The World Food Show in November 2017 was huge. Food services emerge as a key segment of Indian economy. The Indian food services market in India (organised and unorganised) is estimated at Rs 3,37,500-crore in 2017 – and is projected to grow at a CAGR of 10% over the next five years to reach Rs 5,52,000-crore by 2022.
The question to ask is: How is print and packaging readying for this challenge? Does the industry have a plan?
Harsimrat Kaur Badal, announced at the end of the three day World Food India fair in November that USD11.25 billion investments were committed in the country’s food processing sector. She added, with government funds put together, the total investments signed have reached USD18.84 billion.
Later, the minister explained during a press briefing that the investments are promised in areas of food processing, beverages, logistics, wholesale and retailing, e-commerce, organic farming among others. Badal said, “The government has inked 50 MoUs. These are not just pieces of papers that we have signed. A lot of homework has gone into it. A lot of work which is going to get done,” she said.
15%-25% of this is dependent on food packaging.
Already international players like Pepsico has 62 manufacturing facilities across India. The state of Tamil Nadu is one of the biggest markets for the company bringing over Rs 1,000 crore in annual retail sales.
Food investments look healthy
PepsiCo, along with its partners, will invest Rs 13,300 crore over five years to set up a food and beverage plant. Coca Cola will put in Rs 11,000 crore for juice bottling infrastructure, fruit processing plants and equipment. Conglomerate ITC and FMCG major Patanjali inked deals with the ministry to invest Rs 10,000 crore each. ITC is looking to set up 20 integrated food processing and logistics facilities.
ITC's CEO Sanjay Puri says the company is proposing to invest Rs 10000 crore in food processing facilities. While speaking to a business channel, he said, "India's consumption market is projected to triple to USD4 trillion by 2025 with the bulk of expenditure going into food products." Much of this investment is in West Bengal. This is a part of the company’s Rs 25,000-crore-investment package that it has planned to invest on 65 projects, including 20 integrated factories for consumer goods across the country.
But at the moment, India is currently only processing 10 per cent of its food, resulting in enormous food waste.
That's right, only 10%.
In its 2015 report, The CSR journal named the United Nations Development Programme as estimating up to 40% of the food produced in India as being wasted. ‘About 21 million tonnes of wheat are wasted in India’, the report states.
In a recent Food and Agriculture Organisation (FAO) study on ‘Save Food’ reported 1.3 billion tonnes of food is being wasted annually in India and China.
This is reflected in India slipping further in the ‘Global Hunger Index’ to 100 this year out of 119 countries and only Pakistan and Afghanistan are lower ranked Asian countries in the list.
An opportunity for packaging converters
Tetra Pak sold more than 188 billion packs in 2016. Since 2010 it has introduced more than 22 packaging formats in many sizes and at different price points to suit the needs of diverse consumer segments in India. The managing director for South Asia Markets, Kandarp Singh, says, “We foresee the introduction of many new categories like ready-to-eat foods and value-added dairy products. We will bring in new technologies in India to cater to the needs of people and continue to evolve with the market. Since 2012 we have added more than 60 customers and we are confident of adding another 100 by 2020.”
India, one of the world's largest producers of food, is also the largest producer of milk and second largest producer of fruits and vegetables. This huge raw material base, paired with a growing 1.3 billion population, presents vast investment and opportunities for the packaging industry.
Arvind Singhal of Technopak Advisors says in his report: Indian Retail has Witnessed Transformation to Papad, Pickle and Pizza. (Published by BusinessWorld)
Singhal has stated in his report, that India will be a USD one trillion retail market by 2020. And food in addition with grocery will be USD 600 billion. Singhal also focussed on how the food service reaches 75 USD trade in this projected one trillion mark.
Presently the food consumption is USD 1320 billion. By 2034 it is expected to be USD 3354 billion. Traditional retail will remain key to food retail in India, said Singhal.
Mumbai and Delhi have a USD 14 billion urban market cluster. Singhal felt, retailers have missed out on an opportunity. With 150 retail outlets perhaps Future retail has accrued some benefits.
Opportunity for print industry
Rupinder Singh Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (Amul), underlined that innovation for the packaging industry is a must for "food to prosper". He was addressing a gathering of packaging professionals at the International Summit for Packaging Industry organised by Indian Institute of Packaging in New Delhi.
Sodhi stressed that consumption is driven by the lower middle class and the bottom of the pyramid consumers. “For the packaging industry to see exponential growth, it is necessary to design packs that will boost consumption in this segment.”
“In the food sector, the industry will grow and the consumer will be satisfied when he gets to buy a product at a reasonable price and the farmer earns good value for their produce. The attempt should be made to reduce the gap between what farmer earns and what the consumer pays.
As Rupinder Singh Sodhi said, "The industry will grow when the producer and the consumer are happy. The innovations in packaging must aim to add value for the producer and for the end-consumer and not just for the manufacturers and suppliers."
(This is the part II of Ramu Ramanathan’s talk on a houseboat in Kochi at the session hosted by All India Federation of Master Printers and the GC members on 4 February 2018)