Growth in food processing is focus at FICCI summit
Manisha Gupta of CNBC-TV18 hosted a panel discussion during the 14th edition of FICCI FoodWorld. The confabulations were about the importance of food and health in the post-Covid world. The panellists were Hemant Malik of ITC; Prakash MG of IFF; Swati Dalal of Abbott Nutrition, Angshu Mallick of Adani Wilmar and Prashant Peres of Kellogg. A report by WhatPackaging? magazine
17 Sep 2022 | By Abhay Avadhani
Manisha Gupta (MG): Hemant Malik, what has been the evolution when it comes to food processing as an industry and what have been the key developments?
Hemant Malik (HM): Food processing is a growth category, considering the size of this country, and considering the amount of organised shift that is expected plus the disposable income growth that is expected in the economy. In the recent past, Covid has been a matter of concern for the food industry. Some of the industries were badly impacted, but the food processing industry did a phenomenal job by making sure that packaged food was available.
MG: What is the total growth that we’ve seen? What are the kinds of exports that we are looking at?
HM: According to the BCG report, the export number has increased from 14 to 20%. So, there is growth. When Nielsen talks about 10% growth in the FMCG section, the focus is on price, not volume. Export is important. There are some recent export restrictions that have been introduced. This is going to be a little bit of a challenge. There are a lot of export incentives which will help in building the brand India.
MG: Angshu Malik, the oil prices, the supply chain, Russia-Ukraine conflict and the things that have transpired in the international markets have impacted you. How have the last couple of years been for you and how do you look at the industry?
Angshu Mallick (AM): The unevenness in prices creates a lot of challenges in risk management and how one handles that is important. In the last one year, we have seen the highest price of edible oil. Almost 70% of edible oil is branded, thanks to large players who have put in technology and plants. But if you look at the other staples, it is not exactly like that. In India, we have the world's largest refining edible oil for single brands in the world.
MG: What about the growth of edible oils in food?
AM: The growth of edible oil in foods is much less, but because of few brands and companies, the growth is higher. These products are consumed on a daily basis and are meant to be hygienic. This can be achieved by making the primary processing strong. Even if the secondary and tertiary processing is done better, it will go to waste if the primary processing is not good. As an organisation we have enough opportunity to work on the primary processing and we feel the need for such good brands in days to come.
MG: Swati Dalal, so much has been talked about during Covid, especially when it was about health and nutrition. People were seeking health benefits in every food item that they ate. How has that changed the market for you?
Swati Dalal (SD): If you look at nutrition, it is actually fundamental to health. And every Indian has a right to nutrition in the same way as you have the right to education. A recent study showed that almost 4% of people were concerned about their families.
MG: Prakash, are consumers aware of sustainability now since it has been the buzzword for the last couple of years?
Prakash MG (PM): We are just in the beginning phase. Today, organisations are looking at sustainability from a manufacturing cost point of view rather than the macro stuff of sustainability. Today, brands are more concerned about how they can make their products affordable for the customers. Sustainability in that context means that affordability is given more importance than sustainability.
MG: What about the consumers?
PM: Today, consumers are not looking at the products to get more vitamins and minerals, but rather products that differentiate them from the less bad ones. That is the starting phase. Combined with affordability and the health aspect, food should also taste good. So, the challenge is to bring these three things together to unlock the greater potential.
MG: And how is that happening? Are there studies being done and where have we reached on that yet?
PM: There are studies on sustainability, health and experience but it is a known fact that people are aware about healthy stuff. Almost 70 to 80% of food brands speak about the benefits of fibre, vitamins or minerals. I think that this is the way forward. Every brand has to speak about the benefits that it can give and that benefit needs to be associated with the brand.
MG: Prashant Peres, during the Covid months and even prior to that, we have seen a particular growth continuing into this phase; people are becoming more health conscious. They're watching out for fibre, minerals or vitamins. How has the industry grown for you?
Prashant Peres (PP): I think the industry has definitely taken off during Covid time. We have seen penetration grow, which is the most important thing in a category. So Covid has helped, but many people have said and the report said it as well that the reasons behind today’s healthy habits are two things; higher awareness of nutrition and nourishment than ever before. But equally there's a need for convenience that is coming.
Getting this combination right is going to be critical because people will not compromise taste when it comes to nutrition. So, a lot of work happening from our side is to get this right combination. Our top-end products could sell anywhere in the world. The question is, do we have the brand image of India as made in India? And do we have the scale in manufacturing and cost therefore, to actually make that happen? We are right up there in terms of product development innovation. The next phase is going to be cracking it in terms of manufacturing.
MG: And what is stopping you from doing that and are the things in place?
PP: I think one is that investment is not constrained at all. The two other things that come into play one is can you build a scalable business? The second is how do you build ecosystems and partnerships …
MG: How can this be achieved?
PP: You have to get an ecosystem starting from farmers. That itself will create a helpful path for converters and so on in the chain. We spoke about taking bold steps. I think we need to have a bold vision. But the steps are going to be very foundational because you've got to build some of these converters, the whole ecosystem ground up and that's what we're being part of.
MG: Do you see those establishments and measures in India?
PP: The establishments are present in India but they're not percolated down to everyone. So, the best practices in terms of farming are not there right across our efficiency.
So, there's a lot of work to be done and a lot can be done in that space, as well as quality because there will be a certain quality standard below which we will not buy. So how do you not only lift up the output, but also the quality of the output and if you can get that combination, It will be a very powerful one.
MG: The concern that we just spoke about is something we've been discussing for a couple of decades now. What has changed in that much time?
PP: I think it's about the partnerships that we're talking about. The private and public partnerships have improved. It's getting into more and more sectors and more spaces. You're seeing this taking root. And once the model comes into play, scaling it up is not a problem. So, the more we, as private players, can be part of that journey, the more you will see this sector take off.