Post on 01-Jan-2020
Food Processing Industry- An
Indian & global overview and
Marketing strategy for rural
areas
INTRODUCTION TO INDIAN FOOD
PROCESSING INDUSTRY
The Indian food processing industry accounts for 32 per cent of the country’s total food market and is ranked fifth in terms of production, consumption, export and expected growth.
It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of India’s exports and 6 per cent of total industrial investment.
Major industries constituting the food processing sector are grain milling, sugar, edible oils, beverages, fruits & vegetables processing and dairy products.
Food processing industry is one of the major employment intensive segments contributing 11.69% of employment generated in all Registered Factory sector in 2013-14.
The industry is largely unorganized, with a small but growing organized sector. The organized sector contributes approximately 30% of the food processing industry in India. The highest share of the organized processed food is contributed by the meat and poultry segment, contributing approx. 27% of the total food processing sector.
Market trends in the Indian food
processing sector • Wide array of products, coupled with increasing
global connectivity has led to a change in the tastes and preference of domestic consumers
• This trend has been bolstered by rising incomes, increasing urbanization, a young population, and the emergence of nuclear families
Changing consumer tastes
• Liberalization and growth of organized retail have made the Indian market more attractive for global players
• With a large agriculture sector, abundant livestock, and cost competitiveness India is fast emerging as a sourcing hub of processed food
Entry of international companies
• Companies have been moving up the value chain; for example, cooperatives are transitioning from being pure producers of milk to offering a wide range of dairy products
• Firms, both domestic and global, have been focusing on product innovation to cater to domestic tastes, while also introducing international flavors.
Rising business and product innovation
Expanding markets and new channels :
Regional to national foot print ( Sudha dairy, Bihar), Rural
marketing (HUL), Franchisee model (APDDCF, Andhra dairy)
International players :
Entry of International players in food processing and value added
services - Del Monte, Walmart
New & Innovative Products:
Pepsico’s Nimbooz, Aliva snacks, Minute maid from Coca cola,
Maggi, Ataa Noodles
Strengthening of linkages :
Development of back end - Contract farming, investment in
modern storage
Emergence of third party logistics
Source: Global AgriSystem
Industry trends in the Indian food
processing sector
Food Processing Industry :
Market Size & Growth Matrix
Source: ASA and Associates
DIFFERENT STAGES OF PROCESSING ACROSS
PRODUCTS Segments Primary Processing Secondary
Processing
Tertiary Processing
Fruits and vegetables Cleaning, sorting, grading
and cutting
Slices, Pulps, Flakes, Paste,
Preserved and Flavoured
Ketchups, Jams, Juices,
Pickles, Preserves,
Candies, Chips etc.
Grains and Seeds Sorting and Grading Flour, Broken Rice, Puff,
Malt and Milling
Biscuits, Noodles, Flakes,
Cakes, Namkeen
Oilseeds Sorting and Grading Oil Cakes Sunflower, Groundnut,
Mustard, Soya, Olive Oil
etc.
Beverages Sorting, Bleaching and
Grading
Leaf, Dust and Powder Tea Bags, Flavoured
Coffee, Soft Drinks,
Alcoholic Beverages
Milk Grading and Refrigerating Cottage Cheese, Cream,
Skimmed and Dried Milk
Processed Milk, Spreadable
Fats (Butter and Cheese),
Yoghurt
Meat and Poultry Sorting and Refrigerating Cut, Fried, Frozen and
Chilled
Ready to Eat Meals
Marine Products Chilling and Freezing Cut, Fried, Frozen and
Chilled
Ready to Eat Meals
DRIVERS OF GROWTH IN FOOD
PROCESSING INDUSTRY IN INDIA
SUPPLY SIDE
Abundance of raw material
Cost competitiveness
Easier credit
Policy support
DEMAND SIDE
Changing profile and tastes of consumers
Product innovation
Increased spending on healthy and nutritional foods
Rising export opportunities
Advent of branded and organized retail
Better preservation and packaging techniques
KEY POLICY INTIATIVES FOR THE INDUSTRY
• This sector has been assigned priority status for bank credit
• 60 AEZ has been set up in the country INFRASTRUCTURE
• 100% FDI under automatic route
• Investment between April 2000 and March 2017 stood at USD 7.54 billion.
FDI
• Global and Indian companies are collaborating to make global products available in India
• Eg: Starbucks and Tata Alliance
JOINT VENTURES AND TIE UPS
NATIONAL MISSION ON FOOD
PROCESSING
The national mission on food processing was approved by the Government of
India with an outlay of Rs 1600 crore during the period 2012-17. The share of the
central and the state government was Rs 1250 crore and Rs 350 crore
respectively. The schemes taken up under the mission included:
1.Scheme for technology upgradation/ establishment/ modernization of food
processing industries
2. Scheme for cold chain, value addition and preservation infrastructure for non
horticulture products
3.Setting up/ modernization/ expansion of abattoirs
4. Scheme for human resource development (HRD)
5. Scheme for promotional activities
6.Creating primary processing centres/ collection centres in rural areas
7.Modernization of meat shops
8.Reefer vehicles
9. Old food parks
VISION 2015
MOFPI had commissioned a vision document for the industry in 2005, which aims to treble the size of the food processing sector from 2005 to 2015.
The tripling of size of the industry is estimated to generate a direct employment of 0.28 crore and an indirect employment of 0.74 crore persons.
The salient features are:
Increase the processing levels of perishables from 6% to 20%,
Increase the value addition from 20% to 34%
Increase the share in global trade from 1.6% to 3.0%
CURRENT STATUS:
The progress of the vision needs to be accelerated.
Greater state cooperation inducing higher levels of cluster farming, accelerated agricultural growth through high value segment (horticulture, livestock, fisheries) is needed.
There is a need to improve the fragmented and unreliable supply chain through infrastructure development.
AGENCIES INVOLVED
Ministry of Food Processing Industries (MoFPI)
Food Safety and Standards Authority of India (FSSAI)
Agriculture and Processed Foods Export Development Authority (APEDA)
National Institute for Food Technology and Entrepreneurship Management (NIFTEM)
All India Food Processors Association (AIFPA)
Commodity Boards under the Ministry of Commerce and the Ministry of Agriculture/Ministry of Food Processing: coffee, tea, spice, meat and grapes.
Indian Grape Processing Board (IGPB)
FOREIGN INVESTORS
Advantage India
Domestic
food
spending:
USD
181 billion 2009
Strong demand growth
• Demand growth for processed food
has been rising with growing
disposable income, urbanization, a
young population and nuclear
families
• Household consumption is set to
double by 2020
Policy support •Sops to private sector participation;
100 per cent FDI under automatic route
•Agri Export Zones have been set up;
under the government’s Vision 2015
plan, mega food parks to be established
•Approval of National Mission on Food
Processing
Food processing hub
•India benefits from a large
agriculture sector, abundant
livestock, and cost competitiveness
•Investment opportunities will
arise in agriculture, food
infrastructure, and contract
farming
Domestic
food
spending:
USD318
billion
2020
Advantage
India
Increasing investments •Government expects USD21.9 billion
of investments in food processing
infrastructure by 2015
•Investments, including FDI, will rise
with strengthening demand and
supply fundamentals
Source: India Brand Equity Foundation
Supply Chain Institutional Gaps
(procurement dependence on APMC
markets )
Inadequate link between production and
processing (lack of processable varieties)
Supply Chain Infra Gaps (Lack of primary
processing, storage and distribution facilities)
Challenges for Food Processing
Sector
Lack of product development and
Innovation
Seasonality of operations and low capacity utilization
Inadequate focus on quality and safety
standards
Food Processing Sector–
Impediments
Source: Ministry of Food Processing Industries
Government of India
INTRODUCTION TO GLOBAL FOOD
PROCESSING INDUSTRY The food market is expected to bring in revenue by 2020 of $3.03 trillion, registering a compound annual growth rate (CAGR) of 4.5 percent from 2015 to 2020.
Geographically, North America is the largest market in the current scenario followed by Europe, APAC and LAMEA.
Prominent players like Nestlé and the Kraft Foods unit are investing heavily in promotions and increasing brand awareness for aiding product differentiation.
Food & beverage companies are actively assessing customer insights and preferences to understand the market requirements.
The leading players in the market have been focusing on mergers and partnerships as their key strategies to expand their presence.
Also, growth of the worldwide packaged food market is mainly due to rising demand from emerging economies.
Asia Pacific ranks as the fastest CAGR of 5.4 percent during 2015 – 2020, primarily driven by the growing per capita incomes and increasing health awareness. China and India are expected to show significant market growth for packaged food products.
FOOD PROCESSING INDUSTRY IN AFRICA
The food processing industry in Africa is an exciting and fast-growing space.
Africa has historically been known for a wealth of fertile regions where fresh
produce is grown, harvested and distributed both for local consumption and
exports.
Now, this sector is being closely watched by private equity funds keen to
maximize investment opportunities across the continent.
The African market has recently seen a trend where companies are moving away
from solely producing raw consumables and increasingly investing in value-add
processing units and branded food products.
This trend has subsequently repositioned food processing as a manufacturing and
Fast Moving Consumer Goods (FCMG) sector rather than an agricultural sector.
OPPORTUNITIES IN AFRICA
Africa’s farmers and agribusinesses could create a trillion-dollar food
market by 2030 if they can expand their access to more capital, electricity,
better technology and irrigated land to grow high-value nutritious foods, and
if African governments can work more closely with agribusinesses to feed the
region’s fast-growing urban population, according to a new World Bank report.
African countries can tap into booming markets in rice, maize, soybeans,
sugar, palm oil, biofuel and feedstock and emerge as major exporters of
these commodities on world markets similar to the successes scored by Latin
America and Southeast Asia.
For Sub-Saharan Africa, the most dynamic sectors are likely to be rice, feed
grains, poultry, dairy, vegetable oils, horticulture and processed foods to
supply domestic markets.
NOTABLE TRENDS IN THE AFRICAN
FOOD PROCESSING SECTOR • A change in consumer tastes and incomes has
increased aggregate demand for processed goods.
• Higher disposable incomes allow for a greater ability to spend on packaged, branded products which are generally of a higher quality.
Changing consumer tastes
• Supermarket chains such as Shoprite, Carrefour and Pick n’ Pay are increasingly popular across Africa, expanding aggressively across urban centres on the continent.
• The ability to stock food products in cold storage and provide multiple varieties of domestic and international brands allows for an easy and convenient experience when buying household food items.
Growth of supermarket chains
• The move towards consolidation has allowed for much smaller players to be acquired by large food conglomerates such as Tiger Brands, Remgro Limited and Foodcorp.
• These food conglomerates have reliable distribution networks (a key advantage in Africa) and can provide consistently higher quality food products as they are vertically integrated.
Emergence of consolidated firms
CHALLENGES FACED BY THE
PROCESSING INDUSTRIES
The high cost of capital and limited access to finance
High crime rates and stock thefts
Lack of technical and market information
Limited managerial and administrative skills
Seasonality of raw materials remains the main supply constraint
RECOMMENDATIONS FOR THE
PROCESSING INDUSTRIES
Small scale food processors must be provided training in aspects related to
marketing
MIS platform needs to be developed for disseminating timely, accurate and
comprehensible information on prices and market by the government to help
strengthen the processing industries
Venture capital institutions need to be created by the government to
support the financial needs of the entrepreneurs
Allocation of budget for improvement in the infrastructural facilities related
to processing must be maintained
Focus on quality and safety standards must be maintained
The model of Food Industry and
channels of linking farmers
Source: Food 360 Knowledge Paper 2013
Market Chain
Farmer Transporter Wholesale
r Processor Retailer Consumer
Technological Innovation Commercial Innovation
Institutional Innovation
Innovation in Agricultural Value chain
MARKETING STRATEGY FOR RURAL
AREAS An overview
DEGREE OF MARKETING
Niche marketing: A very small group in a segment that has specific need and
the marketer has specific skills to satisfy it
Micro marketing: Tailoring of the product to satisfy a particular need
Local marketing: Involves designing brands and promotions to suit the needs
and wants of local customer groups on a geographical basis
Individual marketing: An individual can get the product made exactly
according to his needs, Eg: tailoring
MARKETING STRATEGIES
SEGMENTATION
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
TARGETING
Undifferentiated marketing
Differentiated marketing
Single segment concentration
MARKETING STRATEGIES
POSITIONING STRATEGIES
Product differentiation
Service differentiation
People
Image
PRODUCT STRATEGIES
New product development
Sturdy products
Brand name
Small unit packing
Low priced packing
MARKETING STRATEGIES
PACKAGING
Use bright colors
Use local languages on the pack,
images
BRAND BUILDING
Brand name development
Creating a brand identity
Building a brand image
MARKETING MIX CHALLENGES
Availability: Poor road condition is a challenge to make the products available in
remote areas.
Affordability: Low disposable income for rural consumers.
Awareness: Only limited rural households has access to television, so building
awareness is another major challenge.
Acceptability: There is a need to offer products that suit the rural market.
ICRISAT South-South Initiative
(IS-SI) Projects of Agribusiness and Innovation Platform (AIP) ICRISAT
•AIP-ICRISAT has partnered with Forum for Agricultural
Research in Africa (FARA) for handholding and mentoring
its UniBRAIN (Universities, Business and Research in
Agricultural Innovation) initiative
•Six Agribusiness Innovation and Incubation Consortia
(AIIC) under UniBRAIN are being supported in five African
countries (Ghana, Mali, Uganda, Kenya & Zambia).
•ICRISAT and FARA along with its local African Partners
are helping in setting-up of these incubator consortia
addressing value chains like sorghum, banana, fruits,
livestock and agroforestry.
Six Value-chain based Agri-Business
Incubators in Africa
Proposed initiatives under IAFS II
Establishment of institutions at Pan Africa Level
Establishment of institutions at Regional Level
Establishment of institutions at Bilateral Level
Capacity Building (Special Training courses)
HRD and Scholarships
Supporting Business and Infrastructure
Experience Sharing
ICRISAT initiatives under
The Second India-Africa Forum Summit
(IAFS II)
Setting up of 5 FPBICs in 5 African
Countries in Uganda, Cameroon, Ghana,
Mali, Angola
ICRISAT as an implementing agency
shall help the local entrepreneurs
enhance their business skills for
scaling-up in the business of food
processing.
The purpose is the development of
innovative entrepreneurs contributing
to higher production of quality food
products, which in turn, will help to
increase the economy of Africa by way
of meeting the livelihood concerns and
increased foreign exchange earnings.
SCENE
Establishment of Food Processing Business
Incubation Centres (FPBICs) at bilateral level
Setting up FTLs in 5 African Countries in
Gambia, Republic of Congo, Chad
(replaced with Nigeria), Rwanda,
Zimbabwe ICRISAT shall help the local
entrepreneurs entering the national
and international markets with
products meeting the stringent
nutritional and food safety standards.
ICRISAT shall establish state-of-the art
FTLs for promoting entrepreneurs in
the area of food processing by
providing them access to the latest
food testing facilities enabling
production of quality and safe food
products meeting international
standards.
1
Establishment of Food Testing Laboratories
at bilateral level
Knowledge and skill development training
for African nationals
1
Thank You