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Processed Traditional Beverages – Untapped Potential
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Thursday, 01 March, 2018, 08 : 00 AM [IST]
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Sini
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The potential, of processed traditional foods, remains untapped in India; beverages are one of the key sectors that can be targeted. Consumer preferences, for traditional foods, combined with a need for convenience foods have contributed to the development of processed Indian traditional foods.
A need for quick cooking options, and changing lifestyles have helped in the popularisation of packaged traditional foods. Standardisation, of the product, by recreating home-made recipes in an industrial scale is the biggest challenge faced by processed traditional food companies today.
Indian food processing sector – Key insights
The food processing sector, contributes to 32% of the total food market In India. According to a report of the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in 2017, India’s food processing industry was valued at US$258 billion; it is expected to reach US$482 billion by 2020.
Trends observed in the Indian processing sector
- Evolving domestic consumer perceptions towards healthier options, due to the availability of a wide range of products, and increasing global connectivity
- A rising demand, for Indian products, in the global market
- Value addition of products, in order to increase demand; this is also to improve profit margins
- A search for innovative and convenient food products by consumers, emphasising the use of healthier ingredients
- As a measure of improving business investments, the ministry of food processing industries (MoFPI) has approved proposals for joint ventures (JVs), foreign collaborations, industrial licences, and 100% export-oriented units
- An emerging need is present for convenient cooking options; this is due to a rising female workforce, and changing lifestyles. This has also led to an increasing dependence, on the food services sector, for dining
Indian natural healthy beverage market
According to MoFPI, in 2017, Indian natural healthy beverages are considered to be one of the fastest growth sectors in the food and beverages industry; it has an annual growth rate of 22%.
Dabur’s Real brand is the market leader. The impact of nutritional drinks, on consumer preferences, is obvious from natural and wellness trends.
Traditional beverages’ impact on carbonate
The Indian ethnic flavoured beverages market is valued at US$24 mio. In a market dominated by soft drink multinationals, the shift towards using Indian ingredients to impart traditional tastes—in the beverages sector, is expected to instigate change.
Amul, Dabur, Paper Boat (Hector Beverages), Milk Mantra, and Raw Pressery are a few of the companies launching traditional beverage products. A few of the Indian traditional processed beverages are panakam, kokum, thandai, aam panna, golgappa ka pani, lassi, buttermilk, spiced buttermilk, badam milk (almond milk), flavoured milk shakes (curcumin, mango and so on); others are conventional fruit juices without additives or artificial flavours. Amul has launched lassi and buttermilk in an innovative 1-litre Tetra Pak in 2017 for convenience of usage. The innovation in packaging in combination with the ethnic taste is expected to capture the market. Mother Dairy produces lassi, plain chach (buttermilk) and tadka chach spiced butter milk. Aavin launched bottled lassi and buttermilk in 2017 as a healthier alternative to soft drinks. Almond milk brands include MTR, Almond Fresh (Life Health Foods). Almond Fresh is available in three different flavours - Natural, Vanilla, and Chocolate.
Dabur’s traditional drinks are marketed under its Hajmola Yoodley brand. The six variants of this brand include Awaara Aam Panna, Nimboora Shikanji, Go Goa Guava, Jhakaas Jaljeera, Golmaal Golgappa, and Kabhi Kala Kabhi Khatta.
The other dominant players in the ready-to-drink traditional beverages sector are Hector Beverages with its Paper Boat brand of products, Maiyas Beverages and Foods, with its badam milk/cold filter coffee products, and Hindustan Food and Beverages with its jeera masala drink.
Around 60% of Paper Boat’s business, is expected to be contributed to by Indo Nissin’s distribution network. The seasonal products, launched by the company, include Serbet-e-khaas, Rose Tamarind, and Panakam. The intention behind launching traditional ready-to-drink beverages, is to reintroduce home-made drinks that are being marginalised.
Challenges faced by traditional beverage makers
Challenges faced by Indian traditional beverage manufacturers include Standardisation of the recipe; Premium pricing of the product;
Intellectual property cannot be owned by the company as the recipe is well-known; Supply chain issues during procurement of traditional ingredients; Feasibility limitations during development of traditional beverages like kanji, due to issues regarding raw material availability; Development of a regional recipe, intended to reach national level consumers without affecting profit margins; Preservation of nutritional values, and tastes, of traditional recipes during industrial processing.
Notwithstanding the traditional flavour preferences of consumers, the lack of packaging options for traditional beverages is a key limiting factor preventing their frequent consumption. Traditional beverages, in processed and packaged formats, are increasingly preferred. The sector is currently experiencing a shift from unbranded to branded products.
The necessity, to preserve regional tastes and recipes, has been a key driver of this sector. In order to cope with inadequate raw materials, seasonal launches of products are made during festive seasons. Consumer perception of traditional foods as healthy choices, also drives sector growth.
Govt measures influencing traditional beverage sector
The progressive measures, initiated by the Government of India, include the introduction of Goods and Services Tax (GST), permitting 100% FDI for retail, trading in the food processing sector for Indian manufactured products, and increasing investment in infrastructure projects; these initiatives highlight the government’s positive outlook.
As per the order stated on March 15, 2017, it is a pre-requisite to have a No Objection Certificate (NOC) from the Central Ground Water Authority (CGWA) for renewal of FSSAI licence and registration. This is expected to impact bottling plants and water tanker companies. However, this move is expected to prevent depletion of ground water resources; this is a positive factor.
The ‘Make in India’ campaign was initiated in 2014; this was in order to facilitate investment in various food processing sectors. This is a favourable factor for investments in traditional beverage companies—it is a potent attractor of foreign investment.
Conclusion
Consumer preferences, for traditional tastes, are a key factor driving the ethnic beverages market; this is used as a measure to revive long-forgotten tastes. The ethnic beverages sector is appropriate in the Indian context; it has the potential to gain significant market share in the beverages segment.
With the slow global growth rate of carbonates, the demand for healthier alternatives is on the rise. Therefore, the demand for processed Indian traditional beverages is expected to increase further. However, the sector has to grow significantly to capture a major share of the beverages market. The launch of new products in the ethnic beverages sector, is observed with Hector Beverages; the expansion of the product portfolio, of existing dominant players (like Dabur), highlights the potential of the sector.
(The author is assistant project manager at F1rst [business associate of Giract, Switzerland]. She can be contacted at sini@giract.com)
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