Agro & Food Processing August 2017

MTS foods the one-stop shop for specialised solutions

Vol 12 Issue 10 August 2017 100/-

World's biggest facility for food processing machinery at Chennai

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FDI in Indian

bread industry Required or not

Namkeen industry This year, Heat and Control compleies 20 years being in India. Heat & Control has always considered India and South Asia has large and promising market.

Manoj Paul is discussing this in an interview inside.

Technological advancements are very evident in frozen foods industry

The Increasing production in Indian sea food is mainly attributed to unique compitetive position, India has today compared to other compiting markets.

Uday Sant is providing insite of Frozen food industry.

baffled by 12% GST rate

Biscuit Industry in Doldrums due to GST How To Stop Misleading Claims For Food Products?

Dairy Frozen

Foods

Snacks Meat Biscuit

Confectionary

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n a

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India’s agricultural practices are unique.

With millions of farmers cultivating small pieces of land, the country’s produce has very high variability. KK Menon is talking about his services to the industry.

Indian FPI needs much better quality assurance techniques

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Bakery

Quality of product depends on various factors and one of them is raw material, we need to ensure that we should get correct and good quality raw materials.

Sanjay Kumar spreading some light on the FPI.

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CONTENTS 7

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Namkeen industry baffled by 12% GST rate

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World’s biggest facility for food processing machinery manufacturing in Chennai

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FDI in Indian Bread Industry Required or not ?

MTS foods the one-stop shop for specialised solutions- peeling, cutting, sorting and conveying

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HOW TO STOP MISLEADING CLAIMS FOR FOOD PRODUCTS? 44

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Indian Food Processing Industry needs much better quality assurance techniques

Technological advancements today are very evident in Frozen Foods industry

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Biscuit Industry in Doldrums due to GST 30

Move on Colas; Juices are taking over Analyzing the growing packaged juice industry of India

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EDITORIAL

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I Editor Manzar Aftab Naqvi Group Editor Firoz H. Naqvi firoz@advanceinfomedia.com Consulting Editor Basma Hussain Graphic Designer Naved H. Kazmi naved@advanceinfomedia.com Advertisement Executive Anjali Mane anjali@advanceinfomedia.com Circulation Seema Hayat Shaikh seema@advanceinfomedia.com Delhi Sayyed Shahnawaz +91-8375034558 Gujarat Brijesh Mathuria +91-99245466999 Genreal Manager Gyanendra Trivedi Marketing & Circulation Office

121,1st floor, Rassaz Multiplex, Station Road, Mira Road (E), Dist. Thane- 401107 Telefax : +91-22-28555069, Tell.: +91-22-28115068 Mob.: +91-9867992299 E-mail: info@agronfoodprocessing.com sub@advanceinfomedia.com

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The views expressed in this issue are those of the contributors and are not necessarily those of the magazine.

Though every care has been taken to ensure the accuracy and authenticity of the infomation,"Oil & Food Journal" is however not responsible for damages caused by misinterpretation of information expressed and implied within the pages of this issue.

All disputes are to be referred to Mumbai Jurisdiction.

ndia’s appetite for ice cream is on the rise and why not, with growing incomes, changing tastes and improving infrastructure are all helping to boost the growth of the ice cream industry. The ice cream industry in India generated revenue of more than US$1.5 billion last year and is expected to more than double to generate over $3.4bn by 2021.

To enhance and evolve the level of ice cream industry Indian Ice-cream Congress (IICE) was conceptualized seven year back. The thought behind it was to accelerate the ice cream trade and market by bringing the whole industry under one umbrella.

Today IICE is one of the most significant events in the global ice-cream industry, only one of the three of its kind in the world and South-Asia’s only gathering of ice-cream manufacturers. Hundreds of ice cream manufacturers from different parts of the country and world exchange their views at this platform.

And after 6 successful editions, the 7th event of IICE will take place in Mumbai. The fact that this event is becoming more and more successful after every consecutive affair reveals the impact of its necessity. IICE has efficaciously filled the void in this segment by organizing an international event for ice cream industry in India.

While talking on event, another magnanimous event in the pipeline for the food industry is World Food India 2017 scheduled from November 3-5, 2017 in New Delhi. The event will see participation from over 30 countries and Italy has confirmed to be a focus country.

Undoubted the food industry has opened new avenues of development and is growing at a pace that is definitely going to boost the GDP of our country. India got the highest FDI in all the sectors and food processing saw the highest jump in investments. The industry received 43% higher foreign direct investment (FDI) in 2016-17 on the back of favourable policy measures, While the food processing industry received $727 million in 2016-17 in FDI, it attracted $183 million in just last two months.

Demonetisation and variable GST enactment had shaken the food industry, but it did not deter its progress and at present international companies like Amazon, Grofers, and many more are investing here and benefitting it with double digit growth.

Talking of GST, its council is likely to treat brands sold under names that are yet to receive trademark confirmation with goods and services tax (GST) rate of 5 per cent, ending the exemption they enjoy now.

The exemption was allowed following concerns raised by some state governments that including packaged food with logos could cover smaller traders who sell their own packaged food articles, hurting their business. But some leading companies used this as an excuse and did not go ahead with trademark registration or deregistered themselves to get exempted from GST. Well for small traders and manufacturers it was understandable but for leading basmati rice businesses it created skepticism.

Talking of tax impact Parle has firmed up plans to turn its focus back on confectionary as the future of its mainstay biscuits look bleak, because biscuits now attract a higher tax of 18% under GST compared with 12-14% earlier. Thus, the company has decided to bank on the popularity of its iconic brands like Kisme and Poppins to grow its confectionary business, which accounts for 12% (Rs 1000 crore) of its revenue.

Irony of the situation is that, today Parle will have to really work hard to reposition itself in the confectionery market, as while it was busy biting off a large chunk of the Rs 27,000 crore biscuits market, global confectionery giants, including Hershey, Perfetti Van Melle and Lotte have set up shop here to dominate the local market. Hershey and Lotte acquired local players Nutrine and Parry respectively, to get a stronger foothold in the domestic market.

I did say that the food processing industry has made a special place in the global market.

Imagine Hershey India, wholly-owned subsidiary of the US firm will take learning from India to international markets such as China, for products like syrups, spreads and fortified milk.

The profitable range of products from India grew 40 per cent in the latest quarter, including Hershey’s Syrups, spreads and milkshakes, the relatively newer Brookside premium chocolates and Sofit soy milk. Even Mars Chocolate has overtaken Mondelez in terms of revenue and is now planning on local sourcing for its products.

Certainly even a bit of shortcoming creates the image and this is what food wastage in India has done to food processing Industry. Farm produce worth Rs one lakh crore perish in India annually for want of adequate storage infrastructure and processing facility. India's cold storage capacity is 3.5 crore tonnes right now, which was short by 30 to 40 lakh tonnes and hence there is a need to overcome the shortfall.

So FPI is now giving good financial help to entrepreneurs for setting up cold storage to preserve perishable crops. Around 250 cold storage have already be given financial help will provide such economic assistance to 50 to 60 such projects in coming days.

Agro & Food Processing August 2017

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GST CHAOS

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Namkeen industry baffled by 12% GST rate

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he imposition of the recent Goods and Services tax (GST) from 1 July has meant unending headaches for the manufacturers of sweets and namkeen. The confusion started with different rates of taxation on various kinds of ingredients used in the making of these products. Although it's more than a month since GST came about, no clear solutions seem to be in sight.

Namkeen Industry in India Namkeens as well as sweets are gaining eminence in modern times and their demand is also increasing considerably

Ghufran Naqvi

that cater to the taste of people. Among the namkeens the prominent items are dal moth, bhujia, etc. These are becoming most versatile as for their relish and palatability is concern.

Now days these items are well known not in India but worldwide. These are mainly consumed during breakfast period & are very much during social & cultural periods. These are used as tasty & flavoured food as well as in medicinal way, however, a little it may be, (according to ayurveda) because of their carminative simulative digestive properties.

be used to provide sophistications in the products. The raw materials are frequency available in India. Namkeen which are salty food products get a broad market in foreign countries. These products are very much popular not only in India but also overseas countries. Hence, there is a lot of scope and market for these products & therefore, it will provide a very much profitable business.

India produces almost all these types of salty processed food products of grains all these types of salty processed food products of grains like Grams, Pulses etc.

It aids in digestion and adsorption of food possesses anthelmintic and antiseptic properties. The main raw materials for these products are Gram, pluses & spices.

The various food additives & colours may

GST on Namkeen in India The GST Council has announced 12 per cent GST rate for Indian traditional namkeen, savories, farsan, potato chips, banana chips etc. Pan India Namkeen industry size is large with 8% to 10% growth rate per annum: this growth rate cannot sustain higher GST rate. With 12% GST rate for Namkeen, with no

Agro & Food Processing August 2017

As the ethnic foods category is growing, cash-rich companies make a beeline for a share of the salty snacks market. Around 1,500 snack items are sold in India spanning various tastes, forms, textures, aroma, bases, sizes, shapes and fillings.

Some 300 types of savouries are sold here and the overall snacks product market is estimated more than 1 lakh crores.

GST CHAOS

possibility of input credit, the effective prices of all the products will go up by at least 6% to 8%.

rate for Sweet Meats & Mithai, stated.

Ajit Mota, President – Snack Food Association of Maharashtra.

Current GST slab on input items used in namkeen industry

In most of the cases the proposed GST rates are somewhat similar to the VAT plus Excise Tariffs. But in Namkeen’s case it is going to be Two and a Half times higher and even the GST on raw materials used for Namkeen are of different slabs.

Managing Director of Mumbai based Mota Chips, Ajit Mota urged that in case of Namkeen’s there was no excise duty prevalent earlier. Every state had a different tax rate in the VAT system.

Approx. 35% cost is oils and 5% cost is Spices

Approx. 12% of cost in incurred in following

Confusion over GST Since the government introduced its highly ambitious Goods and Services Tax (GST), the 'one nation one tax' is still the most talked about topics among traders and businessmen. But along with the usual discussions of its pros and cons, they are also lamenting how confusing it is. Makers of snacks, including potato wafers and biscuits, are anticipating a hit on sales as increased tax under the new regime forces them to either increase prices or suffer a dent in margins.

After protest from different business sectors, Federation of Sweets and Namkeen Snack Association of India (FSNAI) along with Snack Food Association of Maharashtra (SFAM) too urged the government to cut GST rate to 5 per cent from the 12 per cent announced by the GST Council.

However, in his monthly radio address Prime Minister Narendra Modi did not mention the protests by traders over the implementation of the new tax set up, Modi said a lot of people called in or wrote to him either praising the GST or seeking clarifications. He said that GST has shown a positive impact on the economy in a short-time.

GST Council has announced 12% GST rate for Indian traditional Namkeen, Savories, Farsan, Potato Chips, Banana Chips etc. This rate should be reduced to 5% to maintain uniformity with GST

“States like Maharashtra, Gujarat, MP, Rajasthan, Delhi etc where the consumption is very high the rates were as low as 6% since revenue collection was higher. But in other states like Andhra Pradesh, Tamil Nadu, West Bengal, and the North East the rates were as high as 15% since there was very little revenue coming from Namkeen’s. Namkeen’s are basically made from agro produce which normally have no tax on them and hence no input credit. Hence the tax rates should have been at 5% since the government will get revenue from the same” he said.

D.K.Gupta of K.P.Das Mithai, New Delhi stressed that GST rate for Namkeen is 12% (double from the present tax) but industry hardly receives any input credit as its raw materials are agro based. There is no tax on raw materials like potato, banana, maida, besan, salt, pulses etc.

There is only a marginal tax on masala.

Namkeens & Sweets are sold from the same shop and are interrelated products from the point of view for common men consumption. With 12% GST, the effective prices of all the products would increase by at least 6% to 8%. At this 12% rate structure, unorganized sector will be in a position to gain considerable competitive leverage by evading tax. And scrupulous business will be forced in unjustified position, he told.

He further explained that plain barfi, which is a ‘sweet’, is taxed at the lowest rate of 5%, but chocolate barfi with a chocolate flavoured layer on top risks being bundled with chocolates and taxed at 28%.

“Even plain barfi garnished with cardamom and dry fruit could be taxed along with nuts at 12%. More complex dishes like falooda — a combination of ice cream, fruit, jelly, vermicelli pudding,

11 jam, chocolate shavings, etc — and fruit jelly custard trifle are easy targets for the highest tax rate of 28%. Even the diabeticfriendly versions of sweets, gums, etc that contain synthetic sweetening agents like sorbitol come under 18% GST. Amid confusion over GST rates, mithai makers are playing safe by cutting back on variety”, he said.

Pan India Industry size for Namkeens is large with 10% to 12% growth rate per annum. 95% of the industry consist of the unorganized sector. Mainly this industry consists of home units, cottage units and small-scale units. These units operate at a very thin margin.

Commenting on the issue Federation of Sweets and Namkeen Association of India(FSNAI) committee VicePresident and Jain Food Products Managing Director, Kunal Jain said that Finance Ministry has always mentioned that the incidence of tax will not increase under GST regime. But in case of Namkeen this hasn’t been the case.

“There was no Excise Levy on Namkeens and in almost every state barring a couple, State VAT levels hovered around 5%. Indeed, in certain cases the Input Tax credit incidence has increased but that benefit is available to very few units working on a large industrial scale. In Namkeen Industry majority of manufacturer are small, working at cottage industry level or at SSI level who will not be getting any additional Input Tax Credit than what they were receiving under VAT regime”, stated Kunal.

He further added that thus there is a practical deviation from the policy which FM has put forth. We would like to bring this aberration into the notice of government and hope that they will understand and review it to make it just and provide relief to the mass of Namkeen Industry, which operates in every village, small town, city, and metro of India.

“The GST, which I call the good and simple tax, has shown a positive impact on the economy in a short time,” Modi said in the 34th edition of the Mann Ki Baat as the ‘one-country, one-tax’ regime entered its 30th day.

Agro & Food Processing August 2017

GST CHAOS

12 Commenting on PM’s statement of GST as simple tax Ashok Chedda of Chedda Specialities as that current GST slab is very confusing as earlier when we sell our products to retail outlets they charge 5% but now when they take they must pay 12% but if we serve them in our shop they should pay 18%. This is not only creating a confusion but also leads towards tax evasion. In government’s view, it may be a simple tax but it is creating a great confusion for inspectors who are looking after it.

He demanded that government should kept this category in single slab i.e. 5% as this is the basic level will make the law very simple and become more valuable for the customers, retailers, and industry.

Focusing on tax evasion, Chedda said that “If it is plain roasted cashew, we would have to tax it at 18%. Instead, we would add some more ingredients like aloo bhujia, namkeen, mixture, etc, to make it a snack that can be taxed at 12%. Even better, make it a sweet for taxation at 5%.” Sellers are getting creative for lower tax rates. As fruit jellies, mousse, pastries, and pies come under the 18% GST slab, some are considering renaming and repackaging them as sweets to pay 5% tax.

After the roll out of the GST, makers of snacks, including potato wafers and biscuits, afraid a hit on sales as increased tax under the new regime forces them to either increase prices or suffer a dent in margins.

Potato chip makers, for instance, will now be taxed at 12% under GST, up from the effective tax rate of 5% under the current VAT regime. This has made wholesalers and retailers of potato chips and wafers nervous about the anticipated hit on their margins owing to higher tax outgo.

Terming the GST as pro-poor and an example of cooperative federalism, PM said that the government’s effort is to ensure there is no extra burden on the poor. “I feel very happy when a poor person writes to say how prices of assorted items essential for him have come down because of the GST,” he said.

Is GST a burden on Consumers?

However, the industry has a different point to note. “Namkeen is a household item and is a daily kitchen need. Commonly is used as a substitute of vegetables.

There are several famous local delicacies

around it in all these states. With new GST, the prices are going to go up by around 7-8%. In many cases it is sold at fixed price point packs. There the portion size will eventually reduce. Thus, there is a direct impact on kitchen budget. In rural areas, Namkeen is provided at rates in range of 60 to 80 rupees per KG. If you look keenly it’s mostly a common men’s need rather than a rich men’s luxury”, said Kunail Jain.

In Rajasthan, Gujarat, Uttar Pradesh, Maharashtra, and Madhya Pradesh namkeen is eaten with Rotis and is a daily consumption item. Manufacturers are tensed that higher tax rate shall be a burden on household budget and practically reduce food sufficiency too.

Standing with the issue Mota Chips MD, said that This tax rate of 12% will affect the common man’s budget as most manufacturers will increase their rates since the slab is now 12%. It will increase at least by 5%.

D.K. Gupta too support the words of Ajeet claiming that namkeens are consumed by the common man and available as cheap as Rs. 60 - Rs. 80 per Kilo to the larger section of society which is economically deprived. “Current tax slab is going to create big-big problem as the production now needs much capital which leads hike in the prices and will lead to make the products out of reach of the common man. Along with this it is produced by a labour intensive industry that provides employment to many skilled and unskilled personnel and thus attract lower taxes, he added.

He is worried that now the unorganised sector is going to boom as organised sector is much focused on the Food safety, quality, labour welfare, tax compliances, environment protection which need much investment and tax slab of 12% is like a budget. In addition, he said that due to current situation we are not even working on new innovations as the market is still not going to digest it. We afraid that the current situation may harm our relationship with customers.

Currently most of industry sales depend on five rupees packet as it very popular among the masses but as the GST council has kept the packing material of namkeen under 18% experts of the industry views that either industry will skip this packet range or will hike the prices.

Agro & Food Processing August 2017

Chedda speciality head said that the industry turnover is more on selling 5-rupee namkeen packet and most of industry focused on sales of this category.

“For instance, Rs 5 packet we have to see that what kind of infrastructure and how much capital is required and what we are earning from it. Industry have to think on that too”, said he.

Mandi Shulk Issue Before rolling out the GST government said that it will be the amalgamation of all taxes but still local taxes are waiting to get subsumed in GST. Because a major issue, we feel is the Mandi tax - Market fees, which is prevalent in many States.

It ranges from 1.5-2 per cent in Uttar Pradesh to even 4 per cent in states like Punjab and Haryana. So, if this Mandi Tax is not going to get subsumed in GST, this will add to the burden.

Commenting on the issue, Gupta said that government should look at it seriously as it will add to the prices of the commodity.

This is something, which the state council or the GST council needs to address. It certainly is a concern for the industry just like high taxation is a concern for the industry. We feel being an essential commodity, the taxation should be minimum on the essential commodities.

Ajeet Mota informed that mandi tax is taken by a private body like APMC. It was formed in 1977-78 approximately.

The system was put in place to protect the farmers from the "evil corporations".

A lot of our policies are indirectly related to our insecurities from being ruled by a Corporation (East Indian Company).

“Government worried that the farmers would be cheated by the end buyers and the Mandis would provide them better prices. This is ok, if you also ensure that the brokers in Mandi don't collude in price fixing and hoarding. But as of now it’s already a place for the middle man to earn huge and create panic or even shortage of material”, he added.

Earlier in his monthly radio programme Modi said that the GST in India will become a model for other nations.

Educational institutes will use it as a case study. The implementation of the singletax regime in a country of the size of India will inspire research in the world one day,

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GST CHAOS

14 the PM said.

Though the PM is stating GST as the single tax but still the namkeen manufacturers are facing a burden of only mandi tax along with entry tax, toll tax and other local taxes.

FOSNAI VP too depressed with the mandi tax charged by the state government after GST. “It is sad that local levies are still creating uneven market conditions. Local taxes on Mandi, Electricity, and similarly taxes on Diesel etc are not conforming to the “free flow of tax credit” idea. “One Country One Tax” is a distant dream”, said Kunal.

While Ashok Chedda explained that the ingredients used in namkeen are mainly agro based and central has put it under 5% slab and when we are going to buy that items we must pay extra mandi shulk which they do not consider as a tax. “The current tax regime is very confusing, traders are not only paying mandi tax but also paying entry tax and toll etc along with GST”, said Ashok.

According to market research made by Agro N Food Processing Times, sweet and savoury snacks have grown by 14%, highest within packaged food segment between 2010 and 2015. About four years ago, packaged namkeen had replaced western snacks such as potato chips and finger sticks as the largest segment within branded salty snacks market.

On an average, regional snack brands offer 30% higher volume than multinational rivals at similar price points, especially in highest selling price points of Rs 5 and Rs 10.

Industry growth and focused areas With a CGAR OF 10-12% per annum it is estimated that the business of snacks and chips in India will cross Rs1.5 lakh crores by the year 2020. This sector thus, can be regarded as a high potential business area for the coming years. Many regional brands are coming forward to cash in on this opportunity.

“We are investing our efforts in creating better value propositions for our customers. Price versus Quality ratio is important in rural marketing. Of course, this doesn’t deny the aspirational needs of consumer. Research and development is now very important. New products and new formats are key to success as

entertainment’s share is increasing in the total value pie of snack food” said Jain Food Products M.D. While Mota Chips head focuses on selling of Potato Chips. We have an edge over others in Namkeen’s as we make some specialized stuff that no other people make.

Changes in country during last decade The average annual per capita consumption of commercial snacks is just 500g and that by urbanites is 10 times more than that by rural consumers. This may be since most rural houses make these at home or buy from the local vendors that come in the unorganized market.

During a last decade, a lot of positive changes has taken place in the namkeen industry. Manufacturers are not only focusing on sales growth but also working to provide healthy snacks.

“Youngsters are quality conscious and going for healthier snacks, we have to go for many quality checks as well as have to innovate those products which are fit for health”, said D.K Gupta.

Consumers from Western India are the leading snack consumers, followed by the North. While the domestic ethnic snack foods industry is hugely diverse, has easy access to indigenous technology and involves low entry barriers, standardization of product quality and backward links to testing facilities are at woefully low levels. Naturally, opportunity is screaming from the rooftops.

According to Ajeet Mota the consumption of Namkeen’s has drastically increased in last decade. Things like Jalebi, Fafda, Thepla which were a Gujarati Dish are now preferred by most people in their morning breakfast. Bhujia commonly consumed in the north is hugely consumed in the south also. So as the cultural diversity is spreading its wings across India the sale of these products is also increasing.

Of course, there are a few segments of people which

Agro & Food Processing August 2017

have become health conscious but they to get their kind of healthy products which are now available in the market.

However, Kunal Jain has different view on the subject. He thinks that there is a little segment of people who look at the nutritional values of products and make their buying decisions accordingly. But this segment is ever increasing. Still Namkeen is considered as an item of indulgence, hence there has been little activity around “healthy namkeen” concept.

Newer scientific studies which proves that it is sugar not fat which is the reason for many endemic diseases like obesity, heart troubles, diabetes etc, somewhat exonerate Namkeens, as it usually has negligible sugar content compared to other snacks which are overloaded with sugar. Still there is a wide field open for research and new developments. Some companies have come about healthier product lines, their success will force others to follow suit.

Ashok Chedda too thinks that the healthy snacks concept is still a dream as the namkeen in our country is mostly used by the common man and they don’t have much time to look that what ingredients product is containing. Even the consumers are unaware of nutritional value.

Conclusion: The namkeen industry is in doldrums after the imposition of 12% GST rates as the slab is too high for the industry. The product is mostly consumed by common man and the current tax will affect the prices as well as business of manufacturers. Soon the namkeen companies will declare their quarterly results and it will be interesting to notice GST effects. It’s time for a serious discussion and GST Council should review the current slab before its too late.

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SETTING NEW GOALS

16

World’s biggest facility for food processing machinery manufacturing in Chennai

H

eat & Control’, India’s number one solution providers for frying lines and ancillary machinery is leading in global market too. It is involved in almost every prominent project in India in snacks and namkeen segment.

Company has shaped up itself as the most protuberant technology provider in India for food processing industry.

Recently Heat & Control started its world’s biggest manufacturing unit in India at Chennai. This will not only cater the Indian market but also other parts of the world. Manufacturing in India for Indian buyers will be more economic. In the past when Heat & Control entered in Indian market it was not a manufacturer of frying lines for namkeens but now they not only make solutions for the same but

also leads this segment.

State of the art factory with world’s best designing centre, laser cutting machines, moulding lines and welding lines is ready for any challenge. It also has a modern demonstration shop with a fully functional frying line for product trails. In the below interview Manoj Paul - Country HeadHeat and Control (South Asia) Pvt Ltd has revealed some wonderful facts about this new facility.

You have just started a new state-ofart factory in India, what is the idea behind this project in Chennai? Kindly brief us about it.

This year, Heat and Control completes 20 years being in India. Company always considered India and South Asia as large

Heat & Control

has always considered India & South Asia has large & promising market Agro & Food Processing August 2017

and promising market. Hence, we are making investments in this region; first major investment was in Indore wherein we had acquired Flavorite Technologies and had expanded their factory. Today it has 60, 000 sq. mt manufacturing facility, office etc. Heat and Control (South Asia) Pvt Ltd had a small manufacturing facility in Chennai where we were making 30 per cent Lines thereby saving import cost of machinery. The management has decided to set up this large facility in Mahindra World City, premium industrial estate in Chennai. The plot is about 8.3 acres of land, with a manufacturing facility spread across 1, 20, 000 sq. ft and the office is 26,000 sq. ft. There are two specific features; one is Technical Centre where small sized equipment is stored, customers can come and conduct product trials. This full-fledged equipped factory has all the facilities to do proper trails for customers’ products.

Brief us more about the Technical Centre wherein there is trial facility.

How will this prove beneficial for you and the customers?

Many people want to see how food is processed in the food processing machinery, and how it functions. Here the advantage is like a small food processing factory possessing all the facilities like

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SETTING NEW GOALS

18

turmeric heater, electric oil heater, there are machines like heatwave fryers, etc.

Customers do not need to go abroad but rather can come here to this Technical Centre with their raw materials and conduct trial activities. There are qualified food processing technicians who can help customers develop new products at our centre. They can experiment with new ingredients and try to develop new products suitable for their market. I request all the customers to make use of this facility that will be ready in a couple of months.

What is the total investment for this project?

An investment of Rs.100 crore has been put in for this project, and state-ofthe-art equipment is being used at this factory. These machines are the same that Heat and Control uses globally for manufacturing food processing equipment. It is interesting to know that this is the largest Heat & Control facility anywhere in the world, bigger than our factories in US, China.

This year, Heat and Control compleies 20 years being in India. Heat & Control has always considered India and South Asia has large and promising market.

Will this facility also caters to other projects in America and Australia?

Will it cater to their demands as well?

Heat and Control has about seven factories worldwide, this is the eighth large facility.

Company export depends on workload on other factories, we will also do exports outside the South-Asia regions.

Why Heat & Control has chosen India at this point of time? Do you see an

increase in demand of machinery in India?

Population is the benchmark for consumption of snack food because more the population, more snack food will be consumed. Apart from that, India has lot of unorganised processing sector, slowly the organised sector is gaining momentum and unorganised sector is merging with the organised. We have observed that large expansion is taking place with customers, they are putting up factories etc. Food processing industry is growing extremely well. We at Heat and Control think that India is very promising market, not only India but also other neighbouring countries like Sri Lanka, Bangladesh, Nepal, Pakistan.

Automation level is very less as compared to other Western countries, because of availability of low-cost labour etc. The scenario is changing as skilled labour is hard to get and hence people are looking for automated machinery hence giving us fantastic opportunity to put in automated equipment in Indian industry.

Is this project in line with the ‘Makein-India’ initiative?

We also go along with the slogan ‘Makein-India’ for India. Our focus market is India; the main idea is Make in India, for India and the South-Asian region.

Will processing companies in India double their capacities in next few years to cater the robust demand for processed food products?

Initially, we used to sell small food processing lines like 500 kg/hour but today customers want two tonnes/ hour and these are the larger lines we are supplying. Customers are looking at bigger lines because that gives

Agro & Food Processing August 2017

them scales of economy and benefit of production cost. The other advantage of manufacturing in India, is a lot of savings on custom duties, freight and labour cost.

Cost of our machinery will come down by about 20-25 per cent.

Heat & Control is globally popular for potato chips and other food items.

You have done R&D on Indian ethnic foods, elaborate on the journey so far and how has it been beneficial for you?

When we came in India, we realised that western snacks have a market in India but the larger market consists of domestic and local Indian ethnic snacks. So, Heat and Control developed its own solution and is known as ‘Namkeen Line’. This line can produce 14-15 varieties of namkeen from a single fryer. The capacity of the fryer was very small, we had started with about 500kg/hour but now the capacity has gone up to 3 tonnes/hour of namkeen.

Further, we have gone to blending solutions like bhujia breaker, blending namkeen products. In one case, we had to do a mixture of 9 products with specific quantity as customer felt that one product may be more than the other. Accuracy has been maintained. Namkeen is a big business for us in India; we are constantly working to develop newer solutions for our customers.

What kind of labour force have you deployed here?

Western world tries to reduce manpower because of the high labour cost and lack of availability of skilled workforce.

Heat & Control equipment are tailormade for Indian customers and involve lot of labour. Hence training is provided to the workforce so that they can work efficiently with several skill development programs. Currently, company has over 100 employees in Chennai and 60 employees in Indore. Majority of the 100 employees are in the factory and about 3040 are in engineering and other activities.

But end of the year, we expect to grow to 150 and if there are multiple shifts then the number of employees could increase.

We are looking for people who have experience in similar machinery.

What is your message to the machinery buyers?

Buyers should take advantage of the new manufacturing facility in India and support us so we can supply worldclass machinery at competitive prices.

Company expects this entire facility to be completed by September.

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Agro & Food Processing August 2017

FDI ISSUE

20

I i n D F

Indian Bread Industry Required or not ?

These days, traditional Indian basic foods have been replaced by breads. In the fast moving life, nobody has time to cook rotis or rice, where breads are preferred which consumes less time to cook. Most people prefer breads as their breakfast meals on a daily basis. The freshly baked breads are high in nutrition and tastes. There are numbers of varieties we can find in breads such as milk breads, sandwich breads, whole wheat breads, multi grain breads etc.

B

read is a hygienically manufactured and packed snack food product available at comparatively cheap prices. Major consumers of bread are people from the lower middle class and economically weaker segments consuming more than 90 per cent of the bread industry's total production. Bread is low margin-high volume based processed food and bread making is a labor intensive process.

Bread is the cheapest and basic instant

food available for consumption. Though bread is not a staple food in the country, its consumption has increased over the years. In India it is still a secondary staple food when compared to chapatti, puri or rice.

Bread is generally a highly perishable item, which has a shelf life of maximum of 72 hrs. in a tropical country like India.

The government has made it mandatory to stamp the date and time of manufacture and the date and time of expiry on the

Agro & Food Processing August 2017

packet. Therefore, once the bread is baked and packed, any baker will make it a point that it reaches the market at the earliest.

The bread industry, consist of organised and unorganised sectors, contributing around 45 per cent and 55 per cent of the total bread production respectively. The organised sector consists of around 1800 small scale bread manufactures around the country, besides 25 medium scale manufacturers and 2 large scale industries which were permitted to continue on the

FDI ISSUE

basis of their installed capacity in 1976 when the Government of India reserved bread industry for the small sector.

The unorganised sector of bread units/ neighbourhood bakeries etc. consist of an estimated 75,000 bread bakers mostly located in residential areas of cities and towns. 35 per cent of the total production comes from the small scale sector with about 1500-1800 units in operation. As bread industry is a low margin business, cost control is crucial in sustaining profitability in the long run.

Harvest Gold Bread The Harvest Gold brand is a perfect combination of innovation, passion, excellence and caring. The breads from

“Demand for brown and fruit breads is estimated to increase further due to an increasing urban consumer base and a rise in health awareness about nutritional food�

Major bread brands that made a mark in India Britannia Bread Britannia is the leading food company of the nation.

The brand has the widest varieties in breads with various flavors and good tastes.

The breads include white bread, multigrain bread, honey & oats bread, multi fiber bread, atta bread, brown bread, vitarich slice, fruit breads and healthy slice.

The range of wholesome and delicious breads is filled with goodness which keeps body healthy. They are baked freshly and are high in quality.

ragi breads, wheat sub loaf, bagels, garlic breads and wheat pita breads. The breads are filled with fiber rich and nutrition which helps with daily fiber requirements.

Muffets and Tuffets Bread The renowned brand Shanti Food Processing Industry (SFPI) has launched the Muffets & Tuffets breads across the country. The best quality breads have a wide range including flat breads to puffed ones. The tantalizing taste of breads is made with natural grains and ingredients ensure rich softness in breads. Other than breads, the brand is manufacturing other bakery items as well. The ranges of breads are available in varieties like milk bread, whole wheat bread and multigrain bread

The bread industry in India, valued at INR 33bn grew at a CAGR of 9% over the last three years. The industry will be worth approximately INR 53bn by FY 2020, growing at a CAGR of 10%.

The reason for amplified demand of bread is growing disposable incomes, changing lifestyles and preferences of consumers supported by an increase in the youth population, female work participation as well as a widening scope of the Indian retail market will drive the industry growth.

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the brand are rich in taste and nutrition filled products. Harvest Gold ensures many options for various bread recipes such as white bread, multigrain bread, garlic bread, garlic cheese bread, hearty brown bread, and vitamin power breads. the breads are rich in fiber which promote health and wellbeing. The bread is tasty and ideal for those who are health conscious.

Bagels and Bakes Bread

Bagels and Bakes is one of the famous brands of bakery items in country. The breads from the brand are made up with traditional techniques which give the tasty and healthy experience each day.

The breads has a huge varieties such as fruit & milk bread, cinnamon raisin rolls,

Agro & Food Processing August 2017

Bonn Bread Founded in 1985, Bonn is the ever growing company in the country. The brand offers premium quality breads with the range of varieties. The types of breads include white breads, brown breads, premium sandwich breads, garlic breads, multigrain breads, healthy slice bread, frooty bread, burger pizza bread, and other varieties. The brand ensures numbers of experiments in cooking with the range of breads made up of high quality grains and ingredients.

English Oven Bread The brand English Oven was established three decades ago. The brand ensures active nutrition daily with the range of breads such as multigrain bread, whole wheat breads, honey oat meal, and milk breads. The breads are baked with simple, unfettered ingredients which provide delicious, earthy taste of grains. The honey oatmeal breads have the sweetened hint of honey and it is loaded with many health benefits.

Breadworks Boulangerie Bread The Claire Food and Beverages Pvt. Ltd. have launched the Breadworks Boulangerie. The famous brand of breads has the highest standards of quality. The brand offers a range of breads which include white bread, brown bread, milk bread, whole wheat bread, multigrain bread, honey & oats bread, and all types of buns as well. The breads are freshly made by hands everyday which gives better taste and whole new experience.

Regulatory controversy that affected bread industry growth Last year a study by the Centre for Science and Environment (CSE) exposed

FDI ISSUE

22

of 60 ppm for the chemical before 1992.

Now it is banned in the European Union, the UK, Canada, China, Brazil, New Zealand and Australia, but not in the US.

the presence of possible cancer-causing chemicals in pre-packaged bread. The specific chemical in question, potassium bromate, was used as an oxidizing agent for bread and a few other bakery items such as pao, bun and pizza base.

Similarly, potassium iodate was also found in samples and is reported to cause thyroid disorders.

The results came to the fore when CSE’s Pollution Monitoring Laboratory (PML) found residues in 84 per cent of the 38 bread and bakery samples it had sourced from retailers in Delhi. The results showed that major brands across categories have concentrations ranging from 0 to 22.54 parts per million (ppm) of the chemicals in the sample.

“Though the discovery was well within the mandated limit of 50 ppm for the chemical, the release of the report by CSE saw stocks of major bread manufacturing companies fall considerably”.

First, potassium bromate had been classified as a level 2B carcinogen in 1999 according to the International Agency for Research on Cancer (IARC).

It places potassium bromate in the list of 290 other chemicals which are “possibly carcinogenic to humans”.

Other chemicals in the 2B category include carbon tetrachloride and acetaldehyde. The classification system of IARC has five broad categories (1, 2A, 2B, 3 and 4) with group 4 representing chemicals “probably not carcinogenic to humans” while Group 1 represents chemicals “carcinogenic to humans”.

Another important issue is the relationship between the relevant stakeholders, namely the Food Safety and Standards Authority of India (FSSAI), CSE, the ministry of health, the All India Bread Manufacturers’ Association (AIBMA) and ultimately consumers.

The FSSAI, on its part, did the right thing by asking for the removal of potassium bromate from the list of permissible chemicals and AIBMA too has been positive about not using these chemicals in future.

Here, the important question to ask is, has the consumer interest been put to risk or is it adequately protected? Well, it seems various bodies have done their job, and there appears to be no reason for panic.

“However, it does point to an archaic standards regime that India continues to follow” The chemical ideally should have been restricted in the first place and even if it had regulatory clearance, it should not have been used by the industry, especially after international agencies in 1992 had termed it “non-appropriate”.

The industry was well aware of the fact and continued its usage on the ploy that it was being allowed as per the national standards under PFA earlier and FSSAI now. The flour milling and bakery industry continued using potassium bromate even though options were available for achieving the desired functional requirements.

Second, it will be interesting to see how the use of the chemical in question is being restricted across the world.

It also raised the question of the efficacy of the regulator and its regulations. Why did the regulator, FSSAI, which came into being after an Act of Parliament in 2006 and was operationalized in 2011, not look into the matter earlier?

In 1992, the Joint Expert Committee on Food Additives (JEFCA) declared the chemical as “not appropriate” and withdrew the previously acceptable limit

Ultimately the need for the foreign backing could have been hindered if the matter had not been tackled within time.

The government has opened doors for

Agro & Food Processing August 2017

food industry by opening the FDI doors.

International investment has started but we need to fully concentrated on food safety, hygiene, regulatory aspect, before the bread industry venture into a big global tie-up.

FOREIGN ENTRY The size and growth of India's bread market has been piquing the interest of investors. In 2016, Indian privateequity firm Everstone Group acquired the 52-year-old Modern bread and bakery brand from Unilever. With bread manufacturing units in 14 biggest cities across the country, Modern bread, last November then held 10%-12% of Indian bread market. Also Indian government policies have also favoured the bread industry by keeping it in nil tax zones.

“India's bread market remains a sector in which local or regional businesses dominate due to logistics and supply chain issues, as well as the cost of investing in production plants” In recent months, Grupo Bimbo, the world's number one bakery business, appears to have stepped up efforts to expand in the world's emerging packaged bakery markets in a bid to give it another platform for sales growth.

Mexico-based Bimbo's domestic business is in growth but its US operations – a significant market for the company, with it being the largest bakery group in the States – has been in the doldrums for a while.

Bimbo's interest in emerging markets has been shown in 2017 through the acquisition of businesses in Morocco and Colombia, while also reportedly indicating plans to expand its business in China through M&A. Last month, Bimbo announced a move into a new, potentially sizeable market

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FDI ISSUE

24

– India. It has acquired a 65% stake in Ready Roti India, a manufacturer of packaged bread, buns and pizza bases and the owner of brands like Harvest Gold and Harvest Select.

India's bread sector, a central part of Ready Roti's business, appears to be growing strongly. Based on data from manufacturers, Pune-based ValueNotes Strategic Intelligence estimates bread sales in India reached INR33bn (US$511.7m) in 2015, contributing to a three-year compound annual growth rate of 9%.

Bimbo described Ready Roti as "the baking leader in New Delhi and its 19 x 15 cm

surrounding areas", with four plants and generating annual sales of approximately US$48m. Ready Roti sells about 150,000 loaves of bread every day in and around India's capital.

oreign investment in an Indian bakery company” Several other bread companies are waiting and watching to see how Ready Roti performs following the deal with Bimbo and points to the growth seen across the wider baked goods market.

Ready Roti, which was founded in 1993, and Bimbo are now devising a business plan, to consider "what products will be coming in to India, what geographies will be going into", adding it should take three to four months to come to decisions.

Bimbo's acquisition in Ready Roti could be the spark for other similar deals in the sector. Its investment is expected to herald a wave of other foreign companies to invest in Indian bakeries as backing from investors could be to the benefit of India's bakery businesses. There is a need to boost automation in Indian baked goods factories, especially in dough handling and loaf packing but the technology is expensive and even larger local companies have found it hard to estimate the scope and cost of the technology required and still guarantee profits.

The wide variety of cultures and tastes within India creates demand for a broad range of bread products that Ready Roti could tap, including breads made from rice. It is estimated that with Indian consumers increasingly time-poor, demand will increase: Bread products will give them more convenience.

“According to All India Bread Manufacturers Association says Bimbo's investment is the first case of

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Agro & Food Processing August 2017

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EXCLUSIVE

26

Indian Food Processing Industry needs much better quality assurance techniques for liquids and powders to wrapping machines for biscuits, chewing gum, semiliquids, par-baked and frozen food and even high-performance thermoforming and vacuum packaging machinery is supplied as per clients’ requirement. Our Group Editor Firoz H Naqvi caught up with firm’s MD Sanjay Kumar and Vice President – Projects Ramana Reddy for an exclusive interview, excerpts are given below.

T

he food industry needs highquality, reliable equipment with superior functionality to produce effective results. The food industry combines several raw food ingredients to produce food products that can be easily prepared and served by the consumer.

Standard Machinery Marketing Company Private Limited (SMMC) was established in 1947. SMMC represents several large European Far Eastern and American manufacturers for industrial food manufacturing, processing and production equipment in India.

India’s agro-climatic conditions, large raw material base, rapid urbanisation and changing lifestyles, rising literacy and income levels and increasing popularity of ethnic food abroad ensure that food processing remains one of the largest industrial segments in the country. To meet this growing demand, SMMC offers end-to-end solutions comprising both

new and pre-owned equipment for simple to sophisticated, high-end output in every area of the food market.

SMMC presents state-of-the-art technical innovations that offer minimally labouroriented production, hygiene and safety while also easing storage and transportation considerations. From the world’s leading food packaging manufacturers, SMMC solutions offer multidimensional functionality – increased shelf life, greater food safety as well as aesthetic appeal. Their equipment ranges from HFFS and VFFS machines

Quality of product depends on various factors and one of them is raw material, we need to ensure that we should get correct and good quality raw materials.

Sanjay Kumar sheds some light on the FPI.

Agro & Food Processing August 2017

Sanjay Kumar-SK What are the current technologies you are offering to Indian agro & food processing industry, what kind of latest advancement industry needs to cater future demand?

SK-Standard Machinery Marketing Co Pvt. Ltd has been offering since many decades total solutions for the following industries: Bakery, Chocolate, Confectionery, Snack foods, RTE, Spices, etc. We offer processing equipment from raw materials stage until finished product and packaging for various categories as mentioned above. This includes material and ingredient handling equipment.

There is a continuous innovation in technology for all the equipment that we offer. This innovation is not only to increase production capacities but the technology involves more hygiene standards and being a food industry, various manufacturers of equipment are ensuring that the advanced machinery

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EXCLUSIVE

28 being offered are automated so as to have a minimum human intervention.

The total market size of food processing equipment industry in India is estimated at US$ 1571 million, how much growth do you expect in coming 4-5 years?

SK-The food processing industry is no doubt huge and the growth can be promising but unfortunately our country needs to improve in infrastructure and logistics. Unless this is done, positive growth cannot be achieved. And we still have a long way to see infrastructure and logistics which are present in most developed countries, in India.

What are the factors driving growth in

India?

SK-At the moment the population and awareness through media, internet and other channels are driving growth in India in food sector. This will definitely grow but PAN India distribution for short-shelf life food products remain a challenge.

The GST council has kept the food processing machinery under 18% slab, your comments.

SK-The GST council should give total relief for the food processing machinery segment; this is my opinion as this will be a bigger growth than the IT segment.

The customers are too possessive for the quality product, what technologies you are offering to maintain quality check of your products, do you think that Indian food processing industry need much better-quality assurance techniques?

SK-Quality of product depends on various factors and one of them is raw material, we need to ensure that we should get correct and good quality raw materials which are important for a good finished product. Definitely the Indian food processing industry need much better-quality assurance techniques there is no doubt.

the industry.

I would like to mention that if you see the growth in Indian food industry from the last 10 years, it has been a tremendous growth with new products in the industry.

Because the ‘buying-power of consumer has really gone up and this is giving opportunity for our customers to invest in new machinery and new technologies to produce new products for our industry.

There has been a tremendous growth in the industry in the last 10 years

I

ndia is a country with huge demand of processed food products varying region to region. Customer also demands different kind and capacity machines with tailor-made applications.

How has been your experience with these kinds of expectations?

RR-The Indian market is huge and customers are also having different ideas when it comes to new products and existing products. We at SMMC are always ready for the new challenges. It has been a very interesting and challenging market for us to find innovative technologies and equipment for new products for our Indian

market. I have always been in search for these new machinery and technologies to offer our customers. As you know, we at SMMC are specialized in innovative ideas and we bring the innovative products / equipment for the industry.

Yes, we also offer tailor-made solutions but these are for the existing products.

But for the new products it’s always a custom-made machinery to suit for the particular products. I am personally very happy always to find the new machines for new processed foods. This is my role and responsibility in the company and I have been doing this since a long time in

Agro & Food Processing August 2017

What are your plans for future expansion in India? Have you entered new tie-ups with foreign company?

RR-Future expansion is always good and we at SMMC are always looking for future expansions. We have been having new tie-ups and business co-operations with new partners from Europe. We have been investing a lot of time and money to find new companies for our business growth in the industry. Yes, recently, we have done several new partnerships with new companies from Europe. We want to be always ready for the future with right machinery/solutions. As I have explained earlier, we at SMMC are specialized in new machinery and new technologies to offer our customers. We are always ready for new challenges.

What are your focus areas in Indian food processing industry like bakery, frozen foods, snacks and namkeens etc.

RR-We are mainly focusing on the Bakery industry, Chocolate industry, Confectionery industry, Snack food industry, Pasta industry, RTE industry, Frozen foods industry, Spice industry, etc. These are our main focus areas and we are also planning to enter into new other segments like Dairy industry, Ice Creams, etc.

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JUICY INDIA

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Move on Colas; Juices are taking over Analyzing the growing packaged juice industry of India

T

he increasing numbers of healthconscious consumers in India, especially in the country’s urban areas, who are more focused on functionality and nutrition in their beverages rather than just their thirst quenching properties and convenience, drove the positive sales growth seen in juice this year.

“The per capita consumption of beverages in India is still very low compared to the US and other developed economies” In the coming days, factors such as rising income of the people in emerging markets, demographic shift in terms of more young people in the economy, changes in the lifestyle and rising health consciousness will give a further boost to this trend.

The market size of beverage industry in India is estimated to be worth around Rs. 65,000 crore and this market is estimated to grow at CAGR of more than 20 per cent. The Indian packaged juice industry size is about Rs. 8,000 crore and it has been growing at more than 30 per cent per annum in last few years and will maintain that pace in future as well.

Juice is expected to increase in both offtrade volume values at a CAGR of 17% at constant 2017 prices over the forecast period, with sales set to rise to INR 272.5 billion in value and 4.1 billion litres in volume by 2021.

Why the shift Lately, there has been a fizzle in the

Agro & Food Processing August 2017

demand for the aerated drinks as two large cola giants Pepsi and Coca-Cola saw a decline in numbers and revenue.

Globally too, cola sales have been seeing a steep decline over the last few years.

With urbanisation and exposure to the West, Indian consumers today are increasingly becoming conscious of their lifestyle including food and beverage choices, in some cases prompting a shift from colas to healthier options such as juices, milk-based flavoured beverages, etc. Cold pressed juices too are slowly finding favour amongst consumers — while Keventers has expanded into Mumbai recently, Juice Up launched its first kiosk in Noida in 2016.

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JUICY INDIA

32 “Even the likes of McDonald’s are now offering customers the choice to opt for milk-based beverages (chocolate milk, smoothies or shakes) with their meals”

Buying behaviour is changing. India is the diabetic capital of the world and there is much more awareness now leading to growth of fruit-based drinks in the last one year.

In the medium-to long-term, fruit-based and milk-based beverages will take away a lot of market share from colas with ready-to-drink beverages in the dairy segment also coming to the fore.

The market share of fruit juices, nectars and juice drinks stands at around 25.1%, which is still less than that of carbonated drinks (approx. 47.9%), as per KPMG. In such a scenario, how are packaged fruit juices and health drinks preparing to jostle for space on the consumer’s refrigerator shelf?

Juicy facts Increasing awareness on the health effects of carbonated drinks has certainly made some consumers rethink about the consumption of colas. While carbonates grew in India at 12.8% CAGR from 2010-16, the juice segment grew at 27.3% CAGR over the same period, KPMG states.

The juice category is witnessing high growth, which is characteristic of a higher per capita packaged beverage market as consumers start looking for a multitude of packaged beverage choices.

Fruit juices are slowly becoming an indispensable part of breakfast, social gatherings, etc., encouraging companies to package them in convenient, easy to carry/easy consumption packs. Some have even launched variants catering to every consumer segment in the market.

But still the all-India penetration of juices stands at around 3% which is very low, so many juice companies are currently

strategizing to increase penetration and make products more relevant. One can’t ignore that the major chunk of consumption still comes from the colas, but developments like the Tamil Nadu traders refusing to sell products by Pepsi and Coca-Cola don’t help the cause. As a result, there is proliferation of international and home-grown brands like Del Monte and Paper Boat. Also company’s like Dabur have brought different products positioned for different segments — Real Fruit Juice for mothers and children; Real Activ Juice for adults; for the 40+ age group it launched Amla and Jamun juice under its Real Wellnezz range; and for teens, who love the fun of fizz but are also conscious about their health, it launched Real Volo last year.

The current scenario has led the juice category to grow at 15% y-o-y and 2017 is going to witness forward to an overall growth of over 20% for fruit drinks over last year.

Companies are doing their level best to grab market share away from colas, fizzy drinks still remain popular. Parle Agro too has launched a fizzy version of Frooti — the first brand extension for the mango drinks in 32 years. One of the major reasons for this is that a majority of the juice market is urbanized. The culture of drinking juices and having energy drinks has limited penetration in rural areas.

Expansion in the category has to match with corresponding growth in support infrastructure, with refrigeration equipment that can operate without electricity, especially in rural areas. Key players have been regularly investing to bring in growth by increasing the number of stores stocking products.

Thus, the challenge currently for companies is to increase availability and affordability of packaged juices.

Juice-based drinks are growing in small towns and rural markets as well but the breakfast table phenomenon poses another challenge. Unlike the West where juices form an important part of one’s breakfast, Indians are habituated to tea/ coffee and milk. As a result, brands have to critically see how to position juices.

Battle lines redrawn

Agro & Food Processing August 2017

PepsiCo’s Tropicana, a billion-dollar brand globally, has lost about 5% share of India’s Rs 2,000-crore packaged juices market— both by value and volume — between April 2016 and January 2017 compared with the corresponding period a year-ago, according to research. Though PepsiCo defers with it as Tropicana has been one of the fastest growing beverage brands and 70% of its growth was on the back of locally relevant innovations and variants such as Mosambi and Alphonso as examples of drinks based on Indian fruits.

“PepsiCo brought a new twist planned for Tropicana juice: live microorganisms” PepsiCo has expanded the Tropicana franchise with functional juices under Tropicana Essentials; It is launching the Tropicana Essentials Probiotics this year to expand the brand into a subcategory of the juice aisle that has seen rapid growth—socalled "functional juices."

Those beverages are selling strongly as consumers look for more nutritional benefits in the foods and drinks they consume.

Orange juice is a beverage category that has fallen out of favor with consumers, a decline that in some ways mirrors the troubles that the soda industry is facing.

PepsiCo is highly active in both beverage segments, with market-leading positions with the namesake Pepsi and Mountain Dew brands. Tropicana, meanwhile, is the market leader for juice—with 7.4% of the market according to research. While it outsells Coca-Cola’s Minute Maid both are losing market share in recent years as upstart brands perform more strongly.

The challenge for PepsiCo: giving consumers a reason to want to buy juice again, ideally by entering into adjacent categories where demand is stronger.

Tropicana Essentials Probiotics is part of a bigger push at PepsiCo to use innovation to fuel growth. In the second quarter, new products comprised about $5 billion, or 9%, of the company's sales.

“Tropicana must confront is the

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JUICY INDIA

34 perception that orange juice has too much sugar—in particular, the misconception that there's added sugar”

have led to the demand for convenient breakfast and snacking solutions such as packaged fruit juices.

The brand's mainstay product, Tropicana Pure Premium, is 100% orange juice without any added sugar, preservatives, or artificial flavors. Tropicana Essentials Probiotics also makes that promise.

Dabur have brought different products positioned for different segments — Real Fruit Juice for mothers and children; Real Activ Juice for adults; for the 40+ age group it launched Amla and Jamun juice under its Real Wellnezz range; and for teens, who love the fun of fizz but are also conscious about their health, it launched Real Volo last year.

Tropicana was founded in Bradenton, Florida, USA, in 1947. It is now enjoyed almost everywhere in the world. Carefully nurtured for over 50 years, Tropicana has matured into one of the most respected beverage brands. Tropicana is the #1 brand in packaged 100% Juice* in the world in 2011 in off-trade volume. It is today available in 63 countries. Since 1998, Tropicana has been owned by PepsiCo, Inc. Tropicana Premium Gold was re-launched as Tropicana 100% in 2008.

Tropicana continues to select the best fruit to manufacture high-quality juices and original products, pioneer innovative processes and explore new markets for its products. It is committed to fostering healthy lifestyles by ensuring that its products are naturally nutritious and provide the daily benefits that one needs.

In India, Tropicana comes in two categories: 100% Juices (sold as Tropicana 100%) and Juice Beverages (sold as Tropicana).

Dabur’s Real has gained about 2.5% over other juice brands in India and has even surpassed PepsiCo’s Tropicana according to Nielsen’s data.

“With Rs 1,000-crore in retail sales, Real Juice is the single largest brand for Dabur in the country” The brand has introduced juices based on local fruits such as Mosambi, jamun and amla, and Dabur’s distribution muscle is also seeking to establish the low-priced mango fruit drink, Ju.C.

“Dabur India is increasing its rural focus which is only 3 percent overall” The company already commands about 60 per cent market share of the packaged fruit juice market in India with its Real and Real Activ brands.

Real Juices have been growing at strong double digits over the past five years, much ahead of the industry average.

However as newer brands jostle for space on urban shop shelves, the company is turning to rural markets.

It has been enhancing its rural distribution footprint under 'Project Double', which was initiated few years ago. They have already increased our rural footprint from 14,000 villages about three years back to 45,000 villages in 2014-15. Dabur in the next phase of the project expanded the rural footprint to 60,000 high potential villages.

“Rural demand for packaged juice is on the rise, urban markets still account for nearly 80 per cent of all packaged juice

Dabur’s new sub-brand Ju.C will compete in the bigger fruit drinks market that comprises of Parle Agro’s Frooti, PepsiCo’s Slice and Coca-Cola’s Maaza.

This category is separate from juices and nectars where Tropicana and Real compete This gain in Dabur’s brand market share is due to increasing health awareness.

Time-pressed lifestyles of urban Indians

Agro & Food Processing August 2017

sales across the industry” Réal is a nearly 20-year-old brand and has a dominant share of the branded fruit juice market in India. Réal is the preferred choice of consumers when it comes to packaged fruit juices in India.

A validation of this success is that Réal has been awarded ‘India’s Most Trusted Brand’ status for 8 years in a row. Today, Réal has the largest range of 14 exciting fruit variants under Réal Fruit Power and another 11 offerings under Réal Activ helping it cater to an entire gamut of consumer segments and need states.

ITC is a late entrant in the packaged juice segment, which is largely dominated

by PepsiCo's Tropicana and Real from homegrown FMCG major Dabur. It forayed into the premium packaged fruit drinks market in 2015 with the acquisition of the B Natural brand.

ITC is expanding its juice portfolio with an aim to garner around 20 per cent market share in five years in the packaged fruit juice segment, currently estimated to be around Rs 2,500-crore.

The cigarette conglumerate is looking to capture India’s juice market through its brand B Natural by focusing on regional flavours and offering premium versions of juices available in the market. It has added around 60,000 retailers in its distribution network for B Natural.

The company, which acquired B Natural in 2014 from South Indian firm Balan Natural Food, is looking to launch at least two variants by October this year, including Bel (Wood Apple) and Falsa (Grewia asiatica berry).

ITC is present in FMCG segment at a niche level with all their premium products and in every category they are in premium segments. They need to start targeting the lower mid-segment.”

ITC is looking to ramp up B Natural’s production while it also expands its distribution network.

Penetration of packaged juice is much lower in the south as fresh fruit consumption is a lot higher in south India than here in (north)

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JUICY INDIA

36 India. So ITC is planning this market as a lot more growth (in distribution) is in the south region right now.

Maker of Paper Boat drinks, Hector Beverages more than doubled its sales during year to March 2016 but its losses increased almost four times at Rs 84 crore due to investments in manufacturing and

Paper Boat’s success has been customercentricity: it sources the best quality raw materials from across the country.

Another factor, which has worked well for the brand, is its communication strategy, which had distinctive tone of nostalgia and innocence.

Meanwhile, it is also keeping a close tab on costs. It replaced tetra packs with a flexi pouch that uses just 8gm of plastic as against 25gm for a pet bottle, making it cheaper by at least 50 per cent. Even transportation costs go down with this packaging.

Hector Beverages is a niche player in this segment with its focus on traditional Indian drinks. Its initial success is now attracting bigger players into the segment.

Paper Boat’s competition includes ITC's B Natural and Dabur's Hajmola Yoodley.

higher marketing spends.

The seven-year-old company posted sales of Rs 72 crore for 2015-16, up from Rs 32 crore in the previous year. Its net loss in 2014-15 was Rs 22.6 crore. While last year, Hector Beverages spent about Rs 30 crore to set up its second manufacturing unit in Mysore to cater to southern and western markets.

Hector Beverages also sell energy drink Tzinga, Paper Boat brand of packaged juices and traditional drinks contribute to about 80% of its overall sales.

Paperboat created a new category of branded ethnic-flavoured drinks when it burst on the scene, and its packaging too set it apart from the crowd and its innovative products and packaging have been a force of ‘creative disruption.

Paper Boat’s traditional Indian flavours and its differentiated packaging give sit a unique look at retail stores The company has clearly gone after market share and taken a penetrative approach. Whichever geography they choose, they are going after it very aggressively. It is clear that they want to be a deeply penetrated mainstream product.

Dabur is multiple times bigger than Paper Boat. With them coming out with a similar product as Hajmola Yoodley, speaks volumes about Paper Boat. There is tough competition even from Parle or Pepsi, which are large players. They are competing for the same consumer wallet share directly or indirectly, that the strength of the company.

Hector Beverages has partnered Japanese food giant Indo Nissin Foods to strengthen its distribution and brand presence in tier II cities and rural markets.

Backed by multiple investors such as Sequoia Capital and China's Hillhouse Capital, the company is now focused on reducing its dependence on summer by launching packaged Indian snacks to make sales round the year. Till now, it has raised about Rs 250 crore in funding.

Manpasand Beverages started off with its flagship brand, Mango Sip. Based on mango, India’s favourite fruit, the brand is strategically focused on semi-urban and rural markets.

Leveraging distributor relationships has been one of their marketing focuses. The company offers a scheme to distributors and retailers to purchase cooling accessories such as fridges and iceboxes at discounted prices, which create a value proposition for the retailers. These accessories prominently display the company’s brands and provide a primary marketing and point of sales branding

Agro & Food Processing August 2017

platform.

Manpasand Beverages has the unique distinction of being the sole listed company in Indian beverages sector. The company primarily focuses on mangobased drinks. Mango Sip, launched in 1997, is company’s flagship product, contributing 80 per cent to revenues in FY16 (97 per cent in FY14). To diversify the portfolio, the company launched Fruits Up and Manpasand ORS as well as commenced the marketing of Pure Sip bottled water in July 2014.

“Mango Sip was first made available only in the rural and semi-rural areas as about 80 per cent of population in India lives in rural areas” They noticed a gap in fruit consumption in these areas and sensed an opportunity as there are very minimal differences when it comes to consumption behaviors in terms of rural versus urban. When they started in 1997, the major players (mostly MNCs) were present only in the big cities of India, leaving a gap for tier II and III cities as well as rural and semi-rural areas. This created a looped opportunity and they experimented with products in these areas. Also, Mango Sip was made available in Indian Railways, which is the lifeline of India in terms of transportation.

These moves paid off in terms of establishing Mango Sip (flagship brand) and made Manpasand a credible name in the Indian beverage market (which mostly consists of bottled water, carbonated / aerated drinks, fruit juices, and others).

“Manpasand’s differentiator vis-àvis global MNCs, is lower price point, wider range of packs and a strong rural focus” Under Fruits Up, Manpasand offers premium fruit juices and carbonated drinks in various flavours. Through Manpasand ORS, the company provides fruit drinks (apple and orange flavours) with energy replenishing qualities across north-east India. Fruits Up is currently available in mango, guava, litchi, orange and mixed fruit flavours. Without any synthetic base, Fruits Up is made up of natural ingredients and contains more fruits content – 5-10 per cent in the carbonated form and 16-17 per cent in the premium juice range.

Earlier this year, the company developed another healthy product called Coco Sip – 100 per cent natural packaged tender coconut water – targeting the huge untapped coconut drink segment as most

JUICY INDIA

thereby help the farmers to cultivate more in fruits and can generate profit. These kinds of initiatives are also expected to promote the inclusion of real fruits in the packaged juices available in the Indian market.

of the coconut drink market in India is catered to by the unorganised players and non-branded products. The company plans to aggressively expand capacities during FY16–18.

Manpasand Beverages have been forming key alliances with various domestic and global companies to further this ambition.

The company has tied up with leading food & restaurant chains including Havmor, Barista, Baskin & Robbins, Metro Cash & Carry, etc., along with 2,000 modern retail format stores and is in advance talks for tie ups with many multinational food chains and retailers such as Reliance.

“Manpasand will continue to increase our significant presence in the rural and semi-rural markets, and have also started aggressively tapping into the urban markets where their presence was minimal until recently.”

Conclusion According to “India Juice Market Overview”, the juice market in India registered a CAGR of 15-20% in the last six years. India is known to be a fruit basket of the world and has been considered as the second largest producer

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of fruits after China.

The fruit and vegetable processing industry in the country is highly decentralized, having wide capacities.

The wastage of fresh fruit, produce has been estimated to be of a very high order in India, i.e. around 30-35% of the total production during harvest, storage, grading, transport, packaging and distribution because of the challenges involved in the industry.

Prime Minister of India, Narendra Modi recently proposed the big players like Coca-Cola and Pepsi to add 2% of fruit content in the aerated drinks, which will

The segmentation in the Indian juice market is done on the basis of fruit content like fruit juices, fruit drinks and nectar drinks. Fruit drinks dominate the market with more than half of the market share. Street vendors find this product feasible as the product comes cheap and viable. The consumers of India are price sensitive and go for the cheaper options without realizing the side effects.

However, with the increasing awareness about the deteriorating health due to such drinks, the market is expected to decline in the coming five years. Top players are working rigorously on fruit drinks that contain 100% juice content. The health conscious people are also shifting from the fruit drinks to the fruit juice segment as it is healthier and does not contain added preservatives or artificial flavours.

DEEP-ROOTED

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MTS foods the one-stop shop for specialised solutions- peeling, cutting, sorting and conveying

M

TS FOODS is a reputed company in India with a dedicated team to service different gamut of equipment required for the food industry. The company has a multidimensional team of experts, young & experienced who cater to most celebrated names in the industry. Indian food sector has emerged as a growing and profitable sector because of its immense potential for value addition, particularly within the food processing industry. Currently food industry is valued at US$ 39.71 billion is expected to grow at a CAGR of 11 per cent to US$ 65.4 billion by 2018 and MTSFOODS is boosting this growth rate with its services.

MTS has gained invaluable experience in the food industry. This experience has translated into designing, supplying and servicing state-of-the-art equipment for their esteemed clients. At MTS, most important objective is to offer valueadded consultancy services for various food industries post harvesting. The commitment to quality has generated a host of leading clients from the food industry. To supplement the exceptional services offered by MTS, they supply a wide range of equipment for the food industry. MTS has a fully equipped testing lab in Bangalore promoted by FAMINDIA with all various models of machines from FAM. Innovation and advanced machine design are two words normally associated with FAM®. Company Director Krishna Kumar Menon popularly called KK in the industry circles shared his experiences of MTS successful journey.

Please brief us about your experience with the Indian-Agro and Food processing industry?

Having over three decades experience in Indian food industry, I have spent nearly twenty-three years working for large corporate and Fortune100 companies.

One of my last assignments was that of a Director of Operations Development - Asia. In the last few years as an entrepreneur, I have seen the Indian food industry’s true potential and am confident in its exponential growth in coming years.

Positive steps taken by the government like FDI and GST has only reiterated my conviction. I have only scratched the surface of this industry and am excited to discover more.

What services you provide to the said industry?

India’s agricultural practises are unique.

With millions of farmers cultivating small pieces of land, the country’s produce has very high variability. This makes it hard to compare India’s produce to that of other countries’. As a result, our nonmechanised harvested produce may be inconsistent but tends to be much cleaner.

My job comes in at the processing phase where I identify these differences between international and Indian produce.

Identifying these differences, I adapt the machinery manufactured by international OEM’s to suit Indian produce and create products that are similar if not superior to the international standards. Mtsfoods adopts a structural way of marketing and sales, service, application development, running demo labs and guiding the principals to understand the challenges of India’s emerging business environment.

You have some of the world’s best food processing solutions. What are they?

MTS foods works in providing solutions for processing post-harvest produce up to packaging. In this niche field of work, we focus on four major areas - peeling, cutting, sorting and conveying. Since these applications complement each other; it makes MTS foods the one-stop shop for specialised solutions. In these fields, we are associated with the global market leaders, thus making us leaders in our work.

How have your associations been with your principals so far?

MTS foods started off with a handful of companies that we represented and I am proud to say that these have been great partnerships. Over the years, we have grown with these companies and expanded. With our principals investing in India in terms of technological support, our association has become more dynamic with them. We have grown to be the most important market globally for some of these companies.

We have observed that you have

Agro & Food Processing August 2017

been sticking with limited number of principals from the beginning unlike others who keep adding new companies, sometimes losing them. Your thoughts.

My approach to the industry is driven more by passion rather than commercial considerations. I highly value my relationship with my principals and customers.As mentioned before, realizing the unique nature of the Indian food industry, I have recognized that the role of an agent works very well in the western market and is not practical in an emerging market like India. Here, MTS foods needs to function more as a partner or an extended arm of our principals by taking full responsibility from application development to final successful production running of the equipment at our customers’ plant. Thus, there is a huge time and effort being invested into each company that we work with. I believe it to be unfair to represent too many companies as it will diminish the quality of work MTS foods has strived so hard to achieve. We take pride in the strong relationship that we have built with every one of our principals and companies.

This is proven by the fact that we have continuous businesses with each of our key customers.

Furthermore, my long term vision is to see that all my principals start their own Indian entity and invest in India. This will allow them to grow faster and use India as a manufacturing hub for the rest of Asia. My ultimate goal is to see those legal entities become the market leaders in India. I am proud to say that one of my principals has already started a legal entity and am humbled to mention that they have appointed me as the Director on the Indian board.

We have seen that many of your employees are now part of your principals’ company. What made you come to this decision?

This decision may not make commercial sense from a business point of view for MTS foods, but makes a lot of sense from a relationship point of view with our principals. Mtsfoods has a set of passionate employees and I have always looked after their interests. At this point, I do not think MTS foods can provide them with the exposure in their career that an MNC can provide. This decision was made in a way, to thank them for their efforts to build our company. That being said, they are still part of the MTS foods family and their work has not changed.

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NO FALSE CLAIMS!

40

HOW TO STOP MISLEADING CLAIMS FOR FOOD PRODUCTS?

A

s per Food Safety and Standards Act, 2006, Section 3(d), Claim means any representation which states, suggests, or implies that a food has particular qualities relating to its origin, nutritional properties, nature, processing, composition or otherwise.

If the food has the particular qualities, then there is no prohibition to advertise the same through any audio or visual publicity, representation or pronouncement made by means of any light, sound, smoke, gas, print, electronic media, internet or website, any notice, circular, label, wrapper, invoice or other documents. Whether the food has the particular qualities has to be substantiated

by Scientific studies by reputed scientific institutions.

As per Section 24 of the FSS Act, 2006, no advertisement shall be made of any food which is misleading or deceiving or contravene the provisions of this Act, the Rules and Regulations made there under.

No person shall engage himself in any unfair trade practice for purpose of promoting the sale, supply, use and consumption of articles of food or adopt any unfair or deceptive practice including the practice of making any statement, whether orally or in writing or by visible representation whicha) falsely represents that the foods are of a particular standard, quality, quantity or grade- composition; b) makes a false or misleading representation concerning the need for, or the usefulness; c) gives to the public any guarantee of the efficacy that is not based on an adequate or scientific justification thereof.

Provided that where a defence is raised to the effect that such guarantee is based on adequate or scientific justification, the burden of proof of such defence shall lie on the person raising such defence.

As per Section 53 of the FSS Act, 2006, there is provision of penalty for misleading advertisement also. Any person who publishes, or is a party to the

Pradip Chakrobarty

publication of an advertisement, whicha) falsely describes any food; or b) is likely to mislead as to the nature or substance or quality of any food or gives false guarantee, shall be liable to a penalty which may extend to ten lakh rupees.

In any proceedings, the fact that a label or advertisement relating to any article of food in respect of which the contravention is alleged to have been committed contained an accurate statement of the composition of the food shall not preclude the Court from finding that the contravention was committed.

Most of the contravention has been found to be made on bogus claims without any scientific justification. It is not that claims are not permitted for food products.

As per Food Safety and Standards Regulations (Packaging and labelling), Section 2.2.2(3), 1) " Health Claims " means any representation that states, suggests or implies that a relationship exists between a food or a constituent of that food and health and include nutrition claims which describe the physiological role of the nutrient in growth, development and normal functions of the body, other functional claims concerning specific beneficial effect of the consumption of food or its constituents, in the context of the total diet, on normal functions or biological activities of the body and such claims relate to a positive contribution to health or to the improvement of function or to modifying or preserving health relating to the composition of a food or food constituents, in the context of the total diet, to the reduced risk of developing a disease or health related conditions; 2) " Nutrition Claim " means any representation which states, suggests or implies that a food has particular nutritional properties which are not limited to the energy value but include protein, fat, carbohydrate, vitamins and minerals; 3) " Risk Reduction " in the context of health claims means significantly altering a major risk factor for a disease or health related condition; In spite of all these clear-cut provisions in the various sections of the Food Safety and

Agro & Food Processing August 2017

Standards Act and rules and regulations made there under, we find a number of food products are being sold in Indian markets with misleading claims either on the label or in the related advertisement.

Consumers are being cheated with very little remedy as the enforcement structure of the Food Safety and Standards Authority, both at the Central and State governments, is very poor.

As per Section 29 of the Food Safety and Standards Act, 2006, the Food Authority and the State Food Safety Authorities shall be responsible for the enforcement of this act. Barring a few state authorities in India, most of them are almost defunct or inactive, particularly Eastern and North-Eastern States. Due to this, very few action have been initiated by the authorities to impose penalties against these food business operators.

Misleading label claims is a concern for the food authorities in the country. Even the big multinational food companies have been found to resort to this unfair trade practices to augment sale of their products. Regulatory head of some of the companies are of the opinion that unless they put some catchy claims, their marketing team finds it difficult to sale their products.

A popular children's health drink had the label claims that it ensures increase of height of the children by 2 inches and helps in brain development. Increase of height by 2 inches by consuming health drinks daily has no scientific evidence and absolutely absurd.

When this was challenged by the FSSAI, the company withdraw the claim that it ensures increase the height by 2 inches but they put forward scientific studies in respect of brain development as the product contains DHA as one of the constituent which helps brain development.

One of the company have been selling Besan, a product obtained by grinding dehusked Bengal gram, which is in no way connected with heart health, with a picture of human heart on the label.

This gives the impression that Besan helps heart health. The company was

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NO FALSE CLAIMS!

42 prosecuted and penalty imposed on them for misleading claim and they had to withdraw the picture of the heart from the label.

Even one reputed brand used to sell Atta, Maida and Besan as Arogya Atta, Maida and Besan. When the state food safety authority started prosecution against them that " Arogya " means free from disease and no Atta, Maida and Besan can ensure Arogya, they were compelled to withdraw the name Arogya from the label.

as diabetes care to help control diabetes are not justified. The manufacturer has been advised to validate these claims by some other independent organisations.

It is well known that the blood glucose in diabetes is increased due to either insulin deficiency or resistance to insulin uptake by tissues. The hyperglycaemic condition has to be managed by administering either insulin or oral anti diabetic agents in combination with diet management and appropriate exercise. However, some companies are selling diabetic atta which gives the impression that by consuming the product prepared from this atta, diabetes can be controlled which has no scientific evidence.

The company has been directed by the FSSAI to withdraw the said misleading claims/ advertisements from all forms of advertising media within seven days, failing which action will be initiated against the company under Section 53 of the FSS Act, 2006.

Even the manufacturer of a blended cooking oil containing 20% sesame oil and 80% rice bran oil claims that the blended oil will help in controlling hyperglycaemia and related complications, hypertension and hypercholesterolemia in diabetic and hypertensive patients. In addition to this, consumption of this oil also reduces blood glucose levels. The manufacturer made a claim that the oil helps in diabetic care and the oil can be used " To help control diabetes ".

All these claims are based on the results published in two research papers, one conference abstract and a patent filed by the manufacturer. It concludes that a blend of sesame oil and rice bran oil lowers blood pressure and improves the lipid profile in mild to moderate hypertensive patients. On the basis of this study reports, the company started manufacturing and selling blended vegetable oil, without informing FSSAI. When the complaint was lodged by someone to the Food Authority that the company not only made the claim in the label but also gives advertisement promoting the oil, the Food Authority issued notice to the company. Since these types of claims/ advertisements may influence the diabetic patients / consumers to believe that by consuming this type of products, one can overcome the problems of diabetic complications, the claims such

Diet counselling for individuals with diabetes or any chronic diseases must be done by professional dietician or physician in a holistic manner and not by claims on the label / advertisements by food companies taking in isolation any one food ingredient such as oil.

Misleading label claims/ advertisements are very common for health supplements, nutraceuticals etc. FSSAI has notified Regulations for Health Supplements, Nutraceuticals, Foods for Special Dietary Use, Food for Special Medical Purpose, Functional Food and Novel Food. In this regulation also, claims have not been denied. Every food business operator (FBO) may make nutritional or health claims in respect of an article of food.

For the purposes of this regulations, health claim means any representation in respect of an article of food that states, suggests or implies that a relationship exists between the constituent of that nutrient or nutritional health and specific disease conditions.

The health claim in respect of an article of food consists of the following two essential components, namely: 1) nutrient or nutritional ingredients; 2) health related benefits.

The health claim in respect of an article of food may include the following types but not limited to 1) ingredients (nutrient or nutritional) function claims; 2) enhanced function claims 3) disease risk reduction claims 4) health maintenance claims 5) immunity claims- increased resistance (excluding vaccines) 6) anti- ageing claims.

The other claims in an article of food that are not drug claims may be allowed subject to prior approval of the Food Authority.

For the product led claims in respect of

Agro & Food Processing August 2017

an article of food based on human studies with evidence based data, regard shall be had to 1) the use of word " shown " when a single human intervention study shows significant benefit 2) the use of word " proven " when more than one human intervention studies or epidemiological evidence on Indian population have been provided with current validity.

In spite of these clearcut guidelines in the regulations, we find that a number of products are being sold in the market with misleading label claims/ advertisements.

The unscrupulous food companies are cheating the consumers by charging extra bucks for these claims.

The Department of Consumer Affairs (DoCA) is one of the two departments under the ministry of Consumer Affairs, Food and Public Distribution. The mandate of the department is consumer advocacy. In its endeavour to address the problem of misleading advertisements, the Department of Consumer Affairs has launched the portal (Grievances Against Misleading Advertisements) for registering on line complaints.

Tackling unfair trade practices and misleading advertisements requires mobilisation of all agencies viz. State Governments, Voluntary Consumer Organisations, Grahak Subidha Kendras, Advertisement Standards Council of India (ASCI) and various such organisations.

As per information shared by the Government of India in the Lok Sabha, between 2013 and 2016 ASCI found more than 500 instances of advertisements in electronic media that were making misleading, false and unsubstantiated claims. However, a lot needs to be done to protect the consumers. Instead of waiting for the complaint lodged by the consumers, they should start action suomoto against these misleading claims by visiting supermarkets, collect samples of the food products, including health supplements. Food Authority and state food safety authorities should also strengthen their enforcement structure to curb this menace.

(Writer is Former Director, FSSAI) Email: pradipchakraborty91@yahoo.com

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EXPERT VIEWS

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J

BT FoodTech (John Bean Technologies India Pvt Ltd) has a large global presence where there are several opportunities to work with products and solutions from beginning to end, collaborate across multiple divisions.

It continually invests in technology and innovation through technical centers, R&D efforts and staff of technical sales and service engineers. Company is ranked one of the top suppliers of bestin-class food processing solutions in the world. Together with highly trained professionals, the company has the right expertise to respond to ever-changing conditions that affect the world’s largest food processors, suppliers and fastfood chains, as well as institutional and commercial restaurants. From solution development to installation and service, the team has the unique opportunity to work with products from beginning to end. With a local presence in over 75 countries, they are always looking for innovative professionals in all fields, ranging from business administration to engineering to operations.In a recent interaction Uday Sant – Director, John Bean Technologies India Pvt Ltd shared his views about the growing segment of frozen food market in industry.

What is the current scenario of frozen foods market in the industry?

The scenario looks very promising and active. The select pockets driven by export markets for products covering seafood, ready meals (snacks) and India breads has been flag bearers.

What factors will be attributed for the growth rate of frozen foods industry?

The factors are really varying and industry specific. For example, the increasing

Technological advancements today are very evident in Frozen Foods industry production in seafood is mainly attributed to the unique competitive position India has today compared to other competing markets like Vietnam, Thailand and Indonesia. For other markets the increasing acceptance and popularity, that Indian cuisine is witnessing results in the increasing demand for the Indian products prepared in the authentic style.

The other significant factor has been the very active role government is playing by extending “real” support by the way of promoting food parks and various subsidy schemes to kick start the industry and improve industry attractiveness.

How important is it to maintain good cold chain for frozen foods especially in tropical country like India?

Cold chain is very critical in frozen industry irrespective for the finished products. What really is significant for Indian tropical scenario is cold / chill chain for the product at harvesting / raw material stage to preserve originality of the products in taste, texture and nutritional value before it can be processed and frozen.

The Increasing production in Indian sea food is mainly attributed to unique compitetive position, India has today compared to other compiting markets.

Describe the technological advancements that have taken place in this industry?

The technological advancements today are very evident right from harvesting till distribution including logistics. The various technologies available to handle, distribute and preserve the products throughout the chain is seeing advantages in terms increased efficiencies, much higher reliability of the technology.

There is increasing possibility to monitor and support performance parameters

Agro & Food Processing August 2017

remotely, which directly influence the quality and costs of the products today with minimal incremental investment.

How do you view the future market for frozen foods?

The frozen food industry today is at a very nascent stage at least domestically in India on any parameters that we measure in terms of level of processing, stage in value adding ladder etc. The increasing domestic demand (particularly institutional) is helping the industry achieve steady growth rates though on a very small base. The technological advances and access to information and global trends are helping consumer and processors alike to participate in growth of the industry. There are more products being evaluated to be preserved and processed using freezing as a method of preservation like dairy, bakery, potato products etc. The wider base on application of this technology together with deeper penetration in traditional areas is contributing to the overall growth of the sector.

Give a brief about the challenges in the frozen food industry?

The challenges in the frozen food industry can be unique as well as general like infrastructure, power availability which is more critical when it comes to maintaining cold chain. The challenges are also general in nature for the food industry mainly related to variation in quality of the raw material posing challenges in achieving economy of scale.

The challenges related specific to frozen products are more related to consumer perception on the freshness and quality of frozen products. The viability and industry attractiveness would only further increase as the potential in huge domestic retail market is unleashed, related mainly to the consumer acceptance of the frozen products.

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Sesotec India Pvt. Ltd.

(Formerly S+S Inspec on India Pvt. td.)

S. No. 81/3/2, NDA Road, Dangat Industrial Estate, Next to Agarwal Godown, Shivane, Pune Maharashtra – 411 023 Tel.: 020- 25293582 /3/4/5 Web.:www.sesotec.in Email: makarand.mandke@sesotec.com, info.india@sesotec.com

GST BITE

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Biscuit Industry in Doldrums due to GST

T

he biscuits and cookies industry in India, valued at INR 145bn (USD 2.41bn) in FY 2014, has been growing at a CAGR of 10% over the last three years. It is estimated that the industry will be worth approximately INR 279bn (USD 4.65mn) by FY 2019, growing at a CAGR of 14%. However, growth of this segment is expected to slow down after current Goods and Service Tax (GST) recently imposed on the industry.

In a recent survey made by Agro & Food Processing Times, most of the biscuit manufacturers think that uniform GST slab will slow down CGAR of the industry. Manufacturers fear that latest imposition of 18 per cent GST not only came as jolt but prices may impact after a slap of high tax.

Effect of the biggest economic reform has begun as tension wrinkles are clearly seen on the various industry players after the first quarter results (April-June). GST

impact could be seen on the first quarter results of Britannia industries wherein the company went down by 1.4 per cent i.e 216 crores. Experts believe that the effect of Q1 Britannia’s business will eventually affect the prices of different biscuit variants and several other companies may go for price hike. After the regular slowdown of their business, the Rs. 36,000 crore Indian biscuit industry has urged the government to waive low price high nutrition (LPHN) biscuits under maximum retail price Rs.100 per kg from GST. Biscuit manufacturers believe that issues are not surface issues, these are deep issues which need to get resolved because a lot of customers are still struggling after GST implementation.

However, industry players are surprised on the exemption given to bread industry.

Biscuit and GST The GST Council’s decisions to tax all varieties of biscuits at a uniform tax of 18 per cent has taken the industry by surprise, which had been aggressively lobbying for

Agro & Food Processing August 2017

a lower tax rate especially for glucose and lower-priced biscuits. Similarly, the two-tax slab rate structure under GST for footwear has evinced mixed response from the industry.

Latest imposing of 18 per cent GST came as jolt to biscuit makers, who have already been reeling under Low margin pressure owing to surge in raw material prices such as wheat flour, sugar, oil, etc.

The biscuit industry in Telangana mostly from Katedan industrial area, a major hub for biscuits and confectionary manufacturing in the country, seeks GST exemption. While expressing its concern over the increased tax burden, Telangana Biscuits, Wafers Confectionery Manufacturers’ Association (TBWCMA) has decided to make a representation to the Centre.

So far, it’s four per cent excise duty and 14.5 per cent sales tax, says Shriprakash Loya, adviser to TBWCMA and former

47

GST BITE

48 president of Federation of Biscuit Manufacturers of India. “Excise duty was exempt for biscuits up to Rs100 per kg.

Adding to this, sales tax above 14.5 per cent makes a total tax component of 18.5 percent on biscuit makers. Now, GST is fixed at 18 per cent.

Now, excise duty exemption upto Rs100/ kg has gone under GST regime. This is another burden in addition to 18% GST. We demand total GST exemption.

Biscuits are common man’s food.

We request the Centre to exempt biscuits from GST,” Loya told.

The rise in raw materials prices and packing material costs is taking a toll on the biscuit makers.

“Of course, we get input credit under GST. Those under less than Rs100 per kg excise duty exemption are not getting input credit. No excise duty for units upto Rs three crore, but only 25 per cent biscuit manufacturers fall below Rs3crore threshold,” adds Loya.

Adding to this, the cost of production has surged significantly. Since corporate majors do bulk business, in both sales and purchase of raw materials, they get bigger discounts. But small and medium manufacturers don’t have such privilege and running on thin margins, he said.

The GST Council’s decisions to tax all varieties of biscuits at a uniform tax of 18 per cent has taken the industry by surprise, which had been aggressively lobbying for a lower tax rate especially for glucose and lower-priced biscuits. The biscuit industry has pointed out that the effective tax on biscuits priced below. 100 per kg works out to be at 8-9 per cent and so the tax incidence will go up significantly for these companies.

Mayank Shah, Category Head, Parle Products said, “Given the rise in input costs and slim margins in the lowpriced biscuits category, companies will be forced to increase prices. Biscuit companies will have no motivation to operate in the below ?100 per kg category as it will be difficult to make any money in this segment.” He added that this is a price elastic segment, so it will be

challenging to even increase prices as it will impact demand for these products.

Sources said that the companies were expecting the GST rate to be at 12 per cent for premium biscuits and the glucose biscuits and lower-priced biscuits to be taxed at 5 per cent.

Kanchan Zutshi, Secretary, Federation of Biscuits Manufacturers of India, said “With nearly 93 per cent of the food basket comprising basic food, being exempted or taxed at lower GST rate, we were hoping that the anomalies in taxation structure on biscuits will be corrected.”

More than 240 small scale units manufacturing the Mubiquitous glucose biscuits may face closure if the government decides to tax the healthy nutrition source of the poor at a higher rate.

The Biscuit Manufacturers Welfare Association (BMWA) has petitioned Finance Minister Arun Jaitley to exempt low price high nutrition glucose, marie and milk biscuits from the ambit of Goods and Services Tax. “We have no objection if premium biscuits sold at Rs 100 kg and above are put in the 18% tax bracket,” said Mayank Shah, vice president of the Biscuit Manufacturers Welfare Association.

As per the current tax regime, the government does not charge any excise duty on biscuits that are priced below Rs 100 per kg. But various state governments levy a value added tax of up to 12.5%.

Low priced biscuits account for 52 % of the total 36 lakh tonnes of biscuits production annually. In terms of value Rs 13,850 crore worth low price biscuits are sold every year as against the Rs22,150 crore turnover of the premium variety.

“We operate at very low margins ranging between 2% and 3%. These are easily washed out by a surge in sugar, wheat and vegetable oil prices,” Haresh Doshi, President of the BMWA said.

The BMWA said as many as 240 big factories that manufacture only lowpriced biscuits will be forced to down

Agro & Food Processing August 2017

shutters if the government decides to tax them at higher rates. Glucose biscuits were retailing at Rs 40 per kg in 1996 and after 20 years cost Rs 70 per kg.“There has been an increase of 225% in input costs, but we have passed on only 75% to the consumer,” Doshi said.

Contending that their biscuits are hygienically produced, he said any hike in the prices on account of high taxes would lead to a shift in demand to poor substitutes that are manufactured without adherence to quality and nutrition norms.

Doshi argued that the biscuit industry contributes Rs 3000 crore to the exchequer annually and in no way, want to shirk from the responsibility. “But, premium biscuits such as oatmeal, cream, cheese and dry fruit cannot be taxed at par with low-priced biscuits,” Doshi said.

GST impact Britannia Q1 profit falls 1.4% Biscuit maker Britannia Industries Ltd’s net profit declined marginally in the AprilJune quarter due to a short-term impact from the government’s implementation of the goods and services tax (GST) that led to destocking of goods among traders.

Britannia’s net profit for the period fell 1.4% year-on-year to Rs216.12 crore, according to the firm’s filing with the BSE on Monday. Revenue rose 6.21% to Rs2,375.01 crore. The Bengalurubased company’s net profit missed analysts’ expectations of Rs217.5 crore, but revenue beat estimates of Rs2,226.7 crore.

“It has been a good quarter in the face of challenging market environment and de-stocking in trade due to GST. While GST has created a short-term impact, it is expected to generate a positive momentum going forward,” Varun Berry, managing director of the company said in a statement.

Britannia, in particular, also had to deal with a different kind of issue arising from GST. The company has gone to court against its distributors in Kerala alleging that they resorted to unfair trade practices

49

GST BITE

50 to extract higher margins after GST Hike in Prices Glucose biscuit makers such as Parle Products, owners of the iconic Parle-G brand, are likely to raise prices as biscuits below Rs 100 per kg have been slapped with 18 per cent goods and services tax (GST).

Industry experts believes that because of goods and services tax (GST) it was very difficult to take price hikes because no one was sure about what the GST rate is going to be. Then obviously because the GST was tax neutral for, there was no reason for to even take a price increase straight after GST. Inflation has been about 6 per cent. So, there is a delta between the inflation and the price that we have got which we will have to bridge over the coming months.

The effective tax rate paid by players in this category is 9-10 per cent at present.

The GST Council decided on doing away with the variable tax structure that prevailed on biscuits, bringing biscuits below and above Rs 100 per kg at par. So biscuits above Rs 100 per kg, much like those below Rs 100 per kg, will have 18 per cent GST. Premium biscuits or those above Rs 100 per kg have an effective tax rate of 1617 per currently. While companies such as Britannia and ITC that focus on the premium end of the biscuit market are happy, those focusing at the lower end are unhappy, according to sources in the biscuit sector.

Price hikes in the glucose category are expected to be in the region of 2-3 per cent to begin with, given that this segment, which constitutes 23 per cent of the Rs 26,000-crore domestic biscuit market, is price-sensitive.

“We are disappointed with the GST rate announced.

This goes against the principle of social justice, where the poor will carry the burden of additional tax and those who are well-off will not," Mayank Shah, category head, Parle Products, said.

biscuits.

Shah said the Biscuit Manufacturers Association, an apex body of biscuit makers in India, was expected to make a representation to the government given that there were 700 units in the country that made glucose and other low-priced

Parle Products derives a third of its revenues from the glucose category, the percentage is small for players such as Britannia. The latter, along with ITC Foods, has been focusing its attention instead on cream biscuits and cookies, which are higher-priced and considered premium in nature.

Biscuit manufacturers seek exemption under GST The Rs. 36,000 crore Indian biscuit industry has urged the government to waive low price high nutrition (LPHN)

biscuits priced under maximum retail price Rs.100 per kg from Goods &

Agro & Food Processing August 2017

Services Tax (GST).

“LPHN biscuits are the only hygienically produced affordable snack sold in small packs retailing at Rs. 2-5. Consumed mainly by low income group, any increase in price of LPHN biscuits causes a direct reduction in demand. While there is a 62 per cent weighted average hike in input costs (maida, sugar and vegetable oil) over the last decade the manufacturers have been unable to increase their realisation pro-rata,” said Mayank Shah, Vice President & Spokesperson of the ‘Biscuit Manufacturers Welfare Association’.

Glucose biscuits offer consumers 72 kilo calories/per rupee compared to 55 by bread, 18 by potato chips and 29 by namkeens. All three enjoy concessional rate of taxes. A 70-gram pack of glucose biscuits which retails at Rs. 5, offers 315 kilo calories, about 16 per cent of the daily dietary recommend allowances by the government.

Last year, the biscuit industry procured agriculture produce worth over Rs. 13,300 crores. Sugar prices have more than doubled in the last decade and current wheat flour and vegetable oil prices make net margins on LPHN biscuits reduced to just 3 per cent. Fear of an advent of negative margins phase forces manufacturer to curtail production leaving demand un-satiated. Glucose biscuits retailed at Rs 70 per kg attract net taxes of Rs. 7.21 which is higher than the value addition earned by the industry (Rs. 7.01only) “The government may tax all premium biscuits as they deem fit and we are a highly compliant industry with last annual contribution to the exchequer at Rs. 3,075 crores. However, on behalf of over 600 manufacturers of LPHN biscuits retailed at up to MRP of Rs 100/- per kg, we urge the GST Council to completely exempt LPHN biscuits from taxes,” added Shah.

Conclusion It will take a little bit of time.

These issues are not surface issues, these are deep issues which need to get resolved because a lot of customers are still struggling on GST implementation.

51

SAFETY EXCELLECNE

52

Systems of TEPL are based on the latest techniques and offer world class quality Today the Technofour group takes pride in their products. Apart from possibly the best Eddy Current NDT systems in the world, the group has three other major lines of business: Highly sophisticated metal detectors for pharmaceutical, cosmetic, food and other industries; Check-Weighers systems and mechanical handling systems and robotics.

F

ood processing industry is one of the largest industry in India and ranked 5th in terms of production, consumption and export. Earlier, food processing was largely confined to the food preservation, packaging and transportation, which mainly involved salting, curdling, drying, pickling, etc.

However, over the years, with emerging new markets and technologies, the sector has widened its scope. It has started producing many new items like readyto-eat food, beverages, processed and frozen fruit and vegetable products, marine and meat products, etc. It also includes establishment of post-harvest infrastructure for processing of various food items like cold storage facilities, food parks, packaging centres, value added centres, irradiation facilities and

modernised abattoir.

Asia Pacific is one of the fastest growing markets for food processing equipment.

The market is driven by increasing demand of processed food products in emerging and developing countries including India, China, Indonesia and Thailand. In Asia Pacific region, China accounts for the largest market in food processing equipment. The total market size of the Indian food processing industry is expected to be reach around USD 350.0 billion by 2018.

Forty-five years ago, four young brains Observed this growth, and came together with one daunting mission: to design and build an entire range of world class sophisticated Eddy Current nondestructive test systems.

Agro & Food Processing August 2017

Technofour have now diversified into Ultrasonic Flaw Detectors as well as Barkhausen Emission Analyzers.

Technofour take pride in introducing the World's smallest credit card sized Eddy Current instrument - the EddyUSB, Ultrasonic flaw detector UTUSB and the World's first Bluetooth enabled instrument, the EddyBLU. The Metal Detectors are widely used for detecting the external metal contamination in the finished product. The metal contamination may be sourced from raw material, during process, maintenance work, human error, etc. “The company also introduced Pin Hole Detector and Dedusters system decade ago, especially for the Pharmaceutical segment. These systems are also Indigenous and based on the world class techniques. All the systems manufactured

by Technofour are based on the latest

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121, 1st Floor, Rassaz Multiplex, Station Road, Mira Road (E), Dist Thane - 401 107, Maharashtra.

Ph. : +91-22-28115068, 28555069, 8689979988 Email : info@agronfoodprocessing.com www.agronfoodprocessing.com

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SAFETY EXCELLECNE

quality and full-fill all the norms required internationally”, said Subramaniam.

He added that clients come to us with new requirements asking if we can develop certain machinery with a particular requirement and we do it with dedication and honesty. “Well from the sales part we are known to be a Technocrat Company, technically very strong but feeble in commercially marketing ourselves. But through word of mouth we have been able to cater our customers and get exceptional business. This very aspect of Technofour has given it all the publicity it needs to stand out in the market” he said.

State of Art Technique, offering the latest features - which are at par with the global market”, Suresh Subramaniam, General Manager Technofour.

About Technofour Technofour is situated at the outskirt of Pune city, Maharashtra, India, spread in about 7 Acres of land with Excellent manufacturing facility. In a four-shed construction company manufactures 30 to 35 check weighers and 30 dedusters per month. Apart from this about 30 handling systems are manufactured in a month.

As the demand of Technofour products is increasing drastically company plans to double production capacity within a couple of months.

Technological Advancements Due to advancements in technology related to food processing equipment, many manufacturers in food industry are replacing their older machines with newer ones, which are more efficient and boost their bottom line through higher throughput. These requirements of the food regulators and the industry’s practical vibration controls are completely fulfilled

by Technofour. All the functions and technology of company’s equipment’s are at par with all the Europeans and US systems that are present in market and are fulfilling all the global guidelines.

Technofour meeting the demand of food safety Earlier food safety was not such a big issue in Indian food industry, and neither was the use of the metal detector. These issues were only prominent in the multinational

companies who were very dedicated with their principles. But now FSSAI, consumer forums, consumer awareness and development of technology, the Indian manufacturers – both big and small- are becoming sentient. Even small manufacturers think of incorporating metal detectors in his machineries before staring manufacturing and Technofour is fulfilling the audit requirements.

The Technofour group takes pride in their products. Apart from possibly the best Eddy Current NDT systems in the world, the group has three other major lines of business: Highly sophisticated metal detectors for pharmaceutical, cosmetic, food and other industries; Check-Weighers systems and mechanical handling systems and robotics.

Customer Satisfaction Systems manufactured by Technofour are based on the latest State of Art Technique, offering the latest features which are at par with the global market today. “Whenever we used to participate in International exhibitions, people used to remark on our finishing and astatic.

Technofour acknowledged that though our parameters were up to the mark technically but we needed to work on our systems superficially. We took this as a challenge and worked out on the modes of fabrication, the ease of fabrication, so that the welding and joints were not visible. On the finishing part, we worked on every minute detail so that our detectors, weighers of dedusters were no less than any global competitors. Now, the systems of TEPL are based on the latest techniques and offer world class

Agro & Food Processing August 2017

Industry Response Technofour sell its machineries to the best of the manufacturers in both food and Pharma industry; In fact, our buyers include multinational companies who have always preferred imported equipment but now are buying our machinery. Sharing his experiences of InterPack exhibition recently held in Germany, Company G.M told that the Europeans were very impressed with our equipment especially its quality, look and cost. And now they are all set to buy our machines and we are all set to increase our export market. “Moreover, our machineries are offered with ease of operation and maintenance. The excellent after sales support arrangement across the globe is an added value for the customers globally”, said he.

Expansion Plans Technofour is all set to double the manufacturing as soon as possible. In a interaction Suresh Subramaniam told that the company have the infrastructure and space which can be used immediately for manufacturing, Other than that we have not thought ahead of that, said he.

Manpower Out of 240 manforce working here, 70 per cent are engineers. Even the directors and managers are highly educated and competent in research and development. Technofour holds its expertise in their respective field with well qualified staff and dedicated team.

Systems manufactured by the company are considered for better quality and performance - in the country and globe.

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MEAT SQUABBLE

56

The upending Indian meat Industry

I

ndia earns around $4bn a year from exporting beef, and last year was the world’s biggest exporter of the product. But nearly all of it comes from buffalo, not cow. And that is the truth.

But India’s paradoxical relationship with beef took a new turn last month, when the Ministry of Environment imposed a ban on the sale of cows and buffaloes for slaughter at animal markets. The ruling was issued with immediate effect, on the ground of preventing cruelty to a class of animals that defines oxen and even camels, as well as water buffalo and cows, as “cattle”.

Cow slaughter has been banned for decades in India because of the cow's traditional status as a respected creature in Hinduism the largest religion in India.

In some cases, penalties for slaughter can be equivalent to five times the price of the animal slaughtered, or as severe as life in prison.

Despite a huge meat trade in India, only boneless meat of buffalo, goat, sheep and birds are permitted for exports, whereas exports of beef (cow and calf) are prohibited. Some states have extended the ban to bulls and oxen because lawmakers say they should be protected and used for farming. But consecutive droughts have caused farmers strife and they want the ban lifted.

“Since the late 2000s, India’s exports of beef -- in this case, water-buffalo meat, a cheaper, lower-quality meat have expanded rapidly, making the country the world’s largest beef exporter by 2014, accounting for 20 per cent of trade in the commodity” This growth was predicated on the rising demand for relatively low-cost meat in developing nations, India’s large and mostly untapped water buffalo herd and the emergence of private-sector, exportoriented Indian processors effective in meeting export demand, which is predicted to grow for the next decade.

The ban will undoubtedly have major ramifications for India’s meat-processing trade, as 90 percent of buffalo purchased for slaughter comes from animal markets.

It also will upset the global beef trade by choking off supply. Since India banned the slaughter of its cattle, meat prices have traded higher on concerns of reduced supply. With no resolution in sight, the trend seems likely to persist.

Weakening the golden period of export A few dozen integrated meat companies have harnessed the potential of water buffalo over the past 15 years, developing the means to send herds of beasts from tiny farms through mechanized slaughterhouses and on to foreign markets. Firms such as Hind Agro, Allana and M.K. Overseas, plus dozens more, most of them crowded into the west of UP, have helped raise the value of India’s beef exports 14-fold within a decade— their worth is now equivalent to nearly a third of the country’s monthly trade deficit.

But in May when the environment ministry put the business on the chopping block it prompted an outcry. Many note that the ban appears unconstitutional.

India’s individual states, some of which allow cow slaughter, are objecting. It also seems biased against the country’s Muslims, who are heavily involved in the meat and tannery trades both as workers and owners. The Supreme Court heard a case against the ruling on June 15th.

“The timing of the ban is

Agro & Food Processing August 2017

particularly irksome for the industry, because it ought to be enjoying a golden period” Brazil, the second-largest exporter, has been hobbled by a meat-contamination scandal affecting JBS, the world’s biggest meatpacker. Shiploads of Brazilian meat have been waiting in the Pacific, as Asian buyers have had second thoughts.

India’s industry is well-placed to take advantage. High standards, regulatory and sanitary, have been enforced, partly because of local sensitivities about animal slaughter.

Teams of foreign buyers considering the Indian market have brought extra scrutiny.

Their inspectors are relentless: three teams of Malaysians spotchecked 32 plants in one fortnight in April, for example.

Unlike the giant feedlot operations of the American Midwest, say, which tend to stink of manure and death from miles away, the high-tech UP abattoir sits near neighbors on other industrial estates, kept spotless and odour-free by an enormous workforce.

Unless the government’s ruling is overturned, however, such advantages are hypothetical. Farmers and traders have become even warier of transporting their

MEAT SQUABBLE

animals within the UP plant’s 200kmradius catchment area. That is a reprieve for the buffalo, at least.

Where Indian buffalo meat exports go

Brazil and India have been vying for the top spot in world beef exports over the past several years. In 2014, India dislodged Brazil from the number 1 slot, according to United States Department of Agriculture data. The latest data from 2016 show India and Brazil tied on top — with both countries accounting for just under 20% each of the world’s total beef exports. They, along with Australia and New Zealand, are the world’s largest beef exporting countries, as per the US data.

“An important clarification here is that India does not officially export the meat of cows. The so-called “beef” that it exports is buffalo meat, which is also known as “carabeef”.”

The United States “beef” data includes carabeef. The bulk of India’s buffalo meat exports are to Asian countries — 11 of the top 15 destinations for buffalo meat by value in 2015-16 were in Asia and 3 in Africa (Algeria, Egypt, and Angola).

Russia was the 15th destination — at No. 15 in the list of the top 15.

The biggest market for Indian buffalo meat, at Rs 13,125 crore, was Vietnam in 2015-16. Malaysia (Rs 2,683 cr) was a distant second, followed by Egypt (Rs 2,326 cr), Saudi Arabia (Rs 1,416 cr) and Iraq (Rs 767 cr). However, Vietnam by itself does not have the capacity to absorb this value (just under half the total) and quantity (over 6 lakh tonnes, or 46% of the total) of buffalo meat exports — and the bulk of the consignments to that country are said to make their way eventually to China. China technically does not import any buffalo meat from India. However, a grey market has developed in recent

57

times, with Chinese traders reportedly using Vietnam’s Haiphong port to bring in Indian buffalo meat loaded on small vessels.

The buffalo meat exported by India is mostly raw, de-boned chunks, used primarily in the processed and canned food industry. Very little makes its way to kitchens for direct consumption by individuals.

This is because carabeef is tougher, and is hence considered inferior to cow meat; for this reason, it also fetches a discount to regular beef in the world market.

Thus, the average free-onboard price of buffalo meat exported from India in 201415 was $ 3,240 (about Rs 2.1 lakh) per tonne, whereas the corresponding unit value for chilled and frozen beef cuts from Brazil was $ 4,515 (more than Rs 2.9 lakh). " ower prices, along with the proximity L to key consuming markets in Southeast Asia and West Asia, has imparted a huge competitive edge to Indian buffalo meat exports in recent years” Thus, between 2009 and 2014, India’s beef exports more than trebled from around 0.6 million tonnes to over 2 million tonnes in carcass weight equivalent terms. In value terms, shipments more than quadrupled from $ 1,163.54 million in 2009-10 (April-March) to $ 4,781.18 million in 2014-15. In the process, beef also become India’s No. 1 agri-export item, ahead of basmati rice ($ 4,518.25 million).

The ban will undoubtedly have major ramifications for India’s meat-processing trade, as 90 per cent of buffalo purchased for slaughter comes from animal markets. It also will upset the global beef trade by choking off supply.

Since India banned the slaughter of its cattle, meat prices have traded higher on concerns of reduced supply. With no resolution in sight, the trend seems likely to persist.

Meanwhile Meanwhile the difference

in opinions rages on. Religious activists have become verbally and physically aggressive toward those in possession of cows. Two years ago, a mob killed a man over rumors that his family ate beef, while today, vigilante “cow protectors,” operating with impunity, kill people just for transporting cattle.

“The ban has severely affected the lives of cattle farmers and could effectively kill India's thriving buffalo meat trade and eliminate millions of jobs.”

There are no buyers for older bulls, and farmers cannot afford recurring maintenance expenses. There are about 190 million cattle in India, and tens of millions go out of the system annually either to die or because they need to be slaughtered. There arises the issue of unwanted cattle crowding towns and cities, disrupting traffic and spreading disease.

“The government argues that it’s not an outright beef ban, does not refer to any religious or sacred purposes of the Hindu religion, and is meant to protect agriculture” Legally this might be true, according to a Kerala high court, but in practice the lines are fuzzy. The laws governing cattle slaughter vary greatly from state to state.

Although about 18 states have banned it entirely, others allow slaughter with restrictions depending on factors such as age, gender and continued economic

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MEAT SQUABBLE

58 viability.

Import demand for Indian beef is growing from nations that are substantially outpacing traditional markets for U.S. exports. The top five export destinations for Indian beef (2013-15) are Vietnam, Malaysia, Egypt, Thailand and Saudi Arabia, while China and Russia could potentially become major markets if trade hurdles could be surmounted.

Indian water buffalo meat exports are not competitive with U.S. beef exports as they don’t meet U.S. quality preferences and animal health regulations" Although U.S. beef suppliers may be able to compete for “high-end” consumer segments in India’s developing-country markets, they likely cannot vie for the faster growing, low-cost segments served by India. Top U.S. beef export destinations are Japan, Canada, Mexico,

Hong Kong and South Korea.

While many state governments are planning a challenge in court, this will take time. Even Prime Minister Narendra Modi, viewed as pro-economic growth, ran on a platform that included banning

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cattle slaughter and imposing a national cow protection law.

“In the long term, the ban will likely be reversed or relaxed. For one, not all of India is Hindu.”

Beef has been an important part of the diet and culture for Christians and Muslims as well as for millions of Indians, such

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Agro & Food Processing August 2017

as the Dalits and others of less socially dominant castes. Opponents believe the ban has elements of cultural imperialism, goes against the interests of minority groups, and is a brazen attack on India's secularism and constitutional values.

In addition, meat-eating habits of Indians have been changing rapidly in the last couple of decades. Chicken, once considered a "dirty bird," is now the most popular meat.

Furthermore, as Indian agriculture adopts more mechanized approaches to farming, the use of oxen will be phased out. But for the immediate term expect supply pressures and global price increases.

www.agronfoodprocessing.com

59

NEWS

60

Congregation of the Food and Drink Industry in SAARC region to meet at one place MARK YOUR DATES FOR… India’s No#1 supplier fair for the Food and Drink processing and packaging industry

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NUTEC- International FoodTec India 2017 is all geared up to showcase new innovations in the field of Food, Drink & Packaging Technology, Equipment & Supplies. The Backbone and sunrise sector of the Indian Economy, FOOD INDUSTRY, has never seen a negative trend and offers an immense employment generation opportunity.

India, with young population of 40% below 30 years out of the 1.25 billion people makes it one of the most vibrant and young country of the World. Urbanisation, cultural, latest trends, education & hospitals catalysts in shifting 30% of the population towards urban areas and thus creating big opportunities for the convenience foods, healthy foods and fast & fusion foods to grow by over 30 per cent.

The Government’s flagship initiative “Make in India” has provided an impetus to the overall industry especially to the food manufacturing and processing by providing attractive business opportunities to the investors. Government Initiatives to improve food processing sector in India include, setting up a dairy processing infra fund worth Rs 8,000 crore (US$ 1.2 billion). Proposal for 100% FDI through FIPB (Foreign Investment Promotion Board) route in marketing of food products produced & manufactured, 25 lakh Metric tonne of cold storage capacity, 100 new cold chain projects sanctioned, completed 44 integrated cold chain projects, 168 new food testing laboratories projects at place, setting up of 41 Mega Food Parks being set up with an allocated investment of INR 98 Billion apart from many other are expected to give a

boost to the business morale in this sector.

The Trade Fair Since 2002, when International FoodTec India started as a satellite show of World’s leading trade fair Anuga FoodTec, Cologne Germany, whole Food & Drink Processing Industry in India was confident that the show over the years will position itself as the most important sourcing platform for the Indian Food & Drink Processing and Packaging Industry. Keeping to this faith, the show has grown many folds and has now become not only the meeting place for the whole industry to exchange their ideas but also has become stage for the World leaders in the food and beverage processing technology suppliers to use it as a launch pad for the whole industry from SAARC region.

Current edition will open its gates from August 21 – 23, 2017 at Hall no. 8, 9, 10, 11, 12 & 12A Pragati Maidan, New Delhi. Over 440 exhibitors from 30 countries covering an area of 16,000 Sq mts, makes this show most coveted show for the suppliers of food, drink processing, packaging and logistics industry to the Indian sub-continent addressing the needs of the business owners, product managers, production line and R & D personnel and other allied industry sector.

Continuing the success trends of 2016 edition, this exhibition is receiving an overwhelming participation response from both national and international companies with group participation from China, France, Germany, Taiwan & Turkey showcasing the technological strength of their respective regions. Many other international food processing and packaging solution providers from Australia,

Belgium, Brazil, Denmark, Greece, Japan, Lithuania, Poland, Russia, Slovenia, Spain, Switzerland, Taiwan, UAE, UK, Ukraine and USA are either participating individually or along with their Indian representatives.

With the presence of 50% International Exhibitors, this show signifies its importance to the Industry and make it the most soughtafter trade fair for the Food and Beverage Processing Industry in India and neighboring countries.

10,000 and more visitors are expected to this three days trade fair. Trade Visitor comes from all parts of the India and neighboring countries, irrespective of the size of organisation and scale of operation. Figures makes it evident of this fact, as the past edition held in New Delhi in 2015 had a visitor count of 9369 and in the Mumbai edition the visitor count was 16452 from 47 countries.

With all major companies participating in the exhibition, the show will be one stop solution for all processing and packaging needs with live demonstrations of machines by over 200 companies from worldwide.

Visitors are bound to have an indelible experience by witnessing the latest technological offerings for the Food & Drink Industry.

Team Koelnmesse YA Tradefair extends invitation to be a part of this important trade fair as an Exhibitor / Visitor and make the most of this opportunity.

Premium basmati rice to be launched

by Bradma Group

B

radma Group has announced the launch of Zeeba, a premium basmati rice brand from India in Qatar. Described as an fragrant, longgrained and flavoured rice that suits the tastes of people all over the world Zeeba shall be produced by Supple Tek Industries Private Limited.

The rice shall be available at all leading hypermarkets and supermarkets in 5kg,

10kg and 20kg packs, with 1kg and 2kg options soon to be introduced as per the Chairman of the group, K L Hashim Mohamed. The new product comes with promotions at hypermarkets and supermarkets.

Bradma Group is a leading importer of rice in Qatar. At a press conference with regards to launch of the new product in Doha, Bradma Group Executive Director

Agro & Food Processing August 2017

Mohamed Hafis said, “Zeeba comes from the renowned rice-growing area in the foothills of the Himalayas in India.

Nurtured in lush green paddy fields, it is known for its delicate aroma, grain length and delicious taste, and is processed using state-of-art technology and by maintaining strict hygiene and quality control standards.”

IICE 2017

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South Asia’s only ice cream event in Mumbai on 15-16 Sept Indian Ice-cream Congress (IICE) will be held at Bombay Exhibition Center-NESCO, Goregaon (E) Mumbai on 15-16 September 2017 Mumbai will witness the biggest show ‘IICE 2017’ in history of Ice Cream Industry in South Asia.

IICE with its other event partners like Elanpro, 2m Cocoa, Morde Chocolate, DuPont, Mahaan, AE International, California Walnuts, Tetrapak is expecting around 250 exhibitors and 4000+ visitors from all over the country and different parts of the world, in upcoming show.

I

ncreasing per capita expenditure, rising young population, introduction of world class flavours, changing consumption patterns, is witnessing the steady growth of Indian Ice Cream Industry.

The change in consumer preference from traditional ice cream to premium brands has now created the market base for international companies to launch their premium ice cream brands. The industry is seeing a growth of 35 per cent year-on-year basis, which makes it an attractive destination for international brands. With increasing consumption, the production capacity of ice-creams is set to increase with many manufacturers planning for expansion. Most of the ice cream projects are in expansion mode due to various reasons in this region. Companies are also working on new innovations as Indians are now looking for premium tastes with international quality and standards and IICE from last six years is continuously providing a platform to showcase their abilities.

After a grand success in Noida (Delhi NCR) last year, one of the most significant events in global ice-cream industry, IICE 2017 is scheduled to be held at Bombay Exhibition Center- NESCO, Goregaon(E) Mumbai on 15-16 September. Entering its 7th year, India’s biggest ice cream show always provides hundreds of ice cream manufacturers from different parts of the country and world to exchange their views on this platform.

IICE with an aim of a higher degree of service to its client is laddering growth by 100% year on year. The show includes all that activities which led ice cream industries as well as manufacturers to their peak. The show will be co-organised by IICMA & AIM Events with Blue Star India as its ‘Title Sponsor’.

According to the organizers of IICE Blue Star, Western Equipments, Voltas Refrigeration, Godrej, Haier, Bitzer, Ace Technology, Bluecold, Consta, IC Ice Make, and Prick India Ltd are the leading companies dealing in refrigeration industry have showed their interest in the event.

Process machinery like Tetra Pak, Target Innovations, ISF, Unique Equipment, Micron, Goma, V-Smart, Bhogal Cycle, Cart Studio, Techofour Electronics Pvt. Ltd, Harvest, Snowball Machinery, Tecknoice, Ice Com and Shruti Icemac Engineers, Bry Air, Mitora Machinex, Lovely Bikes, Sunrise Trolly Manufacturers, Schafer are leading brands who show their interest in Asia’s one & only one ice cream show.

Raw material and Packaging companies like Morde, VKL, E-MoxKavitha Poly Pack, Kanchan Metals Pvt. Ltd., Progressive Polymers, Satnam Flexipac, Delta, Dukes, Mahaan, Taj, Lucid, Orchards Brands, Pellagic Food, Neelkanth Herbs, Fill Pack, Gujrat Enterprises, Carry Cool, Tulsi (K.B.B Nuts), Satnam Flexi- Pac, California Walnuts, Arbuda Kesar Company, DPTL, Mold-Tek Packaging ltd, Tessol, Kapcones, Adani Wimar, Promens, Oror Flavours, Liquid Flavours, Denali, Manik Engineers, AAKAMANI oils, 2M Cocoa, Farmer Fresh, CEC Flavours, Joy n Joy, Garuda Engineers, MF Marketting, Plasto, Amar, Universal Oleoresion Fab Flavours and Print n Pack will display their best of services.

Along with these many more, top ice cream allied companies

have already booked their stalls to participate as exhibitors in the expo.

Last year in Noida (Delhi NCR) IICE 2016 received 4000 visitors, 150 exhibitors and over 800 ice cream companies.

According to Sudhir Shah Secretary of IICMA, “this year ice cream industry has witnessed not less than 20 per cent growth and it was one of the best in last one decade”. He also added that IICE 2017 in Mumbai is going receive huge number of visitors.

IICE 2017 is expected to be bigger in size than all previous shows. Indian Ice Cream sector has become one of the fastest growing sectors in Indian food processing industry. Investment in technologies and new trends has broken all previous records in the last 4-5 years.

NEWS

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T

Mega exports event ‘Indus Food’ scheduled next year

o make India an agro-processing hub, the government shall organise its biggest food export promotion event in the country ‘Indus Food’ in January next year. Commerce Secretary Rita Teaotia said, “We propose to bring at least 400 buyers to Indus Food, to target core areas we have identified for attention in the food and beverage industry. “We want to make Indus Food a targeted organisation where we get the right buyers, and the best exhibitors to showcase the best products the country

has to offer.” Government aims to make Indus Food a platform for a industry that is already worth $33 billion. 18-19 January, 2018 are the scheduled dates for food and beverage trade show to be held in Greater Noida.

Organisers Trade Promotion Council of India (TPCI) said that besides buyers from across the world, the event will have the participation of around 500 Indian manufacturers and exporters.

Exhibitors can showcase 12 product

segments ranging from consumer food, dairy products, marine, meat and poultry to Indian ethnic food, all under one roof.

Teaotia said that mega events like Indus Food aim to give farmers better value for their produce.

“We’re looking at the enormous diversity of agricultural products in India where we are market leaders in some products known globally. We’re looking at making India an agro-processing hub a place in which to do business,”

ASSOCHAM report: Inflation outlook to stay muted for more months

A

SSOCHAM analysis has suggested the inflation outlook will remain muted till festival season of Durga Puja and Diwali as the country set to reap a record foodgrains production and the industry not enjoying any pricing power. The ASSOCHAM note stated that “the inflation, based on the Index of Wholesale Price Index (WPI) for the past six months, between January and June, 2017 clearly shows that there has been a sharp drop in the pace of price rise, not only in the headline number to below one per cent but also in several individual items of interest to the common household. Besides, the inflation for the manufactured products, more so for the manufactured food products has seen a significant decline in the past six months. The headline WPI inflation has dropped in the past six months from 4.26 per cent in January, 2017 to 0.90 in June this year. For the manufactured products, it has decreased from 3.37 per cent to 2.27 per cent, while for the manufactured food products; the figure has dropped from

10.73 per cent to 3.09 per cent on the annualized basis.”

“Going forward, there could be some disruption for one or two vegetable items such as tomatoes, having seen crop damage, but overall, the situation is going to remain quite comfortable for the consumers at least till October-November.

Floods in some parts of the country may also play a spoilsport. However, a vigil needs to be maintained for ensuring that farmers are protected from the market distortions and the procurement agencies like the Food Corporation of India and other government wings both at the Central and the State levels along with the cooperatives like NAFED are fully geared to lift the farm produce in time and at remunerative rates.”

ASSOCHAM Secretary General Mr D S Rawat said the concept of e-platforms for the farm produce is excellent, but the same needs to be given a big push by the state governments, disallowing those middle men who may not be happy to shift to the transparent system of mandi

operations. The fact the inflation for manufactured food has dropped from a double digit to just about three per cent clearly reflects easing of the raw material costs for the food processing firms thanks to abundant supply of farm produce.

The last three months have witnessed a dramatic fall in the WPI inflation from 5.11 per cent in March to less than one per cent in June. ASSOCHAM note added that “here again, the impact of bumper foodgrains and the entire cereals production is clearly visible. With the wheat harvest and arrivals of the new crop began from April, the wheat inflation saw a sharp drop from 11.33 per cent in February, then to 6.33 per cent in March and to 0.29 per cent in June this year on an annualized basis. Of course the biggest contributors to a sharp fall in inflation are the vegetable prices which have dropped by over 21 per cent in June, 2017 year on year. It is here, the inflation should start reviving in the next few months.”

GCC to increase honey unit capacity in Andhra

F

ood Safety and Standards Authority of India (FSSAI) said it is shall ban the use of stapler pins in tea bags effective January 1, 2018. This is likely to affect fast growing packaged tea business in India, as FSSAI considers the use of stapler pins in tea bag a serious health hazard. FSSAI order stated that “The use of stapler pins in tea bags poses potential

hazard to consumers since any loose staple pin consumed inadvertently with tea may cause a serious health hazard.”

Currently, tea bags are either stapled or knotted. “The Food Authority, in exercise of the power conferred under Section (15) FSS Act, 2006, hereby directs the concerned food business operators to discontinue the manufacture, storage,

Agro & Food Processing August 2017

distribution, sale and import of stapled tea bags by January 1, 2018.”

It has also directed all food safety commissioners to take action to prevent the use of unsafe packaging materials by companies and take up measures for enforcement of its order.

NEWS

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India will become self sufficient in pulses, oil seeds: Minister

A

griculture Minister Radha Mohan Singh expressed confidence that India will become self-sufficient in pulses and oilseeds production in coming years with the government taking steps to boost yields through use of better quality seeds and technologies. The country imports over 5 million tonnes of pulses and about 14.5 million tonnes of vegetable oils (comprising edible and non-edible oils) every year to meet domestic demand.

Present at 89th foundation day of the Indian Council of Agricultural Research (ICAR), Singh said the government is not only focusing on increasing production but taking steps to make agriculture ‘income-centric’ as part of its target to double farmers’ income by 2022.

The minister asked ICAR scientists to work in a mission mode to achieve this target as well as the overall development of agriculture and allied sectors, which contribute 18 per cent to GDP. He emphasized on skill development in agri sector to boost crop yield and farm income.

Singh said the green revolution helped India in becoming self-sufficient in wheat and rice, but the country is still importing pulses and oilseeds to meet domestic demand and spending huge amount of foreign currency. “We achieved a record production of pulses in the 2016-17 crop year. The sowing area is also higher this year. We are progressing towards selfsufficiency. In next 2-3 years, we will become self-sufficient in pulses.”

On oilseeds, he said the efforts are being made through more than 600 Krishi Vigyan Kendras (KVKs) across the country to boost productivity and production. Pulses production in India increased to record 22.40 million tonnes in the 2016-17 crop year (July-June) against 16.35 million tonnes in the previous year. Oilseeds output rose by 29 per cent to 32.52 million tonnes last year. The minister appreciated efforts of farmers and scientists for the record 274 million tonnes of foodgrain output in 2016-17.

He said this has been possible due to availability of technologies, quality seeds and related services to farmers.

Agriculture scientists played a significant role in bringing green revolution, Singh said since 1951, foodgrain production has increased five times, fish 14.3 times, milk 9.6 times and egg production 47.5 times. That apart, there has been threefold jump in fruits and vegetables output from 199192, helping in achieving food and nutritional security.

“Our scientists are engaged in the development of innovative areas of science and technology and they are appreciated at the international level for their work.”

At the event, Singh also gave 122 awards

for excellence in 19 categories. Recipients included 19 farmers, 80 scientists, 12 KVKs and three institutes. Highlighting the initiatives taken in last three years, the minister said the government has already provided soil health card to 9 crore out of 12 crore farmers.

Soil health card coverage has reached 100 per cent in 16 states. Except Uttar Pradesh and Bihar, rest of the states will be covered in the next two months, he said.

Singh also spoke about programmes to boost irrigation capacity and new insurance scheme to protect farmers from vagaries of monsoon as well as a scheme to link all 585 mandis through electronic platform.

The minister asked ICAR scientists to go for new research to tackle new challenges in form of climate change and new crop diseases.

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