With strong fundamentals to support growth and a sizeable population there can be little doubt that the Indian market offers international food makers significant potential. But, in order to prosper, international companies must adapt their offerings to local tastes. Mini Pant Zachariah reports.
“Partner, promote and persevere” was the mantra of success for international food brands often repeated at the three-day India Food Forum, held in Mumbai.
According to Mohit Khattar, managing director of Godrej Nature’s Basket, India’s high-end branded – and largely imported- food products market already generates sales of around US$500bn a year. International, non-traditional food sales are growing at 13% compared to 5% for unbranded traditional food purchases.
Importers such as Tree of Life, which bring products such as preserves, dips, chocolates and pasta to Indian consumers, reinforce this analysis. Its director Harshita Gandhi said: “We have seen tremendous growth. From 16 cities we have scaled up our operations to 45 cities. We have reduced the number of brands but increased volumes, in some cases by 200%,” she said.
Jehangir D Lawyer, the director of Mumbai-based Fortune Gourmet Specialties Pvt Ltd, another major importer of high-end food products, concurred: “We are witnessing 45 to 60% growth in the categories we trade in.”
Adam Branson, a Mumbai-based senior agriculture attaché, for the United States Department of Agriculture, said that despite challenges, the bulk value of food imports into India from the US had doubled in the last five years. This, he said, was remarkable growth.
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The volume and diversity of such imports is only likely to expand given the growth of online retail, increasingly sophisticated general trade channels and the impact that the hotel, restaurant and café (HORECA) trade has in generating food sales. These relationships can be tapped by branded food retail, speakers told the conference. Alastair Lyon, exports sales manager of UK-based Fayrefield Foods has seen a substantial increase in demand driven by HORECA in the five years he has been exporting cheddar cheese to India. The volumes from modern retail will grow faster once western-style supermarkets increase, he added.
Meanwhile, impulse buys of chocolates, crisps and ready or partly cooked products are growing in a country that broadcasts 845 food shows on various television channels every day, said Khattar. Gaurav Tandon, director of Epicure Frozen Foods and Beverages. Gaurav identified snacking, bakery and dairy as major categories, thanks to Indian consumer demand for sweets and dairy products. With its taste for ghee, cheese and yoghurt drinks (such as lassis), India is globally the largest national consumer of dairy products.
Elsa Fairbanks, director of the UK-based Food and Drinks Export Association, said health and wellness products imported from the UK would increase as Indians became increasingly health conscious.
But, while demand is growing for non-traditional food items, speakers at the event underlined the Indian reality of extremely diverse palates and the need to customise products for widely contrasting tastes of Indian customers.
International food makers often talk about the logistical and infrastraucture contstaints in India. A lack of adequate cold storage infrastructure, poor transport logistics and substandard roads, however, continue to hamper suppliers of international brands. High duties on food and agricultural produce – from an average 40% up to as much as 200% – can also prove a disincentive. “But the biggest challenge is to make our principals understand the complex Indian consumer who is so different from the European or American market,” said Tree of Life’s Gandhi.
Her advice to international brands coming to India: “Select your star product for India, work over it and build it from scratch with time, patience, money and customisation.”
Consultant Rustom Dalal agreed: “Foreigners get carried away by the numbers [of Indian consumers] and affordability. The key is to understand whether they [the customer] have the inclination to buy.”
“India is not Singapore, Dubai or Hong Kong. Whatever you produce, 99% of times, we have an Indian substitute – good, bad or ugly,” said Sumit Saran, head of international food business at retailer Future Group. He added that in the price-conscious Indian market, value was still critical.
Since India is the second most populous country in the world but only the 12th largest food consumer, there is tremendous scope for growth, he said. Though there are some outlets – such as Godrej Nature’s Basket and Foodhall of the Future Group – for niche products, Saran said that international brands should take advantage of the current climate by bringing premium products to mass markets.
“Create bridges to luxury that the aspirational, young population with disposable incomes has a tendency to pick up,” he suggested.
One smart move is to manufacture products in India by tapping into the help that is available for companies through the Indian government’s Make in India programme. Saran said that companies, especially small-and-medium-sized ones, should look at this option. He stressed that world class manufacturing facilities are available- such the Future Group plant, based at a food industry park near Bangalore.
Joint ventures are another option for international firms hoping to tap the Indian market. For instance Rajasthan-based pasta maker Gustora Foods Pvt Ltd – jointly promoted by pasta maker Rustichella d’Abruzzo, of Italy, and the Goyal Group, of India, traditionally an energy-focused firm.
Ultimately, it is often best to tap Indian tastes by using India-based manufacturers – products that fit the market might not be available overseas. For instance, Chander Dudeja, an exporter based in Dubai, noted he has decided to set up a plant to make pizza and pasta sauces in India. The facility, which has not yet entered the construction phase, will likely be located in Gujarat, Dudeja revealed.. In a country that demands vegetarian mayonnaise, the key is to customise to Indian taste and need, said Dudeja.
This article is part of just-food’s in-depth series examining the potential of the Indian food sector and the crucial question of how to grow your sales in the market. To view our related coverage, click here.