Case Study-Potato and Potato based Products Industry in India

Case Study

Dragon Sourcing Your Tailored Approach to Emerging Markets

Potato and Potato based Products Industry in India September, 2016 www.dragonsourcing.com

Introduction & Project Objective,

 Introduction:  A leading food processing company in Western Europe.  The Company appoints Dragon Sourcing for Procurement/Market Intelligence project to have a feasibility study on the Indian market Potatoes, Processed potatoes & Retail of potatoes.

The detailed overview report covered, Market Analysis – Potatoes Market Analysis – Processed Potatoes

Market Analysis – Retail in India

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Market Analysis Potatoes: Covered following sub-segments,

Market Analysis Potatoes

Raw material potatoes

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Potato production in India

3

Major producing regions

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Statistical analysis were provided based on the facts, Top 10 Potato Producing States in India

Production of Potato in India in Million Tonnes Production in Million Tonnes

60 50

XXX

XXX XXX

XXX

Punjab

40

Haryana Uttar Pradesh

30

Assam Bihar

20

Madhya Pradesh

Gujarat

Jharkhand West Bengal

10 0 2011-12

2012-13

2013-14

2014-15

Karnataka

World Vs. India – Export of HS 070190 Potatoes (Fresh or Chilled) in USD Million 4,000.00

xxx

xxx

2015

2025

2050

Estimated domestic demand of potatoes

xxx million tons

xxx million tons

xxx million tons

Demand for processing quality potatoes

xxx million tons

xxx million tons

xxx million tons

Food demand for fresh potatoes

xxx million tons

xxx million tons

xxx million tons

xxx

3,000.00

xxx

xxx

2,000.00 1,000.00 xxx

xxx

xxx

xxx

xxx

0.00 2011

2012

Total World Exports

2013

2014

2015

India Exports

Source: mapsofindia.com, potatopro.com, faostat3.fao.org, agricoop.nic.in, pib.nic.in Š 2016 Dragon Sourcing. All rights reserved.

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Fresh & Store Potato – Monthly Price & Arrival Report were collected,

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Insight was provided on nearly 15 different potato Varieties farmed in India, Variety Name

Areas Covered

Characteristics

Suitable For

Kufri Sindhuri

Maharashtra, Bihar, Gujarat, Karnataka, Bihar, Punjab, Uttar Pradesh, Jammu &Kashmir

Medium, round red deep eyes. Moderately resistant to early blight and tolerant to Potato Leaf Roll Virus (PLRV). Slow rate of degeneration. Can tolerate temperature and water stress to some extent. Crop matures in 110-120 days.

Average yield is 40 t/ha. Tolerant to late blight disease.

Processing

Kufri Chandr amukhi

Maharashtra, Bihar, Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh, Orissa, Punjab, Uttar Pradesh and West Bengal

Large, oval, white, slightly flattened, fleet eyes and dull white flesh. Average yield is 25 t/ha. Crop matures in 80-90 days.

Instant flakes and chips

Kufri Jyoti

Maharashtra, Bihar, Gujarat, Haryana, Uttar Pradesh, Punjab, Karnataka & West Bengal.

Large, oval, white, fleet eyes and white flesh. Crop matures early in hills, Average yield in hills 20 t/ha. Moderately resistant to early and late blight.

Slow rate of degeneration.

Processing

X

XXX

XXX….

XXX.

X

XXX

XXX….

XXX.

Source: National Horticulture Board (NHB) © 2016 Dragon Sourcing. All rights reserved.

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Market Analysis Processed Potatoes: Covered following sub-segments,

MARKET ANALYSIS PROCESSED POTATOES       

Processed potato market Case Study: Market size Information available for Market landscape few slides only.

Market share of top companies Key products of top companies Retail prices of the key products of top companies Market drivers & challenges

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Processed Potato Market – An Overview Potato processing was negligible in India at the beginning of the 21st century. However, the industry began to progress and the snack foods sector, including potato chips, is developing most rapidly. Annual growth rate of the snack food market in India is expected to be around xxx %. Potato chips are estimated to constitute nearly xxx % of total salty snack food market, showing an annual growth rate of xxx % which ranks second after French fries (xxx%).

Production

Product Classification

 

About xxx % of the national production is processed into potato chips.

In India, processed potatoes currently constitute less than xxx % of annual production

 

Fried products : potato chips, frozen French fries, other frozen fries.

Dehydrated products : dehydrated chips, dices, flakes, granules, flour, starch, potato custard powder soup or gravy thickener and potato biscuits.

Non-fried products : potato jam, potato murraba, potato candy, potato biscuits, potato cakes.

Canned products It is also used to prepare frozen foods like potato patties, puffs, wedges, french fries, hash brown, dehydrated mashed potatoes, others (Smiles, Aloo Tikki, Chilli Garlic Potato Bites, Nuggets, Potato Triangle)

  

Estimated Size of Potato Based Snacks in India in 2015 (in USD Bil) xxx xxx

xxx

 Consumption

Consumption of potatoes including table and processed products is expected to increase by xxx % per year as more processed products will be consumed in the years to come

Chips Extruded Potato Products Deep Frozen Potato Products

 End user segments

Retail, Institutional, Hotels (All Star Hotels), Restaurants (Fine Dining, Casual Dining, Pubs, Dharshnies & Small Hotels), QSR, Others (Crisp and namkeen processors, Food processors like MTR, Vista etc., Canteens, Repackers)

The Indian snacks market (potato based snacks is a subset of this market) is worth around US$ xxx billion, with the organized segment taking half the market share, and has an annual growth rate of 15-20 per cent. The unorganized snacks market is worth US$ xxx billion, with a growth rate of 7-8 per cent per year. There are approximately xxx types of snacks and another xxx types of savories being sold in the Indian market today. Potato chips and potato-based items are the most popular products with more than xxx per cent share of the salty snack market © 2016 Dragon Sourcing. All rights reserved.

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Profiles were shared of the top leading Companies producing Potato Chips in India, Name of Potato Chips Companies Sl. No

1

2

3

4

5

6

Company name

XXX

XXX

XXX

XXX

XXX

XXX

Company Type

MNC

Indian

Indian

Indian

Indian

Indian

Ownership

Private ltd, XXX is a Parent Company which is Public ltd.

Private ltd.

Public ltd, Majority of the stakeholders are of Indian Government owned companies

Private ltd.

Private ltd.

Private ltd.

Head Office

Gurgaon, Haryana

Rajkot, Gujarat

Gurgaon, Haryana

Mumbai, Maharashtra

Nagpur, Maharashtra

Indore, M.P.

Year Founded

1989

1976

1910

1929

1937

2009

Brands

XXX

XXX

XXX

XXX

XXX

XXX

Potato Chips & Extruded Snacks

Potato Chips & Extruded Snacks

Potato Chips

Potato Chips & Extruded Snacks

Potato Chips & Extruded Snacks

Potato Chips & Extruded Snacks

Haryana, Bihar, Rajasthan, UP, Maharashtra & Telangana.

Gujarat

Bengaluru, Karnataka (Food Div.)

Maharashtra, Karnataka, Haryana, Rajasthan etc..

Tamil Nadu, Maharashtra & Karnataka

M.P., Assam & Karnataka

XXX

XXX

XXX

XXX

XXX

XXX

52.5 %

18.5 %

8.9 %

6%

3.8 %

3.5 %

XXX

XXX

XXX

XXX

XXX

XXX

Potato Based Items

Factory Location

Turnover in 2015 Market share in % (FY ’15) Website

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Insight on the retails Brands of Potato Chips, All the brands in this segment were covered,  Manufacturer: XXX - Retail Products & Pricing Brand name - XXX ( Potato Chips) Product name India's Magic Masala

Weight

25g, 52g, 95g, 177g

MRP in (INR)

Rs. 10, Rs. 20, Rs. 35, Rs. 65

Ingredients

American Style Cream and Onion

Classic Salted

West Indies Hot 'n' Sweet Chilli

Spanish Tomato Tango

Chile Limon Chips

25g, 52g, 95g, 177g

25g, 52g, 95g, 177g

25g, 52g

25g, 52g

25g, 52g

Rs. 10, Rs. 20

Rs. 10, Rs. 20

Rs. 10, Rs. 20

Rs. 10, Rs. 20, Rs. 35, Rs. Rs. 10, Rs. 20, Rs. 35, Rs. 65 65

Potato, Edible Vegetable Oil, Spices & Condiments Potato, Edible Vegetable (Onion Powder, Chilli Oil, Sugar, Salt, Milk Powder, Dry mango Products (Milk Solids, powder, Coriander powder, Cheese Powder)(1.4%), Ginger Powder, Garlic Spices & Condiments Powder, Black pepper (Onion Powder, Parsley powder, Turmeric powder, Powder, Pepper Powder), Cumin), Salt, Black Salt, Starch.

Sugar, Tomato powder, Citric acid, Tartaric acid.

Product image

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Potato, Edible Vegetable Oil, Salt (1%).

Potato, Edible Vegetable Oil, Sugar, Salt, Tomato Potato, Edible Vegetable Powder (1.1%), Spices & Potato, Edible Vegetable Oil, Sugar (5.5%), Starch, Condiments (Capsicum Oil, Sugar, Salt, Spices & Salt, Spices & Condiments powder, Garlic Powder, Condiments (Red Chilli (Garlic Powder, Onion Pepper Powder, Ginger Powder, Garlic Powder, Powder, Chilli), Cocoa powder, Clove powder, Onion powder), Lime Juice Solids, Milk Solids.

Cinnamon powder), Wheat Powder (0.1%).

Fiber, Dextrose, Citric Acid, Tartaric Acid.

Actual Packaging Image

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Profiles were shared of the top leading Companies producing Potato Based Extruded Snacks in India, Name of Potato Based Extruded Snacks Companies Sl. No

1

2

3

4

Company name

XXX

XXX

XXX

XXX

Company Type

MNC

Indian

Indian

Indian

Ownership

Private ltd, XXX is a Parent Company which is Public ltd.

Private ltd.

Private ltd.

Private ltd.

Head Office

Gurgaon, Haryana

Rajkot, Gujarat

Mumbai, Maharashtra

Nagpur, Maharashtra

Year Founded

1989

1976

1929

1937

Brands

XXX

XXX

XXX

XXX

Potato Based Items

Potato Chips & Extruded Snacks

Potato Chips & Extruded Snacks

Potato Chips & Extruded Snacks

Potato Chips & Extruded Snacks

Factory Location

Haryana, Bihar, Rajasthan, UP, Maharashtra & Telangana.

Gujarat

Maharashtra, Karnataka, Haryana, Rajasthan etc..

Tamil Nadu, Maharashtra & Karnataka

Turnover in 2015

XXX

XXX

XXX

XXX

52.5%

18.5%

6%

3.8%

XXX

XXX

XXX

XXX

Market share in % (FY ’15) Website

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Insight on the retails Brands of Extruded Snacks, All the brands in this segment were covered.. ďƒ˜ Manufacturer: XXX - Retail Products & Pricing XXX ( Extruded Snacks) Product name

Punjabi Chatka

Spicy Masala

Tasty Tomato

Weight

170g

170g

170g

MRP in (INR)

Rs. 40

Rs. 40

Rs. 40

Ingredients

Potato, Edible Vegetable Oil, Starch, Besan, Rice Potato, Edible vegetable oil, Milk solids, Spices Flour, Pea Flour, Corn Flour, Spices & &Condiments (Tamarind powder, Onion powder, Potato, Edible vegetable oil, Sugar, Salt, Spices Condiments (Chilli Powder, Onion Powder, Black pepper powder, Cumin powder, Garlic & Condiments (Chilli powder, Black pepper Amchur powder, Cumin Powder, Coriander Seed Powder, Garlic Powder, Ginger Powder, Black powder, Turmeric powder, Ginger powder, Large powder, Garlic powder, Ginger Powder), Tomato cardamom powder), Salt, Black Salt, Sugar, Powder (0.1%), Starch, Citric Acid, Tartaric acid.

Pepper Powder, Fenugreek, Turmeric Powder, Tartaric acid, Citric Acid.

Spices Extract),Salt, Sugar, Black Salt ,Citric Acid, Malic Acid, Tomato Powder, Tartaric Acid.

Fully Potato Based or not?

(Yes/No)

Product image

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Yes

Yes

Yes

Actual Packaging Image

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Profiles were shared of the top leading Companies producing Potato Based (Deep Frozen) Foods in India, Name of Deep Frozen Potato Product Companies Sl. No

1

2

3

4

5

6

Company name

XXX

XXX

XXX

XXX

XXX

XXX

Company Type

MNC

MNC

Indian

Indian

Indian

Indian

New Delhi

Mumbai, Maharashtra

New Delhi

Noida, U.P.

Mumbai, Maharashtra

Bangalore, Karnataka

Year Founded

1998

1979

1990

1974

2008

1989

Brands

XXX

XXX

XXX

XXX

XXX

XXX

French Fries, Aloo Tikki, Smiles etc..

Aloo Tikki, Veggie Nuggets etc..

French Fries

Aloo Tikki & Hara Bhara Kebab

French Fries, Mumbai Vada, Burger Patty etc..

French Fries, Aloo Paratha, Burger Patty etc..

Factory Location

Gujarat

Maharashtra

Uttarakhand

Delhi & Karnataka

Karnataka

Kerala

Turnover in 2015

XXX

XXX

XXX

XXX

XXX

XXX

Market share in % (FY ’15)

15%

5%

2%

30%

3%

5%

Website

XXX

XXX

XXX

XXX

XXX

XXX

Head Office

Potato Based Items

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Insight on the retails Brands of Deep Frozen Food , All the brands in this segment were covered.. ďƒ˜ Manufacturer: XXX - Retail Products & Pricing XXX (Deep Frozen Foods) Product name

French Fries

Smiles

Extra Crunchy Potato Nuggets

Super Wedges

Veggie Burgers

Weight

200g, 420g, 750g

175g

200g, 420g

400g

360g

MRP in (INR)

Rs. 40, Rs. 90, Rs. 150

Rs. 40

Rs. 40, Rs 95

Rs. 95

Rs. 95

Ingredients

Fully Potato Based or not?

(Yes/No)

Potato(83.25%), Edible vegetable oil, Garlic paste( Water, Garlic(1.23%), edible Potato (62.84%), potato common salt, Corn starch, Potatoes (92%), Hydrogenated flakes(13.76%), edible Acidity regulator(INS 260), Vegetable Oil, Dextrose vegetable oil, corn flour, edible Permitted class II preservative common salt.

(INS211), Corn flour, Potato flakes, Edible common salt, Onion powder, Red chili Flakes(0.37%)

Yes

Product image

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Yes

Potato Flakes (58.75%), Vegetable Fat (8%), Maltodextrin (5%), Dehydrated Vegetables (Green Peas, Potatoes Wedges(92%), Carrots, Capsicum, French Hydrogenated Vegetable Oil, Beans, Onion Bits) Cheese Dextrose, Spices Powder (4%), Common Salt (2.2%), SMP, Tomato Powder, Red Chili Flakes, Oleoresin, White Pepper Turmeric Powder.

Yes

Yes

No

Actual Packaging Image

14

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Market Analysis – Retail in India: Covered following sub-segments,

MARKET ANALYSIS RETAIL IN INDIA   

Modern versus Traditional Trade in India Key Players in the Market Market Share of Key Players

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Case Study: Information available for few slides only.

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Report on the Retail Industry in India (1/2) Indian Retail Industry Market Size in India (in USD billion)

Percentage share of Organized and Unorganized Trade in India

700 xxx

XXX

600

XXX

500

XXX

xxx

XXX Unorganized retailers

400 300

Organized large retailers

200

Organized small &medium retailers

100 0 2012

2013

2014

xxx

2015

Expected Indian Retail Industry Growth Overall Retail Market

Modern Trade

Traditional Trade

XXX % per annum

XXX % per annum

XXX % per annum

Organized Retail Drivers Demand Drivers  Rising income levels  Increased urbanization  Growing aspiration levels and appetite to experiment  Credit availability

Industry Speak: India’s direct selling industry is expected to reach a size of INR xxx crore (USD xxx billion) by FY2019-20, as per a joint report by India Direct Selling Association (IDSA) and PHD.

   

Supply Drivers  New entrants  Expansion plans of existing players  Infrastructure augmentation  Emergence of new categories

Market Size: Retail industry in India is expected to reach USD xxx trillion by 2020, registering a Compound Annual Growth Rate (CAGR) of xxx% from 2015-2020.

Market Drivers: Major drivers for the growth of retail industry include income growth, urbanization and attitudinal shifts.

Approximately, there are over xxx million mom-and-pop stores in India.

In 2014, food & grocery accounted for about 69% of total revenues in the retail sector, followed by apparel at xxx%.

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Source: ibef.org

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Report on the Retail Industry in India (2/2)  

FDI Confidence Index 2015 Singapore

  

India’s ‘grocery’ retail segment is the world’s most attractive Grocery retailers recorded healthy growth during 2014 and is expected to become world’s third largest grocery market with an estimated revenue of USD xxx billion by 2016.

XXX XXXXXXX XXXXXXXXXXXXXXX



XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

xxx

Australia

xxx

India

xxx

Brazil

xxx

Germany

xxx

Canada

xxx

UK

xxx

China

xxx

USA

xxx 0

0.5

1

1.5

2

2.5

Industry Factors Market Potential

High

Economic Risk

Low

Political Risk

 

Moderate

Inflation rate has been declining since 2013. Inflation rate in 2013 was 9.44% whereas in 2016 it is expected to be at 5.29%.

In 2020, the same is expected to be at xxx%.

Road Ahead

 

Both organized and unorganized retail companies have to work together to ensure better prospects for the overall retail industry, while generating new benefits for their customers.

Nevertheless, the long-term outlook for the industry is positive, supported by rising incomes, favorable demographics, entry of foreign players, and increasing urbanization.

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Profiles were shared of the top Organized Retail Companies in India Name of Supermarket / Hypermarket Sl. No

1

2

3

4

5

6

7

8

9

Parent Company

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Company Name

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Private Ltd, It’s a subsidiary of XXX which is Public ltd.

Public Ltd, It’s a subsidiary of XXX.

Public Ltd

Public Ltd

Private Ltd, It’s a subsidiary of XXX

Private Ltd

Private Ltd

Joint Venture between XXX & XXX

Private ltd, subsidiary of XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Mumbai, Maharashtra

Mumbai, Maharashtra

Mumbai, Maharashtra

Mumbai, Maharashtra

Kolkata, West Bengal

Mumbai, Maharashtra

Mumbai, Maharashtra

Mumbai, Maharashtra

Mumbai, Maharashtra

Year Founded

2006

1987

2007

2007

2000

2002

2005

2004

2006

No. of Stores

> 700

> 570

508

344

157

110

36

24

17

No of cities where Stores located

93

244

173

16

35

38

6

5

11

Total Revenue in 2015

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Website

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

XXX

Ownership

Sub-Division (Hypermarket &Supermarket) Head Office

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Insight provided on the Competitors Intelligence Gain, Retail Company

Development & Future Plans

XXX

 In FY 2015-16, XXX added XXX new stores totaling to xxx stores, spread over xxx million square feet and it is currently operating xxxx stores. “XXX” has consistently appeared in the list of most trusted national brand.  Expected to extend the distribution infrastructure of retail to a larger number of kiranas to cover products and services across all consumption baskets.  Making strategic investments for convergence of physical retail and e-commerce to establish leadership through an omni-commerce presence

XXX

 XXX has decided to close the chain’s online retail venture XXX t. This is because customer acquisition costs, fulfilment costs and other expenses in e-commerce add up to 50 per cent of overall business costs.  The group is likely to focus on its core business of physical retailing, where it plans to add xxx million sq ft of space, the highest-ever addition by the group in a single year.  The group acquired XXX, XXX and XXX to create an entity that operates xxx retail stores spread over around xxx million square feet of space across xxx cities.  XXX is in early discussions with XXXX to buy or merge the latter's More supermarket business to consolidate its leadership in the brick-andmortar retail sector and to build a large network of stores.

XXX

 XXXXX…………………………………………………

XXX

 XXXXX…………………………………………………

XXX

 XXXXX…………………………………………………

XXX

 XXXXX…………………………………………………

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Executive Summary for overview on the Analysis, Potato Market

Processed Potato Market



In the global market, India stands 2nd in potato production next to China.



Expected Production of Potato in 2016: XXX Million tons



Top Potato Producing States: Uttar Pradesh, West Bengal, Bihar, Gujarat, Madhya Pradesh, Punjab, Assam, Karnataka, Haryana and Jharkhand

About XXX % of the national production is processed into potato chips.



In India, processed potatoes currently constitute less than XXX % of annual production







Potato export zones of India: West Bengal, Punjab, Uttar Pradesh, Madhya Pradesh Potato Varieties: There are about X varieties of potato produced in India

© 2016 Dragon Sourcing. All rights reserved.







There are roughly about XXX types of snacks and another XXX types of savories being sold in the Indian market today.

Potato chips and potato-based items are the most popular products with more than XXX per cent share of the salty snack market Estimated size of potato based snacks in 2015: Chips - XXX billion, Extruded potato products - XXX billion, Deep frozen potato products XXX billion

20

Retail Industry



Overall retail industry is expected to grow at XXX% per annum.



Organized large retailers constitute about XXX% of the total retail market, whereas organized small and medium retailers constitute about XXX% of the retail market.

Remaining XXX% is constituted by unorganized retailers.



Approximately, there are over XXX million mom-and-pop stores in India.



In 2014, food & grocery accounted for about XXX% of total revenues in the retail sector, followed by apparel at XXX%.



Top eight cities Mumbai, Kolkata , Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune account for around XXX% of the total organized retail penetration.

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