Food and Beverage Sector in India Monthly Update March 2012
Top Story DRDO, BASIX, FICCI launch Aahar project India has produced 116 mn tons of milk in 2011 and the demand is likely to touch 150 mn tons in the next 5 years; growing at a rate of 29%. India would be requiring 150 mn tons of milk by end of next five year plan (2012‐17). It is estimated that India’s consumption might further rise to 210 mn tons in next 10 years. This increase in consumption can be attributed to the fact that a lot of people are becoming health conscious and shifting to dairy products. Other major reason cited is increase in population. Moreover processed dairy products are easily available at all metros and even rural areas which facilitate the consumption of dairy based products. It is also the reason why India must improve its milk production scenario; else India might have to import milk in spite of being the largest producer of milk globally. It also suggests that there is a need to improve the cold storage scenario and food processing facilities in India.
News Update
General
New ad campaign from Pepsi Pepsi has launched its first football advertisement campaign in the country. This ad features actor Ranbir Kapoor. This is an attempt by the company to cash in on the gaining popularity of sport in India. The company has confirmed that the campaign kick‐starts with a football themed ad film featuring Ranbir Kapoor, and will be followed by a series of initiatives over the year including outdoor, consumer engagement and social media programs Bangalore Milk Union upgrades facility Bengalore Milk Union, has upgraded its processing facility by installing a butter‐making machine at an investment of INR 38.5 mn. The machine has the capacity to produce 1,000 kg of butter an hour. The butter made by the machine has uniform quality. As moisture and fat content are even, the butter retains its shortness which helps in reducing fat loss. Also the manufacturing process ensures little or no wastage. Furthermore, this machine ensures hygienic standards and will prevent presence of unwanted bacteria Central Institute of PostHarvest Engineering and Technology (CIPHET) commercializes food processing system CIPHET has commercialized the two new technologies ‐ custard apple pulper and autoclavable micro‐encapsulation system. The license for the custard apple pulper was Food and Beverage – Monthly Update
sold to Nextgen Drying System Pvt. Ltd (NGDS), Pune, for INR 0.185 mn while the autoclavable micro‐encapsulation system was licensed to Singh Scientific Glass Work (SSGW), Ludhiana, INR 50,000 . The institute is of the opinion that this technology would definitely help the food processing industry Kingfisherthe numero uno beer brand in India The market share of Kingfisher has increase from 43% in 2006 to 57% in 2011, to become the largest player in the Indian beer market. UB group had started selling Heineken in India over the past seven months to offer more options against foreign rivals. Moreover, companies like SAB miller has been plagued by the ever changing state rules and high tax regime. Also the preference of Indian consumers for strong alcohol content has also worked in favour for Kingfisher Dedicated wine park to be commissioned in Bijapur The Karnataka government has decided to set up a dedicated wine park at Bijapur. The key objective of the wine park is to persuade the production of wine, which offers the farmers remunerative prices for the grapes. An area of 150 acres has been earmarked for the project. This new project will be under the supervision of the Karnataka Wine Board. The park would have common facilities like wine labs, research centres to focus on value‐ added products with grapes, quality control centres to test the viability of the crop and a centre of excellence to train and help increase the know‐how of grape cultivation, development of wine and manufacture of value‐added products. As of now the plan is to set up this park with public‐private partnership model. Cadbury launches the new Tang Cadbury India, now part of Kraft Foods, has launched a new flavour of Tang‐ in the mango variant. This new beverage will apparently have the 'thick' texture. This mango beverage has been formulated after an extensive research keeping in mind the Indian consumer preference. The company is of the opinion that this beverage will be thoroughly enjoyed by all mango lovers. Multilayered plastic packing to increase the shelf life of milk Milk can now be packed in PET containers using multi‐layer barrier technology, to extend the product’s shelf life to anything between six months and two years. However, this method of packaging is already in the market and employed by companies like HUL and Heinz to pack products like ketchup jams etc. Parag milk products would be the first among milk manufacturers to use this technology. It would be rolled out in 3 to 4 months time in 40 cities across India. Tata Salt launches flavored salt and black pepper powder Tata Salt has launched flavored range of salt and black pepper in its new range called Flavoritz. Salt is available in Lemon Coriander, Onion Garlic and Red Paprika flavors. Tata's Flavoritz range will be available in 60 gm bottles priced at INR 45. All India launch is
Food and Beverage – Monthly Update
expected to be over by September 2012. This product is particularly meant for a niche segment and won’ be a revenue driver.
News Update Regulatory Nestle charged for violating infant milk law Nestle India has been charged for violating the Infant Milk Substitutes Feeding Bottles (IMS) and Infant Foods (Regulation of Production, Supply and Distribution) Act 1992. This order was in response to a complaint filed on October 19, 1994, against the company. The trials would begin from July 21, 2012. The company which was the leading manufacturer and marketer of 'Cerelac' and 'Lactogen' had violated the provisions of Sec3, 6(1)(a), 6(1)(c), and 7(1) of the Act. Coke and Pepsi to alter drink formulation Both Pepsi Co and CocaCola are changing their method of caramel colouring as it has been brought forward that certain level of carcinogens has the potential to cause cancer. Both this companies will now follow a new set of guidelines. If the companies fail to do so, they might have to put a warning label on their bottles. Wine makers unhappy over special excise duty Dual excise policy adopted by states like Maharashtra and Karnataka is hampering the growth of the grape wine industry. These states have imposed a special excise duty of INR 300/litre for wine manufacturers coming from outside the respective states. This has impacted the operations of wineries that want to expand market in these states. Both states put together approximately account for 16 mn litres per annum. This step has adversely effected the growth of the wine industry as Mumbai is a very large market for wine makers.
News Update
Expansion Plans
Vadilal in expansion mode Vadilal Industries in order to increase their market share in North Indian markets, has taken up an aggressive strategy. They are increasing their point of sales outlets, upgrading their production capacities, offering new products, increasing the company's presence in the interiors of the state and taking on intensive advertising campaign. As a result they are Food and Beverage – Monthly Update
increasing their production capacity of their facility in Bareilly. Vadilal was also procuring milk directly from farmers located around the Bareilly plant. Through their advertising campaign they will be targeting the youth of the country Café Coffee Day to concentrate on food segment CCD is planning to add more menus to their existing food category. They are planning to offer Sandwiches, Biryani and Pastas. The company expects to churn 30 % revenue from this segment. The company would take its total coffee outlets to 2,000 from the existing 1,270 by 2014. This includes lounges and highway cafes and each costing INR 5 mn. Dunkin Donuts to introduce savoury products in Indian outlets Dunkin Donuts is trying to localize its food menu to fit in the Indian platter. The company also has presence through its 462 Baskin‐Robbins outlets in India. The company is trying to promote both the brands in India by roping in NBA player Lebron James. They plan to open as many as 500 stores in India in next 15 years. Living Liquidz launches a new store in Mumbai Living Liquidz has launched its store at Mumbai's domestic airport in Santacruz. Living Liquidz store retails more than 1,000 different brands, covering every region of the world that is renowned for its unique flavour. They also stock an array of flavours of their own newly‐launched wine label Mokssh Wines, which is available in 5 unique flavours. This type of liquor shop which was earlier available only in international airports is now available in domestic terminals as well. They plan to extend its reach to India's other significant airports in the near future. Danone launches packaged lassi Danone has forayed into the packaged lassi segment with the launch of Danone Lassi, a fortified avatar of the refreshing, healthy beverage. This has been specifically designed for the Indian tastes and is available in three flavours ‐ Sweetened, Masala and Mango priced at INR 15. As of now this will be made available in Mumbai, Pune, Hyderabad and Bangalore. This lassi is fortified with 4 vital nutrients. This is a part of the portfolio extension for Danone which already has products like yoghurt. Rasna to enter the ready to eat market Rasna Private Ltd is setting up a separate subsidiary‐Rasna Beverages. This new subsidiary will be responsible for manufacturing, distributing and marketing of ready‐to‐ drink beverages like energy drinks, fortified water and premium juices in tie‐up with global firms. They are already in talks with two European and American firms to sell their products. This new subsidiary, will operate independently of the juice concentrate business, with separate sales, marketing and distribution verticals. Dunar Foods to launch new brands Dunar Foods which has received funding worth INR 1.24 bn. From TVS Capital and International Finance Corporation will go into an expansion mode and launch new brands Food and Beverage – Monthly Update
in about a month. The fund will be primarily used to the fund the purchase of necessary machinery from Germany and the US. New manufacturing and processing units would be set up after the machines are procured. Fifty percent of the products are used for domestic consumption and the remaining is exported to Europe & UAE.
Industry Expert Speak Aahar project to serve readytoeat roti, dal –Dr A.S. Bawa, Director, DFRL “The products are suitable for long journeys, nutritional feeding, catering programmes and other similar civilian applications” Transactions (January 2012 March2012) Date
Buyer
Target
Deal Size (INR mn)
% stake
Deal Status
Type of Transaction
23rd March
Naturex
Valentine Agro Ltd
N.A.
N.A.
Completed
Aquisition
13th February
Bunge Ltd
Amrit Banaspati Co. Ltd.
4,130
N.A.
Completed
Acquisition
6th January
Bain Capital TPG KKR
Parag Milk Products
3,750
N.A.
Not Private Equity Completed
Annual Financial Results – Revenue (INR mn) Companies FY '08 FY '09 Amrit Corp Ltd. 260.837 339.346 Amrutanjan Health Care Ltd. 744.317 906.738 Anik Industries 7,583.7 10,209.8 Bombay Burmah Trading Corp. 3,715.5 4,119.5 Ltd. Britannia Industries Ltd 27762.501 34212.28 CCL Products (India) Ltd. 4,129.6 4,682.5 Dabur India Ltd. 23,657.2 28,122.4
FY '10 FY '11 363.465 454.742 897.789 1,054.088 12,232.8 12,788.3 42,409.2 51,444.2 37748.621 4,375.3 33,958.0
46071.969 3,650.2 40,817.4
Food and Beverage – Monthly Update
Emami 6,180.3 7,489.3 10,217.1 12,590.0 Hatsun Agro Products Ltd. 8,676.8 10,135.7 11,415.6 13,568.5 Heritage Foods (India) Ltd. 5,880.3 7,967.5 9,003.8 10,960.9 Hindustan Unilever Ltd. N.A. 166,639.8 180,319.3 200,245.9 ITC Ltd. 146,591.0 165,561.4 191,358.7 222,736.6 Jubilant Foodworks Ltd. 2,113.2 2,806.1 4,239.3 6,782.8 KSE Ltd. 2,894.7 3,502.5 3,714.1 4,541.5 Kwality Dairy India Ltd. 3,330.4 5,828.0 10,541.2 16,080.4 Marico Ltd. 19,050.4 23,884.2 26,607.6 31,283.1 Modern Dairies 4,135.6 4,594.9 4,379.5 4,670.7 Nestle India Ltd. 43,252.2 51,395.5 62,609.4 72,132.9 Radico Khaitan Ltd. 8,094.1 6,960.3 8,355.5 9,964.6 Tata Coffee Ltd. 9,222.6 11,184.3 12,896.3 12,966.5 United Breweries Ltd. 15,805.8 19,294.6 22,755.0 N.A. Zydus Wellness Ltd. 563.3 1,947.4 2,675.2 3,354.1 Annual Financial Results – Income (INR mn) Companies FY '08 FY '09 FY '10 FY '11 Amrit Corp Ltd. 14.979 27.795 25.956 186.756 Amrutanjan Health Care Ltd. 50.27 923.94 114.717 102.119 Anik Industries 232.6 107.9 110.6 100.9 Bombay Burmah Trading Corp. Ltd. 456.9 190.5 362.9 1,176.3 Britannia Industries Ltd. 1774.389 1514.848 1031.799 1343.489 CCL Products (India) Ltd. 354.5 169.9 280.0 259.2 Dabur India Ltd. 3,331.3 3,905.0 5,010.8 5,685.7 Emami 901.9 918.6 1,697.3 2,287.2 Hatsun Agro Products Ltd. 173.3 118.7 27.9 187.5 Heritage Foods (India) Ltd. 9.4 (357.2) 55.1 11.1 Hindustan Unilever Ltd. N.A. 20,036.1 21,566.3 22,960.5 ITC Ltd. 31,577.6 33,245.9 41,681.8 50,179.3 Jubilant Foodworks Ltd. 77.6 73.0 329.7 717.4 KSE Ltd. 25.8 32.1 82.7 45.0 Kwality Dairy India Ltd. 46.2 93.8 179.5 459.4 Marico Ltd. 1,690.7 1,887.2 2,316.7 2,864.4 Modern Dairies 66.0 (260.0) (17.8) (410.7) Nestle India Ltd. 5,340.8 6,550.0 8,186.6 9,341.2 Radico Khaitan Ltd. 265.4 65.4 415.4 728.0 Tata Coffee Ltd. 238.8 238.8 238.8 238.8 United Breweries Ltd. 541.7 460.9 896.4 N.A. Zydus Wellness Ltd. 45.548 238 452.7 594.8
Food and Beverage – Monthly Update
Quarterly Financial Results – Revenue (INR mn) Companies Amrit Corp Ltd. Amrutanjan Health Care Ltd. Anik Industries Bombay Burmah Trading Corp. Ltd. Britannia Industries Ltd. CCL Products (India) Ltd. Dabur India Ltd. Emami Heritage Foods (India) Ltd Hindustan Unilever Ltd. ITC Ltd. Jubilant Foodworks Ltd. KSE Ltd. Kwality Dairy India Ltd. Marico Ltd. Modern Dairies Nestle India Ltd. Radico Khaitan Ltd. Tata Coffee Ltd. United Breweries Ltd. Zydus Wellness Ltd.
JanMar AprJun JulSep OctDec 2011 2011 2011 2011 150.31 127.491 N.A. 135.813 N.A. N.A. N.A. 363.639 3,912.0 3,283.3 3,287.9 24,929.8
24,929.8
N.A.
24,929.8
N.A.
N.A.
N.A.
12,491.0
1,035.4 11,125.1 3,378.6 3,073.8 N.A. N.A. 1,938.3 1,242.1 4,766.0 7,473.5 1,412.5 18,099.9 2,727.7 3,358.4 N.A. 773.9
987.2 12,045.8 2,999.1 3,139.0 55,793.6 58,601.8 N.A. 1,276.4 4,820.1 10,486.2 1,097.0 17,630.5 3,019.2 3,315.3 9,437.9 907.4
1,274.5 12,623.3 3,104.3 3,461.6 N.A. N.A. N.A. 1,311.4 5,131.0 9,744.5 1,057.3 19,631.0 2,627.3 4,102.8 N.A. 838.9
N.A. 14,526.8 4,572.6 3,545.1 59,376.3 62,478.4 N.A. 1,376.1 6,425.4 10,578.2 N.A. N.A. N.A. 4,128.3 9,610.6 381.7
Quarterly Financial Results – Income (INR mn) Companies Amrit Corp Ltd. Amrutanjan Health Care Ltd. Anik Industries Bombay Burmah Trading Corp. Ltd.
JanMar AprJun JulSep 2011 OctDec 2011 2011 2011 12.306 5.942 N.A. 7.277 N.A. N.A. N.A. 43.172 3.3 26.3 9.4 N.A. 505.5 36.0 N.A. 1,298.1
Food and Beverage – Monthly Update
Britannia Industries Ltd. CCL Products (India) Ltd. Dabur India Ltd. Emami Heritage Foods (India) Ltd. Hindustan Unilever Ltd. ITC Ltd. Jubilant Foodworks Ltd. KSE Ltd. Kwality Dairy India Ltd. Marico Ltd. Modern Dairies Nestle India Ltd. Radico Khaitan Ltd. Tata Coffee Ltd United Breweries Ltd. Zydus Wellness Ltd.
N.A. 18.3 1,469.8 545.7 15.7 N.A. N.A. 190.6 42.3 147.5 716.2 (257.6) 2,557.1 174.3 175.4 N.A. 188.1
N.A. 52.2 1,277.4 415.0 (5.3) 6,271.6 13,327.2 N.A. 24.9 146.4 850.0 (42.6) 2,138.3 207.4 132.6 710.4 84.5
N.A. 83.3 1,738.6 506.4 25.5 N.A. N.A. N.A. 34.0 162.0 783.0 (61.2) 2,611.8 147.9 175.9 N.A. 171.0
540.7 N.A. 1,728.2 944.9 42.4 7,538.1 17,009.8 N.A. 22.7 223.2 841.2 N.A. N.A. N.A. 215.1 286.2 186.4
Events Calendar Food and Beverage Tech 2012 Date: April 25th‐ 27th, 2012 Venue: Bombay Convention & Exhibition Centre, Hall No‐ 5 & 6, Wester Express Highway, Goregaon (E), Mumbai Organizer: CII Ph: 022‐24931790
Food and Beverage – Monthly Update
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Food and Beverage – Monthly Update