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In the last few decades, your taste buds, your brain, your hormones, and your kitchen has been hijacked by the food industry in India. The Food and Agriculture Organization of the United Nations (FAOSTAT) analysed the consumption patterns of Indians over a period of 50 years, from 1961 to 2011, and found that the average daily calorie consumption in 1961 was 2,010. This grew to 2,458 in 2011.

This report is a clear indication that the food industry in India has changed the way people used to eat, spend, and think about food. The industry which was valued at USD 39.71 billion in 2017 is set for a huge growth and by the end of 2018, at a CAGR of 11%, will touch USD 65.4 billion.

Let’s find out how it has been doing and what are the factors that will lead the industry to reach the estimated figure.

Market Size in India

The Indian food industry, the food and grocery market, is the 6th largest market in the world and it contributes to 70% of the total sales. Talking about the contribution within the country, the food processing industry has a share of 32% in the nation’s total market. In terms of production, consumption, and exports, it is ranked as the 5th largest industry in India. The Indian gourmet food market is valued at USD 1.3 billion and is growing at CAGR of 20%.

The food industry in the last few years has seen a drastic transformation with the invention of the “Online Food Ordering” business. Still in the earlier stages, companies like FoodPanda, Zomato, Swiggy, and many such are ready to take the Indian online food ordering business to new heights. The online food delivery sector is growing at 150% year-on-year and the GMV (Gross Merchandise Value) is estimated at USD 300 million.

Investments from across the globe

The food industry in India has, in the last few years, seen a lot of foreign investment. The Department of Industrial Policies and Promotion (DIPP) states that India received around USD 7.54 billion FDI from April 2000 to March 2017. The CII has predicted that the food processing sector has the potential to attract around USD 33 billion FDI in the next ten years and also generate nine million person-days of employment.

To name a few giant investments in the industry:

  1. Amazon, the global e-commerce giant, has plans to diversify its business by entering the Indian food retailing market and invest around USD 515 million in the next five years.
  2. Parle Agro Pvt Ltd has kept its target to achieve an annual target of Rs. 5,000 crore by 2018, and to do so have launched new products like Frooti Fizz.
  3. US-based Cargill Inc aims to grow its branded consumer business in India by two times by 2020.
  4. Uber Technologies Inc has entered the food delivery service with its brand UberEATS.

Steps by Government

The Indian government has taken steps to boost the food industry by allowing the Indian food manufacturers to sell its products manufactured in India through wholesale and/or retail, including through e-commerce without the government’s prior approval. The Food Safety and Standards Authority of India (FSSAI) has plans to invest USD 72.3 million to strengthen the food testing infrastructure in India. It has plans to upgrade its existing 59 food testing laboratories and set up 62 new mobile testing labs. These are just a few steps by the Indian government which will boost the food industry in India by 2018 to reach the desired value of USD 65.4 billion.

Additional Factors

Cultivation

India is ranked at 15th in the list of top 20 exporters of agricultural products, worldwide. The agricultural exports grew at CAGR of 16.45% and reached from USD 11.3 billion in FY 2010 to USD 38.21 billion in FY 2018.

The agricultural ministry has been allocated USD 8.9 billion in the Union Budget 2018-19. In FY 2018, it is expected that the Gross Value Added (GVA) by the agriculture, forestry, and fishing will grow to USD 274.23 billion.

Image – IBEF.org

Agri-logistics

The Indian warehousing market is growing at a CAGR of 9% and is estimated to touch USD 1.5 Billion. A significant part of it, around 85%, is being used for food grains. In addition to it, due to the Indian government’s emphasis on the “Make in India”, the domestic production has sped up and is creating opportunities for the logistics industry in the country.

Distribution

The Indian market has 68% rural population, which is being fed by a strong and deep distribution network by companies like Parle. Parle, the biscuits giant of India has one of the largest distribution networks which comprises of 4.5 million outlets across India.

Important Changing Trends in the Indian market

According to the above facts and figures, the food industry in India promises an encouraging 2018 and the following decisive changing trends in the Indian market confirms the same.

A. Customer’s changing consumption trends

A fast-paced lifestyle, hectic working environment, drastically changing work-life balance, and occurrence of lifestyle diseases like diabetes has changed the scenario of the “Consumer Health market”. Technology has enhanced consumer awareness and people are looking for healthier alternatives when it comes to food so as to include nutrition in their daily consumption. The estimated current worth of the Indian consumer health market is USD 4.8 billion and has numerous new categories like- dietary supplements, weight management, Probiotics, Sports energy, and many more.

Moreover, they prefer items which are convenient, on the go consumption packs like- sachets, ready to drink items, food delivered in disposables, and ready to eat items. They prefer staying “digitally active”, which means their digital presence has enhanced the “online grocery and packaged food shopping industry” as a result of increased options such as online food ordering formats and online payment gateways. The trend of staying “live and active” on social platforms, blogging, and discussion forums has also helped the food industry in India grow at a rapid pace.

Takeaway

With improving supply chain models, the Make in India initiative, organizing the food industry in India, and implementation of encouraging government policies like, SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters), and FSSAI regulations will certainly impact the Indian food industry in a positive way to strengthen it.

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Author
Ekta Shah is a part of the content & marketing team at the deAsra Foundation. deAsra Foundation is a not for profit organization that aims to enable entrepreneurs to start, manage and grow their businesses. Entrepreneurs often face challenges getting enough support, training and guidance on a continuous basis. deAsra supports aspiring or existing entrepreneurs on their journey with a broad array of support services. deAsra has published an all inclusive guide for food entrepreneurs. Find it here.

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