India’s packaged food industry is rapidly growing. The sector is likely to rise to $50 billion next year from $32 billion last year, according to the Associated Chambers of Commerce and Industry of India, which said, “There has been a major shift in food habits in the metropolitan cities. About 79 per cent of households prefer to have instant food due to steep rise in dual income level, standard of living and convenience.” The main categories of packaged food are bakery products, canned/dried processed food, frozen processed food, ready-to-eat meals, dairy products, snacks, processed meat, health products and drinks.
New Jersey-based Mondelez International is setting up its largest factory in the APAC region in the southern state of Andhra Pradesh in India at an investment of $190 million. Spanning 130 acres, creating 1,600 jobs, this factoruy is and has an annual capacity of 250,000 tons. Currently the company produces 60,000 tons of Cadbury’s Dairy Milk chocolate a year . “We are bullish about India and see this country as a huge opportunity,” says Maurizio Brusadelli, the president, Asia Pacific, for Mondelez International. “India is a priority market for us. We are investing today and building capacity for tomorrow.”
The National reports that the demand for ready-to-eat food and snacks is surging in India due to:
- the country’s young demographics
- growth in e-commerce
- rising incomes
- demand for hygienically produced goods
- convenience
- expansion of organized retail
- more working women in India
- better distribution network
Danone, ITC, Mondelez, Nestle, PepsiCo are some of the foreign companies in India in the packaged goods sector. Some regional companies are Amul, Brittania, Haldiram’s, Kwality, and Mother Dairy.
Data from Euromonitor shows that the market for packaged goods in India is very fragmented, with the top seven packaged-food companies holding just 27 per cent share of the market. Domestic manufacturers dominate the packaged food sector, “whereas international players still have to understand the dynamics of the Indian consumer mindset”. Domestic manufacturers are increasing both their range of products and their distribution and penetration into rural India, according to Euromonitor. “Launching smaller packs with lower price points boosted their efforts in this direction in 2015.”
Nawal Sharma, the president and head of business transformation at Kwality, a major dairy products company in India, says there “is not a situation of cut-throat competition or bleeding price wars” in India. Multinational corporations can get into this space and still flourish,” he says. “We would rather invite more players to get into industry. We see a lot of growth for everyone over the next five to ten years.”
There is a lot of scope in launching goods in the market with flavors or sentiments that appeal to the Indian population, and both regional and foreign companies are striving to do this, though the regional companies seem to be able to do this better – being smaller they are nimbler, and being regional they understand that certain flavors are typical to a given area.
Mother Dairy markets Nolen Gur, a palm jaggery-flavored ice cream, to cater to palates in the eastern region. Jagger makes quality dark chocolates with organic jaggery (brown sugar). With Indians becoming conscious of health foods, Kwality has patented reduced-cholesterol ghee (clarified butter). Shivam Gupta, the director of WestCoast Group based in Mumbai, says that sales of its seafood, snacks and frozen vegetable packaged products are growing by 20 per cent annually. “Superior cold chain technologies, growth in e-commerce, convenience, dropping culinary skill sets, busy urban living, increased awareness about the health benefits of frozen foods, which are free from preservatives, are the factors mainly responsible for the growth of our products,” he says.
Among foreing players in India, Danone launched Mishti Doi a sweet yogurt famous in Bengal, which it also plans to market in Europe. Nestle’s Maggi noodles returned to leadership position with close to 50% share in the $300 million instant noodles category. However, Mondelez’s Cadbury chocolate reigns supreme in the world of India’s confectionery market!
