Opportunities
THE INDIAN FOOD SECTOR
OFFICIAL PROGRAM
PARTNER
OPPORTUNITIES IN THE INDIAN FOOD SECTOR Date: May 2015 Language: English Number of pages: 150 Author: T&A Consulting Other sectoral Reports: Are you interested in other Reports for other sectors and countries? Please find more Reports here: s-ge.com/reports
DISCLAIMER The information in this report were gathered and researched from sources believed to be reliable and are written in good faith. Switzerland Global Enterprise and its network partners cannot be held liable for data, which might not be complete, accurate or up-to-date; nor for data which are from internet pages/sources on which Switzerland Global Enterprise or its network partners do not have any influence. The information in this report do not have a legal or juridical character, unless specifically noted.
Research Methodology The methodology was a judicious mix of secondary and primary research. Secondary research involved selection and analysis of various data sources, while primary research involved discussions with decision makers and influencers and it also served as a tool for validation of secondary findings. Apart from industry overview, key statistics, market potential, growth drivers, regulations, government incentives, the research methodology was geared to identify the following: 9
Potential food segments for export from Switzerland to India
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New and emerging growth areas such as Ready food segment and imported food
9
Gaps and Key challenges
9
Identify and list major foreign and Indian players across different segments
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Local partners of foreign brands
9
Pricing across product categories
9
List of major influencers including industry associations, regulatory authorities and other public sector and private sector organizations Important industry events
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Some broad steps of research methodology include Data Collection Secondary Research x Market and industry information x Public and proprietary database Primary Research x Discussions with major industry players
Data Analysis
Data Interpretation
Generate actionable information
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Terms of Reference Food sector is one of the largest sectors in India in terms of production, growth, and consumption. Food constitutes about 30% of the consumer wallet. Growth in food consumption, increased market penetration, addressing new emerging markets and launch of new value added products to meet the needs of convenience, health and variety has created opportunities for overseas companies to increase their exports to India One of the underlying objectives of this study is provide information, which is actionable and acts as a ready reckoner for Swiss Companies looking to enter the Indian market. This ‘Market Intelligence Report India’ is a study on the Indian Food sector undertaken and published by the Export Service of the Swiss Business Hub India in collaboration with T&A Consulting, a boutique advisory firm based in New Delhi. The target readership consists of the Swiss industry associations, Swiss companies operating in the Food and Food Processing sector, Swiss Global Enterprise Business Network and the Embassy of Switzerland in India. The report aims to provide an in-depth assessment of Food sector and new upcoming high value food segments in India in a coherent manner. It provides an analysis of various segments and opportunities in the food processing sector, which can be targeted by the Swiss companies. The report also provides a list of some major players operating in various segments, which in turn provides an indication of the nature of existing competition, potential customers and potential partners. Understanding the competitive landscape of the Indian food markets is necessary for Swiss companies to decide on the appropriate niche. The purpose of this report is to highlight potential opportunities to Switzerland’s food exporters The findings of the report can provide a base for Swiss companies evaluating the possibility of entering the Indian market.
Exchange Rate Used 1 USD = INR 60
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List of Abbreviations Abbreviations
Acronym
APEDA
Agricultural & Processed Food Products Export Development Authority
APMC
Agricultural Produce Market Committees
ASSOCHAM
The Associated Chambers of Commerce and Industry of India
BTP
Bio-Technology Park
CAGR
Compound Annual Growth Rate
CEO
Chief Executive Officer
CIS
Commonwealth of Independent States
DAHDF
Department of Animal Husbandry, Dairying and Fisheries
DCS
Dairy Cooperative Societies
DGFT
Directorate General of Foreign Trade
EAA
Ethylene Acrylic Acid
EHTP
Electronic Hardware Technology Park
EMAA
Ethylene Meth acrylic Acid
EOU
Export Orient Unit
EVA
Ethylene Vinyl Acetate
F&B
Food & Beverage
FEOU
Food Export Oriented Unit
FIPB
Foreign Investment Promotion Board
FPO
Fruit Products Order
FSSA
Food Safety and Standards Act
FSSAI
Food Safety and Standards Authority of India
FTA
Free Trade Agreement
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FY
Financial Year
GCMMF
Gujarat Cooperative Milk Marketing Federation Ltd
GDP
Gross Domestic Product
GMP
Good Manufacturing Practice
HACCP
Hazard Analysis and Critical Control Points
HORECA
Hotel, Restaurant and Catering
HR
Hour
HS Codes
Harmonised System
HUL
Hindustan Unilever
IE
Importer Exporter
IMF
International Monetary Fund
IQF
Individually Quick Frozen
ITC
Indian Tobacco Company
KFC
Kentucky Fried Chicken
Kg
Kilogram
KMF
Karnataka Milk Federation
ML
Millilitres
MMPO
Milk and Milk Products Order
MPEDA
Marine Products Export Development Authority
MSG
Monosodium Glutamate
MT
Metric Tons
NA
Not Available
NOC
No Objection Certificate
NRI
Non-Resident Indian
PET
Polyalkylene Terephathalates
PVC
Poly Vinyl Chloride
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QSRs
Quick Service Restaurants
RTE
Ready To Eat
SEZ
Special Economic Zone
SMEs
Small And Medium Enterprises
STP
Software Technology Park
SWMA
Standards of Weights and Measures Act
UAE
United Arab Emirates
UK
United Kingdom
USA
United States of America
USD
United States Dollar
VAT
Value Added Tax
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Table of Contents 1.0 EXECUTIVE SUMMARY_____________________10
4.3.1 Rising Disposable Income
55
2.0 INTRODUCTION___________________________12
4.3.2 Urbanization
55
2.1 Market Size
13
4.3.3 Organised Retail
56
2.2 Countries Of Major Imports
15
5.0 CONSUMER PREFERENCES
59
3.0 MARKET SEGMENTATION
17
6.0 DISTRIBUTION CHANNEL
63
3.1 Fruits & Vegetable
18
6.1 Intermediaries In The Distribution Channel
63
3.1.1 Fruits & Vegetables Processing Value Chain_______20
7.0 FOREIGN PLAYERS
65
3.1.2 Total Indian Imports
21
8.0 PRICING
69
3.1.3 The Market For Imported Fruits
21
9.0 FOCUS FOODS: Opportunity For Swiss Smes__ 72
3.1.4 Major Player
22
9.1 Chocolates
72
3.2 Dairy (Milk & Milk Products)
23
9.1.1 Overview
72
3.2.1 Market For Foreign Dairy Players
25
9.1.2 Growth Rate & Projected Market Size
73
3.2.2 Total Indian Imports
27
9.1.3 Purchased Imports
74
3.2.3 Major Players
28
9.1.4 Manufacturers & Key Players
74
3.3 Meat And Poultry
29
9.1.5 Opportunities In The Indian Chocolate Industry
77
3.3.1 Total Indian Imports
31
9.2 Cheese
78
3.3.2 Major Players
32
9.2.1 Overview
78
3.4 Marine Products
33
9.2.2 Growth Rate And Projected Market Size
78
3.4.1 Total Indian Imports
34
9.2.3 Purchased Imports
79
3.4.2 Major Players
35
9.2.4 Manufacturers & Key Players
80
3.5 Grains
36
9.2.5 Opportunities In The Indian Cheese Market
82
3.5.1 Major Players
36
9.3 Biscuits
83
3.6 Consumer Foods
38
9.3.1 Overview______________________________ 83
3.6.1 Packaged / Convenience Foods
38
9.3.2 Growth & Future Projections
83
3.6.2 Ready To Eat (Rte) Segment
44
9.3.3 Purchased Imports
84
4.0 MARKET TRENDS & KEY DRIVERS
48
9.3.4 Manufacturers & Key Players________________ 84
4.1 Market Trends
48
9.3.5 Opportunities In The Indian Biscuit Industry
87
4.2 International Food & Trends
49
9.4 Olive Oil
88
4.3 Demand Drivers
54
9.4.1 Overview
88
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9.4.2 Major Imports & Duties
89
9.8.2 Growth Rate And Projected Market Size
113
9.4.3 Import Restrictions
90 9.8.3 Purchased Imports
114
9.4.4 Manufacturers & Key Player
91
9.8.4 Manufacturers & Key Players
114
9.4.5 Opportunities In The Olive Oil Industry
93
9.8.5 Opportunities In The Tea Market
117
9.5 Juices
94 9.9 Functional Foods
118
9.5.1 Overview
94
118
9.5.2 Market Size & Projected Growth
94 9.9.2 Market Size & Projected Growth
9.5.3 Organic Juices
95 9.9.3 Emerging Categories: Key Opportunities
120
9.5.4 Purchased Imports
98 9.9.4 Key Players & Their Brands
122
9.5.5 Manufacturers & Key Players
98 9.10 Organic Food
123
9.9.1 Overview
9.5.6 Opportunities In The Indian Juice Industry_______100 9.10.1 Major Players
119
124
9.6 Wine
101 9.11 Gluten Free Products
126
9.6.1 Overview
101 9.12 Lactose Free Food
128
9.6.2 Major Imports
102 9.13 Vegan Food
129
9.6.3 Key Players & Brands
103 10.0 GOVERNMENT REGULATIONS & IMPORT RESTRICTIONS 130
9.6.4 Regulations
106 10.1 Sector Specific Government Policies
132
9.6.5 Opportunities In The Wine Industry
107 10.2 Foreign Direct Investments
134
9.7 Coffee
108 10.3 Import Duties
136
9.7.1 Overview
108 10.4 Specific Import Restrictions
139
9.7.2 Growth Rate And Projected Market Size
108 11.0 PACKAGING & LABELLING
141
9.7.3 Purchased Imports
144
9.7.4 Manufacturers & Key Players
109 12.0 KEY INFLUENCERS 110 13.0 KEY CHALLENGES
9.7.5 Opportunities In The Coffee Market
112
9.8 Tea
113
9.8.1 Overview
113
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14.0 MAJOR INDUSTRY EVENTS
147 149
1.0 Executive Summary The underlying objective of this research study is to provide a brief outline of the opportunities that exist in the Indian food sector for Swiss companies who are engaged in the production and processing of food and beverages. “Food” in the Indian context conjures images of Indian cuisine with its mix of spices and hot food and getting increased visibility across the world. Traditional Indian traveller is known for his inclination to try “Indian food” even during travels further ashore. While this continues to be true to a large extent for a leisure traveller, what is lesser known is the propensity of the new and increasingly urbane Indian customer to try food from distant countries. This consumption is aided by the fact that the higher income group has an increased disposable income, which often comes with paucity of time and thus preference for a meal, which can be cooked in relatively shorter span of time.
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Imported food segment carries a perception of “luxury’ and is perceived by the government as something which is of interest to a very small minority of the population and restricted to large urban centres especially New Delhi, Mumbai and Bangalore The Indian Government uses a variety of import restrictions including non-trade tariff barriers to protect its domestic food market. However we are gradually witnessing easing of these norms and many foreign players having benefited by supplying food products as well as equipment and sharing technology for the same. Having said the above, regulatory environment does remain one of the main challenges for a foreign entrant. In this report, we have highlighted key segments, which may be of particular interest to the Swiss companies and major players operating in each of these segments. This report also provides insights into the Indian food retail market, consumer behavior, attitudes and perceptions toward food products, a brief regulatory overview, list of major stakeholders including industry associations, regulatory bodies and finally important trade events which may be a good platform for Swiss companies. The preferred route for specialty food products to enter Indian market is through importers/distributors. Importers / distributors in India can help in product promotions like in-store promotions, testing of samples, educating customers on various usages of new food products. Exporters (foreign partners) usually provide necessary help (financial incentives, packing products in small samples etc) to the importers / distributors for promotion of their products. However the above route is not a panacea for a new foreign company. The Indian importer is still a relatively small promoter led company with limited bandwidth and resources towards investing in building a brand in the country. Typically Indian importers look to the principal towards sharing part of such expenses at least in the initial years.
Also sometimes Indian companies also seek some assurance that there will be continuity in the relationship once they have built the business in India. The background being that there have been instances in the past wherein Principals have set up their own subsidiaries once the Indian business has reached a certain critical mass and cased business with Indian distributors. A potential next step for Swiss companies evaluating India market entry would be undertake a market check on demand potential of their respective product and qualified shortlist of potential partner(s).
Some of the recent trends observed in the Indian food industry are mentioned below:
Online Retailing
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India's online retail market for food and groceries is also expected to grow on the back of growing Internet and Smartphone penetration in India. This shift in consumer preference is due to competitive pricing and convenience of doorstep delivery.
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A clear indication of this is increase in the number of online food and grocery retailing sites from 14 in 2013 to 44 in 2014.
Value Added Food 9
Value added foods such as organic , lactose-free, gluten-free are gaining demand due to increasing awareness
Demand from Smaller Cities 9
In terms of imported food demand region-wise, six cities (Mumbai, Delhi, Kolkata, Chennai, Hyderabad and Bangalore) were earlier driving growth but new trends show that smaller cities and in some cases small towns are also driving the growth.
2.0 Introduction
India produces annually 9
127 million metric tons of milk, the highest in the world.
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76 million metric tons of fruits and 156 million metric tons of vegetables, the 2nd highest in the world
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485 million livestock, the largest in the world
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259 million tons of food grain, the 3rd largest in the world
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