Despite the remaining scepticism of some consumers, the ready-to-eat food sector in India has shown promising growth in the last year, and further growth is expected. But the market still has several challenges to overcome, as Debasish Ganguly reports.
The processed food sector in India is heading towards a ready-to-eat revolution. Grocery stores are unveiling, almost on a monthly basis, new convenience food products, with a startling range of heat-and-eat foodstuffs, sauces, pastes and potions. A straw poll among users, mostly homemakers, revealed that now even those who keep a good table, and pride themselves on their cooking skills, are willing to look at ready-to-eat options. As double-income nuclear families become the norm in urban India, many have started eyeing the ready-to-eat (RTE) foods sector.
Up until a few years back, the RTE foods market had not really provided any options beyond the Cup-O-Noodles produced by Indo-Nissin. A Pune-based company, Tasty Bite, that began operating back in 1987, was the first player in this market. They did not make much headway at that time and withdrew the products a year later as the consumer mindset had not shifted from home-cooked food. The company was taken over and restructured by a US multinational in 1998 to come back into the market. The most successful company in this category today is South–based MTR Foods, with its MTR range of RTE meals. Other companies in the category include Currie Classik of Nasik, Kohinoor from Satnam Overseas, Kitchens of India from ITC, and Amul from GCMMF.
The total branded market for RTE foods is currently estimated at Rs500m (US$10.8m) and is expected to touch Rs3.0bn in three years’ time. However, the market has only recently undergone a transformation after two or three years of slow growth. The increase in demand of RTE foods also correlates with the growth of supermarkets and other specialised retail chains like Food World and Nilgiris.
Shelf life problems
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By GlobalDataA common element across all the current brands in the market today is that most of them produce vegetarian meals, the only exception being ‘Kitchens of India’ from ITC that has two non-vegetarian meals. Ensuring that the meat product does not spoil is difficult as the use of current popular sterilisation methods are not ideal for meat.
Today, almost all companies in this business claim to be using “Retort Technology” developed by Defence Food Research Laboratory (DRFL), in Mysore in the southern part of India. The process involves sealing fresh hot food in four-layered pouches, sterilising the content using temperatures close to 120 degrees Celsius for 20 minutes and then cooling them. This curbs the bacterial growth with the food remaining fit for consumption with a shelf life of two to three years from the date of manufacturing, without use of any preservatives. However, most companies give “best before dates” of a year from manufacture.
Companies are required by law to maintain separate production lines of vegetarian and non-vegetarian items and pay a higher excise tax for the latter.
The prices of most brands in this segment range from Rs25 to Rs40 for a typical 285g dish. The Kohinoor rice and spice brand, from Delhi based Satnam Overseas, is priced at Rs46 to Rs49 (depending on which part of the country it is sold in) for 300g. The ‘Kitchens of India’ range from ITC comes in a tin pack, and is priced much higher than the rest, ranging from Rs110 to Rs150 for 450g. This brand also finds its way to homes overseas, where it is mainly sent as a gift item. Purchases for overseas travel constitute almost 10% of sales in this category.
A lack of variety?
Another characteristic of the RTE segment is the similarity in the menu. Despite what the various manufacturers say, there does not seem to be much product differentiation. The focus of all is on how convenient it is to buy these products, heat them and eat them. Almost all brands contain the staple Palak Paneer (cheese-based dishes), Rajma masala (kidney beans), Aloo mutter (potato & green peas), Dal makhani (pulses prepared in butter), Navrattan Korma (fruits and vegetables mixed together) and Chana dal (dish made using hulled, split chickpeas).
However, all the players in this sector insist they are all different, for example: “our prices are higher because we use the best spices and other ingredients,” claims Satnam Overseas. MTR claims that while south Indian cuisine is their forte, they have tied with well known culinary expert Jiggs Kalra for North Indian recipes. All the major players plan to include Eastern and Western cuisine in their menu lists as well. Tasty Bite has plans to introduce Thai curries in the Far Eastern market. The company plans to test market the same in India.
While efforts to expand the market reach and variety of RTE products continue, there remain a few hurdles, such as making foods shelf stable to combat the lack of an effective cold chain infrastructure in India. Since technology and packaging costs are high, all the current players, instead of being present in few, mainly metropolitan markets, need to look at expanding their reach in cities with a population of over one million, which will help bring down prices indirectly.
Some of the major players and their focus areas and plans:
| Name of company | Brand | Focus and plans |
| MTR Foods | MTR | Has 21 varieties of curries and other rice delicacies. Also makes ground spices and premixed foods. Recently introduced Frozen Dhosas (a south Indian snack food) |
| Tasty Bites | Tasty Bite | Mostly an export driven company with limited presence in the domestic market. Currently has 6-7 varieties of curries |
| ITC Foods Ltd. | Kitchens of India | Presently have 4 varieties, of which 2 are non-vegetarian items. Besides this the company has a presence in staple foods, confectionery and snacks. Plans to add more Indian curries (Eastern and Western) to its RTE range |
| Satnam Overseas | Kohinoor | Presently focusing only in Northern India with sweet dishes like carrot and sooji halwas, and also curries like Paneer curries, Pav bhaji curry etc. It has 19 different products in its heat-and-eat range at present. Projects an increase to 30 varieties by the beginning of 2005 |
| Haldiram Manufacturing Co. Ltd. | Haldiram | One of the largest manufacturers of savoury snacks. It has recently ventured into the RTE segment with Paneer curries, Dal and also some rice dishes |
MTR foods is the largest player in this emerging market with a near 65% share. The rest of the market is made up of Satnam Overseas, ITC, Tasty Bites, GCMMF, Haldiram and other local players.
