AgriBusiness & Food Industry - November 2012 by S Jafar Naqvi

AgriBusiness & Food Industry w November 2011

Cover Story ...10

INDO-DUTCH COOPERATION IN POTATO CHAIN

Curtain Goes Up for India Potato Expo 2012 Agri Affairs ...14

A Common Market for Indian Republic!

EDITORIAL

food

Pizza, chicken & more: India’s eating out like never before!

Tribute

Mansur Ali Khan “Tiger” Pataudi still lives in brands! — Harish Bhat

Burning Issue

Agricultural biotechnology

Fruit Growing ...16

Seizing ‘Apple-A-Day’ Opportunity — Vipul MIttal

UAE & Gulf Market ...32

Whither Policy?? — G. Chandrashekhar

Dairy

Italian cheese – Made in Italy by Indians!

— Sanjeev Chopra

inside...

— Elisabetta Povoledo

BRAND

Hindustan Unilever

Packaging

Weigh filling Vs Volumetric filling system

RETAIL NEWS

l Aditya Birla Retail eyes rural markets

“Bru”-ing market with its exotic coffee & cafes

— Mayank Shekhar

l FDI in multi-brand retail soon: Pranab Mukherjee

38 CORPORATE NEWS

l McDonald’s to expand its ice cream and breakfast segment l Vadilal’s frozen snacks to be available in India

41 FOOD & BEVERAGES NEWS

UAE business group opens more outlets of food, beverages and halal meat

AgriBusiness & Food Industry w November 2011

l Amul opens quick-service restaurants l Now, order cut fruits and vegetables online!

INDUSTRY NEWS

l Seafood exporters focus on Chinese market

DAIRY NEWS

l Dairy Queen wishes joint venture with Reliance Retail

AgriBusiness & Food Industry w November 2011

orial Edit

ndian Meteorological Department deserves credit for being frank enough to admit in its end-of-the-season report that its predictions on south-west monsoon this time has been mostly off the mark. It could neither forecast the prolonged dry spell in the crucial month of July nor the surfeit of rainfall in August-September.

Chief Editor

S. Jafar Naqvi

Consulting Editors

T.V. Satyanarayanan K Dharmarajan

Chief Co-ordinator

M.B. Naqvi

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Vol 8....... Issue 11 ...... November 2011

Needless to emphasize, in a country like India which has 60 per cent of the 142 million hectares of net cultivated area totally dependent on the monsoon for crop growth, a fair amount of accuracy in monsoon predictions would be of great help to farmers in crop planning and to government in drawing up its food management plans. With 60 per cent of the population depending on agriculture for their livelihood, this sector certainly plays a crucial role in the overall economy of the nation. Fall in farm production can cause tremendous damage and result in loss of seasonal employment and shortage of food and income, besides fuelling inflation and retarding economic growth. What the country needs today is initiation and strengthening of a series of measures to make its agriculture more and more monsoon-proof. One way to do it is to augment the irrigation facilities so as to make more cropped area less monsoon-dependent. Two problems that farmers face frequently after the onset of the monsoon are drought and floods. Both these natural disasters are dreaded particularly by the farming community who incur huge losses. While increased irrigation facilities and development of droughtresistant crops by researchers are a great help to the farmers to face the specter of drought, ways and means are available to mitigate the flood damages as well. One way to reduce the impact of floods is interlinking of rivers and storage of surplus waters at appropriate places for use in times of need. Grandiose plans were unfolded by various governments in this country in the past few decades like the Ganga-Cauvery Link, Garland Canal Scheme, and Perspective Plan for linking of rivers and so on, but nothing much has materialised so far. Happily, researchers have come up with their own answer to enable farmers to protect their crops during the floods. Work on developing flood-resistant rice plants has been going on for long at the Central Rice Research Institute (CRRI) in Cuttack, but some more success seems to have been achieved with farmers in the eastern region readily accepting a new variety for large scale planting. Farmers in flood-prone eastern parts, particularly Orissa and West Bengal, are now growing the new variety Swarna Sub 1, which can withstand submergence even for two weeks at a stretch. After the water recedes, new shoots would appear. Released in 2009, the variety has become the most sought after in the region, since it also gives an average yield of around 3.5 tonnes per hectare. It took CRRI scientists nearly ten years to develop Swarna Sub 1, after they received the breeders’ seeds from Manilabased International Rice Research Institute. Uttar Pradesh has released this variety to farmers in its eastern districts, while Andhra Pradesh has done so in its food-prone coastal areas. While scientists working in various institutes are doing their bit to develop crop varieties which can withstand stress conditions like drought and floods, extension work needs to be strengthened to spread the benefits of research over larger areas. The new agriculture strategy on the anvil for the 12th plan needs to give greater thrust to reducing the time gap in the transfer of technology from the research labs to the farmers’ fields. Comments are welcome at: mediatoday@vsnl.com Views expressed by individuals and contributors in the magazine are their own and do not necessarily represent the views of “AgriBusiness & Food Industry” editorial board. AgriBusiness & Food Industry does not accept any responsibility of any direct, indirect or consequential damage caused to any party due to views expressed by any one or more persons in the trade. All disputes are to be referred to Delhi Jurisdiction only. .....Editor

AgriBusiness & Food Industry w November 2011

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Cover Story Grain

INDO-DUTCH COOPERATION IN POTATO CHAIN

Curtain Goes Up for India Potato Expo 2012

Potato, a versatile horticulture crop, has cut out for itself a special place in the vegetarian cuisine. Being an affordable vegetable, it is a preferred item, particularly for the low & middle income groups. Cold storage industry is heavily dependent on potato for its survival. In the last two decades, value addition has become important, with potato chips and French fries getting popular. But one problem that farmers are facing in potato cultivation is low productivity. Unfortunately, there is no common platform for this important crop where all stakeholders -- farmers, seed suppliers, researchers, processors and others, specially companies who want to diversify from production to processing – can come together for synergized action. Keeping this lacuna in mind, Media Today Group has decided to launch India Potato Expo 2012, a professional international exhibition, concurrently with the 4th International Horti Expo in New Delhi in March 2012. On display will be production techniques, products and processing technology, cold storage, handling and supply chain management up to the retail level. The objective is to bring all stakeholders under one roof. It is only natural, that The Netherlands, ranked number one in potato productivity in the world, is a partner country. As a precursor to the potato expo, a workshop on ‘Indo Dutch Cooperation in Potato Chain’ was held in New Delhi. A Report on the workshop by T V Satyanarayanan & Madhu Khurana .

AgriBusiness & Food Industry w November 2011

Cover Story

he Netherlands, a leader in potato production and productivity in the world, has offered to share its technology with Indian farmers. India has high potential to increase potato production and even to feed the world but much needs to be done to bridge the information gap between researchers and farmers. Problems relating to the entire gamut of potato cultivation, processing, value addition and were discussed at a Workshop on “Indo-Dutch Cooperation in Potato Chain” held in New Delhi on October 5. The workshop was a precursor to the forthcoming India Potato Expo 2012. The workshop was the outcome of efforts by Media Today group with Agriculture Counsellor in the Netherlands Embassy in India Mr. Henk van Duijn, who was the Chairman of the workshop. The workshop started with the traditional ceremony of lighting of lamp by Mr. Henk van Duijn, along with Dr. R K Sharma from NHB, Dr. Bernard de Geus from Top Institute Green Genetics, Ernst de Ende from Plant Science Group and M B Naqvi from Media Today. Mr. S Jafar Naqvi, Chief Coordinator of India Potato Expo 2012 conducted the inaugural session. In his speech of welcome, S. Jafar Naqvi said lack of awareness amongst farmers is the main reason for low productivity of potato. Netherlands on the top of the productivity chart contributes much to the potato yield. The Chairman Henk van Duijn in his address said that working together on seed potatoes will extend the potato chain and help to fight crop disease. Dr. Anton Haverkort elaborated his views on potato research. Other speakers including R.K. Sharma, Sr. Dy. Director, NHB, expressed their views on potato yield in India. Sharma explained the developments undertaken by NHB in this field

and how NHB has promoted the techniques of potato farming, funding etc. All this was displayed in a video clip prepared by NHB. The thrust of his twenty- minute speech was on how India is tackling this problem of low productivity and increasing the income of growers. Technical Sessions The first technical session started after a short tea break. The speakers were: Ernst van den Ende - MD Plant Science Group, Wageningen University & Research Dr. Govinda Krishnan - Principal Scientist , CPRI, Shimla Dr. Anton Haverkort - Wageningen University Jang Bahadur Singh Sanga – Secretary-General POSCON Jan Jappe Alberts - Tolsma Techniek Ernst van den Ende made the first presentation discussing the ways to fight the problems in cultivation of potatoes. The next presentation on ‘Relevance of Potato Industry in India and Opportunities for Cooperation’ was made by Dr. Govinda Krishnan, representing CPRI-Shimla. focussing on the importance and relevance of potatoes in India, he emphasized the importance of climate factors and seed quality on productivity. He also presented past, present and future potato production scenario & potential areas for India. The next speaker was Dr. Anton Haverkort. He made a presentation displaying the potato yields and water use in India. The video slides showed the production of potato yields in India, effect of solar radiation on potatoes. After highlighting the potential yields, attainable yields and actual yields, he stressed the need for setting norms of sustainability. The next speaker, Jang Bahadur Singh Sanga talked about the seed potato production

AgriBusiness & Food Industry w November 2011

Cover Story Grain

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and storage. He stressed the need for having a strong variety development programme, as also problems faced by exporters in EU nations. He was dismayed at the figures relating to availability of certified seeds in India, which, he said, was 3% against 300-400% in the Netherlands. He explained how an Indian farmer harvests the seed potato, threatening the total system. He talked about the Genetically Modified Crops and mentioned about Phytophthora and how it destroys the crops every year. The GM Technology is a better idea for fighting Phytophthora. He raised the issue of internationally popular varieties. Absence of these varieties resulted in loss of huge potential orders from Russia. Due to this, Pakistan was able to make huge exports to Russia. The last speaker was Jan Jappe Alberts, who elaborated on the innovations in post harvest technologies and said that more processing techniques are needed in India as only 5% potatoes are processed in India as compared to Europe where 72% potatoes are processed. He further discussed about storage, maturity bruising, sugar & starch content, grading and cleaning of potatoes. Through video presentation, he unfolden a variety of potato handling equipments. In the second session after lunch, the speakers were : Narinder S. Kochhar - Director-Kiron Hydraulic Needs Pvt. Ltd. Dr. Anton Haverkort - Wageningen University Dr. Henk van Duijn- Counsellor for Agriculture – Nature & Food Quality of the Netherlands Romko Wustman – Wageningen University & Research Centre The session started with presentation by Narinder Singh who elaborated various ways in which potato can be consumed, raw or cooked. He explained how India can feed the world, why

AgriBusiness & Food Industry w November 2011

tastes change and what is the contribution of street vendors in distribution of potato products. He showed the figures relating to funds available and utilised, processing techniques and how technologies create high yields at every step. He suggested to the Chairman to set up learning centres where education can be given to all the entrepreneurs in potato production. This was followed by a presentation by Dr. Anton Haverkort on Food Industry. He cited the consumer demands 50 years back and now, to show why potatoes are becoming important. Romko Wustman from Wageningen University was the next speaker. The slides showed India’s position in global production and Azadpur Mandi– one of the largest markets in Asia. The presentation consisted of 26 slides showing major potato growing states, growth seasons, variety development, types of potatoes for consumption, opportunity for cooperation, Seed Potato production in Central Potato Research Institute (CPRI), harvest time, losses in hot summer, storage period and modern storage & processing in India. He also spoke on production cost of potato per ton, stakeholders in Potato Chain, Pre-requisites for modern Potato cultivation. He explained that the main aim of his University is: “Potato Science for Impact”. Panel Discussion The Chairman then invited Devangshu Dutta and other speakers for a Panel discussion. The theme of interactive session was “Innovation in the potato chain” and solving the problems faced by the potato growers. The panel consisted of l l l l l

Jang Bahadur Singh Sanga, POSCON Dr. Anton Haverkort, WUR Narinder S. Kochhar, Kiron Hydraulic Needs Ms Bhavna Vishwanath, Tolsma Jan Jappe Alberts, Kiremko

Cover Story

Bridging gaps in Potato Chain - S Jafar Naqvi

otato is among most important food crops ensuring food security to billions of people worldwide. It is most widely consumed vegetable in India. Presently, India ranks 2nd to China in global potato production closely followed by Russian Federation. We produce close to 11% of world potato basket. This production comes mainly from Utter Pradesh, West Bengal, Bihar, Punjab, Gujarat and Madhya Pradesh. While we produce substantial quantity, the productivity & quality remain areas of concern. India stores about 45-50% of the total crop, the rest is consumed fresh and partially processed. According to CPRI figures, European nations reap about 400-450 quintals per ha. The same for India is just about 160 Q/ha, except for Punjab and Uttarakhand where it reaches 200-250 Q/ha. Lack of technological awareness among farmers is believed to be the primary reason for lower productivity. Media Today had conceived Horti Expo way back in 2005 to promote interests of Indian horticulture sector, especially those who can absorb knowledge. Horti Expo is now developed as a single platform to meet, deliberate, and discuss various issues connected to Horticulture. A platform where one can showcase various technologies, interact with buyers & importers, look for production inputs like seeds, fertilisers, irrigation systems etc.; where post harvest technologies and systems are displayed. In fact, the Horti Expo is truly a display of entire

Chain of horticulture from Farm – to – Fork. After success of Flora Expo, Horti Expo and India Foodex, the Group is taking the cause of Potato sector for long term sustainable growth. Potato, despite being the single most important horticulture commodity, was not getting due focus. Yeomen service by institutions like CPRI, IARI etc., under ICAR, has created a good knowledge base. However professional connectivity between farmers and knowledge sources is still weak. India Potato Expo 2012 will bridge this gap and bring all stake holders, production input suppliers, agribusiness entrepreneurs, cold storage owners, food processing equipment manufacturers, research institutions and farmers under one roof. With globalization, many new avenues

Explaining how potato came to India, Devangshu threw light on how potato has conquered the Indian market. This was a very interesting question answer session with many questions asked on problems of the farmers. This interactive session proved fruitful for growers and others present in the hall. The workshop provided information on production, development and all aspects relating to potato chain. Dr Anton in this interactive session explained the difference between potato flakes and potato powder. Ms. Bhavna Vishwanath shared her experiences of marketing with the audience. The Panel fully endorsed the suggestion to collaborate with The Netherlands to import potato seeds. S. Jafar Naqvi then invited the Dutch Potato sector to display its production & processing technologies in the forthcoming Potato Expo 2012. Various problems in potato like late blight were discussed and answered by Dr. Anton. The presentations made by the speakers sought to help to present

have opened for farmers, including diversification opportunities. New markets need new varieties, specific characters for chips, finger-chips, flakes & powder, general & dish-specific characteristics. Food processing sector demands uniformity of size, shape and chemical properties. The entire chain needs to get modernized. From mechanized sowing & harvesting, post harvest treatment, storage & preservation, grading, sorting and transport. Potato needs technology and India Potato Expo 2012 will utilize all possible ways to bring together all technologies beneficial for Indian potato industry. We are happy to have The Netherlands as Partner Country in the program. Considering the Dutch expertise in the entire Potato chain, including retail products production. Their presence will enhance experience of professional trade visitors. There will off-course be all other ‘potato-culture’ countries from all over world. We thank all participants for making this launch event a success by their presence and cooperation. Special thanks to Ministry of Agriculture, The Netherlands, National Horticulture Board (NHB), CPRI and Poscon for their support. The website of India Potato Expo 2012 has been started as www.IndiaPotatoExpo. Com. All are invited to visit and send in their comments and suggestions to the coordinator on my email ID MediaTodayMails@Gmail.Com .

the whole scenario and problems encountered by the farmers and how can they be tackled. In his concluding speech the Mr. Henk van Duijn informed the participants that this workshop will be repeated in Jalandhar, hosted by POSCON, the federation of Potato Seed Farmers. POSCON President Mr. Bhatti extended invitation to all participants and speakers from Holland to participate in the next workshop at Jalandhar where over 300 members will join the workshop. Mr. Duijn also informed that a Dutch delegation would be coming to India in March 2012 coinciding with India Potato Expo and Horti Expo. He thanked Media Today Group for organising the workshop to bridge the gap between the farmers and the researchers. He said that conducting scientific research alone would not be enough to contribute in potato production. We have to take up the problems of the farmers of every state and provide them solutions. Farmers are the best carriers of information and also research. n

AgriBusiness & Food Industry w November 2011

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Agri Affairs

A Common Market for Indian Republic! — Sanjeev Chopra

herever growth opportunities become pronounced, migration follows. Thus the factor markets tend to develop a fine balance, and the effort of governments and policy makers should be to promote ‘harmony’ rather than ‘discord’. However as state after state introduces legislation or voluntary compliance codes for industry to offer employment only to ‘sons- of- the soil’ and enact laws which hinder, rather than promote an All India market, there are concerns that need to be addressed if India has to move to a trade regime in which transaction costs and time are lowered, and business transactions become more transparent. To that extent, the recent move by the Department of Consumer Affairs, Food and Public Distribution of the Government of India to hold a consultation with the states on ‘removal of trade barriers on internal trade’ is a welcome step, for primary commodities are the ones where the restrictions play the most distorting effect on the incomes of marginal and small producers who cannot hedge their production risks in the manner of organized firms. Interestingly, even though the Sarkaria Commission that went into the entire gamut of Centre-State relations strongly advocated greater fiscal and administrative decentralization in favor of the states, when it came to the removal of barriers on internal trade, the Commission felt that state laws have implications for inter-state trade and commerce. These could be in the nature of discriminatory taxes or unreasonable restrictions impeding the free flow of inter state trade and commerce’. Therefore, as this column

has argued at length in the past with respect to the APMC Act, the Union Government has to take the initiative for ensuring that barriers to inter state trade and commerce are removed. The Constitution (Article 301) provides that: ‘subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free’. Article 303 (1) also declares that neither the Parliament, nor the state legislatures have any power to make a law giving, or authorizing the giving of any preference to one state over another, or any discrimination whatsoever in the above fields. The only restrictions that can be imposed by the Centre are non discriminatory (article 302). As the Indian economy grows, so do the linkages and the scope both for preferences and discriminations in so far as individual states are concerned. However for the country as a whole, the vision for a national market is necessary,

AgriBusiness & Food Industry w November 2011

for both agricultural commodities and manufactured goods with encouragement of agro industry linkages at the base of the pyramid. It must be acknowledged that trade engages the highest number of people, and generates twice the income of ‘finance and insurance’ in the tertiary sector. Unfortunately, a comprehensive strategy or action plan to ensure free and smooth flow of internal trade in the country has not been drawn up so far. On the contrary, over the years, governments at the centre, state and local bodies have adopted practices that have erected direct and indirect barriers to smooth flow of trade in the country. Therefore the consultation that is now underway, will examine ways to come out of the ‘plethora of state and local taxes, and an antiquated, complex and ineffective regulatory framework’ which has ‘fractured the national market into several fragmented markets’. As a result the final price paid by the consumer is very high, inconsistent across states and leads to misallocation of resources. Moreover it would be inconsistent for us to demand the removal of ‘protection measures’ by EU and US when several examples can be cited from within our own country. The paper points out that besides economic significance, it has important political ramifications because this will remove the ‘perceived’ sense of economic exploitation that some regions feel. This will also lead to fulfillment of a single market across the country, reduction in the gap between the price paid by the consumer, and the ‘value’ received by the producer, besides lowering transaction costs, reduced

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Agri Affairs inventories, and a higher level of global competitiveness. Therefore, the pressing need for the sector to have a common regulatory mechanism which can replace the diversity of controls exercised by multiple authorities at different levels which hinder inter state (and sometimes even inter district) movement of goods. A recent study of the Planning Commission has shown that there are over 400 laws which govern internal trade in the country. These include the Essential Commodities Act,1955 the Prevention of Black Marketing and Maintenance of Supplies Act,1980, the Standard of Weights and Measures Act , 1976, Package Commodities (regulation

order), Trade and Merchandise Marks Act, the Hire Purchase Act, the Contract Act and the Sale of Goods Act. It may also be mentioned that the tax structure is also highly complex. Even though VAT has simplified the system, many states impose turnover tax, octroi tax and entry tax. Then there are taxes like Tobacco tax in UP and Professional Tax in West Bengal and Maharashtra. Some of these need to be scrapped, others need to be comprehensively reviewed and some need to incorporate and accept ‘technology driven’ reports/ analysis as final. Thus the Food Safety and Standards Organization will need to establish world class laboratories

in every region of the country where the testing can be done as per global standards to make the products globally acceptable. Last but not the least is the restrictions on trade in agriculture because of APMC, has devoted at least three columns to this over the last two years. However in addition to APMC reforms, there is an immediate need to address the Control Orders in Sugar, Fertilizers, Milk, Meat, Fruits, Cotton and Jute as well. Getting them all under a single regulatory mechanism would be a welcome first step in the direction of establishing a common market for the Indian Republic!

Stop food wastage and tackle inflation efficiently: World Bank to India

he World Bank has said that South Asia's foodgrain stock management, especially in India, needs to improve to tackle inflation. In its focus on food inflation in South Asia, the bank said that high stocks have led to high wastage due to inadequate storage capacity and technology. According to World Bank's estimates, the Food Corporation of India lost 10-16 million tonnes of grains in 2000. “The FCI's inefficiencies not only lead to high losses of the grains it handles, but also drive up the costs of food handling. Comparisons show that the FCI's handling and storage costs are significantly higher than those of the private sector. The increase in procurement has led to a significant increase in the fiscal costs of the system,” the report said. The FCI procures nearly one-third of wheat, rice produced in the country, besides coarse grains at the minimum support price fixed by the Government. The stocks are then transported to deficit States and sold through the public distribution system at a subsidized rate. It said demand for food is undergoing structural shifts as incomes rise. Growth in consumption of pulses, fruits, meat, eggs, and dairy items is more than double the consumption growth in cereals. Inflation in these items has been higher than in cereals. “Public intervention in agricultural marketing in India and Pakistan has high fiscal costs and narrowly supports cereal production, while high food inflation and continuing high rates of food insecurity are linked to an inadequate supply response in non-cereal food products,” the report said. Input subsidies contributed to the overuse of water resources, high losses of electricity utilities, and deteriorating soil conditions because of skewed application of fertilizer. It said expenses on these were not contributing to productivity and they could instead be used as investments in agricultural research, education, and rural roads are amongst the most effective public spending items in promoting agricultural growth and reducing poverty. Food and fertilizer subsidies have increased to over 1.5 per cent of the GDP since 2008-09 from around one per cent

in the 1990s. Outlays on food subsidies are far higher than public investment in agriculture and outlays for extension services, which could increase agricultural production and lead to lower prices over time. In India and to a lesser degree in Pakistan, large-scale public procurement hampered the private sector not only by pre-emption, but also by taxes and rules for moving grains across state borders, and caps on storage of grains designed to facilitate public procurement. The bank found fault with mandatory Jute Packaging Act, frequent changes in the Essential Commodities Act, low private investment in grain marketing, insufficient investment in supply chain and marketing rules. The bank proposed five policy options to tackle inflation including in foodgrain storage management. It called for demand management policies in South Asia earlier than in advanced countries because of the high share of food items in consumer baskets with priority for fiscal consolidation. Over the longer term, it called for policies aimed at increasing agricultural output and productivity to alleviate pressures on food prices, including focus on technology, improved water management, rural infrastructure, agricultural diversification, and private sector investment in marketing and the agro industry. It said governments should exploit the efficiency gains they could achieve (in terms of protecting and improving nutritional status) through provision of more nutritious foods (e.g. foods fortified with essential vitamins and minerals) and by increasing beneficiary knowledge on how to maximize household resources for nutritional impact. It asked governments to explore developments of marketbased tools and assistance for managing risks, particularly those that affect the government's budget.

AgriBusiness & Food Industry w November 2011

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Fruit Growing

Seizing ‘Apple-A-Day’ Opportunity — Vipul MIttal

n apple a day keeps the doctor away. Even if 10 per cent of India's 1.2 billion people were to subscribe to this adage, it would require a quantity of over 6.5 million tonnes (m.t.), taking an average apple weighing 150 grams. That's a whopping 4.7 m.t. more than the 1.8 m.t. produced annually by the country. This 4.7 m..t gap is a big opportunity we somehow seem to be missing, even while the world is not. During the last five years, our apple production has remained almost constant and nothing appears to be changing on this front. Compare this with China, which has raised its output by 5 m.t. over this period, despite being the world's largest apple producer at 32 m.t.. That the world is not unaware of India's potential as a major apple market – with consumption growing on the back of rising population and affluence – is borne out by imports. During the 2010-11 season (September-August), the country imported an estimated 140,000 tonnes of apples, which, at an average $25 for a box of 20 kg (cost & freight price), would have been worth some $175 million. More than half of the apples India imports today come from Washington State in the US – so much so that these grew by more than 140 per cent last season.

In the process, the country has ended up becoming the largest importer of Washington apples. Benefits of Imports The question to ask is: How can this growing market be converted into an opportunity for the Indian grower? Do we want to be the largest producer or the largest importer of apples? The latter is, obviously, easier to achieve. This is, however, not to dismiss the imported apples' journey, which has actually been a great learning experience for our own industry. What growers and traders alike have realised from imports, first of all, is that the customer is ready to pay a price for good, consistent quality. Two, it has shown that scientific packaging — the tray-packed telescopic cartons - can transport material across

AgriBusiness & Food Industry w November 2011

seas and shores with minimal damage to the fruit and negligible wastage. Three, if properly sorted, graded and packed material is sold, price volatility is considerably reduced. The prices of apples can then be fixed the way it is done for branded consumer products, as against normal agri-commodities that are auctioned in the mandis on a daily basis. Four, the consumer is willing to eat an apple every day, irrespective of the season, provided it is made conveniently available. That makes modern controlledatmosphere or controlled atmosphere (CA) storage technology a viable option in India as well. But what needs to be done now is to leverage these valuable lessons to convert the 4.7 m.t.-gap into an opportunity for our own growers. Necessary Steps In all the big apple growing and exporting countries, the growers are organised in a fashion as to protect their interests that includes securing their future through global trade. Take, for example, the Washington Apple Commission, which undertakes advertising, promotion, education and market development activities across 30 countries for the fresh apples produced by growers of the State. In addition, there are groups of growers that invest heavily in R&D and

Fruit Growing developing specialised ‘club varieties' differentiated from and commanding a premium over the normal Red Delicious, Royal or Richa Red apples. A case in point is the ‘Pink Lady' brand of Cripps Pink variety apples promoted by APAL, a body representing apple and pear growers of Australia. What we need to concentrate is on the following: Planting new cultivars & varieties to improve productivity & quality; Scientific post-harvest practices to ensure regular and increased production; Providing assured market to growers to incentivise them to produce more; Investing in complete marketing programmes, including brand development, to compete effectively against global competition; and Developing a proper packaging and supply chain infrastructure to deliver the desired quality to the consumer. HPMC'S Failings But how about organisations such as HP Horticultural Produce Marketing & Processing Corporation (HPMC) created for this very purpose? HPMC's failure, one would argue, is not having a vision to keep pace with time. There can be no

better indicator of this than the fact that HPMC today does not have a single CA storage facility to store fresh apples over long periods, thereby helping growers realise a better value for their produce. On the other hand, the likes of Adani, Suri Agro Fresh, and Indraprastha Ice & Cold Storage or even the Governmentowned Concor have in the recent past put up many such storage facilities. How can one expect HPMC give remunerative prices to the grower, if it does not have the holding capacity to effectively intervene in the market? Let us compare HPMC with the National Dairy Development Board (NDDB). Organised dairying in the country picked up only after the setting up of NDDB, with its unique autonomous structure under the able and visionary leadership of a professional like Dr Verghese Kurien. The latter created models to collect milk from various small producers, which he converted into a strength rather than a limitation through the now well-known ‘Anand pattern' of dairy cooperatives. The apple industry, too, needs to figure out similar viable models of organising apple growers. Just as dairying today has become the

largest output as well as employmentgenerating component within Indian agriculture, apple production could create sustainable employment for a large number of youth in Jammu & Kashmir, Himachal, Uttarakhand and the North-East region. This would not only improve their income generation prospects, but would also help solve social and other related problems. It is time that policy makers examined this ‘apple-a-day' opportunity and create an institutional framework to increase India's productivity as well as competitiveness in the global apple trade. (The author is a horticulture marketing professional.) Courtesy: The Hindu Business Line

Soon, Big Bazaar will showcase Himachal fruits & vegetables

xotic vegetables, apples, colourful capsicum, flowers, cherries and maize from Himachal Pradesh will soon be available for sale in Big Bazaar outlets. Kishore Biyani, Chief Executive Officer, Future Group, signed a memorandum of understanding with Prem Kumar Dhumal, Chief Minister, Himachal Pradesh, for direct market linkage of agricultural and horticultural produce. The retailer will buy the produce from Himachal Pradesh Horticultural Produce Marketing and Processing Corporation Ltd (HPMC) and sell through its outlets across the country. Future Group will be a platform to promote ‘Brand Himachal' as it will reach out to a much larger customer base, said Dhumal. “This would benefit farmers at large as Big Bazaar will showcase the products in 85 cities and 60 rural

locations across the country. The initiative will touch the livelihoods of 25,000 families in the State,” said Dhumal. Biyani said: “Apples from Himachal are the most popular. We will try to add handicrafts and handlooms going forward.” The group expects to generate business worth $200 million to $250 million in three to five years. By the end of the current financial year, Biyani expects to generate Rs 100 crore worth of business through the sale of Himachal products. “We have to develop the supply chain and ensure the quality of the produce.” The retailer is in talks with companies from Israel and New Zealand for technology tie-ups that would help strengthen the supply chain. “Most of the wastage that happens today is due to the lack of proper handling and because there is no retail outlet. We have to work in collaboration to improve it,” he said.

The retailer is also looking to market its products in North American and West Asian countries but nothing has firmed up yet, said Biyani.

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Concurrent Events

AgriBusiness & Food Industry w November 2011

Curtain Raiser

FICCI FOODWORLD INDIA 2011

ith a huge population of 1.08 billion and population growth of about 1.6 % per annum, India is a large and growing market for food products. Its 350 million strong urban middle class with its changing food habits poses a huge market for agricultural products and processed food. Currently this sector employs around 19% of the total population and contributes to around 9% of the GDP. In the years to come, the Indian food and beverages market is expected to grow at a CAGR of 8.2% and reach INR 15,300 billion by 2015. Recognizing the strong growth potential of the sector, FICCI FOODWORLD INDIA 2011 will provide a platform to debate and discuss the key issues of the industry and develop a roadmap for the sector. The event would witness the presence of food industry stalwarts and the policymakers, deliberating on the vision document – “Vision 2020 for Food Processing Industry” that would be released during the event. The document paper is jointly being prepared with Boston Consulting Group (BCG) and would be the key highlight of the event making way for subsequent discussions. ‘Vision 2020’ would be the next step towards inching the sector to newer heights from the existing vision statement of ‘Vision 2015’.FOODWORLD INDIA 2011 would be ‘the’ forum where first time ever ‘Vision 2020’ would be released and discussions would be witnessed on the way forward through

other strategic sessions viz, l Policy challenges in growing food business l Impact of global business environment on food processing industry l What can politics and industry do to ensure Food security? With the new ‘Food Safety & Standard Act’ coming into force in August 2011, it becomes imperative to have discussions to understand its implications for the industry, small businesses, consumers and enforcement agencies. FOODWORLD INDIA will provide an opportunity where all the stakeholders will come together to confer upon the ways the Act could be useful towards the growth of the sector keeping aligned the interest of all the stakeholders. Culture of every Nation has always been associated with Food and food habits of the natives there. The conference will also touch upon this innovative and new theme of impact of Indian food habits on shaping up the food industry through an exclusive consumer session. These… and many more “Food for thoughts” would be served at FICCI biggest platter – FOODWORLD INDIA 2011. Join us and be a part of this food fiesta. Book your table at ITC Maratha, Mumbai on 16th and 17th Nov. For full menu, visit – www.ficcifwi.com

AgriBusiness & Food Industry w November 2011

Food Grain

Pizza, chicken & more: Indiaâ&#x20AC;&#x2122;s eating out like never before!

eep dish, thin crust or burritos. Chicken wings, tandoori gucci or mushroom pepper fry. It's not just chef speak, but part of the vocabulary of a growing breed of Indians who have taken to eating out as a quick-fix after a long day's work or for a get-together with friends. Result: a long queue of restaurant chains seeking to open shops, similar to those outside popular eateries in weekends. The list includes Burger King, Applebees, CKE Restaurants with brands Hardee's and Carl's Jr., British noodles chain Wagamama, Carluccio's and Chinese chain PF Chang's, industry players said. A slew of pizza chains such as Pizzeria Uno, Donatos, Famous Famiglia, Little Caesar's, Round Table pizza, Spanish brand Tele Pizza and Pizza Express too have shown interest. They are excited by India's increasing appetite for outside food and a rapid jump in the number of double-income families, helping quick service restaurants, casual dining and fine dining prosper in metros and smaller cities despite rising prices and signs of economic slowdown. "People may not be frequenting the five-Star outlets, but eating out at value-for-money places or food courts in malls continues. It's this part of food retailing that's beating the recession blues and reporting over 25% growth month on month," says Amit Burman, chairman of Lite Bite Foods, which runs restaurant chains Punjab Grill, Zambar, FresCo, Asia 7, Street Foods of India and Baker's Street. This is evident from the long queues outside restaurants. Queue for Food Try stepping into Punjabi Grill at Gurgaon's Ambience Mall or the Manchester United Bar at Mumbai's Phoenix Mall on a weekend; you may have to wait for more than an hour! Several restaurants in metros and big cities now allow people to reserve tables to avoid long wait. This is largely driven by rising incomes, an increasing appetite to travel and experiment, and drive for convenience among working families. Also, eating out has become as much fun as watching movies. "Choices for leisure are limited-it's either a movie in a theatre or eating out. And very often, the two are clubbed together," says Sandeep Kataria, chief marketing officer of Yum Restaurants, which runs Pizza Hut and KFC chains. In a recent survey, nearly 63% of the participants in Mumbai said they eat out, followed by Bangalore and New Delhi at 53% and 44%, respectively. And it's not just about metros. In Ahmedabad, 85% respondents eat out and the number is 59% in Kochi, says Sriram Sharma, vice president of Starcom

AgriBusiness & Food Industry w November 2011

â&#x20AC;&#x201C; Sarah Jacob & Ratna Bhushan

MediaVest, quoting Target Group Index data for 2010. "More than half all these consumers eat out 2-3 times a month," he says. Nearly 2.1 million people have joined the list of doubleincome homes between July 2010 and June 2011, Sharma says, quoting IRS figures. All this have helped organized restaurant industry grow 20-25% a year, says the White Paper on the Indian Restaurant Industry 2010 published by the National Restaurant Association of India along with Technopak's research division Mindscape. And the room for growth is huge as organized players account for just 2% of the overall restaurant business. Hence the big rush! Venturing beyond metros To cash in, new players are rushing in and established ones are expanding rapidly, beyond metros and big cities. "Most players are now expanding aggressively as many have achieved even bigger success from outlets in smaller cities," says retail planning consultancy Asipac Projects Chairman Amit Bagaria. Om Pizza's & Eats-holding company of Papa John's pizzas, Chilli's and Great Kabab Factory -has roped in Barista Lavazza's CEO Sanjay Coutinho to steer an expansion plan months after it landed 50 crore from TVS Shriram Growth fund. Yet, nobody is complaining about competition. "High growth coupled with low penetration is what's making the Indian market boom. None of us have penetrated deep enough, so there's room for everyone to grow," says Harneet Singh Rajpal, GM-marketing at Jubilant Foodworks, whose stock price has grown nearly six times from 160 per share at the time of listing in early 2010. Pizza mania Much of the pizzazz in the industry comes from pizza chains. While Domino's, run by Jubilant Foodworks, dominates the 1,500-crore industry with around 45% share, it faces strong competition from companies such as Pizza Hut, Papa John's, Chicago Pizza and Sbarro among others. And then there are those waiting at the door. India has developed a taste for pizza, says Technopak Advisors Associate Director Pratichee Kapoor. "It's not just the higher socioeconomic class but the pizza consumption has percolated to the Indian middle class too, as companies tweaked entry-level prices." While Domino's introduced the 35 pizza a few years ago, Pizza Hut launched a meal at 99. International entrants Chicago Pizza and Sbarro innovated by offering pizzas by slice. Yet others are positioning themselves as specialized players. n

AgriBusiness & Food Industry w November 2011

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Tribute Grain

Mansur Ali Khan “Tiger” Pataudi still lives in brands! – Harish Bhat, COO – watches, Titan Industries Ltd.

iger Pataudi, swashbuckling captain of the Indian cricket team… handsome, stylish, enigmatic, attacking batsman, fearless leader, the aura of royalty… he was not merely a hero, but India's biggest sporting brand those days. When he passed away on September 22, it was not only the cricket world and fans that mourned, but the brand world grieved too. Why? Because some of the finest brands in the world and in India are named “Tiger”, and, of course, Pataudi leads this pack. In virtually each such case, the brand name “Tiger” has come to denote energy, speed and power, which is the natural imagery triggered by this ferocious and majestic wild animal. Tiger Biscuits Britannia's largest brand of biscuits is a household name in India. The name ‘Tiger' in this case has possibly been triggered by the need to make these biscuits instantly recognizable across India, even in semi-literate consumer households, particularly as this brand is targeted at the mass market. Even if a consumer cannot read English, he can immediately recognize the Tiger

graphic on the packs, while asking the kirana shopkeeper for a pack. The tiger displayed on these biscuit packs is always an animated, fun version. Used in this manner, the brand name conveys both fun and energy, which is a perfect proposition for a brand of nutritious glucose biscuits aimed primarily at children. Wagh Bakri Tea The Hindi word for Tiger (Wagh) is used alongside the word for Goat (Bakri) as brand name of one of the best known brands of tea in Western India. Several elements of branding work well here. Firstly, strong (kadak) tea is sought after in many parts of our country, and the tiger certainly conveys strength. Second, the name subliminally conveys tea for everyone, given that these two animals are virtually at opposite ends of the spectrum on various aspects of their personality. Third, the combination of opposites – a ferocious tiger living in harmony with a gentle goat – makes the name quite memorable. There is a lesson here for marketers, and also a subject of enquiry for consumer psychologists. The tension between opposites, in a brand name or proposition, tends to create a

AgriBusiness & Food Industry w November 2011

unique impact on people. Tiger Beer Singapore's first locally brewed beer is also one of its most famous brands. Its famous advertising line – “It's time for a Tiger!” – has not merely drawn millions of thirsty consumers, it has also inspired books such as Anthony Burgess's first novel, titled Time for a Tiger. Tiger is a good brand name for a beer, as it signals the strength and kick that one expects in an alcoholic drink. It is interesting to note that the tiger shown on the label is a happy tiger, undoubtedly the right mood for beer. The brand used its name even more interestingly during World War II, when some raw materials required for making strong beer became scarce. It quickly launched “Tiger Cub”, a lighter version, for a few years. Its official Web site provides additional meaning to three alphabets in the word ‘Tiger': ‘i' stands for No. 1, reflecting Tiger's ambition to be the world leader in beer; ‘g' looks like “8”, the most auspicious number in many South-East Asian countries, and ‘e' denotes the lineage of Heineken Europe, the brand which provided the initial technical expertise that went into the making of Tiger Beer. In addition to this, the world's best known pain-relieving formulation sports a gentle tiger on its labels. “Tiger” is one of the most popular brands of matchboxes, anywhere in the world. The stories of all these excellent brands hold good and useful marketing lessons on the subject of how brands are named. It’s time to end here by paying respects to the one and only Tiger who burns bright in our minds today - Tiger Pataudi, a legend and a tiger who patrolled the covers ferociously and became one of the country's most inspiring people-brands. n

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Burning Issue Grain

Agricultural biotechnology

Whither Policy?? â&#x20AC;&#x201C; G. Chandrashekhar

ill someone within the government explain what precisely is the policy relating to agricultural biotechnology? Huge investments have been poured into researching genetically modified crops, covering grains, oilseeds and vegetables. But there seems to be no transparent approach or stability of policy relating to acceptance of the technology. Agriculture demands focused attention, not benign indifference. In the context of the country's current economic journey, what we need is growth with equity. Agriculture alone can deliver growth with equity. After all, more than half the workforce is engaged in farm-related activities. But growth rates in the farm sector have been rather modest (approximately 2.5 per cent a year, annual average for the last 10 years), which means a large number of people in the rural areas have been excluded from enjoying the fruits of growth. Several simultaneous steps are necessary to strengthen domestic agriculture in a way that ensures sustained output growth, reduction of losses and decent farm incomes. One of them is agricultural research and technology infusion. Change in rules However, the country's policy focus in the last 10 years has been so diffuse that investors have become wary about putting their money into the farm sector. Their wariness has only increased, thanks to sudden changes in the rules of the game. Seed companies that have invested in researching genetically modified seeds for a number of crops have suddenly been forced to reckon with a new rule. The Centre has asked them to get permission from the respective State governments to conduct mandated field trials in the States. This new rule has been enforced from June and has caught most companies completely unawares. The dimensions to this new development are more than one. First, by asking the seed companies to get

permission from the State governments, the Centre is abdicating its primary responsibility to promote science-based research and development. Next, there is no uniformity in the approach of the State governments to agriculture R&D. This means different States can potentially take conflicting or contradictory stands on the subject. This is sure to create uncertainty and foster distortion. Currently, the policy environment is utterly confusing. No one is sure if science or populism will prevail. We saw what happened early last year when theatrical road shows sealed the fate of Bt brinjal. Now, directing the seed companies to seek permission from the State governments is seen as a further setback. Without policy stability, transparency in implementation and ease of execution, research funds, at least from the private sector, are unlikely to flow into agriculture. No wonder, in recent months, more than 100 applications seeking regulatory approvals to conduct field trials have reportedly piled up. Seed companies are unsure if and when they will receive formal approval from State governments. Time is the essence in these matters. Effective regulatory mechanisms and strict compliance with research mandates is another area that deserves attention. Bio-safety and related issues have to be addressed with utmost care and commitment. Whether it is done and how may be open to question. The ongoing uncertainty on adoption of agricultural biotechnology as a way forward is in no one's interest, neither the seed companies, nor the government, nor the people. Seed technology no longer optional Under the Constitution, agriculture is a State subject; but strangely, New Delhi seems to have realized it only this June and has asked research firms to get clearance from the respective State governments. It is most critical that the Central government takes a clear stand on the future of agriculture biotech. We are at a stage where seed

AgriBusiness & Food Industry w November 2011

technology is not just optional, but turning critical. Otherwise, the country runs the risk being swamped by the daunting challenge of pursuing nontechnology options. Although agriculture is the country's largest private sector enterprise, the role of the government is critical, given the numerous ways in which restrictions are placed and freebies distributed. Admittedly, we have almost all it takes to be an agricultural superpower â&#x20AC;&#x201D; abundant sunshine, adequate rainfall, varied agro-climatic conditions and biodiversity. However, as a nation and in terms of farm policies and their implementation, we have failed to leverage the strengths. The ways It is not as if non-technological options are not available; but we have done precious little to pursue them vigorously. We need to take a few simultaneous steps: Strengthen the input delivery system: Timely delivery of quality inputs (seeds, fertilizers, agrichemicals and credit) at affordable prices is critical. Today, there's hardly any regulatory oversight of the input market, as a result of which farmers are often short-changed. Expand irrigation facilities: Huge investments are being made to create irrigation potential; but there is no real expansion of actual acreage under irrigation in case of major field crops. Last mile connectivity issues as well as cost and time overruns of projects will have to be addressed. Improve agronomic practices: Extension services should be revived. Instead of perceiving smallholder cultivation as a weakness, it must be converted into an opportunity. Precision farming is the way forward. Invest in rural infrastructure: Huge investments are necessary to upgrade existing infrastructure and build new ones (access roads to marketing yards; scientific warehouses; primary cleaning, sorting and grading centres; cold chains). Use strengths in IT to deliver price and market information to growers.

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Dairy Grain

Italian cheese – Made in Italy by Indians! – Elisabetta Povoledo, The New York Times

Alongside common local last names like Ferrari and Galli, the telephone directories for the province of Cremona have been registering an increasingly present surname: Singh.

or the past 20 years, Indian immigrants from Punjab have been settling in Italy’s agricultural heartland to work primarily on farms, often as bergamini, as dairy workers are known in the native dialect. It has been said that if the Indian workers went on strike, production of Grana Padano, the hard, grainy, spaghetti-topper that this tract of the Po Valley is known for, would shut down. “Well, I don’t know if production would stop, but it would certainly create many difficulties,” said Simone Solfanelli, the president of the Cremona chapter of Coldiretti, Italy’s largest agricultural organization. “I can tell you that they are indispensable for farming,” and for the milk produced in the province – at one million tonnes per year, about a tenth of all milk produced in Italy, he added. The Indians, many of whom are Sikhs, first arrived in the area just as a generation of dairy workers was retiring, with no substitutes in sight. “They saved an economy that would have gone to the dogs because young people didn’t want to work with cows,” said Dalido Malaggi, the mayor of Pessina Cremonese. Though the dairy industry is mostly mechanized today, human labour is still necessary 365 days a year, he explained. The work is split into two four-hour shifts per day, about 12 hours apart. “Young Italians don’t want to work those kinds of hours,” he said. “They’d prefer to work in factories and have evenings

and weekends free.” It was a fortunate match, because many of the immigrants already knew what it took to keep a farm running. “This is dairy land, and many of us have cows in Punjab,” said Jaswinder Duhra, who has lived in Italy for 25 years, working first as a bergamino and then for one of Italy’s best-known cheese manufacturers. “We’re used to the work that we do here.” There are no official statistics of how many Indians work in dairy barns here, but Solfanelli said that, of the 3,000 agricultural labourers in the province, about a third were Indians. One measure of their presence was the recent inauguration of the Gurdwara Sri Guru Kalgidhar Sahib, a Sikh temple designed to hold 600 comfortably (though at least six times as many people attended the opening ceremony on Aug. 21). It has been touted as the largest Sikh temple in Continental Europe. Built in an industrial area that includes a factory that makes vacuum pump compressors and a cold-cut production plant, the temple was inspired by Sikh models in India “but is both a monument

AgriBusiness & Food Industry w November 2011

and a centre for the community,” said its designer, Giorgio Mantovani. (Other Sikh temples in the vicinity are sited in repurposed poultry farms or warehouses.) The road from the drawing board to the gleaming white structure that rises amid soya and corn fields was not without its rocky patches. Municipal permits were given in a nearby town and withdrawn when the temple became a politically thorny issue, so another site was found. A decade’s worth of bureaucratic hurdles also had to be overcome, money had to be raised by the Sikh community, and loans found to make up the rest of the price tag of 2 million euros, or nearly $3 million. “It took years, but we all pitched in as best we could,” Duhra said. The temple is still missing a fountain in front of the entrance and the gilded cupolas that characterize Sikh architecture. The latter have been a matter of some concern, because Cremona’s clammy, foggy winters “make gold a bad choice,” said Malaggi, the mayor. Various other construction materials are being considered. While the mayor was an active supporter of the temple, and the road sign into town proudly proclaims Pessina Cremonese to be “free from racial prejudices,” there was some opposition from local politicians with the Northern League, the political party most closely associated with anti-immigrant oratory in Italy. A small group of protesters from Forza Nuova, an extreme right party,

Dairy demonstrated when the temple opened. Manuel Gelmini, a Northern League lawmaker in Cremona’s provincial council who unsuccessfully tried to block the building of the temple, said his main concern was the Kirpan, the ceremonial sword carried by orthodox Sikhs. “For us, it’s a weapon, and people shouldn’t be allowed to go around armed,” he said. He also objected to the use of Punjabi as the lingua franca in the temple. “They live in Lombardy,” he said. “How can there be integration if we allow them to speak their own language in a public space?” But tellingly, the Northern League has not campaigned openly against the Indian immigrants working as bergamini. “As long as they respect our laws, work legally and learn Italian, they are welcome in our country,” Gelmini said. Dilbagh Singh arrived in Italy when he was 14, and now, 12 years later, he speaks with the distinctive accent of his adopted hometown, Nogara, near Mantua. He said his compatriots “come here to work, and want to live peacefully.” To this end, Singh runs a Web site on Sikhs in Italy so that “Italians can understand us.” “We want people to know who we are,” he said. Nearly 16,000 Indian immigrants are

legally employed in agriculture in Italy, with the Latium region becoming the newest pole of immigration, especially for seasonal workers. “You only have to travel 100 kilometers from Rome to discover a world most people don’t even know exists,” said Patrizia Santangeli, a filmmaker whose documentary about the Sikh community in the province of Latina, “Visit India,” is to have its premiere in October. Santangeli’s documentary exposes some of the exploitation that many immigrant workers are subject to, regardless of their provenance. “They often live in camps like homeless people and can get paid low wages, 2 euros to 4 euros an hour for 12-hour days,” she said. “But what struck me is that even though they live in difficult conditions, the Indian workers are still able to see the positive side of situations.” In the north, life seems less harsh, at least on the surface. Many of the Indian immigrants have become Italian citizens. Many have bought homes and settled their families here. According to the national statistics agency,

about 40 per cent of all Indian immigrants to Italy are women, but only a small percentage has jobs. In the case of Pessina Cremonese, concerns about their isolation have been sporadically addressed with Italian lessons and worktraining programs, and labour unions have offered similar programs in other towns. Many of the Indian immigrants have also raised children in Italy, who imagine a different future. “They work hard at school; they’re not spoiled like our kids,” said Gianluigi Fiamenghi, who employs seven Indian workers on his dairy farm of 1,700 cows. “And their children won’t want to work on a farm. They’ll go to university and want to get ahead.” One of Fiamenghi’s workers, Prem Singh, moved to Italy in 1995, and many of his relatives followed. He and his wife are raising three children now in primary school. “They feel more Italian than Indian,” Singh said, adding that he had no plans to return to his native land. “We’ve put down our roots here. It’s our home, and that’s that.” n

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Brand Grain

Hindustan Unilever

“Bru”-ing market with its exotic coffee & cafes W

ithin the cramped confines of South Mumbai's Suryodaya outlet opposite Churchgate station, customers are surprised to see a mannequin holding a tray of Bru's Exotica coffees. Taking on the onus of building the premium coffee category, Hindustan Unilever Ltd (HUL) is pushing its latest range of international coffees from Brazil, Colombia and the Kilimanjaro region with prices that are nearly double than that of Bru Instant. While modern trade will play a major role in building the category, HUL is also roping in local stores such as Suryodaya to vend its exotic coffees. The 50-year-old coffee brand from HUL's stable has now entered the premium end of the Rs 950-crore organized coffee market hitherto dominated by imported brands. Even its nearest competitor Nestle has a single brand, Nescafe Gold, in the premium segment, and HUL sees this as an opportunity to tap into the trend to consume high-end coffee at home. “We have to create the premium coffee market and would be investing in market development in the next 3-4 years. While tea penetration is 96 per cent, coffee penetration is as low as 12-15 per cent,” says Arun Srinivas, Vice-President (Beverages), HUL. But considering the coffee category is growing at almost 20 per cent, HUL is tapping into the trend, be it at home or even at cafés. “There is a lot of urbanization, affluence and lifestyle changes

“We have to create the premium coffee market and would be investing in market development in the next 3-4 years. While tea penetration is 96 per cent, coffee penetration is as low as 12-15 per cent,” says Arun Srinivas, Vice-President (Beverages), HUL happening among Indian consumers. We intend to capture this trend by launching Bru Exotica, the world's finest coffees from Brazil, Colombia and Kilimanjaro. This would give Indian consumers a chance to indulge in international flavours from the comfort of their home,” says Srinivas. Adapting these international flavours to suit the Indian palate, HUL believes the market is now ready to accept these premium coffees but recognizes there will be challenges to drive penetration for the category in both the urban and rural markets. It has roped in actors Priyanka Chopra and Shahid Kapoor to endorse the latest range. The ads show both the actors enjoying these international blends as they imagine dancers from these countries entertaining them as they sip their brew. “We are the only ones investing in the premium coffee category, unlike our competitors who have not done much to build the category in terms of advertising,” adds Srinivas, alluding to Nescafe Gold.

AgriBusiness & Food Industry w November 2011

Bru World Cafes Emulating the Starbucks strategy of selling the coffee brand through retail stores and its own chain, HUL's new premium offering is in sync with the launch of its Bru World Cafes, which sell premium coffees. HUL took a big leap forward into coffee retailing through its Bru World Cafes early this year. While a pilot is currently on in Mumbai with six outlets, a nationwide launch soon should see the Bru franchise being strengthened courtesy such cafes. “We have been a product-driven company but now we are getting into services with Bru, just like we had done for Kwality Walls' Swirl parlours. We are testing out the Bru Cafe in places such as Juhu, Bandra and Mulund (all in Mumbai) currently,” said Srinivas. HUL's nearest competitor Nestle has also tried the concept of Nescafe Coffee Parlours in the past. Says Harish Bijoor, CEO, Harish Bijoor Consults, who has earlier worked in the coffee sector: “Every product

Brand must have a ‘service' avatar. Youngsters who experience the ambience of a Bru World Cafe will take its positive strokes back to the coffee their moms will buy off the kirana store shelf. Exotic coffee is a tough and generic task in India. I do believe this is the route for roast and ground filter coffee to take. Instant coffee adopting this stance is a tough one to justify. Real good exotic coffee is best had in the filter coffee form. Bru is trying to break this paradigm. And that's tough to crack.” Going beyond coffee Industry observers believe that while Bru has brand recognition, HUL would have to go beyond coffees at its cafés to make a success of this business. According to Harminder Sahni, Founder and Managing Director, Wazir Advisors, “HUL's Bru has brand recognition and the company understands how to manage its supply chain. But just having cafés under a pure-play coffee brand is not going to work for HUL. It has to look beyond coffee if it has to sustain it as a retail business.” In fact, most of the existing coffee chains such as Barista and CCD (Coffee Café Day) get more revenues from the non-coffee part of the business and this is what is expected to work for a typical coffee chain. HUL is already selling its tea brands at its cafes and it may be a matter of time before it unleashes a full-fledged foods portfolio. “Food services is already growing in excess of 35 per cent and it is going to be a new opportunity area for HUL as it will give it a larger part of the market,” observes Pankaj Gupta, Head (Consumer & Retail), Tata Strategic Management Group. With a dominant share in the southern markets (estimated at 65 per cent), Bru continues to be the second largest coffee brand (with a value share of 44 per cent) in the country

HUL is already selling its tea brands at its cafes and it may be a matter of time before it unleashes a full-fledged foods portfolio.

with variants such as Bru Lite, Bru Green Label Roast and Ground, Bru Ice and Bru Hot Cappuccinos to create segments within coffee. But more than segmentation, it is about getting tea drinkers to also consume coffee, and this applies to even the rural markets. For instance, HUL has been trying to build the instant coffee market in rural India through body-mounted DVD players engaging 15 million households. “The task was to build the category by reaching out to non-drinkers and encouraging them to try Bru. The team working on Bru is using body-mounted DVD players to build the market across rural areas and small towns in the South, says Srinivas. According to the company, the Bru team of promoters goes from door to door and shows one of three short films depending on whether the householder currently drinks tea, filter coffee or another instant brand. They then offer the consumer a Bru sample. “So far the team has reached over 15 million households with the brand gaining a 70 per cent share of new category entrants

and increasing sales by around a third,” claims Srinivas. Instant coffee for rural markets Penetration of instant coffee in the South is quite low, particularly in small towns and rural areas, so the task was to build the category by reaching out to the non-drinkers of instant coffee and encouraging them to try Bru. Is it doable? “Totally,” says Bijoor, who says he has been championing this cause for many years now. “”Instant coffee offers convenience, economy, ease of use and the ability for every home to be a coffee-making home, never mind that you do not have a filter or a percolator. It is coffee dumbed down to its lowest degree of ease. If one is to penetrate rural markets instant coffee is the best way to go.” With HUL pushing its coffee portfolio in both the urban and rural markets, hopefully the high price of the commodity will not affect its brand building efforts. According to Kaustubh Pawaskar, analyst at brokerage firm, Sharekhan, “HUL's beverages portfolio has been growing between 13 and 15 per cent and is a small segment within the foods portfolio. Considering the segment is still under-penetrated unlike its HPC (home and personal care) portfolio, there is scope for the FMCG player to drive coffee consumption in the country. Hopefully, its brand building efforts in the category will not get impacted by the high raw material costs hitting its margins.” But HUL is ready to splurge on its coffee brand considering Bru has recorded a 26 per cent growth, according to Nielsen. “Commodity prices are at their peak for coffee but we will not stop investing in and building our brand,” says Srinivas. HUL, it is clear, knows its brew. (Courtesy: BrandLine – Business Line)

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UAE & Gulf Market Grain

UAE business group opens more outlets of food, beverages and halal meat Pakistan eyes meat trade prospects

ubai-based conglomerate, Alif Investments, is on an expansion spree that includes strengthening its position on food and beverages sector. As part of this plan it has inaugurated three branches of Emily & Chilli — two in Dubai and one in Sharjah. It also launched two outlets of Meat One, a concept store offering fresh halal meat to consumers in Dubai. The outlets are located at Al Nahda and Motor City. The outlets of Meat One and Emily & Chilli at Motor City were inaugurated by Ambassador of Pakistan Jamil Ahmed Khan, while Pakistan Consul General Tariq Iqbal Soomro performed the formal ceremony for the two outlets at Al Nahda. The fifth, an outlet of Emly & Chilli, was opened at Sahara Centre in Sharjah. “This is an extremely good opportunity for the UAE and Pakistan to create an environment in which halal meat requirement of the UAE is met through natural and religious confidence and up to the satisfaction of people as in Pakistan all meat has to be halal,” the Ambassador said. Khan said the UAE per capita meat consumption is 18 times more than the world average. “The requirements in the UAE and Gulf can be met by Pakistan with proper strategic planning. This will bring down the cost because of Pakistan’s close proximity to the region.” Abu Dhabi launches “Our Agriculture” campaign Separately, plans are under way in Abu Dhabi to step up production of fresh vegetables and fruits, which are mostly imported at present.

The Abu Dhabi Farmers’ Services Centre (ADFSC) has set for itself an ambitious target to achieve 40% presence of locally-produced fruits and vegetables in the markets of the Emirate by 2015 and reduce 40% water consumption by 2013. This was stated by Khalifa Al Ali, Managing Director and Board Member of FSC, while officially launching Zera’atona (Our agriculture) campaign, which seeks to bring to the centre stage the sustainable agriculture strategy in line with Abu Dhabi’s 2030 Vision. There are around 24,000 farms in the emirate of which around 8,500 farms are in the Western Region, some 12,000 in Al Ain and about 3,000 in Abu Dhabi. Says Al Ali, “our target today is obtaining at least 40 per cent of the local produce to be presented in the local markets of the Emirate by 2015. Currently, we can say that the presence of local tomato, potato and other local vegetable, for example, is very high during the cropping season and it represents 70 per cent in the market. But

AgriBusiness & Food Industry w November 2011

round the year we want a 40 per cent representation.” The production of these two vegetables is gradually growing. However, the production of other crops is comparatively less as farmers are using different techniques of production for generating more monetary benefits and due to awareness deficiency, adds Al Ali. “But we are trying to convince them to use better technology to reduce the water consumption.” The farmers in the Emirate are currently producing 10 to 15 types of vegetables successfully. The fruits grown include mango, strawberry and apples. According to ADFSC, in quantitative terms the total sale of locally produced vegetables and fruits in the cropping season June 2010 to June 2011 was 16,790,829 kilos, valued at Dh12,402,658. At a press conference on the launch of Zera’atona (“our agriculture”) campaign by the Abu Dhabi Food Control Authority (ADFCA), together with the Farmers’ Services Center (FSC), officials

UAE & Gulf Market highlighted the need for furthering and implementing initiatives to promote agriculture in the Emirate. The campaign seeks to ensure economic diversification and agricultural sustainability through preserving vital natural resources, motivating farmers to adopt state-of-the-art technologies and promoting local produce. ADFCA’s Agricultural Affairs Sector will have a legislative and monitoring role alongside managing and streamlining government support programmes emirate-wide with a view to making farming more sustainable and lucrative. FSC will provide agricultural services and strengthen awareness, besides helping farmers market their produce according to the best practices and in line with Abu Dhabi’s agricultural sustainability plans. Mohammad Jalal Al Reyaysa, Director of Communications and Community Services at ADFCA, emphasized that creating awareness on the importance of sustainable development is crucial to the success of the efforts. “To reap the fruits of this campaign, farmers play an integral role in promoting locally-grown produce and raising its competitive edge in line with the Abu Dhabi Vision.” The business group, an exclusive franchise partner of the renowned designer wear label ‘Junaid Jamshed’, on Friday also opened the first J dot boutique in Abu Dhabi at the upscale Al Wahda Mall, taking the total number of boutiques to three in a span of just one year. The first boutique was launched in Meena bazaar in Dubai last year and the second in Sharjah’s busy Zamzam market this April. J dot boutique at Al Wahda Mall is the first outlet outside the bazaars and Alif Investments plans to replicate this practice by opening two more boutiques in New Dubai and Al Ain by year-end. The Abu Dhabi outlet was inaugurated by former Pakistani cricket stars Saeed Anwar and Inzamam-ul Haq in the presence of Saifee Rupawala, chief executive of EMKE Group, other VIP guests and senior management of Alif Investments.

The farmers in the Emirate are currently producing 10 to 15 types of vegetables successfully. The fruits grown include mango, strawberry and apples. “Since its inception, J dot boutique has not only established a strong foot hold in UAE but also opened new avenues for other brands to enter and explore the UAE market,” Alif Investments chairman Arif Abdul Aziz Memon told Khaleej Times. Junaid Jamshed features a full range of readymade, hand woven apparel along with exclusive unstitched fabrics. The collections in various categories for men, women and kids are cut to perfection highlighting the exquisite unmatched eastern designs. “J dot has witnessed success and a regular customer following in Dubai and Sharjah and the decision to open in Abu Dhabi comes due to the continued demand of our patrons,” Memon said. “The strategic decision to open outlets at the heart of the busy and bustling consumer markets was a good idea which has certainly helped the brand get a strong consumer following and now seems to be the perfect time to explore new locations such as Al Wahda Mall,” chief operating officer Ahmed Samir said. “Our new collection is exclusively designed keeping in mind the consumer and fashion conscious people of the UAE and hence we believe that the boutique will be well accepted in Abu Dhabi too,” Samir added.

and group chief executive of Alif Investments, said the group’s plans to expand in the Gulf’s retail sector are on track despite economic slowdown and unrest in some parts of the region. He said Gulf’s retail sector is likely to be unaffected from downturn and the group will continue its expansion drive as per the plan. “The GCC will not be affected. It is in the Middle East and we believe that nothing will happen to this region.” The group, which only invests in Shariah-compliant sectors, is expected to make a foray into the Saudi market next year, before looking at other countries in the Gulf. It is likely to launch three outlets in Saudi Arabia by first quarter of 2012. Alif Investments, a Dh100 million company, is a diversified business conglomerate focusing on restaurants, packed foods, confectionery and snacks, fashion, real estate, export and imports, hotels and hospitality and exclusive writing instruments. It has the exclusive franchise rights for Meat One, the business venture launched by Pak cricket legends Saeed Anwar and Inzimamul Haq, and J dot boutiques owned by famous Pakistani singer-turned designer Junaid Jamshed.

Expansion on track Asif Jabbar, director

AgriBusiness & Food Industry w November 2011

Packaging Grain

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Weigh filling Vs Volumetric filling system â&#x20AC;&#x201D; Mayank Shekhar

ackaging forms a very important aspect of available to perform various kinds of packing solutions. This article delves into the different types of filling methodologies available, their application and advantages and disadvantages. A packaging system comprises three major components. Broadly Filling system, Pouch Forming system and Sealing system. The filling system ensures that the correct quantity of material is filled in the packing. The packing may be a pouch or a carton or a plastic container. Traditionally volumetric filling systems have been used for a variety of filling machines. The forming and sealing systems are out of the scope of this article. Volumetric Filling System Volumetric filling system is for filling liquids which are sold by volume. They comprise a pistion filling arrangement where the displacement of the piston governs the volume dispensed. This ensures the same volume to be dispensed in every cycle. The volumetric filling can also be used for granules and powders, such system comprises of cups / cavities of uniform volume. The material is made to fall inside the cup by gravity and the top is levelled using a leveller. The volume of each cup is calibrated to match the final weight to be packed. The cups are made on a circular disc and as the disc rotates about its axis at one end the cups get filled and at the other end the filled cups get discharged. The basic principle is that each drop of the machine gives the same volumetric output. The volume is in turn calibrated to the weight and hence the same weight is theoretically outputted by the machine. Weigh Filling System The weigh filling system weighs material and drops it into the packing machine. The material is weighed using electronic transducers (Load Cells) to sense the weight, sophisticated electronic hardware and software converts the output of the load cell into weight. This information of weight is used to sample the product for its weight before dispensing it to the packing system. These systems work on the basis of the nett weight to be packed and not on the volume of the material. Typically the weigh filler system comprises of a hopper that contains feeder. Performance of Volumetric Filling System The weight of the quantity dispensed depends on the volume of the cup in which the product is measured. This system gives reasonable accuracy in weight for powdery products that have a consistent bulk density. The flow characteristics of the material also play a vital role. For sticky materials the accuracy in weight is not good. Products which are susceptible to breaking eg chips, corn puffs cannot be run in volumetric machines, as when the disc carrying the material rotates it tends to break the product. The materials which are free flowing but have irregular shape also give inconsistent weight. The machines utilizing the volumetric filling systems are not very versatile and cannot run different products on the same machine. Also for each weight setting different cups are required. There is a provision of adjusting the height of the cups for filling so there can be some degree of adjustment in the volume to compensate for the variation in density. However in

AgriBusiness & Food Industry w November 2011

practice it is difficult for the machine operators to continuously monitor the output weight and then readjust the cup height for achieving the correct nett weight. As a result of this either material in excess falls into each packet or it results in short fills, in both the conditions it is not good for the end consumer and the manufacturer. Performance of Weigh Filling System Weigh Filling system weighs the material before dispensing so a variation in density does not pose any difficulty in achieving consistency in the packed weight. To a certain extent sticky materials can be run. Many types of materials can be run on the same machine. The same machine can be configured to run different nett weights. The handling of materials is soft and they do not get damaged. Materials with irregular shapes can be run without any difficulty. These systems give a much higher accuracy in the nett weight of the final packing as compared to volumetric filling systems. Construction and Operation of Weigh Filling System Material is stored in the hopper of the machine. From the hopper the material moves forward through a vibratory feeder. The vibratory feeder controls the rate of flow of material into the weighing pan. Weighing pan is mounted on the load cell and electronic hardware continuously samples the weight in the pan and controls the feed rate of the vibrator. At the start of the cycle the feed rate is high, once nearly 80-90% of the material falls into the weighing pan the vibration enters the trickle mode and the material flows slowly to reach the target weight. As soon as the set weight is attained the vibration stops and then the material can be dispensed in the pouch/ bottle/ carton as the case may be either automatically or manually. The sealing can be done in semi automatic machines or in fully automatic form fill and seal machines. The weigh filling systems have much lesser parts which are prone to wear and tear. The electronics is all mounted in a single control unit and can be easily serviced. Applications of Weigh Filling System Granular Material : Tea, Coffee beans, Namkeen Mixture, Rice, Suji, Rye, Spices- Pepper, Cardamom, Flour, Besan, Chips, Corn Puffs, Tablets : Ayurvedic Medicines, Powders : Spices such as Dhania, Zeera, Sambar Powder, Rice powder, zeera, Wheat Flour, Besan, Desiccated Coconut Powder, Ayurvedic Medicinal powders, Animal feed mineral mixtures Reasonable Cost Volumetric fillers have inconsistent weight output, weigh fillers dispense the material accurately by weight. Owing to the above factors there is a continuous shift from volumetric filling systems towards weigh filling systems. Till a few years back the price of the weigh filling systems were exorbitant and technology for low end weigh fillers was not very well developed. Today the weigh fillers are available at a very reasonable cost for machines with low to high production speeds. The author is the director of business development at Shekhar Brothers, a company that manufactures state of the art weigh filling and packing equipment from low end to high end segment. Email : sales@munky.in

AgriBusiness & Food Industry w November 2011

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Retail News

Aditya Birla Retail eyes rural markets

ditya Birla R e t a i l Ltd (More) will focus on expanding its presence in rural markets, according to its Vice-President (FMCG) Sumit Chandana. He said out of 580 supermarkets, about

200 were in smaller towns. The disposable income in tier-II and tier-III locations was high and there were no inhibitions about spending in retail chains. “Our expansion plans to a large extent are centered around smaller towns,” he said. V Ganesh, Head – New Geographies & Direct Trade, Colgate-Palmolive India,

said understanding the shopper with the aid of analytics, technology and market data was a key challenge in retail. While the modern methods of trade are becoming important, the traditional trade patterns in retail would still account for about 80 per cent business and, hence, was important, he added.

FDI in multi-brand retail soon: Pranab Mukherjee

he Finance Minister, Pranab Mukherjee, has assured foreign investors that foreign direct investment (FDI) would soon be allowed in multibrand retail. “A consensus on allowing FDI in multi-brand retail is being evolved and will be operational in the near future,” Mukherjee said in his address at the India Investment Forum in New York. Currently, foreign investment is not allowed in multi-brand retail. In the case of single-brand outlets, foreign investment is allowed up to 51 per cent. In cash-andcarry or wholesale trade, up to 100 per cent is allowed. Mukherjee's remarks are expected to provide some comfort to many foreign retailers who were concerned over the Government's yo-yo approach towards allowing FDI in multi-brand retail. With almost two months having lapsed since the Committee of Secretaries (COS) recommended that FDI up to 51 per cent be allowed in multi-brand retail, there are apprehensions that the long-awaited

multi-brand retail policy may have been put on the back-burner. The Union Cabinet is yet to consider the recommendations of the COS. The inprinciple approval of the COS came with conditions: Foreign retailers will have to dedicate at least 50 per cent of their proposed investments to back-end supply chain infrastructure. They would further have to commit a minimum FDI of $100 million. With the decision to allow foreign direct investment (FDI) in multi-brand retail round the corner, the Aditya Birla Retail CEO is not in a hurry to rope in a foreign partner. Supporting the move to allow FDI in retail, Thomas Varghese, CEO Aditya Birla Retail, says, “No we are not looking at roping in a foreign partner immediately. However, capital is the need of the hour for expansion and domestic funds are not readily available. Funding is going to be crucial for the business.'' In the past, Varghese had hinted at offloading not more than 15 per cent stake in his retail venture to private equity investors. The company has already planned to add 150 supermarkets and 12-14 hypermarkets every year under the More brand. “The next few years will make it difficult for retailers to cope up with the huge demand that is going to be generated in the country. Retailers have to be prepared for this,'' he added. At the same time, most of the retail networks are not profitable today. The EBIDTA levels are the lowest for food

AgriBusiness & Food Industry w November 2011

while fashion and apparel command the higher levels of EBIDTA in India. Varghese expects the Government to allow FDI in the next 3-6 months. He further said, “There should be no delay as the consensus note has already been prepared by the Cabinet committee. However, the State Government will have the final say on the FDI.'' But capital is going the mainstay for retailers to expand their operations. The largest retailer in the country, Kishore Biyani, Chairman of the Future Group, intends adding nine million square feet of retail space in the next 3-4 years. There are plans of setting up between 25-30 Big Bazaars every year. According to Biyani, “FDI will be a game-changer for Indian retail, but an even bigger boost will be the GST which I see getting implemented in the next 12-18 months.” However, in spite of the riders expected to come about as a result of the policy changes, retailers are not too concerned about their implications. “The riders will not be a cause of concern for domestic Indian retailers unlike their foreign counterparts, '' said Varghese. “We hold talks with every foreign retailer who wants to come into the country since they know we are the largest retail chain in the country,'' said Rajan Malhotra, President, Retail Strategy, Future Group, which is currently in talks with Japanese convenience store chain, Lawson Inc.

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Retail News

India will soon decide on multi-brand retail: Sharma

midst economic woes hitting global investor confidence, India will soon liberalize its foreign direct investment policy and take an “early and appropriate” decision on allowing FDI in multi-brand retail. “Very few sectors are left, where sectoral caps are there and we are very actively engaged in talking to the stakeholders, what more we can do. There will be more policy pronouncements soon,” Commerce and Industry Minister Anand Sharma said. Asked about the much-awaited decision on opening the multi-brand retail to foreign investment, Sharma said,”...the Committee of Secretaries has made the final

recommendations. We will take an early, appropriate and committed decision.” The Committee of Secretaries (CoS) headed by Cabinet Secretary Ajit Kumar Seth has recommended that 51 per cent FDI could be allowed in the sector, which is dominated by neighbourhood kirana stores. The CoS has also suggested that at least 50 per cent of the investment and jobs should go to rural areas. Global players will also have to commit at least $100 million investment, both in the frontend and the back-end infrastructure. Sharma said that India’s post harvest losses are huge and the steps “we are taking in the policies will address that

challenge.” India is one of the largest producers of fruits and vegetables in the world and second largest Anand Sharma producer of food grains. At present, India allows 51 per cent FDI in single-brand retail and 100 per cent in cash and carry format of the business. Several global chains like Wal-Mart, Metro and Carrefour have opened their cash and carry stores and are waiting in the wings for opening of the policy for front-end retail.

Modern organized retail encourages new growth categories

rganized retail has fuelled new growth categories like liquid hand wash, breakfast cereals and pet foods in the consumer goods industry, accounting for almost 50% of their sales, said data from market search firm Nielsen. The Nielsen figures show some of these new categories got more than 40% of their business from modern retail outlets. The data also suggests how products in these categories reach the neighbourhood kirana stores after they have established themselves in modern trade. India's organized retail is estimated at $28 billion with around 7% penetration, but is expected to grow to 21% and become a $260 billion business over the next decade, said a recent report by Boston Consulting Group. "While grocers continue to be an important channel, for the new and evolving categories we saw an increased presence of high-end products in modern trade. For example, premium products in laundry detergents, dishwashing, car air fresheners and surface care increased in availability through this format as these products are aimed at affluent consumers who are more likely to shop in supermarket/hypermarket outlets and who are willing to pay more for specialized products," said Roosevelt

D'Souza, executive director, CS, retail measurement services, Nielsen India. Some other categories that have grown exceptionally and now account for bulk of the sales from modern retail are frozen and ready-to-eat foods, pet food, diapers, pre- and post-wash products, hair conditioners, and high-end shaving products, besides others. "With the evolution of modern trade, our growth in this channel has been healthy as it is for several other categories. Modern retail is an important part of our business and has been for some time," said Sangeeta Pendurkar, managing director, Kellogg India. What modern retail offers to companies experimenting with new categories is the chance to educate customers, which was not the case with a general trade store. "Category creation and market development starts with modern trade but as more consumers start consuming this category, they penetrate into other channels," said Devendra Chawla, president, food & FMCG category, Future Group - the country's largest retailer operating stores like Big Bazaar, Food Bazaar and Foodhall. But a point to note here is that modern retailers themselves push their own private brands in these very categories

and can emerge as a big threat for the consumers goods and foods companies. For instance, Big Bazaar's private label Clean Mate is hugely popular and sells more than a brand like Harpic in its own stores. "Most of the big retailers also look to push their private labels in these categories, which offer good margins and are amenable to organized retail. So, there is a certain amount of conflict and competition that will play out over the next few years which the FMCG companies will have to watch out for," said Ramesh Srinivas, KPMG's executive director (retail). In the past, there have been instances of retailers boycotting products from big FMCG players on the issue of margins; but as modern retail becomes increasingly significant for pushing new categories, experts say we could see more partnerships being forged between retailers and FMCG companies. "Market development for new categories takes time, so brand wars for leadership and consumer franchise will be fought on the modern retail platform. A new brand can overnight compete with established companies by tying up with few retailers in these categories," Chawla of Future Group added.

AgriBusiness & Food Industry w November 2011

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Corporate News

McDonald’s to expand its ice cream and breakfast segment

n a bid to grow its average ticket size of Rs 120 to Rs 140 across 235 outlets in India, McDonald's will push its newly launched icecream brand McFlurry with a national campaign beginning October 1. Of the annual advertising budget of Rs 60 crore, the McFlurry launch campaign will see ‘substantial' investment, running for over a month, said a senior official. Amit Jatia, Vice-Chairman, Hardcastle Restaurants (McDonald's India — South and West), said, “The ice cream market (size) is estimated at Rs 2,000 crore and (is) growing at 12 to 13 per cent annually. We believe we can play a role in growing this industry.”

At its outlets, the brand claims to serve over 200 million people a year. McDonald's enjoys sales of 21 million ice cream cones a year, priced upwards of Rs 12 per cone. It sees the McFlurry, priced at Rs 69, taking off as a dessert option, a standalone snack, and through home delivery (McDelivery). The campaign will urge customers to ‘go slow' and indulge in a McFlurry. McFlurry has been in ‘operations testing' at stores for two months now. The launch campaign will seek to maximize on the festive season and the post-monsoon ‘second summer'. On the increase in ticket size, Jatia said, “We do see it increasing with more customers coming in and with a wider range of offerings on the menu. In the US, the ticket size is between five and six dollars. In India, it is around three dollars. As customers and the menu evolve, this will grow further.” McFlurry ice cream will come in

two variants – one of them with Oreo biscuits custom created by Kraft Foods for McDonald's. The brand is banking on Indians' affinity for sweets, and the success of McFlurry in around 100 countries. The campaign, as with other campaigns from the brand, will see a mix of national and regional TV, besides outdoor and radio. The regional media share is growing as is the marketing budget, with expansion in number of outlets, said Jatia. The chain is also introducing its breakfast menu at more outlets. These restaurants open at 7 am (three hours ahead of other outlets), and the menu stays until 11 am. “We have launched the breakfast menu in Mumbai, Delhi and Pune now, and in 10 restaurants in Bangalore. By the end of the year, we should have launched it in all 35 restaurants in Bangalore, and will look at taking it to Hyderabad and Chennai next year,” revealed Jatia.

ITC's paper unit to start agro-forestry with tribals, farmers

he Paperboards and Speciality Papers Division of diversified ITC Ltd recently announced plans to take up agri-forestry engaging local tribals and farmers, thereby, helping them secure higher returns from the same land. ITC's unit in partnership with CRIDA, Acharya NG Ranga Agriculture University, Integrated Tribal Development Authority (ITDA) has developed a new model based on its research initiatives which enables farmers to take up inter-cropping and increase their farm yields. This is mutually beneficial; while ITC manages to get raw material for pulp making from the inter-cropping of eucalyptus, farmers get higher returns from the same field. The ITC PSPD held a Rythu Sadassu in one such farm field where cotton crop had eucalyptus and farmers from

various parts of the State narrated their success stories of inter-cropping suitable for increasing farm yields. Dr. H.D. Kulkarni, Vice- President (Plantation) ITC PSPD, said that it is proposed to take up at least 1,000 hectares by the end of this financial year in Andhra Pradesh, Madhya Pradesh and Maharashtra. Farmers can grow pulpwood trees along with tobacco, cotton, bengal gram, chillies and so on to add to their income. Divisional Chief Executive of ITC PSPD Sanjay K. Singh said that ITC has taken this initiative not only as a corporate social responsibility, but also to meet the growing requirement for raw material for making pulp and paper at its unit. The research and development teams of ITC based in Bangalore and Bhadrachalam have developed certain

traits which suit such inter-cropping. They are particularly useful for farmers who have small holdings and low income due to uncertainties of nature. For more than a decade, ITC has taken up social forestry initiatives engaging local tribal population. “Through demonstration projects, we have managed to convince them about the advantages of taking up planned cultivation. The buyback assurance from ITC is an added incentive as they do not have to struggle going about marketing their produce,” Dr Kulkarni said. “Apart from engaging small farmers and tribals with small holdings, ITC also works with large farmers needing help. By doing so, we also ensure that there is steady back up of raw material for our plant need. Incidentally, several other paper manufacturers also buy wood from these farmers,” Dr Singh said.

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Corporate News

Britannia Industries plans to go beyond biscuits; eyes entire food & beverages sector

ritannia Industries plans aggressive moves beyond its mainstay biscuits business as its ambitions now encompass the entire world of food and beverages industry, its managing director Vinita Bali says. "Obviously, we are going to be in a business which is about things that people eat or drink," Bali said. "Anything

within that, which is relevant (and) which can be differentiated, would be of interest to us," she added. Bali does not name any particular segment Britannia plans to enter, but feels that her 119-year-old brand has huge potential to grow beyond biscuits, which make four-fifths of its sales. "I agree that Rs 4,600 crore (in sales) is too

little for Britannia. Therefore, we have to work even harder to grow that," she says. "But we need to grow it meaningfully, and in a manner that is profitable and sustainable."

McCormick to market Kohinoor rice

cCormick and Company Inc, which recently entered the domestic market through an alliance with Kohinoor Foods, is targeting sales of $85 million in the first year of operations here. The US-based manufacturer and marketer of seasonings, spices, flavours and speciality foods owns 85 per cent stake in joint venture company Kohinoor Speciality Foods India Private Ltd, with the Indian partner holding the remaining stake. “McCormick expects the joint venture sales to be approximately $85 million

in the first year, and will be accretive to McCormick's earnings per share in 2012,” Satish Rao, Managing Director, Kohinoor Specialty Foods, said. The joint venture is part of McCormick's strategic business plan to expand sales in emerging markets. Including India, it expects emerging markets to contribute approximately 12 per cent of total sales by 2015, from 9 per cent currently. Elaborating, Rao said, “McCormick believes that Kohinoor has developed a fast-growing, profitable business, with

pan-India brand equity and a national distribution network enabling (our) product reach to 3,50,000 retail outlets. This will help McCormick strengthen its footprint in India.” McCormick plans to launch new products, penetrate under-served markets and expand the foodservice channel in India. To begin with, the company has launched marketing and advertising initiatives for Kohinoor rice, and introduced the concept of ‘Basmati Meter' to educate consumers on how to choose true Basmati rice.

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Corporate News

MTR eyes buys in jams, ketchups segment

TR Foods, that has a presence in the mixes, spices and snacks market, is eyeing acquisitions in the jams and ketchups segment. Speaking to a business daily at the launch of its snacks range, Sanjay Sharma, CEO, MTR Foods, said that the company is ready to expand into ‘adjacent’ lines of the foods business that are fruits and vegetables based.

Eyes acquisitions “These acquisitions could be in the areas of jams, ketchups or confectionery,” he said. MTR Foods, now a wholly owned subsidiary of Norwegain food company, Orkla Brands, bought Pune-based Rasoi Magic in April for an undisclosed amount. Sharma said that Rasoi Magic augmented MTR”s presence in the

ready-to-cook category. Funding for such strategic buys would be through internal accruals, he said. Enters snacks market: MTR Foods today entered the Rs 6,200-crore Indian snacks market with its range of South Indian snacks. The company posted revenues of Rs 250 crore in 2009 and expects to double its revenues in 2012, Sharma said.

Vadilal’s frozen snacks to be available in India

ce cream major Vadilal Industries Ltd, which had diversified into frozen food for mainly export markets a few years ago, said it would now make available these products across India through various retail chain outlets. India’s frozen snacks market size in the organised sector is about Rs 2,000 crore with an industry CAGR of 18%. Currently, Vadilal is launching these products in Gujarat, Maharashtra and Rajasthan markets from the retail outlets of Reliance, Food Bazar, Hypercity, D Mart, Star Bazar and others. The company has tied up with these retail majors for marketing frozen food products through their nearly 200 outlets, said Rajesh Gandhi and Devanshu Gandhi, both Managing Directors here. Over the next few months, Vadilal

will also supply these items in the Delhi and Bangalore markets as a prelude to its penetration into the northern and southern states. Vadilal Industries’ turnover in 2010-11 was Rs 350 crore, including Rs 38 crore from export of frozen snacks items consumed by NRIs, particularly by the non-resident Gujaratis (NRGs), in countries like the USA, Australia, the UK and Europe. “We want to increase this component of revenue to Rs 75 crore this year by launching the products aggressively in the Indian market as well.” The company, which has been manufacturing frozen food items at its Dharampur (Valsad) facility in South Gujarat and exporting about 70% of these, is also setting up a new, fully-automated

paratha line with an investment of Rs five crore to boost up production. The ready-to-eat snacks include plain and stuffed parathas, samosas, kachoris, and spring rolls. In all, Vadilal will be offering a menu of more than 50 items in the frozen snacks category. These would have a shelf-life of up to two years as the products would be stored frozen at -18oC temperature in retail stores as well. Vadilal had so far invested Rs 15 crore in Dharmapur unit, which has a capacity of manufacturing 5,400 tonnes per annum of frozen snacks. In order to procure vegetables and other ingredients for frozen snacks, Vadilal has roped in nearly 50 contract farmers in South Gujarat.

Nature's Basket expects break-even soon

ourmet foods retailer Godrej Nature's Basket expects a companylevel break-even in 18-24 months. Mohit Khattar, Managing Director of the company, said out of the 16 stores, nine have become profitable at the store level. “Indians have doubled their spending on gourmet foods in the last three years. Today, the average ticket size of a consumer in our store is between Rs 700

and Rs 1,000, while it used to be half of that three years back,” Khattar said. Godrej Nature's Basket operates in the niche gourmet foods segment that is a mere 2-3 per cent of the overall food market in the country. The gourmet foods basket encompassing wines, cheeses, pastas, cold cuts, meats, vegetables, fruits, dessert, beverages and spices is estimated to be about Rs 1000 crore growing at 30-

35 per cent every year. About 80 per cent of Nature's Basket shelves are occupied by international brands. The gourmet retailer chain currently has 16 stores across the country and plans to open 16 more in the next two years. The company posted revenues of around Rs 60 crore in the fiscal 201011 and expects to grow to a Rs 90 crore company by the end of the current year.

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Food & Beverages News

Indians are spending more on cookies as on biscuits

hile recent statistics relate consumer spending to poverty status, the country's Rs 15,000-crore biscuits market is throwing light on yet another consumption story. Indians are spending as much on cookies as they are on biscuits that are staple fare, including Glucose, Marie and Milk. Both categories now command 24 per cent each of the consumer spend. In the last two years, the biscuits segment, ruled by the Glucose biscuit, has been consistently losing market share to its more appealing cousin, the cookie, Anuradha Narasimhan, Category Director, Health and Wellness, Britannia Industries Ltd, said. She said that the category's share has

dipped from one-third of the market it commanded two years back, while the cookies' share has shot up from the 12 per cent it commanded two years back. “We realize that consumers are looking for food for pleasure but are not willing to give up on nutrition,” said Narasimhan. Thus, to keep consumer interests alive in the declining mass market biscuit segment, Britannia is re-launching its rusks range. With offerings like new variants, smaller packs priced at Rs 5 and Rs 10, and a new promotion strategy, the company hopes to infuse new life into the category. The company also recently launched Tiger Crunch, a variant of the basic Glucose brand and is eyeing entry into the savouries segment.

Rusk, a twice-baked hard biscuit, is mostly sold through the unorganised segment and is seen as an affordable ‘health product.' The category is valued at about Rs 900 crore and growing at 40 per cent plus, almost double the glucose biscuit market growth rate.

No lip service; ban junk food sale in schools: HC tells Centre

elhi high court has pulled up the Central government for doing mere lip service in the name of efforts to curb sale of junk food and aerated beverages in school and college canteens in the capital. The court demanded that the government take concrete steps on enforcing the ban. “We do not need lip service, we want the government to take effective steps to ensure that the sale and supply of junk food is completely banned near the educational institutions,” a division bench of Justices A K Sikri and Siddharth Mridul said, expressing displeasure over the government affidavit that simply admitted the health hazards of junk food. “We are not satisfied with the affidavit you have filed,” the bench said. It was hearing a PIL for a ban on the sale of junk food and carbonated drinks near educational institutions. “You have merely written to various state governments informing them about the harmful effects of consumption of junk foods. But what are the effective steps you have taken to prevent the sale of junk foods,” HC queried, seeking a fresh

action-taken-report from the Centre by November 2. HC pointed out that the government said it had written to governments of various states about the harmful effects caused by consuming junk food. But this does not solve the problem as it won’t prevent selling of junk food near institutional areas, the court said. It made the remarks when senior lawyer N K Kaul, appointed by the court as its amicus curiae, told the bench that in response to the plea for banning sale of junk food around educational institutions, the Centre had only written to various state governments. The affidavit filed by the Centre in July this year is vague and nothing has been mentioned as to how to control selling of junk food near schools, Kaul told the court. In its affidavit filed on July 18, the Central government had invited proposals from experienced agencies, organizations and institutions for framing guidelines for providing safe food in educational institutions. The centre is actively engaged in dealing with the health risks that the consumption of junk food may pose to the general health of

the population and more particularly the children of the country, the government’s affidavit, which was filed in July, said. Earlier, in another affidavit, the health ministry had stated that it wrote to all states and union territories to consider issuing instructions for withdrawing carbonated beverages and junk food from school and college canteens. HC was hearing a PIL filed by an NGO seeking a ban on the sale of junk food and carbonated drinks within a 1,500 feet radius of schools.

AgriBusiness & Food Industry w November 2011

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Food & Beverages News

Now, order cut fruits and vegetables online!

venly and thinly sliced vegetables are now available at the Veggi Bazaar website. Veggi Bazaar, one of the country’s first online destinations for fresh fruits and vegetables, home-delivers cut veggies and fruits to Chennai. With the arrival of this website, we can gleefully say goodbye to long phone calls to get our veggies and fruits delivered from the nearby grocer or the usual morning haggle with the pushcart vendor. Once you ensure that they deliver to your area code, shopping for your meals is just a click away! Unlike the run-of-the-mill startup centre every IT professional tried to put up during the recession, Venkatesan had something else up his sleeve. Considering his father was in the catering business, it also made sense for him to get involved with something to do with food. “My wife and I found it very difficult to shop for fruits and vegetables, considering both of us were working and we were mainly looking for hygienic cut vegetables,” explains Venkatesan and adds, “Keeping in mind the time constraint everyone else

also has, we thought internet was the right medium.” He also makes sure that the vegetables and fruits that go out on delivery are as hygienic as they can be. “There is no hand touch, the vegetables are all machine-cut and are also cleaned and washed carefully before being packed into trays with plastic wrapper,” he explains. Apart from the Julienne (in Veggi Bazaar, it means evenly and thinly sliced) cut, they also have diced and ripper cut sliced vegetables and fruits. To help make kids’ meals fun, they also offer various packages, with one colour scheme each day. Drive away Monday morning blues with hues of purple with the Monday Purple Package with Red Cabbage Grater cut (250 Gms), Beetroot dice cut (250 Gms) and Chevvazhai Pazham (3 Pieces). To make shopping easier, they offer smartly planned, preset packages such as the Pregnancy Combo Pack and the Kids and Vitamins Package. And if you have scrounged around expensive stores looking for exotic ingredients, Veggi Bazaar is the

perfect solution for you. They have leeks, asparagus, lettuce, broccoli, celery, among other greens. These “English vegetables,” as Venkatesan calls them, are directly sourced from Ooty, he informs us. The other products available through the website are sourced from the Koyambedu market and farms 90kms away from the city. All orders that have a billing value of over Rs. 150 are not charged for delivery, whereas for those lesser than Rs. 150, a nominal charge of Rs. 20 is levied. Orders from phone calls are taken in till 7pm, while those from the website are taken in until 10pm. “Our delivery people call the customers ahead and provide them with a window time of two hours,” says Venkatesan.

Chinese Muslims tap the West Asian halal food market

hen Chinese officials discovered a business opportunity in the fastgrowing West Asian halal food market, they turned to Wang Meng, who prefers to introduce himself as “Sayyid” when he meets foreigners. Twelve years ago, Wang, who is from China's Hui Muslim minority group, founded a halal food company in Beijing to cater to the city's Muslim community. In a country where pork is the dominant meat — consumed in every restaurant and found on most dinner tables — Wang felt there was a crying need for a brand of food that ensured the strictest quality control. A brand, he said, that Chinese Muslims could trust. “As a Muslim, I wanted to do something for my community,” Wang said. “So I started this business from the heart.” Today, Wang's Xiangjuzhai Foods Group is one of Beijing's biggest halal

Trader Wang Meng showcases Halal-certified Chinese sweets and mooncakes at a Chinese-Arab trade fair

food suppliers and has been approached by the government to play a role in its ambitious plan to build a dominant halal foods export industry to cater to West Asian markets. With the support of the government, Wang's company will, next year, begin exporting its halal products to West Asian countries, Malaysia and Indonesia,

AgriBusiness & Food Industry w November 2011

at competitive prices that traders say will challenge dominant halal exporters around the world, including those from Brazil and India. China's growing halal trade is only one part of a wider push to expand ties with the Arab world beyond oil, which makes up a bulk of the trade now. China is dependent on the region for its growing energy needs, importing 55 per cent of its oil. Recently, China launched its biggest effort yet to tap West Asian markets in Yinchuan, the fast-growing capital city of Ningxia, a dry desert land home to the Hui. Ningxia, where two million Hui Muslims live, making up a third of the population, is being developed into a “strategic centre” for China's West Asian trade push. The government is looking to leverage the region's religious and historical connections to the Arab world

Food & Beverages News — Huis descended from Muslim traders who travelled to China on the Silk Road — to boost trade ties. At a China-Arab States trade fair in Yinchuan, the government sought Arab investment in the construction of a $300million industrial park, four five-star hotels and a number of infrastructure projects listed in its Five-Year Plan, announced earlier this year. China's plans, in the food processing sector for example, will have an impact beyond the region. Wang said Ningxia was in the process of setting up a halal certification system — with Malaysian

help, to boost its credibility — and had received the support of Qatar and the United Arab Emirates. According to the local government, nearly 10,000 companies are now involved in Ningxia's $3.7-billion halal food and Muslim products industry. Wang, of the Xiangjuzhai food company, said Ningxia's preferential policies for “Muslim products” had led him to invest in a factory near Yinchuan. With government support, low investment costs and huge infrastructure investments in Ningxia's processing centres, companies like his, according to many traders at the

fair, will pose a serious challenge to the Brazilian, Australian and Indian players who dominte the halal foods market. At the fair, he said, a number of Malaysian and Indonesian investors had expressed interest in his halal products, from traditional Chinese mooncakes to bread. Wang will also visit India later this year to meet with potential trading partners. “The halal market in China is growing every year,” he said, pointing to rising consumption and a fast-growing middle class. “But our focus from now,” he added, “will be overseas.”

Vada pav can be India’s burger!

o-Founder of the Mumbai-based Goli Vada Pav (GVP), Venkatesh Iyer, believes it can become India's own burger, given that both are basically patties placed between two pieces of bread. GVP is a chain that doles out the popular Mumbaiya snack. The chain, of which Shivadas Menon is another founder, is now established in Tier-II cities in Maharashtra and Bangalore, and wants to expand in the South. GVP recently got Rs 21-crore funding from the Chennai-based VenturEast, will use it to strengthen manpower and IT systems. It uses social media to market itself, says Iyer. The founders worked in corporate finance earlier. The chain has 120 outlets across India, most of them in Maharashtra's tier-II cities, 20 in Bangalore, a couple in Hyderabad and one in Chennai. In the next 3-5 years, it expects to have 500 stores operating across the country, 150 of them in the South. This would call for adding two new facilities, one each in the

North and South, to the unit in Mumbai. GVP intends launching a certificate course in retail management for its employees that would aid their advancement within and outside the chain. It will collaborate with training schools and hopes to launch it within a year. A so-certified employee who works for a year at GVP can become a cluster manager and even an entrepreneur later, says Iyer. When the business was set up in 2004, it capitalized on some observations and goals: Potato and wheat is a universally loved combination (in India, think bonda, samosa, aloo paratha); Indians love besan (gram flour – think Mysore pak, son papdi, dhokla); the snack has to be ready and served in five minutes; it has to be fast food, finger food and mobile food (that could be eaten on the go). Wastage, pilferage and price and quality standardization were challenges. A tie-up with Vista Processed Foods, which makes the patties for McDonald's burgers, ensured them a standardized

A Goli Vada Pav outlet in Bangalore

supply – with a proprietary spice “formula” of ginger, chilli and garlic supplied by GVP's factory. Frozen patties are ferried in trucks to outlets, which only have to fry and assemble the snack. Chutneys and pav are sourced locally. The chain serves seven varieties of vada pav, including corn-spinach, cheese and Szechuan, priced Rs 20-35 a piece. What would it do in Chennai, where the vada (a potato patty) may well be mistaken for a medu vada? “Yeah, we'll have to address these problems,” says Iyer, adding that they may introduce versions with paruppu vada, bonda and local chutneys.

Costlier milk & cashew impact biscuit prices

iscuit prices are heading northward. Leading biscuit makers including ITC,Britannia , Parle and United Biscuits have raised prices in the range of 2% to 10% to encash festival demand despite a significant price drop in its raw materials

like sugar , edible oil and wheat. The biscuit makers say they don't foresee any dip in consumption because of the price hikes as entry-level price points like Rs 5 and Rs 10 remain constant, adding that prices of packs that have gone

up largely don't target value-conscious consumers. The Rs 12,000-crore biscuit industry has been growing at 10% to 12% annually. Chitranjan Dar, divisional chief executive, ITC Foods, said: "During the last

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three months, there has been a marginal increase in a couple of biscuit varieties. On the whole, these would amount to less than a percent or two across the entire category. We do not react to inflation in a jiffy. Therefore, some price hikes take time to implement , and happen only when we are convinced that a downturn in costs is unlikely." ITC manufactures biscuits under the brand name Sunfeast and Dark Fantasy. Dar said that the costs of milk products, cocoa, cashew and several other commodities are continuously rising. "These are critical ingredients. The weakening of the rupee will also have an impact on oil costs," he added. However, the edible oil industry says that oil prices have not gone up in

the recent past. Angshu Mallik, chief operating officer of Adani Wilmar, said: "Edible oil prices have gone down as international commodity prices have cooled down. Prices are down by Rs 1 - Rs 1.50 per litre and this price will continue for sometime now." Adani supplies edible oil to ITC, Britannia, Parle, Biskfarm and other leading biscuit manufacturers. But cashew prices have really hit the biscuit industry. Cashew nut prices have increased by Rs 700-Rs 800 per bag (each bag contains 80 kg) over the last one month. Imported nuts prices are now at Rs 7,500 per bag as against Rs 6,600 in August. Milk prices have also appreciated by 10.35% over the last couple of months. Pravin Kulkarni , general manager (marketing) at Parle Products, the country's largest biscuit firm that makes brands like Monaco and Hide'n Seek, says: "We have to look at weighted average prices of the full year; we don't take pricing decisions based on one or two months." Kulkarni said Parle has been hiking prices by 8-10 % over the last two months across its brands like Marie, Monaco, Hide'n Seek and Parle-G . Prices of Oreo, CadburyKraft's chocolate-vanilla biscuit launched this April, have also gone up. While a 7-unit pack of Oreo is at Rs

12 against Rs 11 earlier , a 14-unit pack is now priced at Rs 24 in place of Rs 20. The US-based parent company, Kraft, has raised prices this year as sugar prices have increased. In the US, sugar stock piles is the lowest in 37 years after rain and freezing weather damaged the beet root. On the contrary, sugar prices in India have not firmed up yet and the prices are much lower than the industry expectation. The small variety of sugar, which is used mostly, is commanding a price of Rs 27.80 - Rs 28.30 per kg. The medium variety price is hovering between Rs 28.50 and Rs 29.50 per kg whereas the large variety sugar is garnering a price of Rs 29.70 Rs 30.20 per kg. Jayant Kapre, president of United Biscuits (UB), the India arm of the UK snacks firm that makes McVitie's digestives biscuits, says: "If price hikes are not done repeatedly and are on account of genuine input inflation, consumers will accept them a bit easier." A 230-gm pack of McVities biscuits went up from Rs 30 to Rs 35, starting this July. A spokesperson of Britannia, maker of Good Day and Tiger brands, said the company constantly reviews input costs and modify its pricing appropriately. Britannia, too, has increased the prices of its digestive cookies.

Amul opens quick-service restaurants

oining the race with Big Mac and others to open quick-service restaurants (QSRs), Asia's largest dairy products brand, Amul, on Thursday launched two of its own in Bangalore and Ahmedabad,

and said it would open eight more cafes-cum-restaurants across India by the end of the fiscal 2011-12. This is yet another step by the Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets the Amul brand, to expand its footprint by diversifying into the fast food market. Amul is going the franchisee-model way to set up these outlets, an official said. The franchisee will be investing around Rs 20-25 lakh to set up an outlet in an area of nearly 1,000-2,000 sq ft, while Amul will be providing its expertise in branding and marketing and

AgriBusiness & Food Industry w November 2011

offering technical expertise. GCMMF plans to open such cafes in Tamil Nadu, Maharashtra, Karnataka, Gujarat and other States to cater to the youth segment. The cooperative body, having a turnover of nearly Rs 10,000 per annum, is also considering to set up dairy plants outside India, including the US, besides aiming to expand its network of 6,000 outlets to 10,000 by next year. In 201011, Amul exported products worth Rs 98 crore. Mr R. S. Sodhi, Managing Director, GCMMF, said the cafes-cum-QSRs would offer a range of Amul products as well as fast food varieties, including pizzas, burgers, gulab jamuns, sweets, noodles, pav bhaji, dosa and sandwiches.

Industry News

Guargum and sesame industry not affected by US & Europe recession

slowdown in the US and the debt crises in Europe have not affected the guargum and sesame industries. The unit price realization has increased in the last quarter due to limited supply. The industry has now put forward a proposal to the commerce ministry for increasing acreage in Rajasthan, Haryana and Gujarat. Managing director of Sunita Hydrocolloids PK Hissaria said, "The recession is yet to affect the guargum industry. The next few months are critical for the exports as the global importers will close their financial year in December. There may be some decrease in demand; however, as of now, prices remain firm in the global markets." The export figures shared by Shellac

& Forest Product Promotion Council (Shefexil) show that exports has risen by 200% in value terms in the first three months of the current financial year. In June this year, the exports have gone up by 255.73% compared to the same period previous year. Based on this trend, the industry is expecting to achieve a Rs 2,845.65-crore export turnover in FY12 compared to Rs 2,276.52 crore in FY11. The area under guar cultivation in Rajasthan this season stands at 2.9 million hectares, compared to 3 million hectares last season. In Haryana, the area under guar has come down from 2,56,000 hectares registered last year to 2,15,000 hectares this year. According to the first advance estimates, guar seed output in Rajasthan is estimated at 11.36 lakh tonne

for 2011-12 season compared to 15.46 lakh tonne in 2010-11. Nearly 75% of the guar gum and their derivatives produced in India are exported to the US and Europe. The US had imported guargum worth Rs 1,009.98 crore in FY11. "The demand for guargum is increasing in the US and Europe for industrial use like oil well drilling, mining, construction and explosives. We have submitted a proposal to the ministry for increasing acreage in growing regions," said Debjani Roy, executive director of Shefexil. Kanak Thakker, vice chairman of Indian Oil Seeds & Produce Export Promotion Council, said the recession has not yet affected the sesame industry. Sesame is used in burgers and other food items.

Coffee Board says global production shortfall will continue

he Coffee Board says the shortfall in global coffee production to continue this year as well. Speaking at the 118th Upasi annual meet on commodity outlook for coffee, M. Chandrasekar, Secretary, Coffee Board, said: “South America is yet to recover and the shortfall for crop year 2011-12 is expected to be around 3.10 million bags.” Global arabica output is expected to be down by 6 per cent at 78.76 million bags and robusta up by 1.7 per cent at 50.71 million bags. Major production gain is seen in Columbia 10 million bags (10 per cent) Uganda 3.2 million bags (14 per cent). Shortfall is seen in Brazil 43.15 million bags (10 per cent), Vietnam 20-22 million bags (10 per cent) Indonesia 6.7 million bags (27 per cent). Coffee prices witnessed downward correction in September, but is still relatively firm, particularly in arabica. The decline is mainly caused due to disinvestment in commodities in response to anxieties the world economy is going through. “Low stock in exporting countries and buoyant world consumption mean that the supply/demand balance remains tight,” Chandrasekar explained. He further added that growth of niche markets in traditional consuming countries and the arrival of new consumers in emerging markets and exporting countries

indicate promising prospects for coffee. Major Issues Despite good remunerative prices, issues facing Indian coffee sector are augmenting production to retain export share and meet domestic demand. Declining productivity is another area of concern; it is affecting cost competitiveness especially due to rise in labour costs. Shifting monsoon patterns, heavy and unseasonal rains during harvesting phase, drought during blossom, has impacted Indian coffee production.

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Industry News

Seafood exporters focus on Chinese market

s purchases from Europe and the US dwindle, Indian seafood exporters are turning more to China. Already China is the top buyer and, with the ongoing economic distress in the US and Europe, it could further raise its share in the Indian seafood market. "China is quite active in the market. They are reducing cost by going for direct purchase, avoiding middlemen. By the end of the current fiscal, their share in Indian seafood by value could rise beyond the current 15%," said N Ramesh, director of marketing, Marine Products Export Development Authority. Though the EU accounts for a major share of 27% in value terms, its off take is showing signs of a gradual decline. This

can be seen in the purchase as, unlike in the past, they are going for small-sized shrimps to cut down cost. Higher demand from China and Southeast Asia is partly due to some problems faced by these countries. "They are facing some shortage of the product as farms of vannamei shrimps, which command the best prices in the market now, have been hit by diseases. Floods in Thailand have led to a washout," said Anwar Hashim, president of Seafood Exporters Association of India. Gujarat, the largest exporter of fish in both quantity and value from India, saw demand from Europe and the US fall by 5% to 7%. "We expect a further decline of 5% from these markets. The

European buyers are currently adopting a wait-and-watch policy, anticipating that the prices will fall by 10% or the market will stabilize," said Jagdish Fofandi, secretary-Gujarat, Seafood Exporters Association.

Sri Lanka ponders over Food Security Bill

he draft Indian Food Security Bill could provide valuable inputs to a similar Sri Lankan initiative, President Mahinda Rajapaksa said. The Indian Bill is designed to ensure that every citizen has a legal right to food. President Rajapaksa made the remark at a meeting with Indian agricultural scientist and Member of Parliament M S Swaminathan. Professor Swaminathan, who has visited Sri Lanka several times since the 1970s to share his expertise in agriculture, observed that rice production in the island had shown a remarkable increase in recent years, largely due to supply of fertilizers to farmers at subsidized prices. This year Sri Lanka would export rice, he was informed at the meeting at Temple Trees. Steps to sustain and expand the rice “revolution” were discussed at the meeting. The additional measures suggested included providing nutrient-based subsidy to promote balanced fertilization, introducing mobile soil health monitoring vans that can issue

soil health passbooks to farmers and appropriate high-yielding hybrid rice s t r a i n s , coupled with sustainable rice intensification agronomic M S Swaminathan procedures. S t e p s will have to be taken to increase the yield per unit of land and water on an environmentally sustainable basis, it was felt. Improving productivity with respect to other crops, enhancing the catch for fishermen using modern technology and introducing mitigation measures in the context of climate change also came up for discussion. Anticipatory action was required to meet the challenge of rising sea level. The December 26, 2004 tsunami was a wake-up call, it was noted. The meeting recognized that climate refugees will move from coastal to inland areas.

AgriBusiness & Food Industry w November 2011

Professor Swaminathan suggested that Sri Lanka’s Sea Level Rise Management Strategy might include the following components: updating the coastal vulnerability map prepared about 10 years ago, raising mangrove and nonmangrove bioshields, introducing and cultivating salinity tolerant rice varieties and establishing a genetic garden of halphytes (seawatertolerant plants) to promote agri-aqua farms along the coast. It was decided to establish International Research Centre at Jaffna to convert the scientific findings into field-level applications. Such a centre will help to bridge the gap between scientific know-how and field level do-how. External Affairs Minister Prof G L Peiris, Economic Development Minister Basil Rajapaksa, Fisheries Minister Rajitha Senaratne, Agriculture Minister Mahinda Yapa Abeywardena, Foreign Secretary K. Amunugama and Indian High Commissioner to Sri Lanka Ashok K Kantha attended the meeting.

Dairy News

Dairy Queen wishes joint venture with Reliance Retail

illionaire investor Warren Buffett's Berkshire Hathaway wants a big scoop of India's consumption story. Berkshire-owned Dairy Queen (DQ), an international soft-serve ice cream and frozen food retailer, is holding talks with Reliance Retail for joint venture in India, according to multiple sources directly aware of the matter. A potential deal could also see the Mukesh Ambani firm making a big move into the quick service restaurant business, as DQ operates close to 6,000 outlets worldwide selling grilled products like burgers and hot dogs. India, with the highest per capita

consumption of milk, has seen robust growth in premium processed dairy products in recent years. But with per capita ice cream consumption estimated at 300ml, which is just 1.4% of that in the US, the domestic consumption offers a huge growth story for global soft-serve retailers. The $2.5-billion DQ wants to expand aggressively in Middle East and Asian markets. Top Reliance executives visited south east Asian markets like Thailand in recent weeks to understand DQ's operations. The Mukesh Ambani firm has reasonable presence in the domestic dairy market processing half a million litres of milk

everyday, with 3,000 collection points nationwide. A tie-up with DQ would see Reliance Retail becoming serious player in the frozen foods market and scaling up its dairy operations in the process. It is learnt that DQ had mandated consultancy firm Technopak to chart its India plans, which may be finalized by early 2012. A Reliance spokesperson said the company would not comment on speculation as a matter of policy. Sources said DQ's deal with Reliance Retail was still in the making and not yet clinched. Minnesotta-based DQ may be keeping options open with other potential Indian partners even as Reliance evaluates a tie-up.

South Africa impressed by 'Amul' model

mpressed with the success story of Gujarat Cooperative Milk Marketing Federation (GCMMF), which sells its products across India under the 'Amul' brand name, South Africa has expressed interest in following this model in its land. Harris Sithembile Majeke, the High Commissioner of South Africa to India, and Mvuyo Mhangwane, the South African High Commission's Counselor-Political, visited GCMMF's facility at Anand in the last week of September to understand the 'Amul' model of dairy cooperatives, GCMMF Managing Director R S Sodhi said. They had come on the invitation of Gujarat government. Formed in 1946, GCMMF started off as a dairy cooperative movement in India. Today, Amul is a brand name that is jointly owned by some 2.6 million milk producers in Gujarat and managed by this apex cooperative organization.

The visiting South African officials said the government's 'Operation Flood' milk that Amul personified the best model for production programme. poverty alleviation, Sodhi, who interacted with the visitors, said quoting them. They said the experiment would be particularly helpful in solving the problems of small dairy farmers in their country. The delegation also noted the impressive growth achieved by GCMMF, which is now a Rs 12,000 crore (India's Leading Agro-based Publications and Exhibition Organiser Group) (USD 3 billion) entity. They were impressed Looking for Suitable with the model, which not only Marketing Agents on Commission Basis provides livelihood for Booking of Advertisements in to 3.1 million milk Agriculture, Food Trade Magazines, producers in Gujarat, Newspaper & Directories. but also has brought prosperity to milk Interested Please Write to: producers in other Media Today Pvt. Ltd. parts of India, as the E-mail: mediatodaymails@gmail.com, 'Amul' model has catchcos@yahoo.com been successfully Website: www.MediaToday.in replicated under

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