Retail Landscape

Role of 3PL

Current Status of Cold-chain in India

Major Trends & Developments

Key Challenges

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Cold-chainA Historical Perspective

Refrigerated movement of temperature sensitivegoods is a practice that dates back to 1797 whenBritish fishermen used natural ice to preserve their

fish stock. This trend was seen in the late 1800sfor the movement of food from rural areas to urbanconsumption markets, namely dairy products

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Indias Food Economy

India is one of the largest producers of fruits andvegetables in the world

Inadequate handling infrastructure and methodsresult in a value-loss of over 30% of all freshproduce

Indias scorching economic growth graduates

millions of consumers from basic foods to adiverse food basket

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Cold-chain in India

Evolution from a cold-storage business

Impetus to integrated Cold-chain logistics wasprovided by McDonalds in mid-90s

Thrust to fresh produce handling was providedby export-oriented horticulture, again in mid-90s

Unfortunately, the past decade was

disappointing in terms of development of thesector

What has changed Retail & 3PL

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Retail Sector

Current market size is $258 billion

Projected: $415 billion in 2010 and over $600billion by 2015

India's private consumption share of GDP is64%

The Food and Grocery (F&G) market in India is

estimated at $168 billion, thereby constituting65% of the total retail market.

Source: Technopak Advisors

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Retail Sector

Organized F&G segment is $1 billion (13% ofthe total organized retail market)

Organized F&G retail is only 0.6% of the total

F&G segment in the country The overall F&G market is expected to grow at

8% over the next few years.

Rural market is 60 per cent of the total retailmarket

Source: Technopak Advisors

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Retail Sector

Highly concentrated in the top 20-25 cities.

Approximately 70% of the country's high incomehouseholds are located in these cities.

Top 24 cities have 32% of urban population andare about 50% of the total urban market

Top 119 cities have 51% of the urbanpopulation, and are 72% of urban market

Source: Technopak Advisors

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Third Party Logistics (3PL)

Indias 3PL market is all set for explosive organicgrowth

Current market over $90 billion

Expected market over $125 billion by 2010.

Outsourced logistics currently 25% of market will

gave fastest growth of over 16% $300 billion worth of infrastructure investments

Source: India Logistics Outlook 2007", Datamonitor

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Third Party Logistics (3PL)

Logistics industry is characterized by dominanceof a disorganized market

Over 70 % of freight movement is via roads

2% of roads (National Highways) handle over40% of the national road freight traffic

Average speed of 20 mph vs. over 60 mph inmature logistics markets

3PLs are increasing investments to becomeend-to-end integrated players

Source: India Logistics Outlook 2007", Datamonitor

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Indian Cold-chain Industry

Estimated size of the Indian cold-chain industryis Rs. 8,000-10,000 crores (US$ 1.80 - US$ 2.27billion)

Cold-chain industry is expected to grow at 20 to25% annually

Estimated that this industry will grow to over Rs.40,000 crores (US$ 9.09 Billion) by 2015

Source: SCS Agribusiness Consultants Pvt. Ltd.

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Indian Cold-chain Industry

Overall logistics and supply chain managementis approximately a Rs. 60,000 crores (US$ 13.64billion)

Expected growth over 10% during the next fiveyears

Industry is largely fragmented and unorganized

Share of the organized sector is under 25%

Source: SCS Agribusiness Consultants Pvt. Ltd.

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Indian Cold-chain Industry

Processed food like Jams & Jellies

Indian chain of restaurants. e.g. Nirulas

Indian beverage, ice cream, milk & milkproducts market e.g. Amul, Mother Dairy, Verka

Indian meat, egg market

Indian frozen mood market

Fresh fruits & vegetables, super markets

Organic foods

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Major Trends & Developments

Serving Indias Fresh Produce Exports

Growing realization of potential of India as asupplier of fresh produce

Evolving from traders to Grower/Shippers

Investments by large domestic corporations

Large multinational groups seeking partnerships

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Major Trends & Developments

Domestic Perishables Distribution

Imports of fresh produce have been a driver ofreform

Technology adoption is still at preliminary stage

Retail players seeking quality produce are

pushing for upgrades and investing directly Several ventures seeking to be category

suppliers

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Challenges for the Future

The ownership challenge

Whose baby is it?

The service fee challenge Who will pay for it?

The QA challenge

Whose responsibility is it?

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Abundant OpportunitiesLets All Go Out And Grab Them