Bbk india opportunities indian food sector 20150717 preview

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

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Gaps and Key challenges

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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

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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

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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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