Professional Documents
Culture Documents
Regulatory Compliance
Regulatory Compliance
Pricing Pressures
Pricing Pressures
Labor Costs
Labor Costs
Energy Prices
Energy Prices
Inflation
Inflation
Convenience
Premiumization
More-out-of-home
consumption
Choice/Selection
Freshness
Shopping Experience
Weakness
Strengths
Threats
Opportunities
1. Logistical problems,
underdeveloped service
networks and poor
infrastructure hinder
development in fresh food
industries, such as dairy
2. The division between the
urban rich and the rural poor is
as great as ever, meaning
food manufacturers do not
have access to the entire
population
3. Elevated commodity costs
are a threat to food processors
The industry has huge growth potential: Of the country total food
and agricultural produce only 2% is processed
Diet food and nutraceuticals are the latest fad are available for every
patient today, be it hypertension, diabetes, obesity, or even weight
reduction
The income split essentially means that India has two separate
consumer segments, which are further split by strong regional
differences
India is one of the worlds largest food producers and has a large
agriculture industry and combined with a cultural preference for
fresh food, means that India supplies the majority of its own food for
consumption
It has a highly fragmented structure that includes thousands of ricemills and hullers, flour mills, pulse mills and oil-seed mills, several
thousands of bakeries, traditional food units and fruits, vegetable
and spice processing units in the unorganized sector
Segment
Dairy
Sector
Fruit and
Vegetables
Meat and
Poultry
Processing
10%
Fisheries
Packaged
foods
Beverages
Staple
foods
20%
8%
27%
85%
Noodles/
vermicelli
Fruit-based
drinks and
carbonated
drinks
Sugar,
wheat flour
and salt
Growth
rate of the
market
15%
10%
Key
segments
Value
added
milk
products
like
butter,
Cheese,
ghee ,
condens
ed milk
and
infant
food
Raw fruit
and
vegetables,
fruit pulps,
canned
fruits and
pickles
Cattle,
buffalo and
poultry
Extent of
Processing
37%
2%
1%
12%
Share of
organized
sector
15%
48%
5%
80%
77%
50%
Marine
fisheries,
frozen
products
and
minced fish
products
The West India region has the highest value sales of packaged foods
in India
East and Northeast India are the smallest markets in India for
packaged food, due to the underdeveloped nature of these areas
and continued political instability
ITC Limited
Parle Products Pvt. Ltd.
Agro Tech Foods
Amul
Perfetti India Ltd.
Cadbury India Ltd.
PepsiCo India Holdings
Nestle India Pvt. Ltd.
Britannia Industries Ltd.
Hindustan Lever
Limited
Milkfood
MTR Foods Limited
Godrej Industries
Limited
Gits Food Products Pvt.
Ltd.
Dabur India Ltd.
Conagra Foods
Nissin Foods
Wal-mart
Venky's
The dairy exports in 2007-08 rose to US$ 210.50 million against US$
113.57 million in the corresponding period, in the last fiscal, whereas
the domestic dairy sector is slated to cross US$ 108 billion in revenues
by 2011
There are about 516 large flour mills in the country, as well as
about 10000 pulse mills
Processing of fish and canned fish is almost entirely for export market
Alcoholic Beverages
The demand for spirits and beer is estd. Around 373 million
cases per annum
Around 1000 snack items and 300 types of savories are sold in
India
The segment is largely dominated by potato chips and potatobased products with over 85% share of the salty snack market.
The global retail market for organic food has grown to US$ 100 billion
from US$ 35 billion over the last three years
The exports of organic food from India have grown to US$ 65 million
over the past one year from US$ 21.6 million two years ago
The number of such growers has been rising in the Dehradun valley
and Bundelkhand. APEDA in association with the Ministry of
Agriculture has taken an initiative to convert 20000 farmers and a
total area of 75000 hectares to organic farming over the next three
years
be in higher demand
There is high growth for processed dairy and milk products.
Additionally, the dairy processing industry in India is growing and
demanding milk and dairy ingredients
Cheese, butter, whey, yoghurt and ice cream are some of the
major dairy products that are imported with cheese being the
most popular
Packaged Food
Confectionary
Canned Food
Bakery
Processed food
Dairy
16,00,000.0
14,00,000.0
12,00,000.0
10,00,000.0
8,00,000.0
6,00,000.0
4,00,000.0
2,00,000.0
0.0
2007
2008
Packaged Food
2009
Canned/Preserved Food
2010
Confectionery
2011
Dairy
2012
Confectionary
Gum
Sales grew by 4% in 2010
Can be attributed to its
rising consumption in
smaller towns & cities
Sugar Confectionary
Sales grew by 1% in 2010
Market size
1,40,000.0
1,20,000.0
1,00,000.0
80,000.0
Confectionery
60,000.0
40,000.0
20,000.0
0.0
2007
2008
2009
2010
2011
2012
Canned/Preserved Food
4,500.0
Canned/preserved food is
set to increase in constant
value at a CAGR of 8% over
the forecast period
1,500.0
4,000.0
3,500.0
3,000.0
2,500.0
2,000.0
1,000.0
500.0
0.0
2007
2008
2009
2010
Canned/Preserved Food
2011
2012
Bakery
Baked Goods
It is expected to post a CAGR of 4% in constant value terms
Unpackaged/artisanal pastries is likely to register the fastest growth of 13%
Biscuits
Its sales are expected to post
a CAGR of 9%
Cookies is expected to register
the strongest value growth
Breakfast Cereals
It is projected to grow by a
CAGR of 16%
Hot cereals is likely to lead
breakfast cereals with value
sales rising 33% in 2011
Market Size
3,00,000.0
2,50,000.0
2,00,000.0
1,50,000.0
1,00,000.0
50,000.0
0.0
2007
2008
2009
Bakery
2010
2011
2012
Market Size
1,80,000.0
1,60,000.0
1,40,000.0
1,20,000.0
1,00,000.0
Baked Goods
Biscuits
80,000.0
Breakfast Cereals
60,000.0
40,000.0
20,000.0
0.0
2007
2008
2009
2010
2011
2012
Artisanal baked goods players were the leaders with a 57% value
share in 2010
Processed Food
Market Size
1,00,000.0
90,000.0
80,000.0
70,000.0
60,000.0
50,000.0
40,000.0
30,000.0
20,000.0
10,000.0
0.0
2007
2008
2009
2010
Processed Food
2011
2012
Mother Dairy Fruit & Vegetable Ltd, Al Kabeer Exports Pvt. Ltd and
Venkys India Ltd are the three leading players
Dairy
Ice Creams
Cheese
Market Size
6,00,000.0
5,00,000.0
4,00,000.0
3,00,000.0
2,00,000.0
1,00,000.0
0.0
2007
2008
2009
2010
2011
2012
Current value sales of single portion dairy ice cream are expected
to see the fastest growth
The healthy growth being registered by ice cream fast food chains is
expected to result in increased demand for retail forms
Dairy only flavored milk drinks and soy milk are forecast to see the
fastest growth
Milk and milk powder, which are both essential components of other
dairy products in India, registered exceptional increases in both
wholesale and retail prices in 2011
Noodles
It is expected to increase by a CAGR of 18%
Pouch instant noodles will experience the fastest growth
Pastas
It is expected to increase by
CAGR of 18%
Strong growth in the category
due to the rising popularity of
Italian cuisine
30,000.0
25,000.0
20,000.0
15,000.0
10,000.0
5,000.0
0.0
2007
2008
2009
2010
2011
2012
Noodles was dominated by Maggi five years ago, but with brands
like Foodles, Yippie! and Knorr entering the space through brand
extensions and deep advertising pockets coupled with strong
distribution networks, the competition is intensifying
Many private label products have entered pasta and are expected
to do well as they can offer competitive pricing
1,00,000.0
90,000.0
80,000.0
70,000.0
60,000.0
50,000.0
40,000.0
30,000.0
20,000.0
10,000.0
0.0
2007
2008
2009
2010
2011
2012
Market Size
4,00,000.0
3,50,000.0
3,00,000.0
2,50,000.0
2,00,000.0
1,50,000.0
2007
2008
2009
2010
2011
2012
Market Size
Spreads
It is expected to increase by
70,000.0
CAGR of 7%
It will witness value growth of 12%
Honey is likely to lead in spreads
with 13% growth in current value
sales
60,000.0
50,000.0
40,000.0
30,000.0
20,000.0
10,000.0
0.0
2007
2008
2009
2010
2011
2012
Another factor which has led to robust growth in this category is the
increasing prices of vegetables, like onion, garlic and ginger
MTR Foods Ltd which forayed into the snacks market is eyeing
acquisitions in the jams and ketchup categories
Field Fresh Foods Pvt. Ltd has plans to introduce pasta sauce to the
Indian market
Soup
It is expected to increase by a CAGR of 12%
Dehydrated soup to exhibit 21% value growth
Market Size
Ready Meals
It is expected to increase by
3,500.0
CAGR of 9%
Canned/preserved ready meals
and frozen ready meals are set to
be the most important categories
in ready meals
3,000.0
2,500.0
2,000.0
1,500.0
1,000.0
500.0
0.0
2007
2008
2009
2010
2011
2012
Demographical Changes
India has a large young population; with a median age of 25.5 as of 2012
They have sufficient disposable income, are individualistic and want to
stand out in whatever they do.
As a resulting they are driving demand for & rapidly embracing new
brands
Children are aware & have become more vocal in making their
preferences known to parents
An increasing number of young adults have moved to cities for work or
study & also make daily decisions regarding what food products to buy
The Indian middle class is increasing in size and purchasing power and
will definitely spend more on this category of consumer expendables
Shifting lifestyles of Indian people & the ongoing increase in the size of
Indias middle-class population is also driving demand
Due to the paucity of time, consumers are looking at options where the
meal can be prepared fast and is tasty as well
Marketing Efforts
Leading multinational manufacturers have started using social media to
engage young consumers
Examples of such products include sweet and savory snacks, sugar
confectionery, ice cream and snack bars etc.
The increased reach of media channels such as television and Internet in
both urban and rural India is likely to help the growth of consumer goods
value sales over the forecast period
Marketing efforts for brands such as Quaker and Kelloggs heightened
awareness for the entire cereals category, while increased instances of
breakfast buffets at restaurants led to growth in demand for hot cereals
as well.
FDI in retail
With government allowing 51% FDI in multi brand retail and 100% FDI in
single brand retail, International giants such as Wal-Mart & Carrefour are
coming in
With the arrival of these giants, there is immense scope of growth for new
segments in packaged food
This also signals the arrival of more international giants and increased
versatility of products
In particular, food and oil prices surged in the first half of the year,
although the pace of inflation slowed down in the later months
For products where profit margins are thin, for example plain biscuits
and staples, dominant manufacturers were able to increase unit
prices by applying direct price hikes or reducing pack sizes.
Manufacturers targeting the mass segment launched lowprice variants of premium products
Cup-a-Soup is Rs12.00
The key growth driver will be growing demand for higher quality
products (for example richer chocolate, premium offerings, healthier
products) and the switch from the unorganized segment to the
organized segment due to increases in consumers disposable
incomes.
This is because margins are very narrow and retailers will not be able
Segmental Analysis
2) Hot Drinks:
This segment includes
Tea
Coffee
Other Hot Drinks
3) Alcoholic Beverages
This segment includes
Spirits
Beer
Wine
Drinks Sector
Soft Drinks:
Coca-Cola
and
PepsiCo
compete
through
lemonade/lime carbonates by increasing the visibility of
their brands Sprite, Limca and 7-Up respectively
Hot Drinks:
Success of retail chains leads to robust growth within hot drinks
Specialty teas and green tea still new but increasingly accepted
Alcoholic Drinks:
Alcoholic drinks value sales growth for 2011 = +9.3% in
local currency terms; compound annual average
sales growth to 2015 = +13.3%
Alcoholic drinks volume sales growth for 2011 = +5.3
%; compound annual average sales growth to 2015 =
+6.2%
Vast sums being invested by the worlds leading
companies into increasing production capacity as
well as marketing and branding initiatives
Numerous product launches in 2011 by both global
and domestic brands, across different price points
and categories
Drinks Segment
The Growth drivers vary in each category within each segment. They
can be listed as follows
Soft Drinks:
Supermarkets and hypermarkets accounted for a combined 9%
share of total volume sales in 2011
Hot Drinks:
In 2011, hot drinks recorded its highest level of off-trade value
growth of the review period
Alcoholic Drinks:
Drinks Sector
Soft Drinks:
Coca-Cola India Pvt Ltd and PepsiCo India Holdings Pvt Ltd
continue to compete aggressively in this category by
increasing the visibility of their brands Sprite, Limca and 7-Up
respectively
Soft Drinks:
Hot Drinks:
Hot Drinks:
GlaxoSmithKline led other hot drinks sales in North India in 2011 due
to the popularity of its Horlicks brand. Other hot drinks are slowly
increasing in popularity in North India, mainly among children
Premium tea brands like Twinings, Tetley and Honest tea target
urban consumers, especially young working professionals
Alcoholic Drinks:
The year 2011 saw many new such brands making their presence
felt in India
Aspri Spirits Pvt Ltd brought Framingham wines to the Indian market;
these are premium quality wines from New Zealand to target the ontrade and high-end restaurants and bars.
Alcoholic Drinks:
Soft Drinks
Consumers are driving this trend as they are becoming more health
orientated, particularly educated young working professionals.
Leveraging the growing health trend, Coca-Cola India and PepsiCo
India Holdings are strengthening their non-carbonated offerings
Supermarkets and hypermarkets accounted for a combined 9%
share of total volume sales in 2011; however this figure is following a
rising trend. Soft drinks players look towards supermarkets and
hypermarkets as ideal channels to cater to the young, fashionable
and relatively wealthy consumer segments
Domestic manufacturers and multinational operators have
launched local flavours to cater to local tastes. PepsiCo India
Holdings relaunched its Dukes range in carbonates with exotic new
flavours such as raspberry, masala soda, ginger ale and ice-cream
soda
Manufacturers who were focused on powder concentrates have
slowly started to diversify their product portfolio to include RTD
formats
Hot Drinks
Success of retail chains leads to robust growth within hot drinks Demand for coffee is being driven by the surge in the number of
cafes in India. The expansion of established coffee chains like Java
City, Caf Coffee day and Barista Coffee has resulted in an
increase in both on-trade and off-trade sales
On-trade coffee volume sales increased by 8% in 2011 whilst offtrade volume sales only increased by 6%. The number of chained
specialist coffee shops increased by 15% in 2011
Child-specific and female-specific other hot drinks drive volume
sales - Horlicks and Bournvita have introduced products like Horlicks
Lite, Womens Horlicks and Bournvita Lil Champs which are
targeted at specific consumer.
Acti Life from Zydus Wellness was launched as a daily nutritional
supplement for adults which the company claims contain probiotic
actifibres which help to control cholesterol and improve digestion
Alcoholic Drinks
Packaging used as tool to attract aspirational consumers Semi-premium products are launched with attractive
packaging to give them a premium appearance. Embossed
bottles without labels were used to give a new look to the
bottles
Young adults becoming more prominent consumer base Heineken was launched locally only in the on-trade channel
all over India. The company is focusing on young adults by
promoting the brand through music shows, TV campaigns for
Champions League football
Amul Dairy
PepsiCo India
Company
Segments
Sales ($mn)
Year end
Hindustan Unilever
Beverages-Hot &
Limited India
Soft
3,921
Mar-10
Coca-Cola India
Beverages-Soft
5271
Dec-10
Amul Dairy
Food-Dairy, Confectionery,
Convenience; BeveragesHot & Soft
1791.2
Mar-10
PepsiCo India
6639
Dec-10
Food-convenience;
Modern Bread
Bru coffee
Lipton Tea
Sales
Others
Sales
Others
Beverages
2,577.02
40.41
2309.23
37.27
Packaged
1,341.93
17.53
1,162.28
16.15
2009
2010
Net Sales
202,393
175,238
194,011
Net profit
24,965
22,020
23,060
No of
employees
NA
NA
16,000
Production, 2010
Brand
Annual Production
18 million litres
Rank
Soup
62.0
Ice cream
16.7
Bakery
2.5
Noodles
2.3
5.9
HUL as the company posted a 10.8% growth in its net sales for the
year ending March 2011
the year ending March 2011 despite rising raw material costs
HULs price hikes to protect its profit margins and boost value
growth, further price increase could frustrate its efforts to
reach the rural consumer base given that majority of the
Indian population still falls into the lower-income bracket and
are unlikely to be able to afford the substantial price increase
Hot Drinks
Soft Drinks
GEORGIA Gold
Coca-Cola
Diet Coke
Thums Up
Sprite
Fanta
Limca
Maaza
Minute MaidPulpy Orange &
Nimbu Fresh
Burn energy drink
Kinley- Water & Soda
Schweppers
GEORGIA Gold- Cold Coffee &
Iced Tea
Coca-Cola
35
34
33
32
Coca-Cola
31
30
29
28
2007
2008
Turnover in Rs million
2009
2010
2011
2012
Coca-Cola
24
23.5
23
2007
2008
2009
2010
2011
2012
Beverages - Dairy
Growth
Year
Turnover (INR,
mn)
Growth(%)
2010
80
80,053.6
52.2
2009
52.6
67,113.1
22.9
Rank
Confectionery
1.2
11
Dairy
14.6
Ice cream
36.3
10.8
6000
4000
2000
0
2010-11
2011-12
2012-13
Procurement
Members
No of producer members
3.03 million
No of village societies
15,712
Aliva
Cheetos
7 UP
Kurkure
Lays
Dukes - soda
Lehar Namkeen
Quaker Oats
Mirinda
Uncle Chips
Mountain Dew
Nimbooz
Slice
Tropicana & Tropicana 100%- juices
PepsiCo Inc
27.5
27
26.5
26
25.5
25
24.5
24
23.5
23
22.5
22
PepsiCo Inc
2007
2008
Turnover in Rs million
2009
2010
2011
2012
PepsiCo Inc
20.5
20
19.5
2007
2008
2009
2010
2011
2012
Future Trends
Trade
Rapid income growth, a young and growing population and a continued influx of sector
investments underline the potentially dynamic opportunities on offer on the consumer side.