Indian Processed Food Industry with reference to Ready to Eat Market
09020242007
SYMBIOSIS INSTITUTE OF INTERNATIONAL BUSINESS (SIIB) is a constituent of SYMBIOSIS INTERNATIONAL UNIVERSITY (SIU) (Estd. Under section 3 of the UGC act 1956,Vide notification no. F-9-12/2001-U-3 of the Govt of India) Accredited by NAAC with ‘A’ grade
DISSERTATION PROJECT REPORT Course Name: Dissertation Dissertatio n
Code: 020242402
Project name: THE INDIAN PROCESSED FOOD INDUSTRY
WITH REFERENCE TO READY TO EAT MARKET
Programme: MBA- AB
Batch: 2009-11 [Fresh]
Season: April 2011. Semester- IV Name of the Student: Boddu Divya PRN: 09020242007 Submitted to Mr. Suresh Bhosale
Final submission date: 12th Feb’11
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ACKNOWLEDGEMENT During the perseverance of this project, I was supported by different people, whose names if not mentioned would be inconsiderate on my part.
I would like to extend my sincere gratitude and appreciation to my project guide Mr. Suresh Bhosale, H.O.D Agri-Business, Symbiosis Institute of International Business-Pune; for extending valuable guidance and encouragement from time to time, without which it would not have been possible to undertake and complete this project.
I would also like to thank my family and friends; the respondents of the research; and experts and students contacted for details, for their support and patience throughout the completion of the project.
DIVYA BODDU
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Index CHAPTER 11- INTRODUCTION 1.1
BACKGROUND ................................... .................. .................................. ................................... ................................... .................................. ................................... ........................... ......... 7
1.2
INDIAN FOOD PROCESSING INDUSTRY ................................... ................. ................................... .................................. ................................... ........................ ...... 7
1.2.1
Dairy ................................. ................ ................................... ................................... .................................. ................................... ................................... ................................... .................. 9
1.2.2
Fruits and Vegetables ................................. ................ ................................... ................................... ................................... ................................... ........................ ....... 10
1.2.3
Grains .................................. ................. .................................. ................................... ................................... .................................. ................................... ............................... ............. 11
1.2.4
Meat and Poultry Processing ................................. ............... ................................... .................................. ................................... ............................... ............. 12
1.2.5
Fisheries ................................. ................ .................................. ................................... ................................... .................................. ................................... ............................ .......... 13
1.2.6 Consumer Foods including Packaged foods, Beverages and Packaged Drinking Water /Ready to Eat (RTE).............................................................................................................................................. 14 1.3
READY TO EAT MARKET .................................. ................. ................................... ................................... ................................... ................................... ........................... .......... 16
1.3.1 Concept of RTE ............................................................................................................................... 16 1.3.2 RETORT & ITS PACKAGING ............................................................................................................. 17 1.3.3 Types Of Ready To Eat Food .......................................................................................................... 20 1.3.4 Players In Ready To Eat Food Market ............................................................................................ 20
CHAPTER 2: REVIEW OF LITERATURE Tata Strategic Management Group ............................................................................................................ 24 Ratna Bhushan (The Hindu) ........................................................................................................................ 25 SUBHA J RAO (The Hindu) ........................................................................................................................... 26 Indrajit Basu ................................................................................................................................................ 27
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CHAPTER 3: RESEARCH METHODOLOGY 3.1 EXPLORATORY RESEARCH ..................................................................................................................... 32 3.1.1 Secondary Research ....................................................................................................................... 32 3.2 DATA COLLECTION DESIGN ................................................................................................................... 32 3.2.1 Survey Type: ................................................................................................................................ 32 3.2.2 Type of questionnaire: ................................................................................................................ 33 3.2.3 Classificatory variable .................................................................................................................... 33 3.3 SAMPLE DESIGN .................................................................................................................................... 34 3.3.1 Sample Size: ................................................................................................................................... 34 3.3.2 Sample Type: .................................................................................................................................. 34 3.4 FIELD WORK DESIGN ............................................................................................................................. 35 3.4.1 Data collection period: 1 week in the month of January 2010 ....................................................... 35 3.4.2 No. of Investigators: 1 .................................................................................................................... 35 3.4.3 Area of Operation: Different retail outlets in Pune area (Aundh, FC etc) ..................................... 35 3.4.5 Time required for each Respondent: 10 minutes approximately .................................................. 35 3.5 LIMITATIONS ....................................................................................................................................... 35 3.5.1 Validity limitation: ........................................................................................................................ 35 3.5.2 Reliability limitation: ................................................................................................................... 35
CHAPTER 4: ANALYSIS AND DATA INTERPRETATION 4.1 INDIAN FOOD PROCESSING INDUSTRY ................................................................................................. 36 4.1.1 S.W.O.T ANALYSIS .......................................................................................................................... 36 4.2 THE READY TO EAT MARKET ................................................................................................................. 40 4.2.1 POTER’S 5 FORCE MODEL .............................................................................................................. 40
4.2.2 S.W.O.T ANALYSIS .......................................................................................................................... 45 4.3 ITC FOODS Vs MTR FOODS .................................................................................................................... 47 4.3.1 The Big Decision ............................................................................................................................. 48 4.3.2 Market Entrance ............................................................................................................................ 48 4
4.3.3 Distribution Network ..................................................................................................................... 49 4.3.4 Market differentiation ................................................................................................................... 49 4.3.5 Cost control strategy ...................................................................................................................... 49 4.3.6 Diversification of products: ............................................................................................................ 50 4.3.7 Extensive advertising ..................................................................................................................... 50 4.3.8 Maintenance of freshness and hygiene ......................................................................................... 51 4.3.9 Other factors .................................................................................................................................. 51 4.4 RTE AND CONSUMER BEHAVIOUR ........................................................................................................ 51
Chapter 5: Main Findings Main findings……………………………………………………………………………………………………………………………………… .57
CHAPTER 6: SCOPE FOR FURTHER RESEARCH 6.1 CHECK FOR GROUND REALITIES ........................................................................................................... 59 6.2 CONSUMER BEHAVIOR Vs DIVERSITY ................................................................................................... 59 6.3 GLOBAL SCENARIO Vs INDIAN SCENARIO IN RTE .................................................................................. 59
CHAPTER 7: CONCLUSION and RECOMMENDATIONS 7.1 RECOMMENDATIONS............................................................................................................................ 60 7.2 CONCLUSION ......................................................................................................................................... 61
BIBLIOGRAPHY BOOKS ..................................................................................................................................................... 62 WEB-RESOURCES .................................................................................................................................... 62
APPENDICES 5
List of figures: Figure 1: Food Processing ..................................................................................................................... 8 Figure 2: Dairy Products ........................................................................................................................ 9 Figure 3: Processed F Vs- Canned slices; Juices; Flavors ..................................................................... 10 Figure 4: Processed Grains-Bread; Flour............................................................................................. Flour ............................................................................................. 11 Figure 5: Meat n Poultry Processing- Meats; Egg liquid; Egg Albumin and Egg Yolk .......................... 12 Figure 6: Processed Fisheries- Fillets; Canned Tuna and Sardines ..................................................... 13 Figure 7: Packaged Food and Beverages............................................................................................. Beverages............................................................................................. 14 Figure 8: Retort Packaging Process Flowchart .................................................................................... 18 Figure 9: Retort Packaging machinery ................................................................................................ 18 Figure 10: Market share pie in RTE ..................................................................................................... 47 Figure 11: RTE KNOWLEDGE ............................................................................................................... 52 Figure 12: RTE KNOWLEDGE SOURCE ................................................................................................. 52 Figure 13: RTE PRODUCT PURCHASE PERCENTAGE ............................................................................ 53 Figure 14: NON-COOKING OPTIONS ................................................................................................... 53 Figure 15: RTE PURCHASE TIME .......................................................................................................... 54 Figure 16: WEEKLY CONSUMPTION ON AGE BASIS ............................................................................ 54 Figure 17: Reasons for buying RTE foods............................................................................................ foods ............................................................................................ 55 Figure 18: SALES PATTERN OF READY TO EAT FOOD IN VARIOUS FORMATS ..................................... 55 Figure 19: INCOME-CONSUMPTION GRAPH IN READY TO EAT SECTOR ........................................... 56
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CHAPTER 11- INTRODUCTION 1.1 BACKGROUND India has made lot of progress in agriculture & food sectors since independence in terms of growth in output, yields and processing. It has gone through a green revolution, a white revolution, a yellow revolution and a blue revolution. Today, India is the largest producer of milk, fruits, cashew nuts, coconuts and tea in the world, the second largest producer of wheat, vegetables, sugar and fish and the third largest producer of tobacco and rice. India‘s Food Processing industry is one of the largest industries in the country - it is ranked fifth
in terms of production, consumption, export and expected growth. The industry employs 1.6 million workers directly. Now the time is to provide better food processing & marketing infrastructure for Indian industries to serve good quality & safest processed food like
READY TO EAT (RTE) food, keeping in mind the changing tastes and lifestyle of the Indian demography. In fact, it is opening a new window in world scenario as far as taste & acceptance is concerned. For example, the Excise Duty is now ZERO % on RTE and 100 % tax deduction for the first 10 years for new units.
1.2 INDIAN FOOD PROCESSING INDUSTRY India‘s Food Processing industry is one of the largest industries in the country - it is ranked fifth
in terms of production, consumption, export and expected growth. The Indian food industry is estimated to be worth over US$ 200 billion and is expected to grow to US$ 310 billion by 2015. India is one of the world‘s major food producers but accounts for only 1.7 per cent (valued at
US$ 7.5 billion) of world trade in this sector – this share is slated to increase to 3 per cent (US$ 20 billion) by 2015. The Indian food processing industry is estimated at US$ 70 billion. It contributed 6.3 per cent to India‘s GDP in 2003 and had a share of 6 per cent in the total
industrial production. The industry employs 1.6 million workers directly. 7
Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of edible products. The Ministry of Food Processing, Government of India has defined the following segments within the Food Processing industry:
• Dairy, fruits & vegetable processing • Grain processing • Meat & poultry processing • Fisheries • Consumer foods including packaged foods, beverages and packaged drinking water.
Figure 1: Food Processing
While the industry is large in terms of size, it is still at a nascent stage in terms of development. Out of the country‘s total agriculture and food produce, only 2 per cent is processed. The highest
share of processed food is in the Dairy sector, where 37 per cent of the total produce is processed, of which 15 per cent is processed by the organized sector. Primary food processing (packaged fruit and vegetables, milk, milled flour and rice, tea, spices, etc.) constitutes around 60 per cent of processed foods. It has a highly fragmented structure that includes thousands of ricemills and hullers, flour mills, pulse mills and oil-seed mills, several thousands of bakeries, traditional food units and fruits, vegetable and spice processing units in unorganized sector. In comparison, the organized sector is relatively small, with around 516 flour mills, 568 fish processing units, 5,293 fruit and vegetable processing units, 171 meat processing units and numerous dairy processing units at state and district levels.
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1.2.1 Dairy
Figure 2: Dairy Products
The dairy sector ranks first in terms of processed foods with 37 per cent of the produce being processed. The organized sector processes an estimated 15 per cent of the total milk output in India. There are 676 dairy plants registered with Government of India, which come under the organized sector. Milk and milk products contribute to a significant 17 per cent of the country‘s
total expenditure on food. Traditional dairy products account for about 50 per cent of the total milk produced. The market for dairy products is expected to grow at 15-20 per cent over the next three years.
India stands first in the world in terms of milk production .The output is expected to be about 108 million tonnes, growing at a compounded annual growth rate of 4 per cent.
The dairy whitener market comprises of sweetened milk powders, condensed milk and creamers. Its market size is estimated at US$ 450 million.
Ghee is the most widely marketed and branded product with a nation-wide penetration of 24.1 per cent. It is estimated to be growing at a rate of 8 per p er cent per annum
The cheese market is estimated at US$ 2.49 million for (54000 tonnes in volume terms), growing at a rate of nearly 10 per cent per annum. The organized cheese market is dominated by processed cheese which accounts for 74 per cent market share
The ice-cream market in India is estimated at US$ US $ 226 million, with the organized market at US$ 158.2 billion. This is currently growing at 20 per cent
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1.2.2 Fruits and Vegetables
Figure 3: Processed F Vs- Canned slices; Juices; Flavors
o
India produces the widest range of fruits and vegetables in the world. It is the second largest vegetable and third largest fruit producer accounting for 8.4 per cent of the world‘s food and vegetable production.
o
The share of organized sector in fruit processing is estimated to be nearly 48 per cent.
o
Fruit production in India registered a growth of 3.9 3. 9 per cent during the period whereas the fruit processing sector grew several times faster at 20 per cent over the same period.
o
However, less than 2 per cent of the total vegetables produced in the country are commercially processed, as compared to nearly 70 percent in Brazil and 65 percent in USA.
o
India‘s installed capacity for fruits and vegetable processing nearly doubled during from
1.1 million tonnes in to 2.33 million tonnes. o
About 20 per cent of processed fruits and vegetables are exported. Major products exported include fruit pulps, pickles, chutneys, canned foods, concentrated pulps and juices and vegetables. Fruit exports have registered a growth of 16 per cent in volume and 25 per cent in value terms. Mango and mango based products alone constitute 50 per cent of the exports.
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1.2.3 Grains
Figure 4: Processed Grains-Bread; Flour
o
India produced nearly 209.32 million tonnes of grains.
o
India‘s production covers all major grains – rice, wheat, maize, barley and millets like
jowar, bajra and ragi. o
It ranks third in the production of grains in the world. With a share of 40 per cent, grain processing is the biggest component of food sector.
o
Primary processing constitutes 96 per cent with the remaining accounted for by the secondary and tertiary sectors.
o
Total rice milling capacity in the country is 186 million tonnes. There are about 516 large flour mills in the country, as well as about 10,000 pulse mills.
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1.2.4 Meat and Poultry Processing
Figure 5: Meat n Poultry Processing- Meats; Egg liquid; Egg Albumin and Egg Yolk
o
India has the largest number of livestock population in the world accounting for 50 per cent of buffaloes and 16 per cent of the goat population.
o
Meat production grew at a CAGR of 34 per cent during the period 1999-2004 and stood at US$ 12.44 million in 2005-06.
o
Meat exports stood at US$ 0.104 million in 2005-06.
o
Only 11 per cent of the buffalo population, 6 per cent of the cattle, 33 per cent of the sheep and 38 per cent of the goat population is culled cu lled for meat.
o
Consumption per head of both fresh and processed meat is very low at 1.5 kg compared with world average of 35.5 kg.
o
Indian poultry meat market was approximately US$ 2.03 billion in 2005. Indian broiler industry has seen a rapid growth in the last few years - CAGR of more than 10 per cent a year since 1998.
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1.2.5 Fisheries
Figure 6: Processed Fisheries- Fillets; Canned Tuna and Sardines
o
India is the third largest fish producer in the world and second in in-land fish production.
o
The Fisheries sector in India has been classified into marine, inland and aquaculture.
o
The fisheries sector contributes 1.1 per cent to the country‘s GDP.
o
This segment also provides employment to 11 million people engaged fully, partially or in subsidiary activities pertaining to the sector.
o
India‘s f ish ish production stood at a level of 6.4 million tons in 2004-05. Of this, about 60
per cent (3.9 million tons) came from marine resources. o
There are over 369 freezing units with a daily processing capacity of 10,266 tonnes and 499 frozen storage units with a capacity of 134,767 tonnes.
o
Currently fish processing is mostly targeted for export markets. Processed fish product exports include conventional block frozen products, individual quick frozen products and minced fish products like fish sausage, cakes, cutlets, pastes etc. Export of marine fish products touched of US$ 1.48 billion during 2004-05. Exports showed an increase of 11.97 per cent in volume and 11.1 per cent in value realisation. Frozen shrimp is the largest item in terms of value contributing to 63.5 per cent of the total exports, and frozen fish is the largest in terms of volume contributing to 34.62 per cent. 13
1.2.6 Consumer Foods including Packaged foods, Beverages and Packaged Drinking Water /Ready to Eat (RTE)
Figure 7: Packaged Food and Beverages
o
Packaged foods segment in India registered a growth of 8 per cent in 2005-06.
o
Noodles/Vermicelli is the fastest growing category in this segment with a CAGR at 15 per cent. The market for branded noodles no odles is estimated at 230 million servings per year.
o
The Soups market is still small and nascent in India and is approximately US$ 14 million in value.
o
The market for culinary products is estimated at US$ 475,000 and estimated to grow at 18 to 20 per cent per annum.
o
Products like Tomato Ketchup and Jams currently have low penetration levels, but are growing rapidly. Ketchups, for example, have a penetration of just 3 per cent in India; however this category is estimated to be growing at 20 per cent per annum. an num. 14
Beverages o
The beverages market primarily consists of non-alcoholic beverages which can be broadly classified into carbonated drinks, non-carbonated drinks and hot beverages.
o
This segment is estimated at US$ 155 million out of which fruit juices and fruit-based drinks account for US$ 60 million.
o
The market size of organized carbonated drinks is estimated at US$ 119 million. In the past decade the carbonated drinks market registered a healthy growth rate of 20 per cent, driven by the positive changes in India‘s consumer profile.
o
Hot beverages include health drinks such as white beverages (‗Horlicks‘ etc) and brown beverages such as tea/coffee as well as branded drinks (Eg: ‗Boost‘). The total to tal size of this
market is estimated at US$ 333 million by value and 85,000 tonnes by volume. o
White beverages account for 65 per cent of the market and brown beverages constitute the remaining 35 per cent. India is the largest producer of tea in the world accounting for 28 per cent of the total global production, at 857 million kgs. Tea production in India has been growing at 1.2 per cent per annum and India is the fourth largest exporter of tea in the world with estimated exports of US$ 5 million in 2002-03. India is also the fifth largest producer of coffee accounting for 4 per cent of the total production in the world. Nearly 75 per cent of India‘s production is exported and coffee exports stood at US$ 5.2
million in 2005-06.
Staples – Bread, Wheat Flour, Salt and Sugar o
Bread is slowly coming to be a staple product consumed by people of all economic classes in India. Total bread production in the country in 2004-05 was estimated at 2.7 million tons, growing at 7.5 per cent. About 55 per cent of bread production comes from the organized sector.
o
India is the second largest producer of wheat in the world with an output of more than 70 million tonnes. Branded ‗atta‘ (wheat flour) is an important item in this segment with an
estimated market of US$ 195 million. 15
1.3
READY TO EAT MARKET
Ready-to-eat food can be defined as food in a form that is edible without washing, cooking, or additional preparation by the food establishment or the consumer. It is a category of convenience food where the preparation time is extremely short and convenient, to where the product is prepared in advance and can be eaten as sold depending upon the requirement of the users and the weather conditions. These foods meet the specific needs of convenience, nutritional adequacy, shelf stability, storage, distribution to the centers and have become very popular after the year 2002. The pioneer introduction of retorting technology has made the sale of ‗Ready-toEat‘ food products commercially viable with great taste.
1.3.1 Concept of RTE Ready to Eat Meals like already cooked or prepared lunch & dinner are relatively new
products which came in market only a few years back and are now sold through retail general stores in especially made sealed aluminum laminates.
The retorting or sterilization process ensures the stability of the Ready-to-Eat foods in retort pouches, on the shelf and at room temperature. The application of sterilization technology completely destroys all potentially harmful micro-organisms, thereby making sure that the food product has a very long shelf life of over 12 months and needed no refrigeration.
When customer needs to eat, the food item pouch is either put in microwave oven to warm it or keep in heated water for a few minutes and then serve to eat.
Such ready to eat meals have been especially given to soldiers in army of many countries who require carrying their rations while on war front or while located far away from their main unit.
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The advertisements like, "Hungry Kyaa" are adding zest to the market by popularizing such food items which are pre-cooked and free from any preservative, and yet have a long shelf life of over 12-months. These food items are normally sold in pouches, well packed in cardboard printed boxes of small book size and carry about 300 grams of cooked food at a price of about Rs. 40 to 200 in foreign market depending upon the type of dish packed. One packet of vegetable dish is normally sufficient for one meal for three persons and therefore falls in economic zone of consumer‘s preferences.
1.3.2 RETORT & ITS PACKAGING
The water RETORT is an equipment or vessel or sterilization module through which steam (at 130 degree centigrade for 25 minutes) is applied on food products packed in retort pouches. The retorts use water or steam/air combination as processing medium to heat the container/packages. Compressed air or additional steam is introduced during the processing cycle to provide the overpressure (any pressure supplied to the retort in excess of that which can be normally achieved under steam at any given retort temperature). Overpressure is important in preventing package damage or loss of seal integrity (like bursting), during the heating process.
o
Retort pouches is a flexible packaging material that basically consist of laminates or bounded layers of different packaging films of Polyster-Nylon-Aluminiumpolypropylene that can withstand high h igh process temperature & pressure.
o
Their most important feature is that they are made of heat-resistant plastics unlike the usual flexible pouches. This makes the retort pouches unique which are suitable for the processing of food contents at temperatures around 120 degrees Celsius. That is the kind of ambient temperature prevalent in the thermal sterilization of foods.
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Figure 8: Retort Packaging Process Flowchart
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o
Some of the major equipments used in packaging food materials are shown below in Figure 9
Auto Can Feeder
Nozzle type vacuum and gas filler
Retort pouch filler 19
o
ADVANTAGES OF RETORT PACKAGING:
Pouch laminates permits less chance to overcook during the retorting thus products having better color, texture & less nutrients loss.
It requires less energy for sterilization.
It requires less disposal & storage space.
Low oxygen & moisture permeability.
Shelf stable for longer time & requires no refrigeration.
Sun light barrier, light weight, easy to open.
1.3.3 Types Of Ready To Eat Food Veg Food
Non Veg Food
Alloo Matar Palak paneer Sarso Ka Saag Chana Masala Kadi Pakora Cheese Tomato Dal Makhani Rajma Masala
Chicken Curry Butter Chicken Karahi Chicken Mughalai Chicken Mutton Masala Mutton Korma Karahi Mutton Mutton Biryani
Deserts Gajar Ka Halwa / Sugi Ka Halwa / Milk Kheer Snacks Wafers/ Cream rolls/ Biscuits/ Soups
1.3.4 Players In Ready To Eat Food Market Brands
Descirption
Amul
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. Apart from being known for its dairy products, Amul has ventured into the ready-to-eat industry and includes Processed Cheese, Pure Ghee, Shrikhand, Nutramul and Mithaee Gulab Jamuns among its offerings.
Gits
Gits produces the selected range of popular ready to cook and instant foods that cover a range of ethnic Indian cuisine-and where the recipes have "Global pallete acceptance".
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The traditional Indian Sweet-Maker from a small set up has transformed into a full fledged processing food industry and taking its wares beyond the domestic frontiers to the Western World. Offers packaged Bhel puri chats such as Sev Puri, Chana Masala, Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa, Dhokla among others
Haldirams
Kitchens
Of
ITC
ITC's Flagship brand 'Kitchens of India ' has begun to carry this exotic taste of Indian cuisine beyond the shores of India . Connoisseurs of Indian food in the US, India, UK, Switzerland, Bhutan, Bangladesh, Hongkong, Tanzania, Canada and Australia now have the opportunity to taste these delicious delici ous recipes.
MTR
Amongst the top five processed food manufacturers in India, the company claims to "market and export a wide range of packaged foods to global markets" that include USA, UK, Australia, New Zealand, Malaysia, Singapore, UAE and Oman. MTR foods currently comprises twenty-two delicious and completely authentic Indian curries, gravies and rice.
Priyafoods
Priya has a range of popular traditional recipes starting from Dal Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter Masala, Punjabi Chhole and Rajma Masala along with true southern delicacies like Andhra Veg Pulav, Mango Dal, Gongura Dal. Priya's products are available in USA, Canada, West Indies, UAE, Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Singapore, Malaysia, Australia, U.K., New Zealand etc.
RainbowFoodsIndia
Exporters, manufacturers & suppliers of all types of Indian Frozen Vegetables, Meals & Snacks to USA and UK. They procure Frozen Vegetables, Meals, Fruits, Parathas, Punjabi Veg Curries, vegetables, fruits, pickles, pastes and Snacks.Reputed professionals from 5-star hotels. Supply of Indian Frozen Vegetables, Meals & Snacks food.
Satnam Ltd
Kohinoor Heat & Eat Indian Curries are a range of ready - to - eat Indian Overseas delicacies. Kohinoor claims that "Heat & Eat range of curries use the wellestablished retort technology to offer extended shelf life to the products through steam sterilization." Tasty Bite has a range of entrées and Ready Meals. They have exceptional retort pouches which was developed for the Apollo space program. Tested to withstand extreme temperatures and heights from well below sea level to as high as the moon, this retort packaging has made Tasty Bite a favorite with campers, mountain climbers, sailing expeditions, desert safaris.
Tasty Bite
Veekay
Impex.com
Exporters of Fresh Fruit Juice, ready to eat food products; kairameen Moliee(Pearl-spot fish), Motha Fish curry, see Fish Curry,Chilly Chicken (boneless).
Ashoka is a Brand owned and managed by ADF Foods Limited (a BSE listed Company) in India. Ashoka is our Flagship Brand and the leading Ethnic Indian food brand made in India. It is among the widely distributed ethnic Indian brand. Its range includes ready-to-eat curries (Heat & Eat), Frozen Foods (Indian Breads Ashoka Ready to Eat & Snacks), pickles, condiment pastes, mango pulp/slices, chutneys, pappadums, IQF ready-to-cook vegetables, and Microwaveable rice.
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ITC Limited (BSE: 500875) public conglomerate company headquartered in Kolkata, India. Its turnover is $6 billion and a market capitalization of over $30 Billion. The company has its registered office in Kolkata. It started off as the Imperial Tobacco Company, and shares ancestry with Imperial Tobacco of the United Kingdom, but it is now fully independent, and was rechristened to Indian Tobacco Company in 1970 and then to I.T.C. Limited in 1974. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hotels. Over time, the strategic forays into new businesses are expected to garner a significant share of o f these emerging high-growth markets in India. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, infrastructure, significantly enhancing the Company's marketing reach.
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MTR Foods Private Limited is amongst the top five processed food manufacturers in India. We manufacture, market and export a wide range of packaged foods to global markets that include USA, UK, Australia, New Zealand, Malaysia, Singapore, UAE, Japan and Oman. Starting with the legendary MTR restaurant in Bangalore, India‘s silicon valley, we now offer ''complete meal solutions'. solutions'. Our wide range of products include ready-to-eat curries and rice, ready-to-cook gravies, frozen foods, ice cream, instant snack and dessert mixes, spices and a variety of accompaniments like pickles and papads.
MTR Foods was headed by Sadanand Maiya (son of the Yajnanarayana Maiya) until it was sold toOrkla, toOrkla, a Norwegian company for $80 Million in March 2007. It produces packaged foods in different ranges - spices, instant mixes, ready-to-eat foods, vermicelli, ready-to-cook gravies, range of frozen products, papads, pickles, chips, snacks and ice creams. It bought the packaging technology from the Defence Food Research Laboratory in Mysore and there are no preservatives added to the food while packaging. MTR is also the first Indian processed foods company to be certified with the Hazard Analysis Critical Control Point (HACCP) certification which is a rigorous standard of food safety and hygiene. Their deep understanding of culinary expectations and needs has resulted in many new and innovative products. Their investments in infrastructure and technology ensure that they can scale rapidly and bring these to market. Today, consumers across the globe count on them to bring them all-natural, wholesome and delicious food that is also convenient and no-fuss. no -fuss. Ready to Eat dishes are an amazing combination of convenience, taste and variety. They're 100% natural and have absolutely no preservatives. The range currently comprises twentytwo delicious and completely authentic Indian curries, gravies and rice. They have successfully adapted technology from the Defense Food Research Laboratory, Mysore to make sure each dish has that "just -cooked" freshness.
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Indian Processed Food Industry with reference to Ready to Eat Market
09020242007
CHAPTER 2: REVIEW OF LITERATURE Tata Strategic Management Group Ready-to-eat foods market in India October 18, 2007: Ready-to-eat foods market in India to reach Rs 2900 Cr by 2015. Tata Strategic recommends focusing on affordability, acceptability and availability of ready-to-eat food s. Tata Strategic Management Group, today, released its analysis on the Ready-To-Eat (RTE) foods market in India currently worth Rs. 128Cr. (2006), expecting it to further expand to Rs 2900 Cr. by 2015. The factors contributing to this growth would be changes like cold chain development, disintermediation, streamlining of taxation, economies of scale on the supply side, coupled with increasing disposable incomes, diminishing culinary skills and the rising need for convenience on the demand side. The Tata Strategic report on the Ready-To-Eat (RTE) foods highlights that the RTE market in India has remained under penetrated owing to factors like consumers‘ penchant for freshness, low affordability and the Indian housewife‘s preference for home cooked food. The report also draws attention to the ‗perceived‘ taste and nutrition gap and poor range availability for the
Indian consumers. Significant RTE foods industry data highlighted in the Tata Strategic report:
Packaged foods in India have grown at approximately 7% per annum between 2000 and 2005, with Ready-to-eat foods (RTE) being the fastest fa stest growing category at CAGR 73%.
The Indian RTE foods market, canned/preserved segment is more popular, contributing to approximately 90% of the market and growing at a CAGR of 63% between 2001 and 2006
The chilled and dried ready meal segments are non-existent.
According to the report, the packaged foods industry in India has not experienced significant growth due to inadequate demand arising from low household incomes and consumer preference for fresh and home-cooked food.
e r u t a r e t i L f O w e i v e R : r e t p a h C
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Speaking on the future outlook for the RTE market, Mr. Raju Bhinge, CEO, Tata Strategic Management Group said, ―There is a huge untapped market opportunity arising due to rapid demographic shifts in income, urbanization and proportion of urban working women in India. The industry needs to concentrate on broadening the market and increasing penetration amongst Indian consumers.‖ Tata Strategic analysis of the Indian RTE market also put forth that the industry players would have to significantly improve their price competitiveness with respect to other options such as domestic help, eating out and ordering in, available to the Indian consumer. Besides price considerations, the product range offered by industry players will have to be strengthened. At the moment the regional cuisine and non-vegetarian cuisine markets are relatively under serviced with concentration on the vegetarian North No rth Indian meals. Mr. Pankaj Gupta, Practice Head- Consumer & Retail, Tata Strategic further added, ―According to our analysis, India provides an attractive opportunity for both Indian and International players with a mix of demand and supply side changes. If consumer demands of affordability, availability and enhancing acceptability are met, the RTE foods market has the potential market size of Rs 2900 Cr. by b y 2015 from its existing Rs. 128Cr.‖
Ratna Bhushan (The Hindu) Ready-to-eat segment whets NRI appetite MADE in India. Sold in i n Sainsbury, Selfridges, Walmart and Safeway.
It's fast becoming a reality. For, even as the Rs 25-crore ready-to-eat packaged foods market faces challenges back home, the category is gathering momentum overseas. From ITC's Kitchens of India and MTR Foods, to Tasty Bites Eatables and Satnam Overseas, everyone seems to be wanting a slice of the NRI's food pie. ITC Foods has already had a test run of its Kitchens of India range of ready-to-serve packaged foods in Selfridges, UK. Mr Ravi Naware, Chief Executive, ITC Foods, said, "Retailing in the UK, other European countries and the US is very much on the agenda. Next year, we plan to begin retailing in supermarkets in the UK." Or take the Rs 130-crore MTR Foods. "We plan to begin selling our ready-to-eat food range in
25
Sainsbury, UK, within the next six months," said Mr Sadananda Maiya, Chairman & Managing Director, MTR Foods. The company's presence on the global map - at roughly 8 per cent of its sales - is currently marked by exports to the US, Canada, UK, Germany, France and Japan, among other countries. MTR has projected exports to account for 20 per cent of its sales in five years. The Pune-based Tasty Bite Eatables Ltd (TBEL) claims to be the largest-selling Indian food brand in the `natural foods' category in the US. Mr Ravi Nigam, Executive Director and President, TBEL, attributes the brand's performance in the US to "significant" investments on the distribution front. "We have decided to focus on our largest revenue generator — the ReadyTo-Serve (RTS) or retort packaging category," Mr Nigam added. Tasty Bite's portfolio also includes ready-to-cook (RTC) curry pastes — already popular in western markets.
SUBHA J RAO (The Hindu) Cooking made convenient: Want to try out a new dish on your family? Just snip away at covers to bring home the tastes of India IT'S EIGHT in the evening, you're still in office, and some friends have invited themselves over for dinner. What will you do? Rush home, don the apron and rustle up something delectable? "Nah!" says Rohit, a self-confessed lover of cooking. The great stuff he churns out in the kitchen has many of his bachelor friends lining up for home-made food. What Rohit does now in moments of crisis is pick up ready-to-eat side dishes straight off the super market shelf and team them up with pre-packed parathas and rotis. For dessert, he chooses from any of the readymade ones on offer. His friends can't really make out the difference. If you're a regular super market shopper, chances are you would've noticed the number of items on offer in this segment growing by the day. Thanks to change in mindset on eating packed food and the fact that no preservatives are used to extend the shelf life, more and more people, especially working couples, are taking to ready-to-eat read y-to-eat food in a big way. wa y. And, the variety on offer is mindboggling. Five companies, MTR, ITC, Tasty Bite, Currie Classic and Kohinoor, put together offer customers more than 25 options to choose from. The Th e list goes like this ... The modest Pongal (how does Madras lentil rice sound?), lemon rice and sambar rice share shelf space with their North Indian and Pakistani cousins like Palace paneer, Daly 26
Machine, Narrating Korma, China Masala (all the way from Rawalpindi), Baghare Baigan (Hyderabad), Methi Mutter Malai (from Agra, apparently concocted by Noor Jehan), Kashmiri Rajmah, Avial, Peas and mushroom curry... Phew! And, this is just part of the list. A staple offering of most companies is the ubiquitous Dal Makhni, a creamy mix of various lentils, Indian spices and fragrant butter (Do I read like the menu card in a star restaurant?). And, that is the fastest moving item in most stores. These packs come in the range of Rs. 15 (for lemon rice and the like) to Rs. 40 (Palak Paneer et al). The `Buy two get one free' scheme of ITC has caught on very well with customers, store managers say. M. Chellayan, Director, the Nilgiri Dairy Farm (Nilgiris), says that with more disposable income on their hand, many middle and upper middle class people are going in for these dishes. S. Prakash, Senior Manager of Alankar Supermarket, agrees. "We've had to replenish our stock often," he says. Though people are open to trying out new dishes, the fact that it is pre-cooked and packed rankles some. But, one bite and they are hooked. "I opened a packet of MTR's Bisibela bhath bravely, but wondered how it would taste. I refused to believe that something cooked a month ago and packed, that too without any preservatives, would still be fresh. But, one spoon was enough to make me a convert. I now buy packed subzis when I am in the mood to eat something nice without going through the bother of cooking," says Leena, who works in the field of medical transcription.
Indrajit Basu Here's $20m, just don't make me cook It took a while to catch on, but as the country's 15-year-old globalization process brings about rapid changes in the lifestyles of urban Indians, ready-to-eat food is fast becoming a compelling proposition. Over the past two years, the ready-to-eat packed food market has grown from an almost insignificant number to become a US$20-million-revenue industry in 2004. Industry 27
players say that, considering the current 35% growth rate, revenues in this sector can easily touch $50 million in the next three years. Take the instance of Mumbai-based Ruma Banerjee, a 40-year-old market research professional, who gets her ready-to-eat curry pastes or cooked packed meals from a grocery shop at the mall next to her office. "It's not that I do not like to cook, but with a 70-hour work week, an equally busy husband and a 10-year-old child at home, we have little time for regular cooking," she says. For Shruti Rajam, 23, an insurance-industry professional living alone in Chennai on her first job, time is not really a problem. Cooking is. Shruti never had to enter the kitchen in her life when she was with her parents. But now that she is on her own, stuffing her kitchen cabinet with ready-made food seems to be the obvious option. "It's cool," she says, "I have become an expert at this. Even my friends think I am a great cook." Ruma and Shruti are part of a rapidly growing tribe of urban Indians who are increasingly shunning the painstaking job of chopping, slicing, dicing and mixing the right ingredients, to simply picking up a pair of scissors and snipping open a pack of a two-minute everyday Indian meal. Indeed, ready-made India curries that were unheard of even a few years back occupy the pride of place in Indian kitchens now. Brands such asITC Aashirwad, Kitchens of India, MTR Food, Tasty Bites and Currie Classic are not only gaining acceptance in double-income nuclear families all over India, but are also spreading rapidly globall y. "Indian lifestyle is undergoing a massive socio-economic change, which is also being reflected in food habits," says Ravi Naware, divisional chief executive of ITC Foods, a wing of ITC Ltd, one of India's largest fast-moving consumer-goods company. "In urban India, where time is more important than money, it's tough to return from office and put the hours into cooking that a typical Indian meal demands.‖ J Suresh, chief executive officer (CEO) and executive director of MTR Foods that claims to be the largest player in the segment with over 65% market share, adds that ready-made food is not considered extravagant expense anymore. "Many Indian households with little time and inclination to spend in the kitchen are adopting this as a necessity. Moreover, with disposable income going up as families become more double-income and salaries going up, people don't mind spending on something that will save them the sweat in kitchen," he says. 28
The quick-fix food concept is not really new in India, it has only picked up of late. It was launched over a decade ago in different forms but failed to take off primarily because of a general preference for freshly cooked food. And also, as Naware says, "because retail outlets in India lacked the adequate refrigeration facilities". With the availability of a new technology called Retort - that packs cooked food in a four-layer package, which is then heated to 120 degrees Celsius to kill all living organisms, thereby ensuring freshness through its much longer shelf-life - the ready-to-eat food concept has become far more acceptable." Besides, says Suresh of MTR Foods, all ready-made food makers have adopted Hazard Analysis Control Point Certification from the British Standard Laboratory, which signifies that factories making such products follow strict food and safety norms. Nevertheless, all ready-made food makers say the primary driving force behind the growth of this sector is the changing Indian mindset toward food. Convenience is the new buzzword. "There was a time when eating out was a luxury," says Amit Jatia, managing director of McDonalds India. "Not any more. Likewise, an urban Indian no longer hesitates to pick up a phone and order meal from a neighborhood restaurant or pick up a ready-to-eat meal from the next-door store." According to AC Neilsen ORG MARG, a top market research outfit, it is not just ready-to-eat food that is growing at a scorching pace, but "eating habits are changing rapidly and fast-food consumption is now a part of everyday life...Almost a third of urban Indians now claim to opt for fast food, even for breakfast. Dinner, however, remains the most-preferred occasion for eating fast food," says Sarang Panchal, executive director of AC Neilsen.
According to the findings of the latest online survey from AC Nielsen, urban Indians are among the top 10 most-frequent consumers of fast food across the globe. The survey finds that a huge 71% of urban Indians consume food from take-away restaurants once a month. Some 37% of the adult Indian population does so at least once a week. This makes India one of the top 10 countries among the 28 surveyed in terms of frequency of fast-food consumption.
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"The incidence of fast food consumption in urban India is accelerating much faster than most people anticipated," says Panchal. "Contrary to the belief that a reliance on traditional and homemade preparation may hinder the growth of fast food, changing lifestyle has altered the view toward out-of-home meals. A willingness to spend and, most importantly, the urban Indian acquiring a more global palate has catalyzed consumption."
Among the international fast food chains and local operators, McDonald's is the most popular of all take-away options. Nonetheless, selling fast food and ready-made food is not exactly easy, say the players, especially for foreign players, as Domino's Pizza India CEO Arvind Nair discovered. Which is why, he says, "Imported fast food chains were quick to adapt to Indian tastes and even the regional variations. There are extensive vegetarian menus, for example, and emphasis on the kind of meats that Indians have no objection to," says Nair.
Indians' discerning taste buds is a big reason why industry experts like Naware and Suresh feel that foreign players would find little opportunity in this new fad "unless it is ready to tie up with a local player". However, for foreign players, India could be a good sourcing point for the overseas markets. "The growth of ready-made food and curry pastes has also been scorching in overseas markets," says Naware. "The potential for exports are very good. We are experiencing explosive demand for ready-made Indian food from overseas markets like the US, the UK, Canada and Europe. This demand is not only generated by the non-resident Indian community but also by the local populations that are increasingly getting exposed to Indian cuisine through Indians living there, and also through their travels. I came across a projection recently that says by 2020, no American will cook starting from basic ingredients all the way. They will either use ready-to-cook or ready-to-eat food". India exported about $7 million worth ready-made Indian food in 2004, which is growing at around 20% a year. According to industry insiders, the opportunity for foreign players in the country's fast food segment is huge. Nair of Domino's Pizza says although Indians' penchant for spicy food has resulted in an Indian-Chinese cuisine that is quite unknown in Sichuan province or Guanzhou, the snowballing retail revolution aimed at India's 300-million-strong middle class has created a natural habitat for imported fast food. "Down the road, I can see not only pizzas and burgers and 30
fizzy drink but also branded sushi, Vietnamese soup, Lebanese kebabs and Thai food-in-bowls to join our Mughlai and dosa," says sa ys Nair. And according to Naware, yet another untapped segment that could be utilized by foreign players through their marketing prowess are the smaller towns and suburbs of India. Despite its scorching growth, the concept of ready-to-eat and fast food are still restricted to the six larger Indian cities and a few smaller ones while a huge section of the country's billion-plus population is still not exposed to it. "That has happened because marketing ready-made and fast foods in the rest of India requires huge wherewithal that Indian companies do not have. This is where foreign players can excel," says Naware.
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Indian Processed Food Industry with reference to Ready to Eat Market
09020242007
CHAPTER 3: RESEARCH METHODOLOGY 3.1 EXPLORATORY RESEARCH 3.1.1 Secondary Research For the successful completion of the proposed objectives, a secondary research was undertaken. This included thorough knowledge search from various resources like
Research Journals
Text Books related to Food Processing and Ready to Eat Foods
The FOOD Magazines
Internet resources including that of the Ready to Eat player‘s websites
Newspaper Articles on the trends and latest happenings happen ings in the RTE market.
The secondary research helped establish knowledge base and give better insights for interpretation, analysis and suggestions relating to the project.
3.2 DATA COLLECTION DESIGN For the purpose of understanding the consumer behavior and other implications in the growth of RTE market, a primary research is required. It will also reinforce the findings of secondary research.
3.2.1 Survey Type: Mall interview (at the retail outlets) a) Flexibility: The research requires that a direct and open communication is established between the interviewer and the respondent, especially for the open ended questions. This eliminated other methods of survey namely telephonic, teleph onic, mail or electronic survey methods and we remain with personnel interviews, ie, farm, home or mall survey method. Personnel interviews allow the investigator to explain and clarify difficult questions and entail probing and prompting during the survey to enhance validity, diversity and exhaustiveness.
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b) Quantity of information : Since the questionnaire was semi-structured, open questionnaire and contained large amount of data to be collected, farm, home or mall interview was the obvious choice for the survey method. Farm or home interview helps in easy recording of open ended questions with more responses mall interview, the former was a better choice for survey method. Further, it was found that the questionnaire requires a minimum of 15-20 minutes for completing it. Since this much time is not there with the respondent in mall interview, farm or home interview would have been the best option for the survey.
But due to the time and budget constraints it was decided to conduct cond uct mall survey for the research.
3.2.2 Type of questionnaire: Semi-Structured The type of questionnaire is kept semi structured because, for some questions the respondent may want to answer something that is not there in the options given. For example ―What do you
see before buying a RTE food product?‖
3.2.3 Classificatory variable The secondary research suggests that the preference to RTE majorly depends upon the income level of the consumer. Hence, the classificatory variable taken here is also the same. a. less than 10,000 b. 10,000 – 25,000 c. 25,000 – 50,000 d. More than 50,000
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3.3 SAMPLE DESIGN 3.3.1 Sample Size: Since we have 4 classificatory variables, a minimum of 30 * 4 = 120 respondents should be approached. For better results and keeping into mind the time and budget constraints, a sample size of 200 is ideal.
3.3.2 Sample Type:
Non probabilistic sampling technique is adopted. Probability sampling is avoided as the sampling has to be done among the respondents who visit the retail outlets and it is not possible to pre-specify every potential sample of a given sample that could be drawn with their probability of being selected. Further probability sampling required precise definition of the target population which was lacking here. Thus due to inadequacy of sampling frame and not to make the research complicated, non- probabilistic sampling technique is adopted. But efforts were made to avoid selection biases while selecting the respondents for better representation. So among non probabilistic sampling techniques, Quota sampling is done where the sample elements selected fit the control characteristic of being a prospective RTE buyer. Quota ensures that the composition of the sample is same as the composition of the population with respect to the characteristic of interest. The sampling was also disproportionate as the criteria was to achieve the target of 200 with each classificatory variable having a sample size of minimum 30 samples , thus flexibility of a range of 25-30 per variable and the decision on the number of sample was not dependent on the secondary data analysis but based on judgment. Therefore even though the sampling is non-probabilistic sampling, all care is taken to ensure the reliability of sampling.
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3.4 FIELD WORK DESIGN 3.4.1 Data collection period: 1 week in the month of January 2010 3.4.2 No. of Investigators: 1 3.4.3 Area of Operation: Different retail outlets in Pune area (Aundh, FC etc) 3.4.5 Time required for each Respondent: 10 minutes approximately
3.5 LIMITATIONS There are some limitations of the research caused by time and budget constraints and are listed as:
3.5.1 Validity limitation: During the response there may be high interference from friends and relatives of the respondent. This to some extent may cause the response to their opinion instead of the respondent‘s opinion. Thus there is a compromise in the validity of the response. Even though this error is non quantifiable still this will have somewhat effect on the overall validity of the research.
3.5.2 Reliability limitation: Since the sampling technique used is non-probability technique an evaluation of the precision of the sample results are not permitted and the estimates cannot be statistically projected to the population.
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Indian Processed Food Industry with reference to Ready to Eat Market
09020242007
CHAPTER 4: ANALYSIS AND DATA INTERPRETATION For the purpose of better understanding and flow of the report, this chapter is divided into 4 sections, each catering to the 4 objectives of the research.
4.1 INDIAN FOOD PROCESSING INDUSTRY 4.1.1 S.W.O.T ANALYSIS
STRENGTHS o
India has access to several natural resources that provides it a competitive advantage in the food processing sector. Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base suitable for food processing industries.
o
o
India is world‘s largest producer of milk, tea and pulses and fruits and vegetables. India has large marine product and processing p rocessing potential with varied fish resources along the 8,041 km coastline, 28,000 km of rivers and millions of hectares of reservoirs and brackish water.
o
India possesses the largest livestock population in the world with 50 per cent of world‘s buff aloes aloes and 20 per cent of o f cattle.
n o i t a t e r p r e t n I a t a D d n a s i s y l a n A : r e t p a h C
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o
India‘s comparatively cheaper workforce can be effectively utilized to set up large
low cost production bases for domestic and export markets. Cost of production in India is lower by about 40 per cent over a comparable location in EU and 10-15 per cent over a location in UK.
o
Traditionally, different players across the value chain played the different roles and worked more or less independently. Recently, the trend has been towards increasing integration and collaboration across players in the value chain, to garner mutual benefits. Thus taking advantage of forward and backward linkages to the maximum.
o
India has a large number of research institutions like Central Food Technological Research Institute, Central Institute of Fisheries Technology, National Dairy Research Institute, National Research and Development Centre etc. to support the technology and development in the food processing sector in India.
WEAKNESSES o
Domestic penetration of processed fruits and vegetables overall is at 10 %.
o
The relative share of branded milk products especially especi ally ghee is still low at 2 %.
o
Domestic penetration of culinary products is still 13.3 % and is largely tilted towards metros.
o
Consumption of packaged biscuits for Indian consumers is still low at 0.48 % while that for Americans is 4 %.
o
Most of the processing in India is currently manual. There is limited use of technology like pre-cooling facilities for vegetables, controlled atmospheric storage and irradiation facilities. This technology is important for extended storage of fruits and vegetables in making them conducive for further processing 37
o
In the case of meat processing, despite the presence of over 3600 licensed slaughter-houses in India, the level of technology used in most of them is limited, resulting in low exploitation of animal population.
o
Nearly 90 per cent of the food processing units are small in scale and hence are unable to exploit the advantages of economies of scale.
OPPORTUNITIES o
The demographics at large are changing rapidly. Increased income, search for convenience, increased work force per family etc happens to provide the required boost to this sector.
o
Food processing is being encouraged through contract farming and land leasing arrangements to allow accelerated technology transfer, capital inflow and assured market for crop production.
o
The government of India is taking initiatives for enormous investments in this sector.
o
The national policy aims to increase the level of food processing from 2 per cent to 10 per cent in 2010 and to 25 per cent in 2025.
• The level of institutional credit to be provided by banks and FIs has been
increased from US$ 17.41 billion during 2003-04 to about US$ 23.76 billion in 2005-06
• Allowing full repatriation of profits and capital.
• Automatic approvals for foreign investment up to 100 per cent, except in few
cases, and also technology transfer.
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• Zero duty import of capital goods and raw material for 100 per cent export -
oriented units. Customs duty on packaging machines reduced. Central excise duty on meat, poultry and fish reduced to 8 per cent
• Income tax rebate allowed (100 per cent of profits for 5 years and 25 per cent of
profits for the next 5 years) for new industries in fruits and vegetables besides institutional and credit support.
• Allowing sales up to 50 per cent in domestic tariff area for agro-based, 100 per
cent export oriented units
• Government grants given for setting up common facilities in Agro Food Park.
• Full duty exemption on all imports for units in export processing zones.
o
The Government of India is looking to promote terminal markets, as a means of integrating domestic produce with retail chains. There are plans to set up such markets in eight cities across five states, at a cost of US$ 131 million. The cities being considered are Mumbai, Nashik, Nagpur, Chandigarh, Rai,Patna, Bhopal and Kolkata.
THREATS o
o
o
Increased processing of food means increased spending of resources such as water, electricity, raw materials for appropriate machinery etc. Since any kind of processing will generate lot of waste effluents of chemical and non-degradable nature which may affect the environment in the long run. Also, processed foods require special packaging which a gain will involve lot of paper and plastics, thus harming the environment even further.
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4.2 THE READY TO EAT MARKET 4.2.1 POTER’S 5 FORCE MODEL
Packaged food industry has been lately drawing criticism from Industry pundits and experts, for it has shelved its status of being a recession proof Industry. It was only a few months back when the same pundits were going gung-ho about the opportunities lying galore ahead of players in this Industry. It almost seemed packaged food had evolved over the years from its status from a bare psychological need in Maslow‘s hierarchy to aesthetic needs of health and well being. The only chant heard around was about the forces of consumerism, globalization and rising income levels in third world countries, which would be upholding the future of this Industry high. However, it didn‘t take long for this recent recession to shed those claims and reject those profound theories. The matter of fact is that packaged food Industry, particularly its consumption is as susceptible to cyclical trends of economy as any other Industry today. It doesn‘t take much for any consumer to trim his food budget in wake of credit crunch and move to alternate cheaper avenues like fresh foods. Hence, it becomes imperative for both, Incumbent players and New Entrants to estimate the very forces that will be deciding the fate of this industry over a period of next 2-3 years.
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Competition and Rivalry Characteristic Product Differentiation
Comments There has been convergence in the attributes of food labels with most desirable being Natural, Nutrients, High Quality and Convenience. Traditional differentiation models based on brand and product formulation are losing relevance. Low Switching Cost The customer is not loosing on anything by switching from one brand to the other, hence leading to frequent churning and fierce advertisement rivalry to attract and retain customers Price and Process War Rigorous price and process wars are waging the entire spectrum of value chain from raw material procurement to customer delivery. The recent supermarket was between Tesco and Walmart‘s Asda serves as a testimony. Consolidation & Due to spate of acquisitions and Concentration expansions, the industry is getting concentrated and consolidated. Currently Nestle has highest market share, approx 3.3%. But this consolidation trend may lead to an oligopoly where some are price setters and others price takers. Storage Costs & Time to As this industry deals with highly Market perishable products there storage costs are significant and time to market forms a critical part. This occasionally leads to unloading of similar products at the same time by different players and further intensifies the game. Growth Worldwide packaged food industry has been witnessing more than 7% growth over the last 3 years, much better than 4-5% growth rate of the entire economy. Economies of Scale Economies of scale are becoming more and more important in attaining cost efficiencies. Each player is trying to exploit the global sourcing model to rationalize its cost and pass on the benefits to its customers
Conclusion Unfavorable
Unfavorable
Unfavorable
Unfavorable
Unfavorable
Favorable
Favorable
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Buyer Power Buyers for packaged food industry players can be categorized into retailers and consumers, hence different set of forces are applicable to each of them. Characteristic Comments Conclusion Buyer Awareness Consumer is becoming more aware and Unfavorable capable to compare each product on all the 3 fronts of health ingredients, safety and alternate price discounts making it more challenging for players to enjoy consumer focus and loyalty. Price Sensitivity In the wake of recent recession, Unfavorable consumers have trimmed their expenditures drastically and have further led to closing of several retail chains. The only mantra that‘s working for marketer is price discounts. Incentives and Rebate Retailers are expecting the big players Unfavorable of this industry to share their expenditure and losses, helping them sustain their operations in the cut throat price wars. And are vouching for products with which companies that are sharing their burden. Product innovation Customer is loaded with plethora of Unfavorable new and attractive product options to initiate their buying momentum, ever increasing his expectations and further rewarding him with significant buying power to exercise. Availability of Substitutes The option of moving to alternate foods Unfavorable like fig bars for cookies and soy proteins instead of meat reduces the bargaining power that the food manufacturer would have enjoyed otherwise. Low threat of backward Retailers do not pose credible Favorable Integration backward integration threat. This is not feasible for their cost efficiencies and also because the producers subsidize a large part of their marketing budgets Buyer Concentration The buyers for this industry are highly Favorable fragmented and only likes of Walmart, Carrefour are able to exert any influence, retaining the threat of retaliation. 42
Supplier’s Power
Characteristic Raw Material Availability
Low Concentration
Low input differentiation
Switching Costs
Comments There has been a marked shortage in the raw materials due to usage of agrarian lands for energy crops. This has been further worsened by the commodity trading leading to highly volatile prices of grain and animal feed. Majority of suppliers of these food companies are cooperatives or individual farmers who supply commodities to the producers. This takes away the leverage they could have utilized if they were providing large volume of suppliers individually. The raw materials procured by food companies are commodity products or livestock that cannot be differentiated on any factor other than quality. This gives the companies alternate sources of raw materials, rather than depending on a sole supplier for its highly specialized unit. The switching cost for the suppliers are huge as the procurement for raw materials are done through contracts and tender processes and are long term in nature.
Conclusion Unfavorable
Unfavorable
Favorable
Favorable
Threat of substitutes Substitutes are specific to product categories in this industry and they ma y or may not pose the relevant threat. They can be b e a significant threat if the price performance value offered by substitute is better than products being offered, henc e to be considered on a case by case basis.
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Barriers to entry
Characteristic Access to Distribution
Customer Loyalty
Capital requirements
Compliance regulations
Asset Specification
Expected retaliation
Comments With opening of array of retail chains in every nook and corner, and as a consequence of rapid globalization, the unique access to distribution channels earlier enjoyed by only a few is available to all The buyers of packaged food are exhibiting easy brand switching for promotions and discounts. This makes it easy for a new player to enter and attract customers Capital required for setting up plants, machinery and regional sales offices is no more difficult with easy access to equity, loans and seed funding. With new laws emerging like COOL and MTC, it becomes difficult for a new player to manage the legal and quality requirements by these laws. The plant and machinery and processes for food companies are highly specialized and cannot be used in other industries. This makes it difficult for players to exit the industry because of low re-usability of assets. With neck to neck price wars in the industry, any effort by a player to outsmart rivals by cutting prices or offering new product formats is matched by rivals. This fear of retaliation also deters new players from entering using low cost advantages or a new product.
Conclusion Unfavorable
Unfavorable
Unfavorable
Favorable
Favorable
Favorable
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4.2.2 S.W.O.T ANALYSIS
STRENGTHS o
o
o
o
Ready to eat packaged food industry is over Rs. 4000 crore or 1 billion US $. These foods meet the specific needs of convenience, nutritional adequacy, shelf stability, storage, distribution to the centers and have become very popular after the year 2002. These food items are normally selling in pouches, well packed in cardboard printed boxes of small book size and carry about 300 grams of cooked food at a price of about Rs. 40 to 200 in foreign market depending upon the type of dish packed. One packet of vegetable dish is normally sufficient for one meal for three persons and therefore falls in economic zone of consumer‘s preferences Euro monitor International, a market research company says that amount of money Indian spend on ready to eat snacks & food is 5 billion US $ in a year while on abroad Indian or Indian subcontinents spend 30 billion US $ in a year.
WEAKNESSES o
o
o
Low level of technology usage n the country brings down the efficiency that is required for this sector to flourish. The consumption of Ready to Eat foods is concentrated in the urban areas and rural consumers find it as waste of money rather than see the value addition that is made. The Domestic penetration of culinary products is still 13.3 % and is largely tilted towards metros. One example of bad penetration is that consumption of packaged biscuits for Indian consumers is still low at 0.48 % while that for Americans is 4 %.
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OPPORTUNITIES o
o
o
Government of India has set the Excise duty as ZERO % on RTE and 100 % tax deduction for the first 10 years for new units. This allows manufactures to bring down their prices & spreads its flavors to the world. Ready to eat meals can be given to soldiers in the army of many countries who require carrying their rations while on war front or while located far away from their main unit. The Ready to eat market is growing at the rate of 20 % per annum in India. And it is developing specifically in UK, USA, Canada, and Gulf & South Asian Countries with the growth rate of over 150 % per annum.
THREATS o
o
o
o
o
Increased Ready to Eat food means increased spending of resources such as water, electricity, raw materials for appropriate machinery etc for their manufacturing. Since any kind of processing will generate lot of waste effluents of chemical and non-degradable nature which may affect the environment in the long run. Also, RTE foods require special packaging which again will involve lot of paper and plastics, thus harming the environment even further. Intense competition and price wars make the players and new entrannts difficult to survive. Also, the exit barrier is high since asset reutilization capacity is very low.
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4.3 ITC FOODS Vs MTR FOODS
Established in Company Type Brand of RTE
ITC LIMITED
MTR FOODS
1974 Public (Listed in BSE) ITC-Kitchens ITC-Kitchens of India
1997 Private MTR-Ready to Eat
Market Mar ket Share - Ready Ready T o Eat
9%
ITC Ltd.
8%
MTR MTR 48% Kohinoor 35%
Others(Gits, Priya Foods etc.)
Figure 10: Market share pie in RTE
The chart in figure 10, clearly shows that ITC Limited is the number one in RTE with a close second MTR Foods. The strategies followed by these two companies are similar in some ways and different in few others. Nevertheless, a comparative study of these two RTE giants in India was conducted during the course of o f the research. The analysis of which is given below. 47
4.3.1 The Big Decision Entering the foods business was itself a st rategic decision for ITC. While ITC‘s core business, tobacco, was under pressure owing to several factors like government bans on advertising and on smoking in public places, hikes in the excise duty for cigarettes, and anti tobacco campaigns. Thus ITC strategically moved towards food division with extensive CSR activities etc. ITC planned to deploy its surplus in the packaged food business where it saw huge h uge business potential. On the other hand, MTR the parent company of MTR foods has always been into food. MTR was founded as a restaurant by Parampalli Yajnanarayana Maiya and his brothers in the year 1924.In the mid 1970s when India was under emergency, a Food Control Act was introduced which mandated that food was to be sold at very low prices. This move made it difficult for MTR to maintain high standards in its restaurant business and forced it to diversify into the instant food business, selling ready-to-eat snacks such as chutneys and rasams. Since the 1970s, MTR has expanded and diversified, with MTR Department Stores opened next to the restaurant, and an outlet opened in Chennai. Currently the MTR brand represents two separate entities; the MTR restaurant business and MTR Foods, the pre-packaged food business.
4.3.2 Market Entrance When ITC entered into the foods business in 2001, it focused on unleashing the areas where the competition is very less or there is no competition. Recently in 2008, ITC has announced its desire to forge in the frozen foods category in the domestic market. Players in this category are limited and ITC hope to exploit this fact. Also, in Bingo, although the competition is tough but there is only one player with whom ITC has to compete i.e. Frito Lay. This strategy has helped ITC to quickly establish itself in the above mentioned businesses. ITC Ltd. Entered the market as a premium and high end consumer brand. This was possible only because it already had the tag of a premium organization. On the other hand, MTR Foods tried to exploit all those markets where it already had good command that is the southern states where MTR restaurants were well established. It made use of the existing network and relationships it had with the people of south India. Once it launched itself well, did it start moving to unexplored markets. But when we compare ITC Ltd. and MTR foods, MTR foods has low penetration ability probably because of its extra cautiousness of choosing its markets. MTR foods entered the market as with prices that were not very low or very exorbitant but affordable by middle income group.
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4.3.3 Distribution Network ITC already had a huge distribution network due to its tobacco business. ITC used this network to distribute their biscuits and wafers. This not only provided a good launch to their products but also helped in boosting sales. Today, ITC‘s Bingo and Sunfeast are available at nearly 1.8 million outlets whereas Parle is available at only 1.5 million outlets. For Kitchens of India, ITC Ltd had to just append to the already well established network and enjoy the larger market share. On the other hand, MTR foods brand knowledge with people was good because of the parent company. But since it was just a restaurant, MTR foods had to start from the scratch to lay down a perfect distribution network. It is also noticed that though MTR foods product catalogue has more varieties in North Indian Cuisine, its network in north is not as strong as it is in the South. And moreover, in the North MTR Foods is taken as just another RTE brand.
4.3.4 Market differentiation ITC started packaged foods business with the KoI brand of ready-to cook products. They were positioned as premium products with target groups including tourists, NRIs, etc. In Biscuits also, ITC launched differentiated products in each and every segment. For e.g. it introduced an Orange Marie, a butterscotch cream biscuit, chilli flakes in a biscuit and even honey flavor under the Sunfeast brand.
MTR foods claim to have brought in the concept of instant mixes especially the Rava idly. But apart from that, MTR foods could not bring something new on the table that would allow them to claim a premium or first come advantage. The different varieties of dishes that it makes are well known and prepared at every home. So probably we can say that MTR foods try to itself as a brand that serves food which when eaten feels like home food. This again can be taken as a positive point considering the Indian social structure and tastes of the majority.
4.3.5 Cost control strategy When ITC started the foods division, its main challenge was to compete with the players who were already there. To overcome this challenge, ITC realized that they have to offer products at a price which is either equal or less than what the competitors are offering. To do this, they planned to capitalize by leveraging the strength of the group‘s other businesses. ITC‘s printing and packaging business provided high-quality, cost-effective, and innovative packaging. ITC also enjoyed cost advantages over its competitors owing to its electronic procurement system called e-Choupal. This helped ITC to compete with the best. 49
MTR foods have always been into foods and always stuck to affordability factor. So, MTR foods really did not face much trouble with the competitors earlier. But now that the scenario has changed and the competition has intensified and ITC is taking advantage of its rural initiatives to cut costs, MTR foods has fallen into trouble. Owing to its financial crunch and other operational failures it was then acquired by Orkla, a Norwegian company for $80 Million in March 2007.
4.3.6 Diversification of products: One of the ITC‘s successful strategies has been the method of diversifications among its various products. If we talk just about Bingo, ITC has come up with 16 flavors in comparison to its competitor ‗Lays‘ of ‗Frito Lay‘ which has only 4 major flavors. Same is the case with Ready to Eat food category and Biscuits. This strategy has helped h elped ITC to attract a wide range of o f market.
MTR foods on the other hand has limited varieties in its basket as compared to ITC Ltd. Thus, challenging its position in the market against ITC Ltd frequently.
4.3.7 Extensive advertising Advertising is where ITC made the difference in comparison to its competitors. They hired the best professionals and the best ambassadors in the country to make their products prod ucts famous. This is evident from the award winning marketing campaign for Bingo and Minto Fresh. Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar for Biscuits, Rakhi Sawant for Minto Fresh) showed ITC‘s urge to be the best. On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product. According to industry estimates, ITC spent close to Rs 100 crore on marketing. This kind of promotion of products helped ITC to make its products known to everyone and now it was not difficult to attract consumers. MTR foods has also put its best efforts to market as much as ITC Ltd. but failed. This primarily because ITC already booked industry‘s best ad makers and ambassadors. Moreover, MTR has always taken the homely way, with not so very known faces. There are some ads where MTR foods used southern actresses and actors but they are completely unknown to the rest of the country.
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4.3.8 Maintenance of freshness and hygiene ITC attempted to ensure that the supply chain was responsive, and laid emphasis on making accurate sales forecasts using inputs from distributors, sales personnel and a well-managed MIS system. To maintain freshness of the product, the company strove to minimize the transit time by regulating the shippers to maintain company-specific transit norms. The physical aspects of the supply chain like warehouses and trucks were w ere closely monitored to maintain cleanliness. MTR foods adhere to the most stringent quality standards, from sourcing ingredients to processing and packing. They are ISO 22000 and HACCP certified. They use the latest technology to preserve the quality and freshness of their food. They use of technology from the Defense Food Research Laboratory for their Ready to Eat products has won them the President's award.
4.3.9 Other factors MTR Foods claims to be 100% 100% natural and no preservatives. Also it claims to be 100% vegetarian. While ITC foods does not claim to be free of preservatives and they have non-veg items on their menu too.
4.4 RTE AND CONSUMER BEHAVIOUR For the purpose of fulfillment of this particular objective and to confirm the validity of the secondary research done, 60 mall interviews and 60 electronic mail interviews were taken. After compilation of the data the following points have been analyzed.
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Yes No
Figure 11: RTE KNOWLEDGE
The above pie chart suggests that ready to eat products have etched their presence in the market and consumer‘s mind. The market penetration activities a ctivities have paid off.
9
Word of Mouth
14
News Paper/Magzines
35
Displays at Malls
42
TV Commercials
0
10
20
30
40
50
Figure 12: RTE KNOWLEDGE SOURCE
The above bar graph suggests that TV commercials and display methods have been very successful in market awareness and penetration. It also suggests that consumer experience was not so great that it induces the word of mouth spread of RTE product‘s presence in the market.
Thus the RTE players may want to focus on consumer experience aspect also. 52
Have You Purchased Ready To EAT Meals Anytime? Yes
No
13%
87%
Figure 13: RTE PRODUCT PURCHASE PERCENTAGE
From the above pie chart, it may be concluded that, RTE players have been successful in convincing the people to try out their products and not just make consumers of their presence in the market.
On days when meals are not cooked at home, how do you manage? (Choose more than one if applicable.)
12
We pick up a Ready To Eat Packet
34
We order food from a restaurant
29
We visit a Restaurant 0
We vi si si t a Re Res ta ura nt
10
20
30
40
We order food from a re res ta ura nt
We pick up a Ready To Eat Packet
Figure 14: NON-COOKING OPTIONS
When the meals are not cooked at home the most favourable option that consumers feel is ordering food from the restaurant. The percentages here might add up to more than 100 as respondents were allowed to choose more than one option.
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You Picked up Ready TO eat pack While shopping for MONTHLY GROCERY items Seperately during Emergency
32%
68%
Figure 15: RTE PURCHASE TIME
68% of the respondents said that RTE packs are part of their monthly grocery shopping and not emergency purchase. Even for emergency purchase the 32% is quite a huge number. Kindly take note that the sample for this question was the one who has purchased RTE packs.
5 4 3 FREQUENCY OF CONSUMPTION
2 1 0 15-25
25-35
35-45
45<
Figure 16: WEEKLY CONSUMPTION ON AGE BASIS
Based on fig 16, it can be said that people of age group 25-35 buy more frequently than any other. This is probably because they have just entered the income earning group, are not married or live away from their parental homes and do not have the time to cook for themselves. The analysis re-establishes the fact that demographical shift in income levels, individualism, nuclear family adaptations and working community have led to the rise of convenience food stuff like RTE foods.
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TASTE 16 8 12
64
PRICE NUTRITION VALUE TIME SAVING FACTOR
Figure 17: Reasons for buying RTE foods
From the above graph (fig 17), it seems like the main reason why people buy Ready To Eat Food is due to its time saving factor. This again reinforces the fact that RTE when introduced was introduced for convenience and it will remain as a convenience food. Though experts as well as consumers agree that nutrition is not a positive factor for buying RTE foods, but comparatively it outshines the price factor. This again indicates that the consumers might not be too happy with the RTE food prices.
Mall 20
30
15
Departmental Stores Kirana Stores
35
Others
Figure 18: SALES PATTERN OF READY TO EAT FOOD IN VARIOUS FORMATS
The sales of Ready to Eat food is more in departmental stores and Malls than any other formats. This is probably because of the fact that, people who are ready to spend money and consume RTE foods are majority the mall goers or shop at departmental stores where everything is available under one roof. This again reinforces the faith in the secondary research done and the above two analysis based on income groups and age groups.
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% of consumption vs income group 10,000-20,000 4% <10,000 30%
20000-40000 26%
40000-80000 40%
Figure 19: INCOME-CONSUMPTION GRAPH IN READY TO EAT SECTOR SECTOR
From the fig. 19, it can be easily understood that people whose income ranges from 40,00080,000 are more frequent buyer of ready to eat food. This reinforces that as income levels increase; consumers tend or don‘t mind to spend their money on RTE foods.
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Indian Processed Food Industry with reference to Ready to Eat Market
09020242007
CHAPTER 5: MAIN FINDINGS
The fate of Indian food industry seems to be bright because of the following reasons: o
Change in Indian demography
o
Increased Income levels
o
Increased number of working people per family
o
Concerns for reduction of wastages of food i.e Post Po st harvest losses.
The government of India is doing its best to encourage the processing sector by introducing various schemes, subsidies, trade liberations, tax deductions etc. It has also made efforts to bring in new technologies to India by using its international contacts, set up R&D labs, centers and industrial training facilities.
The taste and trends varies from age group to age group and from profession to profession. The people with higher income don‘t mind going in for packaged foods instead of cooking the food at their home. Their eating habits are changing as they have less time to cook food or they have surplus money so their spending habits for these packaged foods is changing. They don‘t mind going for these packaged foods rather than
cooking three to four times a week.
The results of the consumer behavior for RTE products from the primary research can be summarized as: o
40% of the respondents who consume RTE fall into the highest income bracket of Rs 40,000 to Rs. 80,000.
o
Of the total respondents who consume RTE, the most frequent buyers belong to the age category of 25-35.
o
The malls and the big retailers have the highest sales of RTE among other formats.
o
64% of the respondents preferred RTE because of convenience, 16% because of taste, 12% because of Nutrition and 8 % because of price.
s g n i d n i F n i a M : r e t p a h C
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These days even the kirana shops which are not of organized retail type have stated stocking processed foods and RTE products. This is because the demand of these types of food products is increasing and people do ask for different varieties of packaged and frozen foods.
Big retailers like Big Bazaar etc have many racks of processed and RTE foods as well as different sections for frozen foods. The main brands being MTR, ITC and some foreign brands like Kraft foods and Campbell. But the people p eople are keen in buying bu ying Indian brands.
The main reasons for consumer shift towards processed and RTE foods is because: o
Globalization of Indian food and its culture
o
Fast growing foreign market.
o
Growth of Retail outlet culture
o
Shelf- life: at least 12-18 months.
o
Quality, Taste and Flavor remains as good as fresh up to the expiry ex piry date.
o
Women wanting to spend more time out of the kitchen.
o
More working bachelors staying away from homes.
o
Cost effective in comparison to the Indian cuisine served by the restaurants in foreign countries.
When comparing ITC Ltd. with MTR foods, ITC Ltd outshines MTR foods in most of the factors. This probably because of its increased exposure in the business world and being a public listed company provides it with enough capital to work with the best partners and bring the best of the best to the consumers.
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Indian Processed Food Industry with reference to Ready to Eat Market
09020242007
CHAPTER 6: SCOPE FOR FURTHER RESEARCH Having had a holistic approach to the study, the scope of the project for further research lies in the following:
6.1 CHECK FOR GROUND REALITIES Though the Indian government is doing its best to offer as much incentives as possible though its policies and regulations, it is a must to assess how much of it is known to the people in the industry and how much of it is being utilized. Thus a primary research could be done to assess the same whose respondents would include the entire chain o o o o o
Farmers/producers Intermediaries (if any) Processors Marketers (if not same as processors) Retailers
6.2 CONSUMER BEHAVIOR Vs DIVERSITY The primary research done to assess the consumer behaviour towards RTE was done on a very small scale and limited to a sample size of just 120. India a diverse nation with gradations in culture and habits may have an impact on the consumer behaviour for RTE products. Thus, the research may also be conducted across different cities and locales to reinforce whether or not there is a relationship between consumer behaviour for RTE products and diversity rather than just profession and income levels.
6.3 GLOBAL SCENARIO Vs INDIAN SCENARIO IN RTE The project encompasses the differences between two Indian RTE giants ITC Ltd. and MTR foods. But it would also make sense to compare with a global player like Krafts Foods to assess what more could be done and what may not be done by the Indian players to improve their brand image and etch their mark in the world RTE player rankings.
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CHAPTER 7: CONCLUSION and RECOMMENDATIONS 7.1 RECOMMENDATIONS As per the study, the following recommendations could be utilized by the companies manufacturing and marketing Ready To Eat Meals:
As is seen from the survey the major concern for consumers is the health aspect. They have a perception that these RTE meals are not manufactured under good conditions. Secondly, they also feel that Ready to eat meals is not good for health. Hence marketers have to touch upon this point. The advertising, communication and promotion should revolve around this point. Packaged foods are relatively new to India hence proper awareness have to be created by companies.
Indian Households are averse to outside food unless they belong to single working high income group and they feel home cooked food can provide the taste and quality. This is a big hurdle for the RTE industry and the efforts should be taken to improve the quality of the food by using better manufacturing, and packing methods.
The ready to Eat marketers should bank upon its strengths i.e. time saving, effort saving and easily available option. The promotion, Packaging should revolve around these characteristics as we all know in the traditional Indian urban family time is less. People crave to spend time with their family after hard day da y at work. However, various limitations like cooking food etc hamper this. RTE should consider this as their positioning strategy.
The pricing strategy should be designed in such a way so as to be competent with the restaurants rate. People do not mind spending more if it saves time. However they will spend only a reasonable hike in price. If there is a lot of difference between the restaurant price and RTE price they would go for the former.
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The consumers came to know about RTE packs from Television Ads and display at malls and the word of mouth was virtually very less. This proves that two promotion methodologies were very effective. The third and the most important as far is food products is concerned ―word of mouth‖ is where marketers should work on. This can
only happen if the consumers are satisfied with their experience and will they give a positive word of mouth feedback to their relatives and friends. This is the most effective form of communication when it comes to something edible as Indian consumers tend to trust people who have already sued it rather than advertisement.
7.2 CONCLUSION The fate of the Indian Food Processing Industry and RTE seems bright due to:
The rapid positive change in Indian demography; increased disposable income; increased concerns over Post Harvest Losses; encouraging steps taken by the Indian government to provide the technological know-how, infrastructure, tax exemptions, export and import regulations. Aggressive marketing and product development activities undertaken by the processed foods and RTE market players. Also their collaborative learning from each other‘s successes and failures enhances the viability and growth of the industry as a whole.
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BIBLIOGRAPHY BOOKS Journal of Indian Food Processing Industry The Food Magazine
WEB-RESOURCES http://www.statusa.gov/mrd_a.nsf/vwNoteIDLookup/NT0003CA62/$File/X_413629.PDF?OpenElement http://www.tsmg.com/media-and-press-releases/219-ready-to-eat-foods-market-in-india.html http://www.indianfoodindustry.net/ http://www.thehindu.com/2007/10/24/stories/2007102454651900.htm http://www.oppapers.com/essays/Ready-To-Eat-Food-Industry/198352 http://www.hinduonnet.com/thehindu/mp/2004/06/10/stories/2004061000130300.htm http://www.thehindubusinessline.com/2003/11/24/stories/2003112400740300.htm http://www.marketresearch.com/product/display.asp?productid=2552630&SID=63229650-463567436409318558 www.marketresearch.com www.hindubusinessline.com www.marketingpractice.blogspot.com www.itcportal.com www.mtrfoods.com www.wikipedia.org/processedfoods www.wikipedia.org/itc_limited www.wikipedia.org/mtr_foods
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APPENDICES Questionnaire
Name of respondent: respondent: __________________________ ____________________________ __ Occupation: Occupation: ____________________________ ___________________________________ _______ Age: ___________________________ _________________________________________ ______________ Monthly Income: a) less than 10,000 b) 10,000 – 20,000 c) 20,000 – 40,000 d) 40,000 – 80,000
1. Have you heard of RTE products? a. Yes b. No 2. How did you come to know about it? a. Word of Mouth b. TV commercials c. Newspaper/Magazine d. Others 3. Have you purchased RTE products, if no why (and then terminate)? a. Yes b. No ____________________________ __________________________________________ ________________________________ __________________ 4. What made you buy these packaged foods? a. Time saving factor b. Taste c. Nutrition value d. Others 63
5. You pick up RTE when… a. You are doing your monthly shopping b. You buy it specially whenever the need arises 6. Would you want to repeat your buying? a. Yes b. No c. Can’t Say 7. Do you find it fully safe for your children, if yes why? a. Yes b. No 8. If you are not cooking at home what do you prefer? a. Going To Restaurant b. Buying Ready to Eat Food c. Ordering from a restaurant d. Others 9. How many times you go for foods not made at home? a. Once in a week b. One to three times a week c. More than three times a week d. None 10.Are 10.Are these foods easily available in your locality, if yes where? a. Yes b. No _______________________________________________________________________________
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