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India’s RTC food mkt estimated to reach $382.06 million by end of 2017
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Wednesday, 16 August, 2017, 08 : 00 AM [IST]
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Shagun Sachdeva
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Said George Bernard Shaw, “There is no sincerer love than the love of food.”
Indian cuisine a covers wide range of regional and traditional cuisines, and Indians seek ethnic tastes due to the emotional quotient involved.
Indian food is considered as diverse as its taste due to the culinary intricacies and diverse gastronomical needs of the Indian population. The cultural differences among Indians, coupled with the variety in local tastes, values and traditions, their temperaments and eating habits are the various factors that have led to the diversity in its cuisine.
The eating habits of Indian consumers vary from state to state. For instance, South Indian specialties include rasam rice, idli sambar, etc., while North Indian specialties include chole bhatura, parathas, etc.
However, these diverse Indian cuisines have common culinary threads that dictate ingredient pairings and cooking practices.
The Indian food industry has advanced over the decades, and presents many facets, ranging from the conventional labour-intensive food industry to the modern food processing activities.
The advancement of technology in food processing, along with the evolution in cooking practices and changing lifestyle (due to the impact of western culture), have resulted in altering food choices and consumers’ spending habits on food.
Gone are the days where the masala was made in the Indian kitchens. Blame it on the changing dynamics of the Indian economy in terms of socio-economic change, including urbanisation, growing working women population, increasing alternate career options, hectic work schedule wherein working women prefer to spend quality time with their families rather than spending time cooking in the kitchen, coupled with the significant role of the media in the knowledge explosion.
Also, the Indian demographic dividend, leading to higher per capita incomes, and a changing demographic trend, which is primarily dominated by a young population, have been driving the urban food consumption trend.
Today, increasing consumer indulgence, and their objective to own experiences and not things, has led to the trend of food adventurism and a greater preference for packaged food, which is more convenient, to traditional food.
The Indian consumer market is primarily dominated by the younger generation, which is sophisticated and brand conscious, and their purchase decisions reflect their lifestyles.
Talking about the Indian ready-to-cook (RTC) food market, which is decades old, several companies have tried their hands in this industry, but very few companies have emerged as major market players/brands. These include Nestle, Venky’s Chicken, MTR, Gits, Kitchens of India (ITC), Al Kabeer, Swadisht, Tasty Bite and Noble.
These are among those companies/brands which decoded the Indian consumer preferences and tastes better than their competitors.
Indian RTC meals are giving tough competition to their Italian and English counterparts, not only in India, but across the globe as well. This has led to the surge in the sales of RTC food in India.
The concept of RTC food was developed by the United States military to be consumed by the soldiers as on-the-go food items where organised food facilities were not available.
In order to meet the food demand of soldiers during the Kargil war in 1999, the Defence Food Research Laboratory (DFRL) floated tenders for processed food manufacturers to supply instant meals by using defence lab technology.
That adversity turned out to be an opportunity for processed food manufacturers, as they acquired the technical knowledge from the defence lab and used low-cost production methods to manufacture and distribute ready-to-eat (RTE) meals to the retail sector for the end consumers.
This initiative brought the change in consumers’ food habits across the globe, and with the introduction of convenience foods like two-minute noodles and others, that have leveraged on the market opportunity through brilliant and innovative marketing strategies, such as bringing in nostalgia factor, making the product exclusive, using celebrity marketing and continuous restructuring of strategies to endorse their product.
Nestle is the first recognised company that grabbed the opportunity to increase the popularity of RTC meals in India by introducing instant noodles.
After the success of instant noodles, Nestle launched packaged RTC soups, which did not meet the sales expectations of the company at that time.
However, today, the rising trends of readymade food items are finding product launches and developments in the diverse category of RTC meals.
Soups, frozen parathas, burgers, desserts and South and North Indian food items under the breakfast and snacks categories are commercially available as RTC food in the Indian market.
The Indian economy is primarily an agrarian economy, and has evolved a great deal in its agriculture and food sectors over the last few decades.
Ever since the introduction of the Green Revolution in the Indian agricultural sector, the Indian agriculture system has improved dramatically.
Also, the food sector has undergone massive improvement in terms of better food processing methods and advancement in food technology. As a result, the RTC food industry in India has been witnessing an impressive growth over the recent years, and it is projected to grow impressively in future.
According to Market Research Future (MRFR), the Indian RTC food market was worth $233.40 million in 2013, and is estimated to reach $382.06 million by the end of 2017. The market is projected to reach $754.82 million by the end of 2022, registering a substantial compounded annual growth rate (CAGR) of 14.59 per cent.
As per MRFR’s analysis, the Indian RTC market is segmented on the basis of region (such as north, south, west, east, central and the north-east), and the regional cuisines of India and diverse food choices have been taken into consideration.
The south region is estimated to retain its dominance throughout the forecast period of 2017-2022. It is estimated to be valued at $88.45 million by the end of 2017. This is attributable to the increasing urbanisation in the southern states and the impact of migration of South Indians to Middle-Eastern countries.
For instance, the Malayali diaspora in the Middle-East has led to the exchange of culture and values and impacted the food values in the south Indian state of Kerala.
These factors reflect the changing lifestyles of consumers and create a positive impact by creating lucrative opportunities for manufacturers to tap into the RTC food market.
The western part of India is estimated to grow at a maximum CAGR of 14.91 per cent during the forecast period (between 2017 and 2023).
This is primarily contributed by the massive industrial growth in Maharashtra. However, the north-eastern region is estimated to be sluggish throughout the forecast period.
The Indian RTC food market is anticipated to grow at a fast pace owing to various factors. The massive growth and strong performance of the organised retail industry over the last few decades is one of the factors responsible for its growth.
Social factors, such as lifestyle changes and absorption of western values into Indian culture and lifestyle, have influenced the dietary patterns of consumers and has made them highly experimentative.
The consumption basket of consumers act as their identity markers rather than reflecting a simple act of purchase.
Today, consumers are more inclined to buy the products from the hypermarkets and supermarkets rather than mom-and-pop shops, which is just a traditional model of retailing in India.
Nowadays, fast-moving consumer goods (FMCG) companies tend to promote their new products in various supermarkets in order to reach wider audience.
According to the Federation of Indian Chambers of Commerce and Industry (FICCI), India’s retail industry is estimated to reach $1.1 trillion by the end of 2020 with a CAGR of 12 per cent.
Also, the gradual increase in the middle-income population in India and the increasing per capita disposable income of the consumers has further intensified the overall demand of the RTC meals, and has created lucrative opportunities for RTC meal manufacturers to come up with new and innovative products to retain their competitive market share in India.
Understanding industry trends & govt initiatives
With the rise in demand, the supply chain for such meals have become a lot more efficient and prominent in urban areas of the country.
Based on these factors, quick service restaurants (QSR), ready-to-eat and home delivery are subjected to tremendous growth in India.
The supply chain of ready-to-eat (RTE) foods involves five major stages, ranging from production, procurement, processing to retailing and distribution.
Food processing units not only add value to the end product, but also increases the utility of end consumers.
Talking about the supply and value chain, food processing is one of the key value addition steps, which further involves the primary and secondary stages.
In the primary stage, the product undergoes basic processing, while the secondary stage includes value-added processing of food, wherein the products undergo a higher level of processing for its conversion to new, unique and modified products. This is estimated to account for between 35 and 40 per cent of the total processed food.
Manufacturers invest extensively in the research and development (R&D) sector in order to introduce unique flavouring ingredients, as well as by grading the raw material based on the quality check measures.
Product development is carried out under the surveillance of experts and gets approved by certified scientists or specialists.
Focus on R&D and product trials and tests has also resulted in quality food products with a longer shelf life, which is of great significance in the RTC food industry.
The storage of the raw materials and the development of the final product are to be done at low temperatures which involve the storage chain facilities.
In India, an estimated figure of cold chain storages is over 6,000. These are mostly temperature-controlled facilities, out of which 90-95 per cent are owned by private players. Also, the capacity of over 50 per cent of the total is below 1,000 metric tonne (MT).
The lack of cold storage facilities has been posing challenges in the growth trajectory of the Indian RTC food market.
The key players in the RTC food in India have dominated kitchens across the country for quite a few years now.
Some of the products which have gained popularity in India include RTC gulab jamun, pav bhaji mix, rava idli mix, chicken gravy mix and others.
The established players in the Indian RTC market include MTR Foods (Bengaluru), ITC Limited (Kolkata), Desai Brothers Ltd (Pune) and Gits Food Products Pvt Ltd (Pune).
ABT Foods Limited (Coimbatore) is one of the emerging brands in the RTC food market. These popular brands have always gained attention from the consumers, mainly because they keep involving innovations in their product line.
The wide variety attracts the consumers to keep experimenting with the range of products offered by them.
The increasing adoption of RTC food on a daily basis in India is found to have huge impact on this market.
The government of India is investing immensely in the food and beverage (F&B) sector of the country.
In 2017-18, Harsimrat Kaur Badal, minister for food processing industries, inaugurated the first mega international food park in Punjab, investing an amount of Rs 136 crore ($20 million).
In addition, to add value to the end product, the Food Safety and Standards Authority of India (FSSAI) has planned to invest around Rs 482 crore ($72.3 million) in order to strengthen the food testing infrastructure in India.
They have planned to upgrade 59 existing food testing laboratories and set up new mobile testing labs all across India.
The government has been funding initiatives such as the setting up/upgradation of quality control/food testing laboratories, R&D and promotional activity schemes, along with the technology upgrade/setting up/modernisation/expansion of food processing industries scheme, which will support the growth of the RTC market in India.
Conclusion
Based on the analysis, we could conclude that over the next decade, the demand for RTC food products will surge considerably.
There has been emergence of new brands and players in this space in the last few years, which is clear evidence of the active participation of consumers as well as investors in the growth of this sector.
The government’s support, coupled with various factors such as strong relationships with suppliers that drive innovation, collaboration with global retailers, expansion of the distribution network, advertising backed by product quality and supportive logistics infrastructure, will further boost the growth of this market.
All these put together will perhaps create a growth platform for industrial players to function smoothly.
[The author is senior research analyst, Market Research Future (MRFR).]
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