India Gets Ready to Eat

Growing numbers of working women and millennial population combined with hectic work schedules and mushrooming of retail chains have been the key factors towards increasing popularity of the ready-to-eat products and ready-to-cook products among consumers in India.

The RTE segment is growing at a fast pace as a result of the high consumer acceptance for such food products globally. With the market for these products expanding at a rapid pace, it provides entrepreneurs in India with an opportunity to not only cater to the Indian market but also exploit the RTE market globally.

As Indians can now be found all over the globe, and as they are eager to taste their home cooked meals, India’s ready-to-eat and ready-to-cook products have immense export potential. Ashok Malkani opines that it is a market with lots of promise for small as well as large entrepreneurs.   

 

The food scenario in India is undergoing an enormous change. The days when home cooked mother’s meal was the preferred choice is making way for packaged food. With the trend of nuclear families and more working women, packaged food is becoming more popular, and several enterprising entrepreneurs are keen to enter this lucrative market.

The next 20 years are likely to see India add approximately 245 million youth to its workforce. At the same time, there will also be a rise in the middle-class population, as well as increase in disposable income across the socio-economic spectrum, which could facilitate sustainable growth of the Indian packaged food industry.

According to Euromonitor International, the Indian packaged food market registered double-digit constant value growth in 2016, in line with its performance over 2011-2016 as a whole. Ready-to-eat and ready-to-cook products play an important role in the packaged food industry.

 

Impressive Growth

It may be noted that major shift in eating habits has been seen in the metropolitan cities of the country. There about 79 percent of households prefer to have instant food due to steep rise in double incomes, standard of living and convenience.

 With considerably rising employment opportunities in the country’s urban set-ups, India has been witnessing continuing migration of a large number of people from its rural and semi-urban pockets to tier -I and tier-II cities. This has been consequently providing a huge impetus to RTE and  RTC food products market in India, especially over the last five years.

“The Indian middle class, in particular, is witnessing a paradigm shift in its lifestyle and living standards. Presently, nuclear families and bachelors residing in metropolitan cities for academic and employment purposes are among the major consumers of RTC food products in the country. Due to cultural diversities, companies are increasingly focusing on launching regional RTC products,” stated NIIR Project Consultancy Services.  Another factor driving the penetration of RTE and RTC food products in India is their abundance across major retail chains, hypermarkets and supermarkets in the country.

According to NIIR Project Consultancy Services, the demand for ready-to-eat food in India is growing fastest in metros where a lot of working people don't get enough time to cook elaborate meals.

According to TechSci Research’s report  titled ‘India Ready-to-eat Food Market Forecast & Opportunities, 2019’, the Indian RTE food market was projected to grow at a CAGR of 21.99 percent during 2014-19, in value terms. The report was published in August 2014.  The report noted that increasing workforce, improving consumer lifestyle, and expanding retail formats were the key drivers buoying growth in RTE food products’ demand in the country.

According to TechSci Research’s report titled ‘India Ready-to-Cook Food Market Forecast & Opportunities, 2019,’ the RTC food products market in India is estimated to have touched 120 million USD in 2014. The RTC food market has been segmented into dessert mixes, snack mixes and curry making enablers. Of these three product categories, dessert mixes outperformed other product segments in 2013 and were expected to continue their dominance through 2019. The report was published in January 2015.

 

Retail Powered 

Supermarkets, convenience stores and hypermarkets are emerging as the key points-of-sale for RTE food products in the country.  They are offering a wide range of RTE food products manufactured by leading companies such as ITC, Kohinoor, Haldiram’s, McCain, MTR, etc.

Expanding retail formats are the key drivers towards buoying growth in RTE food products demand in the country. Another factor contributing to boosting the demand for these products is their wide availability online.

Karan Chechi, Research Director with TechSci Research, has stated, “Retail chains are the key contributors in increasing the awareness about the ready-to-eat products among consumers. The presence of retail players such as Big Bazaar, Easyday, etc., is also contributing towards increasing the demand for ready-to-eat food products in the country. However, as of now, such chains are not vastly present in the semi-urban and rural areas of India. Nevertheless, expansion plans of major retailers, across rural and semi-urban areas, in the coming years, are expected to increase consumer awareness and availability of ready-to-eat products in India in the coming years, thereby driving the country’s ready-to-eat food market.”

 

Heat and Eat

One of the sub-groups of ready-to-cook food is heat and eat food. According to ValueNotes, the heat and eat food industry in India, valued at Rs. 2,370 million in FY 2014, has been growing at a CAGR of 18 percent over the last three years. It estimates that the industry will be worth approximately Rs. 6,405 million by FY 2019, growing at a CAGR of 22 percent. The heat and eat food industry can be segmented into curries, rice delicacies, light meals and desserts. According to retailers, the most popular heat-and-eat items include preparations of paneer, chana masala, rajma masala and pav bhaji, noted   NIIR Project Consultancy Services.

This segment in the country is currently dominated by the top five players, viz. ITC, MTR Foods, Kohinoor Foods, Gits and Tasty Bite Eatables. ITC and MTR together contribute to about 49 percent of the market share, while the other three players make up 35 percent of the total production of heat and eat food in the country. Other players in the category include ADF Foods, Priya Foods and Heinz who are relatively new entrants in the market with limited product lines, having a regional presence.

 

Key Factors

According to India Ready-to-eat Food Market Forecast & Opportunities, 2019, northern and western regions of the country are the key revenue contributors in the RTE food market, with major demand emanating from cities like Delhi-NCR, Mumbai, Ahmedabad, etc.  The report observed that segment wise, shelf stable RTE food demand exceeded that of frozen RTE food in the country. This is attributable to the fact that frozen RTE food needs proper refrigeration for maintaining their shelf life.

However, high prices of RTE food products can be a major challenge to their growth in India as Indian consumers are innately price conscious and their preferences generally change with even slight change in price. This encourages RTE companies to come up with a variety of high-quality RTE food products in affordable price range.

Innovations in the packaging industry like sophisticated packaging products made of biaxially-oriented polyethylene terephthalate (BOPET), biaxially-oriented polypropylene (BOPP) and cast polypropylene (CPP) films have facilitated packaged food industry players to offer products in colourful packs , which can increase these products' market potential. Thus we can see that sophisticated packaging solutions has in turn can give a fillip to the ready-eat and ready-to-cook segment in India.

Newer preservation techniques have led to the advent of ready-to-eat products which are suitable for consumers during fasting season. Extruded products and those with different shapes and tastes have been some of the innovations which have widened the consumer base for the ready to—eat industry in the country.

 

Buoyant Snacks Market

It may be mentioned that ready-to-cook and ready-to-eat market does not merely consist of meals for lunch or dinner. Data research company Nielsen states that the breakfast mixes market is growing at 17 percent in India and is currently pegged at Rs. 275 crore.

Sunay Bhasin, CMO, MTR Foods, has stated, “Ready-to-eat is a huge category with numerous sub-categories. Our core category is the breakfast category and its biggest market in the country is North India. For curries, which come in pouches or trays and can be taken straight off the shelf and eaten, we have 30 odd-products. Then there is the breakfast category wherein one needs to add hot water to the product, and there is no cooking involved. This category doesn’t have any big players, currently. Next is the ready-to-eat sweet category which also sees competition from local sweet shops. In this, obviously, we have a much smaller base.”

In the ready-to-eat market of the country, the snacks market too is enormous. This market comprises biscuits and namkeens and several other confectionery products. According to industry sources, India’s snack food market is growing at 25 percent CAGR.

India is one of the largest snack markets in the Asia-Pacific region. India contributes three percent to the total Asia-Pacific snack market’s revenue. The Indian market has more than 1000 types of snacks presently.

The branded salty snacks market in India has come a long way since the 1990s, when the market was marked by the presence of brands like Haldiram’s and Uncle Chipps (eventually acquired by PepsiCo). There were few other regional brands floating around.

According to a Technopak’s report, “The market registered a major leap in the mid 90s when beverage major PepsiCo introduced Lay’s and Cheetos, and later, Kurkure. Since then, many national and regional players have forayed into the space with diverse offerings. Post 2005, consumer products companies like ITC (with Bingo) and Parle Agro (with Hippo) also entered the market, and, in 2009, CavinKare also made inroads into the market through the acquisition of Garden Namkeens.” Several organised retailers have introduced their private labels in this promising market space.

There has been a change in tastes of youngsters as far as snacks are concerned. Indian youth seem to have recovered their taste for traditional snacks like farsan, bhujia and namkeen. This has given a boost to local firms like Balaji, Bikanervala, Prataap Snacks, Bikaji Foods and DFM Foods among others.

Given the increasing concerns surrounding ‘unhealthy’ snacking, now many snack players in the country have positioned brands and products around ‘health’, e.g. baked, roasted, multigrain, low fat, etc. to reach out to the health conscious segments. This has helped them target a larger consumer base across the country.

Chandu Virani, the Promoter of Balaji Wafers, avers that the company has brought in healthier variants, covered more territories like Rajasthan and Madhya Pradesh, and reduced overhead costs, to enable it to post a 14 percent sales growth last fiscal.

On an average, regional snack brands operating in the country offer 30 percent higher volume than multinational rivals at similar price points, especially in highest selling price points of Rs. 5 and Rs. 10.

Euromonitor expected the salty snacks segment to surpass biscuits with sales of nearly Rs. 35,801 crore by 2020, up from Rs. 19,151 crore in 2015.

 

Promising Future

However, the ready-to-eat and ready-to-cook industry in the country still has untapped segments, which includes a largely underpenetrated rural market. Furthermore, export opportunities are rising with India’s growing integration with the global economy, and thus the export market for ready-to-eat and ready-to-cook products from the country does have great promise.

The fact that per capita consumption of food in India is much lower than that of the developed economies also offers good potential for ready-to-eat and ready-to-cook players to achieve success in the Indian market.  This fact has been recognised by many companies, including the global ones, which are increasingly investing in India.

And of course, the predominantly young demographics of India and the rising number of nuclear families with working couples in urban areas also portends a bright future for the ready-to-eat and ready-to-cook segment in the country.

For new entrepreneurs desirous of entering the RTE and RTC segments of the Indian food industry it may be mentioned that certain snacks are specific to certain regions of the country. So if one does not have sufficient funds, one can have a slim portfolio of products or have a single category which is popular within a small geographic range comprising of a single state or city.

However, in order to succeed in the RTE and RTC segments in India, the producers have to take into account of the fact that India is a highly price-sensitive market, where even slight change in pricing can alter brand preferences, especially in the mass market. At the same time, the Indian market is ripe as far as accepting innovations are concerned. Health consciousness in the Indian society too, is on the rise. Thus success route lies in coming up with innovative RTE and RTC products, preferably endowed with health quotient, which are also affordably priced.

 

 

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