India is seen as a country with loads of potential for Food Industry.
- The diverse agro-climatic conditions offer huge potential for the production of a variety of crops ranging from cereals, pulses to fruits and vegetables all round the year.
- India is the largest producer of several fruits, such as banana, mango and papaya, and the second-largest producer of vegetables such as brinjal, cabbage and onion.
- Further, India is the second largest producer of rice, wheat, sugar and cotton.
- India has the largest livestock population in the world, with 98.7 million buffaloes and 176 million cows. In milk and milk products, India is the largest producer, accounting for 20 per cent of the world’s production.
- The Middle East and Southeast Asia are major export destinations for Indian agricultural commodities and milk.
- The peninsular coastline drives the growth of the marine industry.
- With growing population of 121 crores and increasing income levels, it’s not surprising to see a demand for value added food products growing at 13% p.a.
- It has been estimated that the size of the middle to upper classes will increase to 267 million in the next 5 years, up 67% from the current level.
- Nearly 50% of India’s population is below 25 yrs of age and over 65% below the age of 35 yrs of age. People in this age group, who demand convenience, variety and also health and nutrition, will fuel the demand for food products.
- In addition to the huge production base, India has the advantage of low cost of production, which gives it an unbeatable competitive edge in the world market place.
Food Industry Overview
- The food industry which is growing at a CAGR of 5% p.a. from 2006-07 is expected to reach Rs. 1,320,000 crore by 2015.
- The share of the Food Processing Industry within Food Industry is expected to increase to 50% by the year 2015 from current 44%. Similarly a share of organized sector within the Food Processing Industry is expected to grow to 40% from the current 36%.
- The rapidly growing organized food retailing and food services is showing a promising growth of 25%.
Key Growth Drivers
- Food consumption patterns of the Indian population are rapidly evolving owing to the changing needs and lifestyles coupled with increasing disposable incomes;
- Increased exposure due to international travels and media explosion have led to higher aspirations, matched with availability of wider range of products through organized food retailing has resulted in higher spends.
- Attitudinal changes like experimenting with food and more willingness to spend has benefitted the processed and convenience foods the most;
- Huge production base, increase in organized food retailing and higher investments are other factors which are driving the growth.
- Indian companies, which previously focused only on back-end processing and manufacturing, have now extended their presence into the processed food segment. For example, Andhra Pradesh Dairy Development Cooperative Federation Ltd (APDDCF), which was established in 1981 with the objectives of milk supply and dairy development, now getting into establishing its presence in the market place through its own network of franchisees for retail sales and offering products such as packed curd, butter, ghee and paneer.
- With the Indian economy opening up, many food product MNCs have entered the market and introduced processed agricultural and milk products. For example, PepsiCo has launched Nimbooz, India’s first packaged nimbu pani, a popular traditional homemade drink in India. Del Monte entered the Indian ketchup market through Field Fresh Foods Pvt. Ltd. (a joint venture between Bharti Enterprises and Del Monte Pacific Ltd.) and launched a range of Del Monte products including ketchup and sauces. General Mills launched its ice cream brand , Haagen-Dazs through a franchise arrangement.
- Level of food processing is still lower than the international benchmarks;
- Presence of higher number of small and unorganized players owing to the regulatory bottlenecks has resulted in lower investments in R&D, causing technology gap, which is turning out to be a major handicap in meeting global quality standards;
- Lack of modernization of agriculture with archaic processing and marketing infrastructure has led to inadequate forward and backward linkages in the food value chain. This is adversely affecting the development of the entire sector.
- Many growth opportunities exist across the food value chain;
- The fastest growing segments like dairy, fruits and vegetables, wine, confectionery and poultry could be the promising areas to enter;
- Demand for ready-to-eat (RTE), convenience foods, functional foods, health drinks, flavoured milk and fruit juices is increasing very fast;
- Opportunities exist in agricultural technologies – cold chain logistics, supply chain management, food parks and wholesale markets as well as modernization of the existing infrastructure;
- Organised food retailing and food services throw very promising opportunities. Organised food retail has touched almost Rs. 2,33,200 crore turnover;
- Indian farm produce offers some unique qualities and if processed, packed and marketed systematically holds lots of opportunities;
- Ethnic Indian food is becoming world famous and there exist a lot of opportunities for exports;
Bakery & Biscuits Industry Bakery industry is the largest of all the food processing sectors in India. The entire Bakery industry is estimated to be worth Rs. 18,293 Cr. Biscuits, which is the dominant category, is estimated to be Rs. 10,500 Cr. , growing at 18% p.a. Breads is second bigger category within Bakery Industry. It adds another Rs. 4,500 Cr. and is growing at modest 7% p.a. Cakes comprise Rs. 1066 Cr. and growing at 18% p.a.
The fastest growing products in the Bakery Industry are pizzas, burgers and pastries such as mousse cakes, fresh cream pastries, croissants, flavoured muffins and flavoured breads. Higher disposable incomes, busy lifestyles of the consumers and their willingness to try are all contributing to the rapid growth of these products. In Biscuits category, cream and specialty biscuits are leading the charge.
Key Players in the Bakery Industry are,
- Britannia Industries Ltd - Britannia, Tiger, Bourbon, Good day, etc.
- Monginis Foods Pvt. Ltd. – Monginis brand of Cakes, Pastries, Cookies, Chocolates and Snacks;
- Cremica – Cremica brand of biscuits, breads, buns, ice creams, etc.
- Dukes Foods – Cream Magic, Marie Break, Sweet Glucose, etc.;
- ITC Ltd. – Sunfeast, Golden Bakery, Candyman, etc.
- Parle Products – Monaco, Hide N Seek, Milk Shakti, etc.
- Surya Foods & Agro – Priya Gold, etc.
Of all the above players, Monginis is the only brand which sells its products through its own 540 exclusive Cake Shop franchisees in 37 major cities in India. It has also made its presence felt on the online space through its ecommerce portal www.monginis.net where people can buy cakes, cookies, chocolates and assortment of gifts or send to their near and dear ones. In addition to that through its FMCG distributors it covers around 25,000 retail outlets across India. Monginis also has a presence in Egypt through 45 exclusive Cake Shops in 2 cities viz. – Cairo and Alexandria.
Thus, Food Industry in general and Bakery & Biscuits in particular hold promising future. But, a lot depends on how proactively and prudently the current challenges facing this industry are dealt with.