Food Processing

 

Overview

Securing its position as one of the largest industries in India, food processing is ranked fifth in terms of production, consumption, exports and forecasted growth. It accounts for 32% of the total food market in India and continues to rise with the increase in disposable incomes of people and growing affinity towards living in smaller units which leads to consuming foods that can be quickly prepared. This industry contributes about 9% - 10% of the GDP in agriculture and manufacturing segment. Currently, 13% of India’s exports growing at a CAGR of 33.2%, is claimed by this industry which ensures 6% in total industrial investment.

 

 

Buy Industry Analysis

 

A major contributor to GDP, employment opportunities and investment, food processing in India has become one of the top priority sectors for growth of Indian economy. In India, the major players of this industry are Nestle, Britannia and Kwality, Glaxosmith – Most of the industry is controlled by foreign players.  The Indian primary food processing sector consists of a fragmented framework with many participants at a small scale providing cost efficient and well trusted products and services. A 100% tax deduction of profit for the first five years and 25% for the next five in case of new agro processing units has helped decrease stress to industry participants. An allocation of about US $ 320 million has been made to a special purpose NABARD fund for food processing industries in the Union Budget 2014-15. Much needs to be done in the online food ordering business which may be very small in size compared to its counterparts but is increasing rapidly – almost 20-30% a month.   

 

Outlook

Food production in India would double itself in the coming decade, attracting substantial foreign direct investments. Most foreign participants have adopted to collaborate with domestic participants to establish brands in India. On the other hand, our exports have shown some classic results in the recent past. Indian food brands such as ITC’s Kitchens of India, Bikanervala Foods and many other have found increased shelf space and high turnovers in international retail chains. Within India, Amul is set out to pursue expansion of capacity through investments in new plants and ITC has entered in to dairies and juice through a fresh investment of US$ 160 million. Zomato, the online restaurant search service, after acquiring Urbanspoon, has adopted robust growth strategies and has established its presence in more than 500 cities across the globe as it enters USA.

 

Future Potential

India and China have growing middle class populations and although the USA is the largest consumer of food, food processing in India would see a steep upward graph in the near future. To further stimulate the growth of this industry, the Ministry has undertaken initiatives to push up processing of perishables to 20% from its current 6% and increase its share in international trade.  Easing access to Indian markets for foreign participants by relaxing the previously stringent norms with regard to formation of collaborations, mergers and takeovers with/of domestic participants, many international brands took advantage of these policies. For example, Papa John’s, eyeing to become India’s third largest pizza chain,  acquired its local rival Pizza corner. The dairy sector of this industry needs attention since it holds vast potential, especially in urban India and is run by the unorganized sector. The fruits and vegetables segment is mostly export oriented with the organized sector handling pulp concentrate and juices while pickles and squashes production is mostly through unorganized sector. With a livestock population of about 450 million, over 200 million cattle and 90 million buffaloes, the meat and poultry segment holds plenty of potential in terms of exports. Since this industry has a copula with health and responsible consumption, the Government has formulated strict preventive measures for quality control through the Food Safety and Standards Authority of India and the introduction of various schemes to keep quality in check. Food processing is a promising industry – domestically and globally. This implies high volatility and major foreign direct investment in to the country via partnerships, ventures or even takeovers. 

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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