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Low priced unit packs find favour riding on convenience, affordability
Tuesday, 12 July, 2016, 08 : 00 AM [IST]
Nandita Vijay, Bengaluru
The food processing sector is now witnessing the entry of low priced units (LPUs) packs which are being preferred to conventional ones by Indian consumers because of convenience and affordability, according to P Rajan Mathews, VP, sales and marketing, Mother’s Recipe, Desai Brothers Limited.
Convincing consumers, understanding their behaviour and reaching them at the right price and quality are the factors that any food processing industry needs to focus. This is where the industry is largely looking at packaging in small quantities because low priced units are moving the fastest in the domestic market.
The key attributes of LPUs are economical consumption by the consumers and increased sales for companies. Moreover small packs are seen to also attract new consumers for a first time trial of the product.
With competition intensifying for the food processing sector, the industry faces the big challenge in marketing/ distribution but not manufacture. “LPUs are seen to succeed with the urbanisation of rural India as workforce migrate for employment and look at handy sachets or small packs that can be consumed one-time. This provides a variety in choice of processed food be it a ready-to-eat snack or a ready-to-cook spice or even pickles,” stated Mathews while speaking to FnB News.
The market indicates 60 per cent of demand for snacks and 40 per cent for ginger-garlic pastes in the LPU category. The consumer is inclined to increase his purchases for LPUs in the wake of rising inflation and growing expenses. “The general view is LPUs ensure faster sales and easy access to customer. As companies are engaged in production of large quantity of these LPUs, there are efforts to expand manufacturing operations as small packs generate maximum sales,” he said.
Delving on the pace of growth of food processing manufacturing units, Mathews said, “Most companies prefer to set up their own units either as brownfield or greenfield project based on the access to the farm produce. In this context, the food parks are not preferred by most companies at least in the large and medium sectors. Despite the financial benefits of ready-made plant infrastructure minus machinery installation and manpower availability these parks are posing hurdles in terms of logistics and distribution costs which are huge. In fact, logistic costs constitute five per cent of the total processed food investment. This makes the food processing sector to overlook the food park infrastructure.”
Furthermore, source of supply at an easily accessible distance plays a key role in ensuring the quality of raw materials like fruits and vegetables used in food processing. “Most parks are located in areas where access to both farms and markets are difficult,” he noted.
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