The Indian food processing industry accounts for 32% of the country’s total food market. It is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The past couple of years have seen a tremendous growth of this segment due to high consumer acceptance for convenience food nationwide.
A recent survey by Assocham (Associated Chamber of Commerce and Industry of India) reports 79% of Indian households today prefer to have instant food due to time constraints. In recent years, the focus of the ready-to-eat (RTE) market has gradually shifted from homemakers or students to young professionals and families. It is found that 76% of parents in big cities, mostly both working with children under the age of five, are serving easy-to-make meals in some form or the other, at least 10-12 times every month!
The market for spreads, sauces and dips is now close to $2 billion and growing at 22% CAGR. According to data research company Nielsen, the breakfast mixes market is growing at 17% and is currently pegged at Rs 275 crore. However, as fancy as the various breakfast cereals available in the market might be, we crave the satisfaction that only a traditional dish can give. And hence traditional brands are coming up with options that are suitable for the Indian palate.
Traditional brands such as ITC and MTR have forayed into items such as bhel bar, pot upma, poha, which can be had on the go, anytime, anywhere. To fulfill the demand of this large section of consumers, one needs to find a lot of new RTE brands in the market.
Unlike giant brands, new entrants are trying to create a niche category for themselves, be it breakfast cereals, canned, frozen foods, spreads, chutneys, and so on. Companies are looking to attract consumers within areas like olive oil, spreads and ready meals by:
· Offering promotions
· New product developments
· Health & nutritional benefits
· Attractive packaging.
The Indian consumer behavior has been influenced by exposure to other cultures, primarily in the West through travels, and popular literature.
The ready-to-eat market is somewhat saturated in the West. Hence developing countries like India are attracting the majority of big players with the promise of a high growth opportunity. The booming food sector, multiple food outlets, the popularity of international brands and distinctive distribution channels adopted by players are expected to help the market grow at a continuous pace.
Consumers are increasingly realizing that majorly RTE foods are loaded with preservatives for a longer shelf life. Increasing health awareness, particularly in the young generation, is hindering the growth of this market. Still a large Indian population is price sensitive and therefore the price factor of RTE food makes them affordable only to selected economic classes of the society. Hence it becomes all the more essential for new players in this field to marry convenience with health benefits, to ensure convenience food does not mean compromising on quality. The key is to provide RTE food options focused on Indian taste for everyday consumption, which are is not harmful in the long run.
This is the challenge taken up specifically by food tech startups who want to be considered as serious players and are getting into the game after years of R&D. With state-of-the art technology in packaging and processing, to ensure the end product is not just a world class product that can eventually be on the shelves in countries across the globe, but a product that is a strong contender in being a game changer
This is an excerpt from the article titled ‘Barreling forward on ginned-up demand’ published in the August edition of the Progressive Grocer magazine. To read the complete article, subscribe HERE.
