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Growth and development of convenience foods in India
Saturday, 27 June, 2020, 13 : 00 PM [IST]
Archa Shah, Umesh Kamble
Convenience food are tertiary processed foods or foods which are designed to save consumers time in the kitchen, reduce costs due to spoilage, and reduce costs using economies of scale. Some convenience foods can be consumed instantly or some after the addition of some water, heating or thawing.

The convenience food segment covers a very narrowly defined range of foods such as ready-to-eat meals and soups. However, it does not include products such as frozen vegetables, freshly prepared salads, and cut fruit.

Classification of Convenience Foods
Ready-To-Eat (RTE) Foods

Such foods are edible and do not require additional heating/freezing treatment to make them safe to eat. They are ready for consumption, need only to be reheated and consumed. For example, long keeping/short-term preserved/preserved and flavoured/retort processed/frozen chapattis, composite breakfast cereal bar, RTE soy chunk, intermediate moisture fruits, and so on.

Ready-To-Cook (RTC) Foods
These foods are edible and require additional heating/freezing treatment to make them safe to eat. For example, Instant Curried Dhal mix, Instant Pulav mix, Instant Khichidi mix, Instant Basmati rice, Instant whole legumes like Kabuli channa, Rajama, and Whole grams.

Ready-To-Serve (RTS) Foods
Such foods can be directly consumed from the container and mainly include beverages. For example, juices, squashes, purees (tomato, mango), soft drinks, packaged milk (flavoured milk, pasteurised milk), lemonade, fruit beverages, and energy drinks.

Growth in Processed Convenience Food
Over the past decade, money spent by Indians on ready-to-eat food outside home, has doubled. While US$5 billion are spent on ready-to-eat food this year and research estimates it to double up in over five years.

In 2007, the growth in sales (domestic and export) of processed food is more than 150 per cent; most remarkable are the two sectors which showed remarkable growth in sales. Processed poultry's sales grew by 64%, and spirits and beverages by 75%. Food process outsourcing is presenting good prospects in multi cuisine hotels and restaurants abroad for processed or semi-processed Indian seafood, dairy and Indian curries.

Besides foreign investors, food processing sector is a major attraction for Indian corporate houses to invest. Reliance, Godrej, Bharti, ITC, Hero, Ballarpur Industries, DSCL, Tata and Mahindra & Mahindra are prominent corporate houses with end-to-end integrated operations in the food chain. Convenience, variety and health issues are key drivers for quality of packaged food. With clear demand in the future if India can harness its production to the quality its dream to become the world’s food basket is sure to come true.

In India, the convenience food market has been witnessing increasing mind and wallet share of the hospitality industry. Various varieties of ready-to-eat (RTE) food, such as juices, gulab jamun mixes, dhokla mixes, and other ready-to-use food products are being regularly used by chefs across HoReCa, as convenience food makes it possible to cater to several delivery and dine-out requests simultaneously while also, maintaining an efficient turnaround time, in today’s fast-paced lifestyle. Gits Food was the company which introduced Indians to the world of ready-to-eat and ready-to-cook food, and has been pioneering innovations in the RTE market for the HoReCa industry.

SWOT of Convenience Food Processing Industry

•    Leading multinationals from the US and Europe have already established food processing ventures in India including PepsiCo, Coca Cola, Pillsbury, Conagra, Unilever, Cadbury, Nestle, and Kellogg’s.
•    Frozen foods and other ready -to-eat processed foods are appearing in the market.
•     Private supermarkets growing in number & popularity offering many new products.
•     New government policy allowing 390 agricultural imports into India previously subject to licensing requirements (effectively banning their import).
•     The recent policy packages announced by the new government for farmers for raising rural income are bound to stimulate growth further. With the changing lifestyles of the consumers and rising disposable income of the growing middle-income group. Branded Food Health Food and Convenient Food are rapidly raising segments of this industry which are gaining vast popularity. The market for branded foods is growing at a healthy 10%-15%.

•    Absence of a strong and dependable cold chain system. It leads to 30 per cent of farm produce being wasted every year only because there is no adequate storage, transportation, cold chain facilities and other infrastructure supports.
•    Harmonisation of multiple food laws is an urgent necessity. It has been observed that there are 13 laws enforced by 9 ministries. There is a need for integrating into one common food law.
•    Food standards are overlapping and contradictory.
•    There is multiplicity of taxes, local taxes and levies charged on different commodities belonging to food and beverages industries.
•    Higher cost of raw materials and packing materials put pressure on margins.

• The next sunrise industry for India is going to be food. In terms of total output addition, food has surpassed IT and Pharma.
• India's middle class segment will continue to hold the key to success of the processed food market in India. The profile of the middle class is changing steadily as hired domestic help is becoming costlier.
• Indian food and beverage companies are making a beeline for regional overseas markets like Bangladesh, Pakistan, Nepal, the Middle-East and CIS countries because of similar lifestyles and consumption habits. Godrej Consumer, Marico, Dabur are among the companies
• Lower overheads due to limited local area, family management, focussed product lines and less expenditure on marketing help the unorganised sector to grow.
•The food and beverages sector is witnessing recently large-scale transformation, huge advertisement spending, awareness campaign about the products and brands, distribution of free samples with the focus on improving the distribution network to make strong presence in the Indian market.

• Indian market still closed to many high value and packaged products.
• Non-tariff barriers to trade such as unrealistically high quality standards for imported products are on the rise.
• Private supermarkets viewed as expensive and attract only higher middle and upper class consumers.
• Importers and retailers lack knowledge and training in purchasing, handling, and merchandising of US products.
• The majority of Indians cannot afford imported foods. The number one purchasing characteristics consumers look for price, not brand or product origin.
• Less than 20 per cent of South Indian women have jobs. There is little perceived need for convenience of foods
• American foods/brands have little presence in the Indian market place. Local consumers have limited exposure to American foods and tastes.

Covid impact: Ready-to-cook, frozen foods see surge in sale
With the whole country on lockdown and most people working from home, ready-to-cook and frozen-food products have been flying off the shelves over the past few weeks. Online grocery delivery service Grofers, for instance, has seen its sales surge 170 per cent in the ready-to-eat category, 31 per cent in the ready-made meals and mixes category, and 41 per cent in the frozen food category, said its founder Saurabh Kumar. MTR Foods, a company that manufactures packaged foods, has also seen the demand for its breakfast mixes, dessert mixes and ready-to-eat meals increase by over 20 per cent during the period. Sunay Bhasin, its CMO, said the demand for products such as vermicelli have also seen a surge of 15 per cent

(Kamble is founder & CEO, Shah is head consultant at Farm to Fork Solutions, Mumbai. They can be contacted at umeshretail@gmail.com)

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