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“Greater shift towards health-conscious food products”
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Monday, 06 January, 2025, 08 : 00 AM [IST]
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 India’s food processing industry is adapting to meet the changing demands of consumers who prioritise convenience, health, and sustainability, positioning itself for continued growth in the years to come. As a result, the companies in the space are increasingly developing products that cater to these evolving needs, such as low-calorie snacks, gluten-free options, and foods fortified with vitamins or probiotics. The sector has witnessed substantial growth and transformation in recent years, driven by evolving consumer preferences and changing lifestyles, said Saurabh Saxena, president & executive director, Sumeru, part of Innovative Foods, in an email interaction with Nandita Vijayasimha. Excerpts:
How would you describe the current state of food processing in the country?
The food processing sector in India has evolved significantly in recent years. The increasing demand for convenience, health-focused, and ready-to-eat options has propelled the sector forward. Indian consumers are now more health-conscious and willing to experiment with organic, natural, and fortified food products. While the frozen food industry faces challenges, such as limited awareness and infrastructure gaps, advancements in cold storage and government initiatives have provided significant momentum to the industry. The sector is well-poised for growth as lifestyles evolve and access to information influences purchasing behaviour.
What key trends are shaping the sector and what challenges does the industry face?
Key trends shaping the sector include rising demand for health-focused food options such as low-sugar, low-salt, zero-carb, and high-protein alternatives. There is a growing urbanisation, increasing disposable incomes, and evolving consumer lifestyles are driving the adoption of frozen and ready-to-eat foods. Besides, Q-commerce platforms and enhanced distribution networks fuelling convenience and awareness.
Of course, challenges remain and this is particularly related to the perception that frozen food is less fresh compared to fresh alternatives. Also, there is a highly competitive fresh food market in India. Besides, an underdeveloped cold chain infrastructure and logistics, impacts product quality and safety. However, government focus on strengthening cold storage infrastructure and emerging start-ups in cold chain logistics are mitigating these challenges.
How receptive are the Private Equity and Venture Capitalists to fund the food processing entrepreneurs?
India's food processing and allied activities are going through a major transformation driven by improving policy environment, increasing public private participation and an increasing thrust on the improvement of rural infrastructure. The regulatory environment is changing for the better. Though the agri sector in India is one of the highly regulated sectors, the government has been taking selective steps to liberalise and create an encouraging investment climate. For the processed foods industry in India – agri sector is the backbone of the business. In the last couple of years there has been a lot of innovation which has happened in this space which is attracting a lot of investors and PE funds to invest in the new-age companies supported by government initiatives. As the industry size is huge, investments will continue to happen in this space.
There have been several mergers and acquisitions happening; what is your view on this development?
In recent years, mergers and acquisitions (M&A) in India have shown strong resilience and innovation, reflecting the country's growing economic strength and global influence. Companies are actively seeking acquisitions that can enhance their technical know-how and also improve the speed of execution which is needed to remain relevant in rapidly changing dynamics. The increasing involvement of private equity (PE) and venture capital (VC) firms in M&A (merger & acquisition) deals highlights the growing appetite for investment in Indian companies, supporting their expansion and innovation strategies. This influx of investment capital is enabling companies across sectors to scale up operations, enter new markets, and invest in technology and talent.
The Union Government Production Linked Incentive (PLI) scheme for the food processing sector was a big boost. Comment. Did your company avail of this?
No, the company has not yet availed any scheme.
As a leading food processing player in this space, tell us a bit about what kind of transformations you expect in 2030 in this sector in the country?
By 2030, the food processing sector will likely witness transformative growth driven by: increased adoption of advanced freezing and preservation technologies, like IQF, to ensure product freshness and nutrition. There is a greater shift towards health-conscious and sustainable food products. We will also see the expansion into Tier-2 and Tier-3 markets, leveraging enhanced cold chain infrastructure. The stronger government support and innovation in R&D will help to develop solution-oriented products. Our company too, foresees immense opportunities in providing convenient, nutritious, and environmentally sustainable food options for a growing and informed consumer base.
How did the company perform in 2024 compared to previous years, and what were the key growth drivers and top-performing product categories contributing to overall revenue?
The company had a robust performance in 2024, building on consumer demand for health-focused, ready-to-eat, and innovative frozen food options. Key growth drivers included the successful introduction of products like Frozen Millet Paratha, which aligns with health trends and convenience needs. There has been an increased awareness and acceptance of frozen food, supported by evolving Q-commerce platforms and distribution networks. There is also a stronger penetration into tier-2 towns through targeted distribution strategies. Moreover, top-performing product categories included fries, breaded chicken snacks, parathas and kebabs have fared well.
Did the company expand into new geographical markets or retail channels in 2024, and what new products or innovations were introduced during the year?
We are actively focusing on expanding our presence in the USA, with a particular emphasis on the Indian diaspora. On the domestic front, the company is on aggressive ambitious growth in Tier-2 towns in the Indian market by simply driving distribution. Notable innovations included the launch of the Frozen Millet Paratha, designed to blend health benefits, convenience, and sustainability. The company also maintained its commitment to innovation by introducing products tailored to regional tastes and the needs of health-conscious consumers.
What have been the primary challenges encountered in 2024, such as supply chain disruptions, competitor activity and economic factors?
In 2024, the frozen food industry faced several significant challenges, particularly with consumer perceptions. Many consumers still associate frozen food with being less fresh than traditional fresh produce, despite advances in technology that help preserve the quality of frozen products. In addition, the growth of India’s expansive fresh food market posed strong competition, further emphasising the preference for fresh options over frozen ones.
Another critical issue was the underdeveloped cold chain infrastructure, which can negatively impact the quality and delivery of frozen products. Inadequate storage and transportation facilities in some regions have contributed to inefficiencies and delays, which can result in spoilage or loss of product quality.
Despite these obstacles, the company has taken a proactive approach to overcome these challenges. The company has emphasised quality control throughout its production processes, ensuring that its frozen products maintain high standards of freshness and safety. Additionally, we have worked on strengthening regional cold storage facilities, which helps in maintaining the integrity of products from production to delivery. The company has also leveraged government initiatives aimed at improving the logistics sector and partnered with emerging start-ups focused on enhancing the efficiency of cold chain logistics. These strategies have helped mitigate the challenges and position the company as a forward-thinking player in the frozen food market.
How easy has it been to acquire the right manpower for your locations, and to what extent have you adopted technology in your operations?
Acquiring skilled manpower can be challenging in a growing and competitive industry like food processing. For us, innovation is driven by a strong R&D and Product Development team, ensuring a solution-oriented approach to meet consumer needs. The company has adopted cutting-edge technology, such as Individual Quick Freezing (IQF), to preserve the freshness, taste, and nutrition of its products. By maintaining stringent quality standards and leveraging technology, the company has positioned itself as a leader in frozen and health-focused foods.
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