Saturday, April 2, 2011

Indian Food Processing Industry - A Snapshop 2010 - 11

Figure 1 : Indian Food Processing Industry - Size & Growth

When it comes to food processing, India is at number 2 position behind China. Food processing Industry is 5th biggest industry in India. As India is a country of foodies, it is the most promising of all the industries in terms of production, consumption and expected future growth. The size of the industry is estimated to be worth Rs. 4,00,000 and is growing annually at 14%, as shown in Fig. 1. 

The Food Processing Industry is still at a very nascent stage of development considering the fact that it accounts for only 2% of the total agriculture and food produce. It can be sub-divided in to the following,

Figure 2 : Segments in the Indian Food Processing Industry

 So far as Bakery industry is concerned, it is one of the largest food industries as shown above. Bread, biscuits, pastries, cakes, buns and rusk are some of the bakery products fast catching up with the popularity trend in India. There are 85,000 bakery units, of which 75,000 operate in unorganized sector occupying 65% of the market share. The per capita consumption of bakery products as it stands today is 1-2 kg per annum, which compares very low with that in the advanced countries, which is 10-50 kg per annum. The urban areas hog a major share of the Indian Bakery, comprising 77.5 % of the total market, owing to 2 vital factors – rising disposable incomes and time constraints in the working population residing in these areas. The Indian Bakery Market is estimated to be worth Rs. 16,500 Cr., growing at a healthy CAGR of 7.5 % per annum. Out of this bread and biscuits hold about 82% of the share.
Figure 3 : Segments in Indian Bakery Industry

The total production of biscuits in India is estimated to be around 20 lakh MT. The segment is estimated to contribute around Rs. 8500 Cr. of which 65 % is contributed by the organized sector. It is expected to grow at 15 – 17 % for the next few years. The major players in Biscuit segment are Britannia, Parle, Bakeman, ITC Foods Ltd, Surya Food and Agro Pvt. Ltd and HUL and the major brands are Britannia, Parle, Bakeman, Priya Gold, Elite, Cremica, Dukes, Anupam and Horlicks. The per capita consumption of Biscuits in India is hardly 2 Kg. Yet, India is ranked 3rd after USA and China in the production of biscuits. The penetration of Biscuits in the urban and rural markets is 85 % and 55% respectively.

Bread production is estimated to be 3.75 million tonnes p.a. which would be worth approximately Rs. 4500 Cr. of which 55 % is contributed by the organized sector. The growth rate for the last 5 years is around 6 % (by volume). In this segment the 2 major players are Modern and Britannia. Besides Britannia and Modern, there are 25 medium scale and 1800 SSI units, comprising “organised sector”. The “unorganised sector” has 75,000 bakeries. South India consumes 32 % of the bread produced, followed by North 27%, West 23 % and East 18%. The bread industry is expected to register rapid growth driven by consumers’ need for convenient food options for breakfast as well as increased propensity to snack. Eventhough, consumption of milk bread continues to dominate, segments such as brown bread and fruit bread have been growing rapidly in the recent past. Growth of the food service industry is also expected to catapult the growth of bread and bread based products like burgers, sandwiches and pizzas.

Another segment worth mentioning is Cakes and Pastries. This segment is estimated to be Rs. 1250 Cr. of which 65% is in the unorganized sector. The organized sector is dominated by Monginis, a Cake brand head quartered at Mumbai. Monginis is more than 100 years old brand belonging to 2 Italian brothers by the name Mongini. It was taken over by Khorakiwala family in 1960s. The brand has over 500 exclusive cake shop franchisees spread across 37 cities in India. These shops are catered to by 14 manufacturing facilities. Monginis also has packaged cakes and cookies, which are sold through a well structured network of Super Stockists and Stockists, catering to over 20,000 retail outlets across India. It also has ecommerce portal selling cakes online. It basically caters to a gifting market, wherein if someone wants to gift a cake to his / her near and dear one, all he / she has to do is to book it on and the cake gets delivered. Besides Monginis there is Britannia and numerous local regional brands. The major reason for having a very large number of local regional brands in this segment, is that these kind of products are consumed fresh, just like breads.

The other products in this Bakery industry are Khari, Toast, Rusk and other Bakersware, which are estimated to be around Rs. 2250 Cr. There are no major players in this segment. Even large players like Britannia and Monginis also have a minimal presence in this segment. This is because it is not feasible.

Thus, “freshness”  being the primary buying criterion for purchasing any bakery product, the large organized players always find it a challenging task as of now. In future, when other factors like convenience, health and hygiene start prevailing over the buyers’ purchase decision, the composition of the industry will change for sure in favour of the organized players.

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