24-12-2012, 02:56 PM
Food Industry & Reliance Fresh Analysis
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Introduction to Indian Food Industry
India is the world's second largest producer of food next to China, and has the potential
of being the biggest with the food and agricultural sector. The total food production in
India is likely to double in the next ten years and there is an opportunity for large
investments in food and food processing technologies, skills and equipment, especially
in areas of Canning, Dairy and Food Processing, Specialty Processing, Packaging,
Frozen Food/Refrigeration and Thermo Processing. Fruits & Vegetables, Fisheries, Milk
& Milk Products, Meat & Poultry, Packaged/Convenience Foods, Alcoholic Beverages &
Soft Drinks and Grains are important sub-sectors of the food processing industry.
Health food and health food supplements are another rapidly rising segment of this
industry which is gaining vast popularity amongst the health conscious.
India is one of the world’s major food producers but accounts for less than 1.5 per cent
of international food trade. This indicates vast scope for both investors and exporters.
Food exports in 1998 stood at US $5.8 billion whereas the world total was US $438
billion. The Indian food industries sales turnover is Rs 140,000 crore (1 crore = 10
million) annually as at the start of year 2000. The industry has the highest number of
plants approved by the US Food and Drug Administration (FDA) outside the USA.
Key Players
The major players operating in the Indian food and beverages industry include Dabur
India Ltd, Godrej Industries Ltd, Hindustan Lever Ltd, Britannia Industries Ltd, ITC Ltd,
Nestle` SA, PepsiCo, Inc, Cadbury Schweppes PLC, Future Group, RPG Enterprise
and Godrej Agrovet Ltd.
Among recent investments, World Bank arm IFC has reportedly put in US$ 6.5 million into food-supply chain firm Snowman Logistics. Other similar investments include
Swastik Roadlines (India Equity Partners) and JICS Logistics (IL&FS Private Equity)
and Staragri Warehousing and Collateral Management Ltd (IDFC Private Equity).
The world's largest fast-food chain - Mc Donald’s, is shedding its familiar red and yellow
colours for more muted tones as it goes for its biggest and costliest revamp in India, in
line with its global strategy of attracting more adults. The red and yellow company logo
will be replaced with white across 240 restaurants.
Food Processing Industry
With a huge agriculture sector, abundant livestock, and cost competitiveness; India is
fast emerging as a sourcing hub of processed food. India's food processing sector
covers fruit and vegetables; spices; meat and poultry; milk and milk products, alcoholic
beverages, fisheries, plantation, grain processing and other consumer product groups
such as confectionery, chocolates and cocoa products, soya-based products, mineral
water, high protein foods etc.
India has emerged as world's top rice exporter overtaking traditional leaders, Vietnam
and Thailand. India's total rice export in 2011-12 is expected to be 6.5-7 million tonnes
(MT), which is around 7 per cent of the country's total production. However, with a
bumper harvest in excess of 100 MT in 2011-12 and record stocks of a little over 34 MT
in state-run warehouses, India will continue to remain a major player in the global
market till at least June 2013.
Investments
Britannia Industries Ltd is planning on a global expansion drive to continue with
its growth story. The company has registered 19 per cent growth in top line at Rs
5,400 crore (US$ 969.48 million), derives around Rs 250 crore (US$ 44.88
million) from global operations and is considering all vectors to expand its
presence overseas.
Indian food catering firm Travel Food Services (TFS) has entered into a joint
venture (JV) with Gate Gourmet, a subsidiary of Swiss giant Gategroup, to
provide in-flight on-board catering services. The JV has tied up with Jet Airways
as a first move and will cater to 500 Jet flights a day
Road Ahead
According to the latest trend it has been observed that more and more Indians spend a
fortune on luxurious items that includes food as well. "Indians today have an
experimental palate. People want to be able to have dining options they would choose
in New York, Tokyo or London," as per Aishwarya Nair, Head of Corporate Food and
Beverage, Leela Hotels.
India is one of the fastest growing branded restaurants markets in the world, where the
organised eating-out market is estimated at US$ 2 billion and growing at a CAGR of 25
per cent.
With massive scope for value addition, growing trend in the consumption pattern of
processed food products in India and many fiscal incentives being planned by the
Government, this sector is capable of maintaining the growth momentum in the future.