“Helping southern U.S. companies export food & agricultural products around the world.” 5AS55 India Initiative

General Economy With a population of 1.25 billion, India is the second most populous country in the world. India is also one of the youngest countries in the world with a median age of 25yrs. Nearly 60% of Indians are under the age of 30. All imported foods are gaining popularity not only in the higher income consumers but also but also the middle income categories due to increased awareness & urbanization. “Helping southern U.S. companies export food & agricultural products around the world.”

“Helping southern U.S. companies export food & agricultural products around the world.”  India is the third largest over trillion dollar in the economy.  It’s the 5 th largest retail market in the world.  Indian Retail Industry is about US $600 billion.  It is estimated to be worth US $ 1.3 Trillion by 2020  The food & Grocery constitute 60% of Indian Retail Market.  The imports in accounted to be US $ 3.2 billion with a 20% year over year growth. The Indian Retail Market

Opportunities for US Exporters  Growing consumer base with a higher propensity to spend- presents opportunity for all.  Expansion of organized retail frameworks  Growth of consumers in even in smaller towns  Inclining health consciousness and food safety  Opening up of new Gourmet stores like Food Hall and Godrej Natures Basket “Helping southern U.S. companies export food & agricultural products around the world.”

New Trends in The Indian Market Low calorie & low fat products spells growing opportunities. Nuts, Dry Fruits, Fresh Fruits, Pulses & Lentils are an excellent opportunity. Acceptance of packaged & ready to eat food products is increasing, especially amongst younger and middle class consumers. The Indian consumer is willing to try new foods and cuisines. “Helping southern U.S. companies export food & agricultural products around the world.”

Emergence of Modern Retail India’s food retail industry is dominated by thousands of small “Ma & Pa” stores which accounts for 98% of food sales. During the mid- 1990s, there were an estimated 200 modern grocery stores operating in India. These stores were distinguished by their emphasis on a more modern self-service shopping environment that offered a range of products. The emergence of larger chains and stores began around 2005 and the sector has since grown to over 3200 modern retail outlets across India. Many retailers are expanding and opening new stores. “Helping southern U.S. companies export food & agricultural products around the world.”

Internet Retailing & Home Delivery Several internet grocery retailers have launched over the past few years and India’s first e-retailer dedicated to imported foods. Home delivery & takeaways are expected to increase in popularity as consumers are looking for convenient options. “Helping southern U.S. companies export food & agricultural products around the world.”

Private Label These products are a relatively new in India, but a number of large format retailers have launched their own private labels. Retailers have a greater control over the supply chain with their own private labels, minimizing stock-outs. Among the many categories in private labels, staple foods such as packaged rice, cereals and pulses, flour, sugar, breakfast cereals and packaged tea are the most popular categories and find greater acceptance among consumers. For certain specialty items, retailers could turn to foreign private label manufacturers. “Helping southern U.S. companies export food & agricultural products around the world.”

US Exports In the Indian Market Snack Foods Beverages (Fruit juices, alcoholic beverages, & carbonated drinks) Dry fruits and nuts Breakfast cereals Fresh fruits Canned & Frozen Food Preserves, jam, jellies and marmalades Health food products Pasta and noodles Soups, syrups and seasonings Lentils “Helping southern U.S. companies export food & agricultural products around the world.”

Basics for a New Exporter “Helping southern U.S. companies export food & agricultural products around the world.” Middle class booming and is the main target audience. India has ample growth opportunities as mentioned in earlier slides. Changing consumption patterns increasing demand. Important festivals and gifting occasions where the demand booms. Awareness of competitive brands and their offerings. Awareness of labeling requirements and other documentation procedures. Market is price sensitive. Knowledge of products and ingredients whose import is not allowed. Shortlist a suitable trade partner in India. Smaller towns also an opportunity.

Challenges  Competition from countries with closer geographic proximity to India, which enjoy shorter shipping times and low cost freight advantage.  Competition from Domestic Products in terms of pricing.  Competition from products imported via grey market.  Diverse food preferences throughout the country.  Tariffs are usually 30% on imported food products.  Refrigerated warehousing & transportation facilities are limited & costly. “Helping southern U.S. companies export food & agricultural products around the world.”

Entry Strategy India offers one of the largest English-speaking workforces in the world. Although Hindi is India’s leading national language, most Indian officials and business people have an excellent command of English. The best way to begin exporting in India is to identify an importer that imports and distributes food and beverages. These firms are experts at navigating the import and distribution processes and are able to engage directly with India-based food retailers/Hotel & restaurant Sector “Helping southern U.S. companies export food & agricultural products around the world.”

Some retailers are importing directly but only products that they source in large volumes. With time more retailers will likely import more products directly. The following should be considered: Survey existing and potential opportunities by reviewing market reports. Determine if your product has market access in India. Analyze the likely landed post duty cost of a product. “Helping southern U.S. companies export food & agricultural products around the world.”

Establish a relationship with an Indian importer/distributor that provides services to the food retailing sector. Be prepared to start small by shipping a few pallets or cases of a product & recognize that it could take several months before an importer is ready to order full containers. Be willing to meet India specific labeling requirements Build relationships “Helping southern U.S. companies export food & agricultural products around the world.”

Check the potential agent’s reputation through local industry or trade associations, potential clients or bankers. Consider participating in an Indian trade show as it would be an effective means of identifying a distributor. Participation in trade shows offers a good opportunity to get a sense of the Indian market and engage directly with potential importers or distributors. Participation in Inbound & Outbound Missions. Ensuring payment is another important consideration when establishing a relationship with an importer. “Helping southern U.S. companies export food & agricultural products around the world.”

Marketing Strategy  Be different-Unique product; Unique packaging, Unique flavor.  Innovative marketing strategy and product positioning by surveying existing & potential opportunities in the market..  Shelf life should be good.  Reach on the right price.  US Flag on the package increases the brand loyalty.  More health benefits of the product should be highlighted.  Educating the consumer on International recipes and usage of US food products.  Establishing a relationship with an Indian importer/distributor that provides services to the food retailing sector. “Helping southern U.S. companies export food & agricultural products around the world.”

Distribution Structure Market channels for imported food often include several intermediaries. Many importers have their own warehouses, while others may utilize clearing and forwarding agents to facilitate the storage, movement & distribution of goods. Importers/distributors with national distribution typically have sub- offices in regional cities or appoint other distributors to market their products in specific regions. Key importers are located in Mumbai, Delhi, Bengaluru, Hyderabad, Kolkata, Cochin and Chennai, but tend to be concentrated in Delhi & Mumbai “Helping southern U.S. companies export food & agricultural products around the world.”

Market channels in retail sector “Helping southern U.S. companies export food & agricultural products around the world.”

Cost margins of the intermediaries Importers 15-20% (approx.) Distributors % (approx.) Retailers 20% (approx.) Big Retailers % (approx.) “Helping southern U.S. companies export food & agricultural products around the world.”

Import Documentation i) B/L, ii) Invoice iii) Packing List, iv) Certificate of Origin, v) Insurance Certificate vi) Import Permit vii) Phytosanitary Certificate* “Helping southern U.S. companies export food & agricultural products around the world.”

Indicators for Veg & Non Veg Products Items containing Meat or Animal products must be Marked as per labeling norms for domestic sales with help of visual indicators. Vegetarian & Non Vegetarian products must be marked Veg & Non Veg & include respective Color Dots in Green & Brown.

Labeling Requirements. Goods must be labeled at the time of Import. For Labeling of food products Label should be clear and readable The label must be inseparable one Label should carry importer name All ingredients should be mentioned in the label Nutritional information shall be provided All food additives should be declared. Natural Colors, Flavors etc should be declared

Complete address of manufacturer should be mentioned Net Quantity should be mentioned Batch number or any other identification should be available Label to be in English Best Before date should be mentioned Country of Origin if product is imported Instructions of use of the product Mention of the FSSAI License number on the label

Importer/distributor-the key to succeed in the Indian market The US exporter needs to tie up with the importer who in turn ties up with the distributor. The US exporter should work directly with the importer on advance payment basis for the introductory shipments Due diligence of finding a suitable importer. “Helping southern U.S. companies export food & agricultural products around the world.”

Products Juices Nuts Pulses Wines & Spirits Jams Mustards Jellies Snack foods Apples Preserves Dressings Chocolates Salsas Candies Fruits Chips Cookies Mayonnaise Pasta Sauce Non-alcoholic Beverage Ready – to – eat food Cake mixes Pears Canned fruits and vegetables “Helping southern U.S. companies export food & agricultural products around the world.”

Ingredients restricted in India Import of Beef is Prohibited Meats allowed with Sanitary Permits. Import of Poultry is Restricted Phyto-Sanitary Regulations for Agricultural produce needs to be followed. Import of Alcoholic Beverages is Regulated. Food Products must have 60% shelf life.

Industry is worth US$ 21.5 bn and growing at 23.3%. Major cities comprise of large workplace clusters and high density residential areas. 25% of youth prefers hanging out with their friends over other outdoor entertainment activities “Coffee shop” culture has spread throughout major cities and poised for further growth. The Food service industry

 Hotels are increasingly coming out with Gift hampers for festivals and wedding season with US food products.  US imported foods as beverages, packaged food, snack items and nuts finding space in the Mini bars in the rooms of the hotels.  While leading hotels appreciate the excellent reputation of U.S. food products, higher costs are a constraint.

Hotel, Restaurant and Institutional (HRI) Service Sector Status India’s HRI sector is benefiting from India’s relatively strong economic growth, stable political scenario, foreign investment, rising incomes, high aspiration level, a young population and changing consumer consumption patterns. Hotels are able to obtain a special license that enables them to purchase food items duty-free subject to their foreign exchange earnings. “Helping southern U.S. companies export food & agricultural products around the world.”

Indian consumers are eating out more frequently and younger Indians are shedding the biases of their elders against international franchises and foreign foods. It is estimated that Indians spend 8-10% of their food expenditures outside the home in restaurants, cafeterias and other food establishments. As per the India food service report published by the National Restaurant Association of India, the restaurant sector is valued at $48 billion and is expected to grow to $78 billion in the next five years. “Helping southern U.S. companies export food & agricultural products around the world.”

Tourism on the Rise Foreign tourist and business arrivals have nearly tripled over the past decade. The rapid growth of domestic air travel and an improvement in the quality and number of hotels has helped fuel the rise and increase the number of higher income travelers. Foreign and Indian fast food and casual dining chains are increasing in number and existing chains are adding on outlets. Because the Indian consumer is also well travelled, there is a change in the consumption pattern, where the consumer tends to try all types of exotic food cuisines of all over the world. “Helping southern U.S. companies export food & agricultural products around the world.”

Factors Affecting the HRI Sector Chefs working in the HRI sector are keen to introduce new cuisines and culinary practices. The modern segment of HRI sector is striving to match high standards of quality and service. Rising number of working women, increased urbanization and a very young population are all expected to lead to changes. Strong growth in the casual dining and fast food sectors. “Helping southern U.S. companies export food & agricultural products around the world.”

Market Structure Imported fresh produce is generally bought from wholesalers & distributors. Most establishments procure non-perishable items through distributors. Wines and liquors are generally procured through importers, mainly private bonded warehouse operators, as most hotels and restaurants import liquor duty-free against their foreign exchange earning license. “Helping southern U.S. companies export food & agricultural products around the world.”

Mode of import and associated cost margins 10% 20% %

“Helping southern U.S. companies export food & agricultural products around the world.” Retail VS Foodservice DescriptionRetailFood Service OpportunityExcellent with FDI in multibrand retail and changing patterns of the consumer Excellent with greater eating out patterns among consumer and preference for international cuisines and ingredients Value addedPreferredpreferred SeafoodLowPreferred HorticultureLowPreferred Fresh fruits and vegetables Preferred Lentils Steps to enter Preferred Discussed in detail earlier Preferred Discussed in detail earlier Costs associatedDiscussed in detail earlier

 Indian economic and demographic indicators suggest a market with strong potential for U.S. exports.  The growing middle class resulting in higher disposable incomes tends to increase the demand for better quality products  “Exports of U.S. food and agricultural products to continue to grow as Indian customers become more familiar with American products – making this a perfect time for U.S. producers to explore the market” GAIN report, USDA, FAS. Brand US for Indian consumer

Events By Product Category “Helping southern U.S. companies export food & agricultural products around the world.”  Fresh Produce: Fresh Produce India Trade Show : 26 th - 27 th April 2016, Mumbai  Value Added and/or Packaged Products: Annapoorna Trade Show : 22 nd – 24 th September 2016, Mumbai Aahaar Trade Show: 15 th – 19 th March 2016, New Delhi Fine Food India : 3 rd – 5 th December 2016, New Delhi  Wine: Upper Crust- Food & Wine: 1 st Week of December 2016, Mumbai Drink Technology India: 15 th – 17 th December 2016, Mumbai  Pulses Conclave: 17 th – 19 th February 2016, Jaipur

Thanks “Helping southern U.S. companies export food & agricultural products around the world.” SUSTA In Country Consultant – Ms Devna Khanna Director, i2i Consulting Head Office: 10, Sunder Nagar, New Delhi Branch Office: D-18, Nizamuddin East, New Delhi Tel: / Mobile: Website: