Blog: Dean BestOptimism over India; Unilever upbeat on costs

Dean Best | 12 May 2008

India is a market - and an economy - in flux.

As the country's growing middle class drives growth of 9% a year, India still faces challenges in transport, distribution and infrastructure, as well as swathes of red tape.

Nevertheless, for all these problems, the message last week from India's food industry rang out loud and clear: this is a country - and a sector - with huge potential.

Last week, food industry executives from around the world travelled to the Indian city of Mumbai for the Food Forum India 2008 conference. just-food was there too, reporting from an event that was upbeat and confident about the changes taking place in the market.

The heady atmosphere even led one top retail executive to claim that India could act as a "trailblazer" for the global food industry. The promise of food retailing in India is tangible; the sector is valued at US$350bn and is growing in the high double-digits each year.

However, investing in India remains fraught with problems. From the lack of modern agriculture and inadequate distribution, to fierce local opposition against the growth of organised food retail, challenges abound. While India is seen as providing all the answers to food manufacturers and retailers suffering in stagnant Western markets, the industry would do well to remember that lots of unanswered questions remain, too.

Elsewhere last week, some claimed to have found the answers to one of the burning issues facing the industry - soaring commodity costs.

Unilever's first-quarter results suggest the Anglo-Dutch conglomerate is proving adept in managing its costs. Cost savings and success in convincing retailers to push through higher prices boosted profits, Unilever said. The company insisted the strength of its brand portfolio is helping in the battle to win higher prices from retailers. Unilever's product roster is robust but the company is still taking no chances, with speculation emerging over the future of its Bertolli brand.

Alas, not all food manufacturers are finding it easy. US poultry giant Pilgrim's Pride again pointed the finger at Washington's biofuels policy for its rising corn bill and recent financial woes.

It's likely more tales of financial anguish will be heard throughout the food industry in the weeks ahead.


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