1. Veerender Thakur, General Manager
Indian Food Industry
Emerging Market Scenario- Changing Food Basket & Space for Value Addition
PRESENTATION BY
Veerender Thakur, General Manager

2. Indian Food Market

3. Indian Agriculture Second largest arable land in the world
Diverse agro-climatic zones across the country, Round the year sunshine
Potential to cultivate a vast range of agricultural products
Large marketable surpluses and abundant raw material for processing
Vast pool of skilled manpower in research and extension
These advantages being leveraged, for India to be a leading food market in the world

4. The Indian Paradox 4 Yet our share in world food trade is only 1.6 %
We are among the top few producers of many agricultural commodities in the world…
Yet our share in world food trade is only 1.6 %
The post-harvest losses of fruits and vegetables are estimated to be 25 to 40 %, amounting to more than Rs. 30,000 crores…
Yet less than 2 % is processed !
We have a middle class of million people with adequate purchasing power to buy manufactured goods…
Yet value addition to agricultural products is less than 7%
More than 220 million tonnes of food grains production…
Yet more than 130 million people go to bed hungry every day ! 4
3/27/2017

5. Low Value Addition 5 Agriculture
Comparison of value added in agriculture and food processing*
Food processing
Per cent
India
Brazil
Thailand
New Zealand
33875
USA 5
Source: Indiainfoline; Bloomberg 5

6. Adding Price Without Adding Value !
Total mark-up in the chain
Total margin to 75 %
Margin from farmers to
wholesaler %
Wastage %
Transportation % approx.
Consumer
Retailer
Sub-Wholesaler
Wholesaler
Market level commission agent
Consolidator/village level trader
Small / marginal farmer
< 25%
< 6%
< 10%
< 8% 6

7. What we need…
Transition of Indian agriculture from a “Low input-Low output” farming system to a “High input – High output” system
Increase Value Addition
Cut costs by efficient Logistics Management
Provide Consumer Satisfaction by giving him value at a price he can afford
Be Internationally Competitive 7

8. Food Processing - Current Scenario

9. Indian Food Processing Industry -Trends
The Food Processing industry currently valued at about US$ 100 billion & is estimated to grow at 9-12 per cent, basis estimated GDP growth rate of >8 per cent and increasing disposable income
Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025
Fruit & vegetable processing, which is currently around 2 per cent of total production will increase to 25 per cent by 2025
All these developments will need extensive logistics, quality storage and transportation

10. Growth Trends for Major Food Products

11. Number of Food Processing Units in Organized Sector
Fruit & Vegetables Processing Units
5293
Fish Processing Units
568 (+482 Cold Storage cum icing Units)
Meat Processing Units
171
Milk Products Processing Units
266
Flour Mills
516
The industry is estimated to grow at 9-12 per cent, on the strength of 8% GDP growth during last 5 years

12. Food Processing Industry : Market Size & Growth Matrix

13. Indian Food Processing Industry -Trends
Expanding the market and new channels : Regional to national foot print ( Sudha dairy, Bihar), Rural marketing (HUL), Franchisee model (APDDCF, Andhra dairy)
International players : Entry of International players in food processing and value added services - Del Monte, Walmart, Carrefour
New & Innovative Products: Pepsico’s Nimbooz, Aliva snacks, Minute maid from Coca cola, Maggi Ataa Noodles
Strengthening of linkages :
Development of back end - Contract farming, investment in modern storage
Emergence of third party logistics

14. Industry Growth Drivers
Rise in disposable incomes
Changing Lifestyles and Aspirations
Increasing penetration of organised retail and branded food products
Increase in demand for Functional Foods
Increasing Nuclear Families and Working Women
Increasing spends on health foods
Govt policies and incentives for the food processing industry

15. The emerging Segments Frozen foods RTC & RTE food products
Frozen vegetables
Poultry
Meat and Fish products
RTC & RTE food products
Convenience foods segment
Breakfast cereals & Health foods
Organic

16. Opportunity for Cold Chain
Frozen Food Industry -
Opportunity for Cold Chain

17. High Volume High Volume Chilled High Volume Frozen
Fresh Fruit (Apple, Pears, Grapes) - 1 MMT annual growth 5%
Fresh Vegetables (Off season produce) – 1 MMT annual growth15%
Potato 12 million MT
Packaged milk estimated 12 – 15 % of Annual production of 105 million tons annual growth 5%
Milk 15% of production annual growth 10%
Yoghurt & Butter 50,000 MT
Meat & Seafood 0.5 MMT
High Volume Frozen
Frozen Meat, Poultry & Seafood– 539,000 MT
annual growth 5%
Ice-cream 200 million litres annual growth 12-15%
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18. Medium & Low Volume Medium volume
Imported Fresh Produce – 80,000 MT annual growth 10%
Frozen Vegetables – 40,000 MT annual growth 20%
Cheese 10,000 MT annual growth 10%
French Fries –10000 MT annual growth 15%
Chocolates – 5,000 MT, Dough – 20,000 MT
Floriculture 24 million stems
Low Volume
Pharmaceuticals
Vaccines
Photographic Film
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19. Status of Cold Chain in India
Commodity
Production
(million MT)
Volume moving through CC (mill MT)
Reefer Trucks
Cold Storage (Million MT)
Milk
105
N A
20,000*
0.07
Meat & Poultry
6.5
5.39
5000
Fisheries
6.1
Fresh F & V
188
Potato
34.4
18.2
* Includes insulated vehicles

20. Refrigeration Market In India Segments
Geographical Distribution
Cold Chain Market by Products

21. Service Trends in Logistics
Most companies forced to establish own logistics as reliable service providers not available
Services Outsourcing
95% Transportation including refrigerated is outsourced

22. Size of Monthly Transportation Outsourced by Major FMCG Companies

23. Trends in CCM Logistics Outsourcing
Integrated service providers
End users and organized retailing prefer integrated service providers. For ex: Baskin Robbins, McDonalds, Walmart
FMCG companies, who needs to cover large geographical areas are more dependent on large number of small service providers and Clearing and Forwarding Agents due to interstate taxation
Another reason for not outsourcing to integrated service providers is due to policy of pushing products and collecting the money by sales personnel of brand owner.

24. Satisfaction with Service Providers
Most FMCG companies are not happy with their transport service providers
Intention to Switch
Only 36% users are dissatisfied but 43% are willing to change their service providers indicating tremendous latent demand mainly due to Non availability of services during peak period Lack of choice

25. Product Movement Fresh Fruit & Vegetables Frozen Fruit & Vegetables
Temperate (Apples & Pears) from North to countrywide
Grapes from Mid West to countrywide mainly North
Banana from West to North
Vegetables from concentrated pockets of production criss cross
Small and big traders drive business
Frozen Fruit & Vegetables
Peas are shipped from North countrywide
Other vegetables are shipped similarly
French Fries enter via Mumbai and are shipped to metros mainly
Players include Safal, Chambal, McCain, Vadilal, Sumeru, Al Kabeer
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26. Product Movement Fish & Seafoods
Meat & Poultry
Meat Export is major commodity group, move from Delhi to Mumbai in large quantity ( MT)
Local distribution movement, for instance, to Punjab from Rajasthan
Poultry has both regional and national movement on demand supply equation
Fish & Seafoods
Exporters use own stores and trucks for economy
Movement from coast to hinterland
Andhra ships seafood & fish countrywide
Gujarat ships seafood to the North
Local traders
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27. Product movement Chocolates & Other (RTC RTE)
Shipped nationally by Cadburys, Amul, Nestle
Pharma & Vaccines
Concentration of industry in Gujarat, Maharashtra, Andhra Pradesh, Himachal Pradesh
Shipped nationally
Films
Kodak, Fuji
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28. Players include Walls, Vadilal, Mother Dairy
Product Movement
Chilled Dairy Products
Countrywide milk plants ship milk, curd, paneer, flavored milks
Butter is shipped nationally
Cheese is shipped nationally
Players include Brittania, Amul, LeBon, Mother Dairy, Heritage, Aavin, Vijaya, Verka, Vita, Nestle
Ice-cream
Works on mainly 250 – 300 km plant radius
Only Amul & Baskin Robbins ship pan India
Players include Walls, Vadilal, Mother Dairy
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29. Movement Routes of Snowman

30. Value Added Services - Cold Chain
About % of food passes through cold chain and segment is growing at 15-20% annually
Main products are: Dairy Products (ice cream, butter, cheese, paneer); Fresh and Frozen F&V; Meat & Poultry; Fish & Marine products; Confectionary and Chocolates
Opportunities for primary and secondary distribution. Hubs at strategic location will facilitate city distribution
Also caters to other sectors like pharma, photo films etc.

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