Changing Face of Indian Food Industry
Changing Face of Indian Food Industry
By:
Vijay Sardana[1]
India is a country with 1270 million people. All
are consumers of food. With growing income and growing awareness about health and
nutrition, urbanization, women education and exposure to other food cultures
are bound to change the food habits.
In the last few years’ dynamic
changes have occurred due to the fast growing economy, education and
communication explosion. A shift from conventional to modern technologies, localization
to globalization, small cottage industries to large scale industrialization,
constant travels across the world, evolving tastes and increased demands for
convenience and time saving processed foods, from mom and pop stores to
supermarkets throughout the country are some of the factors impacting food
businesses in India.
India is also complex society with
various traditions and value systems. On the one hand, we have poverty and
hunger causing mal-nutrition and undernutrition and related disorders while on
the other hand, a substantial increase in the intake of fats, salt, sugar and
refined foods leading to over-nutrition related disorders such as obesity.
Urbanization is also adding to life style diseases.
In the Bhagvad Gita, Lord Krishna has
mentioned that “foods which promote life, vitality, strength, happiness, and
satisfaction, those which are succulent, nourishing, and pleasing to the heart
are satvic in nature, and form the basis for a
healthy life.”
Whole grains and grams, limited
intake of refined foods, plenty of veggies and fruits, traditional/blend of
oils, and freshly prepared foods are the cornerstones of health and well-being.
The changing society has also offers huge opportunity for investor s to bring
new and better ideas to service the largest food market with most diversified
options in the world.
Most of the processed food items
launched in India are either rich in carbohydrates like wheat, sugar, potatoes
or in salt and edible oils. Economically, these are the cheapest source of raw
materials to create processed products but their nutritional significance is
now under debate.
Why many existing companies facing
tough time?
As per a recent study among stakeholders of the rice industry in Haryana and Punjab, many families
owned rice units have been closed down or have been sold off to MNCs.
This was
the writing on the wall. Most of the exiting companies have trading background
and they developed backward integration to maximize the profits. There was no
concept of customer service, innovation and strategic thinking in these
companies. Majority of them through industry associations looked at government
incentives and policies to maximize profits and for survival during tough time.
They invested more time and effort on lobbing with policy makers in place of
understanding customer needs, changing market dynamics and changing aspirations
of consumers. Lack of investment in people and technology made these units
outdated in performance and thinking. The recent shakeup of the food industry
is due to lack of leadership in existing industries segments. This trend will
continue for few more years.
In the past few years, a similar
trend has been visible in the edible oil, biscuits and dairy sectors too, where
fewer brands are now dominating the market and the smaller ones have become
their franchise units. The changing retail space will also impact this trend.
There will be consolidation of industry in coming years and after that due to
increased penetration of e-commerce, market will start fragmenting again and
customized products will attract the better profits than mass production
systems.
100 per cent FDI in food retailing
will help small entrepreneurs to develop innovative products which will help
retailers to differentiate their product offerings from others. This is a good
trend and will improve supply chain and innovation in food systems. a laudable
move?
What existing units should do to
revive their businesses?
Value addition and branding are the
key factors to survive in the market. Branding must ensure trust and quality
about the product. Most of the product filed in the market when claims were not
backed by the quality in the product. While preparing for claims, management
must ensure the supply chain and product integrity. It is common observations
when brand starts getting attention in market place, many promoters due to
greed and shortsightedness have tendency to dilute the quality of products to
maximize the profit. This suicidal decision is also one of the main reason of
sudden rise and fall of the many good products in the market.
The lack of professionalism, lack of
planning and lack of service to consumers are the major reason for poor growth
rate of majority of food companies mainly in small and medium companies.
Start-ups have bright future provided
they stick to the basics:
Regulatory regime and social media
will act as catalyst in weeding out bad suppliers and bad products from the
market place. This will create space for many new start-ups. Most of the
start-ups and new investments are based on the either good product idea of good
service model or both. Promoters of the start-ups must remain focused on
innovation and customer service by developing effective execution plan. Me-too
concepts with an eye on valuation will not succeed. Innovations are the way
forward. Retailers will support new ideas to increase customers’ footfall in
their stores. Growing awareness about nutrition, quality and food safety will
influence all new developments in food space. Let us look at expected changes
in the food market in coming days.
Growing trend of healthy grains:
Millets grown locally such as jowar, maize, bajra(pearl millet), finger millets (ragi)
were grown along with legumes. Millets are the storehouses of macro and
micronutrients. They have higher contents of calcium, iron, phosphorous, and
magnesium than rice or wheat. They are also high in fibre, low in fat, and are
gluten free. They have the potential to reduce blood cholesterol and sugar and
are hence considered good for chronic diseases such as diabetes, heart
disorders, etc. Traditionally, millets and wheat were unrefined, and rice was
hand pounded and parboiled ensuring better retention of vitamins, minerals,
fibre, and a host of useful phytonutrients such as antioxidants. Modern
technology and changing lifestyle is creating demand for traditional items but
in refined and presentable form.
Cereal products will drive
investments in food sector:
Traditionally, home-made food was the
established concept in India. Wheat and rice were the stable grains. Due to
growing population and limited agriculture technologies, there was shortage of
basic food in 1960s. The ‘Green Revolution’, was launched to support eh rising
demand of grains and to ensure self-sufficiency in cereal grains and reduced
hunger. The green revolution mainly emphasized on staple cereal grains,
especially wheat and rice, to reduce hunger. This resulted in a shift in the
dietary patterns. Minimum Support prices to farmers for wheat and rice
production promoted wheat and tice consumption at large scale. Traditional
grains were reduced in diets. This neglect affected the output of millet and
pulse productivity. The staple food of Indians soon shifted from millets to
rice and wheat.
After the agriculture revolution, the
wave of ‘rapid industrialization’ changed the scenario further. Due to the
requirement for higher grain output and better shelf life, cereals were milled,
polished, and processed. The first processing industry in India were wheat and
rice milling industry. The intake of polished white rice and refined wheat
flour eventually resulted in loss of fibre and micronutrients from our diets.
Most baked food items include wheat
as part of its ingredient. It is high time when we should devote out time and
energy for rice and millet based products because of growing demand in urban
centers. Cereals will remain the major part of Indian diets and this sector
should get maximum attention because of volume and consumption habits.
Nutritional demand revolutionizing
the dairy sector:
Milk and milk products are integral
part of Indian dietary habits. After the basic food security focus turned
towards nutrition security. Milk by itself is a wholesome food and helps in
building bones and is essential for growth and development. The ‘White
Revolution’ by the National Dairy Development Board (NDDB) in the 1970s made
milk and other dairy products easily available to the community.
Milk and milk products are integral
part of Indian cooking system. The usage of ghee, butter, paneer, and cheese enhanced the diet
especially of the urban Indians. At the same time there is huge wastage of
by-products due to fermented small scale manufacturing. Lately milk is getting
lot of attention from investors and consumers. This is one sector where lot of
innovation is required. It will be ideal to explore milk and grain based
combinations to enhance nutritional intake at low cost.
Growing income creating demand for edible
oils:
The change in the diet pattern due to
growing income created demand for fat intake in the population. The ‘Yellow
Revolution’ in oilseeds was introduced to meet the growing demand for edible
oils. Unfortunately, the demand outstripped the oilseed production. The
‘Industrial Revolution’ added to the changing food patterns in the country by
introducing bakery food items prepared from hydrogenated fats (vanaspathi) and
trans fats – major culprits that cause cardiac disorders and insulin
resistance.
The imported edible oil and refining also
impacted the consumption profile of edible oils in India. Traditional edible oils
like groundnut oil, sesame oil are making way for low cost soybean, palm and
other oils.
Lately there is growing awareness
about type of oil in the diet. Consumers are demanding healthy options. Blended
oils are becoming common in order to balance the nutritional demand. Oil based
products like margarine, low fat bread spreads and similar oils, fats and
shortenings are gaining ground in kitchens and in bakery industry.
Demand for sugar is growing:
Sugar is the cheapest source of
calories. Higher production of sugarcane and a rise in sugar industries led to
the production of sugar confectionaries, candies, and sweetened aerated
beverages resulting in the consumption of “bad” calories.
Sugar based confectionary is common
among kids but this sector needs new ideas and innovations to meet the healthy
options for consumers.
Demand for health diet will focus on
horticulture products:
Due to lack of focus on fruits and
vegetables in diet and other high fiber perishables, the intake of colourful
green, yellow, and orange vegetables and fruits is becoming pitiably low due to
their high prices, perishability and seasonality. There was an urgent need to
ensure balanced diet for all mainly to address the micro nutrient deficiency.
According to nutritionists, our intake of these power packed items should
ideally be around 500g/day/person.
There is growing demand for
hygienically handled and packed greens and other perishables in affordable
formats.
Convenience is key driver for the
processed food market:
Many processed and convenience foods,
which were homemade till few years back are now available in market in
attractive packaging. While processed
and convenience foods have entered the market targeting the youth with energy
dense and salty snack foods. The focus on healthy options are yet to emerge.
Emerging innovations are focusing on
health and wellness:
The erosion of the “healthy diet” as
an outcome of modernization and industrialization has led to the development of
dietary supplements and functional foods. Functional foods are those that
contain components (which may or may not be nutrients) that affect a limited
number of functions in the body in a targeted way so as to have positive
effects on health. They could also have a physiological effect that extends
beyond the traditional nutritional effect. However, dietary diversification is
the best approach as Nature knows what is best for mankind. Some of our
traditional food items contain functional ingredients, which play a major role
in the prevention of diseases and promotion of health.
There is no alternate to safe food:
Pharmacological and technological
advances cannot replace healthy diets and physical activity as the means to
safeguard against both under and over nutrition. It would be worthwhile for us
to consider going back to our traditional diets for controlling the modifiable
risk factors (diet and physical activity) and tackling the emerging epidemic of
chronic diseases.
What investors’ can do?
Food is not just a diet but also
expression of social and personal affection in Indian families. It is important
for them to understand these social dimensions of food and diets in Indian
society. It will be sensible to address the latent need of convenience,
nutrition and saving of time and efforts without disturbing the social fabric
to get wider acceptance.
Seasonality, very high agro-climatic
diversity, fragmented distribution system, evolving infrastructure and
traditional markets are some of the challenges which any investor has to factor
in while planning investment in India.
Livestock products like poultry, meat
and fish are still in very initial stage of development. Modern technology,
food safety and convenience options can be a starting point for these sectors.
India offers huge opportunity and
food market is growing faster than any other sector in the Indian economy. With
high growth projections, growing working class and better exposure with
external world through travel and internet will increase the growth rate of processed
food market.
All major food brands are already in
India and they have modified their approaches with time to adapt to the ground
reality. Now, Indian market is ready for innovation. If your business plan is
logical and product selection is sensible, Indian food market will never
disappoint you.
In case author can be of any help to
you, please feel free to contact.
[1]
Leading International Agri-food
business & Bio-economy Expert, Blog: “Vijay Sardana Online” , Email:
Sardana.vijay@gmail.com
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