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The food processing industry: More players want to eat into this lucrative business

Analysts perceive the ‘convenience food’ sector to be a booming one; it is estimated to grow even further in the coming years

Young, urban and chic, India's populace today has no time to linger around the kitchen to dish out their favourite meals. Gastronomy tours start at the supermarket and conclude at the microwave.

Ready-to-eat food is all the rage now. But despite the fact that India has a stronger agricultural market than countries like Thailand and Malaysia, processed food is being imported from these Southeast Asian countries. Although manufacturers like Nestlé and GlaxoSmithKline Consumer Healthcare have been selling low-priced instant foods for a number of years now in India, the food processing industry is still flooded with imports from various Asian countries. Right from pasta sauces to olives to salad dressings, foreign brands have monopolised the Indian market.

Analysts perceive the 'convenience food' sector to be a booming one; it is estimated to grow even further in the coming years. This lucrative market has also been attracting foreign direct investment (FDI). In FY08, Rs450 crore of FDI came into the country, this figure went up to Rs930 crore in FY10.

But it looks like Indian brands are finally realising the potential of the ready-to-eat domestic food market.

Ready meals by well-known brands such as Karen Anand's Gourmet Kitchen (with Temptation Foods) and Sanjeev Kapoor's Khana Khazana (with Capital Foods) have recorded a good 20%-25% growth since FY09.
    
Dehydrated soups, instant noodles and ready-to-eat parathas are just a few of the products manufactured by Indian companies which are flooding supermarkets now.

Many leading companies have been showing keen interest in this industry. For example, GlaxoSmithKline Consumer Healthcare has extended its famous 'Horlicks', brand to cereal bars, biscuits and instant noodles (among other 'convenience' foods).

"Horlicks has become a Rs1,500-crore megabrand post its progression from just a health and wellness brand to food and beverages," GlaxoSmithKline Consumer Healthcare's general manager-marketing (Horlicks), Prashant Pandey, told reporters recently.
     
Nestlé India Ltd has announced an investment of Rs10 billion in the Indian market by 2011, to build up production facilities. "Around Rs3.5 billion will be invested for a noodle factory in Karnataka and around Rs5.5 billion will be invested to set up a brownfield factory in Haryana," according to Antonio Helio Waszyk, chairman and managing director, Nestlé India. The factory in Haryana is expected to be set up by 2011-end.  

With increasing per capita income and more women joining the workforce, the future of the food processing industry seems bright. Literacy, urbanisation, enhanced lifestyle and the importance of saving time which would have otherwise been spent in the kitchen are a few of the key drivers of this industry.

After all, chicken tikka masala is now Britain's most favourite food. More countries are beginning to appreciate Indian cuisine. With a large expat population in various corners of the globe, there also exists a huge export potential for Indian processed food.

No wonder this is a sunrise industry - and it is just a matter of time before more players (Indian and global) try to eat into this business. 
 

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COMMENTS

Prayag

6 years ago

Great read!

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