Food Processing: Market Opportunities For India

Report
INDIA WEEK HAMBURG 2011
FOOD PROCESSING INDUSTRY
:MARKET OPPORTUNITIES FOR
INDIA
Handelskammer HamburgPlenarsaal
Adolphsplatz1, 20457
Hamburg
By: Dr. Dietrich Kebschull
An
Over view
of the Indian
Food Processing Industry(FPI)
Advantage India:
 Sourcing Hub
 A huge Market
India is an emerging market for processed
food
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Nearly 1.300 million people
350 Million strong urban middle class.
Increasing disposable income.
Fast changing lifestyles with ongoing urbanization.
Increasing Number of working women.
Health consciousness.
Increasing number of small families with two earners.
Increasing consumer base.
Rapidly growing organized retail sector.
Untapped Potential
Healthy living, brand
consciousness, high
disposable income
High returns in
terms of
quality &
brand loyality
building
High
Demand
Estimated
investments
by 2015
=EUR 22.9 bn
Growing
corporate
participation,
improved
infrastructure
Demand for processed food &
value added products
High
Investment
India as a sourcing Hub
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Annual milk Production-105 million tones(Highest in the world).
485 million live stock(highest in the world)
150 million tones of F&V(2nd in the world)
230 million tones of food grains.
20 agro climatic zones
Out of 60 soil types 40 are found in India
160 million hectares of arable land
Largest Producer of spices
3rd largest producer of oil seeds
Major sectors today
 Fruits & Vegetables
 Dairy
 Meat and Poultry
 Marine Products
 Grain Processing
 Beer & Alcoholic Beverages
 Packaged and convenience Food
Present Level of Processing in different
food segments are still low
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Fruits & Vegetables(F&V)-2.2%
Marine Products-26%
Meat -20%
Poultry-6%
Milk-35%
As against 60-70 % in developed countries.
Food wastage due to lack of processing infrastructure is estimated to
be 9 billion!! Euros.
Facts and Figures
• FPI is very important for India’s development and employment. It
links industry, agriculture and services.
• The Industry has highest number of plants approved by the US Food
and Drug Administration(FDA) outside the USA.
• FPI is the 5th largest industry in India in terms of consumption,
employment and exports ,contributes 14% to the Manufacturing
GDP.
• Employs 13 Mn people directly and 35 Mn indirectly.
• The FPI is estimated at 79 Billion Euros (2007-08)and is expected to
grow to 241 billion Euros by 2015.
• The processed food market is expected to grow at a rate of 13.5%.
• Contributes 14% to the Manufacturing GDP.
SECTOR WISE
OVERVIEW
Dairy
• India ranks 1st in the world in terms of milk production
• The dairy sector has an estimated consumer demand EUR 32 billion
and growing at a rate of 8% per annum.
• Present level of processing in Dairy is 35%.
• Industry profitability is good and has high potential for introduction
of new value added products.
• Manufacturing of CASEIN and LACTOSE has good scope in the
country: at present these are generally imported.
• Market of yoghurt is growing at a rate of 18% that of sour milk at
33%.
• Major players in Indian Dairy Industry are Nestle, Cadbury, Amul,
H.J.Heinz, Smith Kline Beachem,Wockhardt.
Meat and Poultry
• Meat and poultry sector is expected t grow at a rate of 15% per
annum.
• Indian buffalo meat is witnessing strong demand in the
international market due to its lean character and near organic
nature.
• Large potential for setting up of modern slaughter houses and cold
chains.
• Poultry is also witnessing strong growth.
• The newly upcoming modern retail sector has strong influence on
the growth of Processed Meat and Poultry.
• Major Players are Venkateshwar Hatcheries(Venky’s) , Godrej
Agrovet, Frigo refico Allana Limited.
Market size of meat and poultry products
Years
2002-03
2006-07
2010-11
2014-15
Market Size
EUR2 bn
3.5 bn
EUR 5 bn
EUR 7bn
Processed
EUR 400mn
EUR 740 mn
EUR1.6 bn
EUR 3.1 bn
Non-Processed
EUR1.6 bn
EUR 2.8 bn
EUR 3.4 bn
3.9bn
Fruits and Vegetables
• India is the 2nd largest producer of fruits and vegetables.
• Expected to grow at 14-15% per annum between 2010 -2015.
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Major F&V products are fruit pulp & juices,fruit based ready to
serve beverages,canned fruits and vegetables, jams , squashes ,
pickels etc.
• F& V processing market growing at a rate of 11% per annum. Offers
opportunities for high tech equipment manufacturers.
• Major players are Unilever, ITC, Dabur, MTR.
Marine Products
• With 8000 Km coast line, 50600 Sq km of continental shelf area &
2.2 million Sq Km of Exclusive economic zone India is endowed
with rich fisheries resources.
• Total marine products targeted for next 5 years EUR 2.82 bn.
• Government has plans to develop India as a major hub for
outsourcing reprocessing of marine products.
• Key products are frozen shrimp,lobster , cattle fish,clams and fish
fillets.
• Major Players in marine products are ASF sea foods, Bell foods,
Deep Sea products.
• More than 200 units are approved by the EU for exports to the EU.
Grain processing
• Grain processing includes milling of wheat rice and pulses.
• There are 43.000 modern rice mills,10.000 pulse mills,820 large
flour mills.
• The breakfast cereal market is growing at a rate of 7% and sales are
expected to reach EUR 55million by 2015.
• Investments in the bakery and milling sector risen by 30,4% since
2007.
• This segment is expected to grow steadly at 15-20% for next 5
years.
• Indian basmati rice has high demand in International markets.
Alcohol and Beverages
• Market value is 60 million Euros. This segment has grown at 25%
per annum for last few years.
• The industry is estimated to grow at 24% per annum to 1.06billion
from 2010-15.
• Government has introduced special wine policy to promote grape
plantation and establishment of wineries.
• India is one of the fastest growing beer markets.
• Evolving pub culture and urbanization.
• Major players are Radico Khaitan, UB, SAB Miller.
Requirements of the Indian
Food Processing Industry
Indian FPI needs..
• Efficient supply chain.
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Quality Testing Infrastructure.
• Packaging and Grading Centers
• Cold Chains
• Modern Abattoirs.
• Policy framework to boost the FPI.
• Modern R&D
• Skill Development.
Government’s Initiatives.
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Vision 2015
Increasing food processing level to 25% by 2015
Increasing Value addition to 35% by 2015
Increasing India’s share from 1.6% to 3% in global processed food
trade by 2015
• EUR 60 billion set apart 11th five year(2007-2012) plan to achieve
above mentioned objectives.
..Contd
 TAX INCENTIVES
• Custom duty reduced 5% from 7.5%earlieron on food processing machinery and to 10%
from 20 %refrigerated vans.
• Full exemption from custom duty to refrigeration units required in manufacturing of
refrigerated vans.
• Customs duty on packaging machines reduced from 15% to 5%.
 TOTAL QUALITY MANAGEMENT(TQM)
• Ministry of Food Processing Industry aims to set a country wide network of Labs for
TQM in FPI
• Reimbursement upto 50% of total expenditure towars impementation of TQM including
HACCP( hazard analysis and critical control points), GMP(good manufacturing
practices),GHP(Good handling practices), ISO 14000, ISO 22000.
 R&D
• To reduce wastage and spoilage
• Development of technologies and methods for preservation of food products
• Identification of better and ecofriendly packaging material.
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Infrastructure Development
Food parks
Mega food parks
Modern abattoirs
 Human Resource Development
• Establishment of industry specific Institutes
India as a
Investment Destination
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India offers big chances to the food processing sector.
An average Indian spends the majority of his income on food products.
Rapid urbanization and busy lifestyles has propelled the demand of processed
food.
Huge consumer base more than 350mn consumers of processed food.
Vast resource of raw material for food processing.
Stable economy with strong growth.
Automatic approval of foreign equity upto 100% for almost all processed food
Items.
FDI in food processing sector from 2000 to 2011 only has been around EUR 1
billion .
Major multinationals that have invested in India are Nestle, Pepsico, Coca Cola,
Perfetti, Conagra,Unilever,Glaxo Smithkline,Heinz ,Wyeth
India Calling :
Opportunities for German Companies
 German companies can assist Indian food processing
sector in all aspects.
 Germany has years of experience and expertise in Food processing
Industry.
 Experience with SPS/TBT which is a big barrier for Indian companies.
 Hold 2nd position in food processing in Europe.
Promising Fields of Co-operation
• Fruit & Vegetable sector : grading, processing ,packaging.
• Dairy : cheese and yoghurt.
• Fish and marine products
• Meat products: smoked varieties products specially sausages.
• Spices ,tea, cocoa and coffee.
• Grapes for wine etc
• Machinery and equipments
• TQM
• R&D and testing Labs
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• Imparting training to food processing professionals.
• Tie ups with educational institutes for industry specific courses
• Building of infrastructure like cold chains ,abattoirs, modern
processing facilities.
• Assistance in marketing in India Europe /USA and third markets
IGEP’s Support possibilities
 Working on Indo German trade for last 25 years
 Representing Hamburg. We are operating Hamburg business center
in India
 Providing professional support to many German SMEs I India.
 Can assist and play a facilitating role in business linkages for
German companies & research institutes with joint cooperation
partners in India.

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