Food Retailers and Industry Partners met at FOOD FORUM INDIA in Mumbai to discuss the Growth Opportunities in the Indian Food Market --

In the continuing global environment of a serious liquidity crunch and slumping demand, India's food sector remains sturdy and resilient, thanks to differentiation and innovation in the country's food retail sector. At Food Forum India on 19th and 20th March 2009 grocery retail and HoReCa segments – both of which were represented well through India's largest grocery chains and most popular food service brands – displayed significant promise. In India expenditures in food retail continue to increase. But it is time to concentrate on creating more added value by investments and innovation in technologies, processing and logistics.

Ireena Vittal, Principal, McKinsey & Co, emphasized in her inaugural speech the importance of food and food shopping for Indians and the checkless increase of turnover in the food retail business by the increasing purchasing power of the growing middle class (206 million households with an average of 5.4 persons with a larger chunk in the aspiring segment). The per-capita-expenditure on food is expected to double in absolute terms, even if it will shrink to 25 per cent of the total expenditures in 2025 (to compare: in the US 11 per cent). According to Vittal, food is still at the top of a consumer's mind in India. "Food shopping behavior in the country is evolving and it is only in India that people enjoy shopping for food. People are experimenting with different formats for their food shopping. However, the local stores remain the key“. 50 per cent of the Indian women enjoy food shopping; only Chinese can keep pace with this 40 per cent fun. On an average Indians have five food shopping tours a week and that too mainly on foot (55 per cent), preferably in shops within a walking distance of 15 minutes. People do not only shop with an intention of saving money (this is natural as 42 per cent of monthly expenditure is on food shopping), 82 per cent preferably visit shops with the biggest range available, irrespective of whether it is affordable or not. Another interesting fact highlighted by Vittal was to do with the craze for 'foreign' brands and what is more interesting is the lack of knowledge to actually distinguish a 'foreign' brand. She said, “In India anything that sounds 'English' is considered as an international brand. In terms of preference, Indians prefer private labels and also like 'fresh foods' and the definition of 'fresh' is that it can be touched and smelt”, suspecting the retailer to sell spoilt goods with the packaging. 90 per cent of the Indians prefer to cook with fresh food at home (only Mexico with 60 per cent approaches this extremely high figure). Vittal concluded that investments in technologies are indispensable, that's where money in food retail is made, not with the branding. With better production systems, for instance in the dairy sector, 70 percent higher growth rates could be reached, the gap between offer and demand being much too high. By the way, India is already the biggest dairy producer in the world with 8,050 tons. Also within the scope of fresh food, dairy products account for the biggest part.

Opportunities for Premium Food and Foreign Brands

With names like Sadashiv Nayak, president, Big Bazaar & Food Bazaar, K Radhakrishnan, CEO, Reliance Hypermarkets, Sumit Saran, director, SCS group, Ajaay Gupta, MD, Capital Foods, AD Singh, Director, Olive Bar & Kitchen, the first day of India's largest food congregation Food Forum India 2009 discussed the scope for premium food in the country along with the entry of foreign brands in India, future of restaurants business and scaling up small ventures in the food industry.
Industry leaders gave an optimistic overview of the food business in India. Elaborating consuming habits of Indians, K Radhakrishnan, CEO, Reliance Hypermarket observed, “India is a country of varied tastes and preferences. Hence, for any food brand to survive in a diverse market like ours, it's imperative that it customizes its products to suit Indian eating habits.” Solid market research as well as adaptation in terms of quality and product presentation is a must for foreign brands. As an example he mentioned Wal-Mart offering a 100gr pack for rice, where 20 kg sacks are required.
During the discussion on scope for premium foods in India, Sunil Sankalecha, CEO, Nuts & Spice commented, “Product positioning is very important for marketing premium brands in India. Premium products require specialized retail chains or niche stores and it's important to bring out the exclusivity of the product.” On the other hand successful marketing in the supermarket is not conceivable without good Category Management. The panel passionately discussed the question whether it is even possible for premium-products and foreign products to reach a mass market. Are they per se a niche product or only because of their high prices due to import duties do they command a premium price? Fact is that retailers can earn much more on the higher margins of premium-products. Since the large retail chains find it more lucrative to stock fast moving, mass products, it leaves a clear space for the retailers dealing in niche and specialized products as for instance the „Gourmet Food Bazaar“ in the Select City-Walk in New Delhi, „Spencer's“ retail with their shop-in-shop solutions, “Bon Appetit“ in Pondicherry or the „Navdanya“-chain, selling more than 100 organic products from 200,000 farmers. However, according to Technopak consultants, it will take some time until these concepts will proliferate and become profitable. These shops are smaller and have to be well adapted to their target group, the young and educated shoppers.
Meanwhile many new concepts are penetrating the fast food sector in India. For example with Amit Burman, franchisee of Subway in India and Vice chairman of Dabur India, who will open a new restaurant chain which could be considered the “Indian McDonalds”. He informed the delegates of Food Forum India that his company Lite Bite Foods Pvt Ltd has plans to invest Rs 2 billion in the next three years to establish a pan-India network of around 200 restaurants. The Delhi-based company, which runs brands such as Food Union, Fresco, Baker Street and Pino's Pasta Pizza, will be rolling out 20 food and beverage outlets next year in the northern part of the country. Currently, the company has 38 outlets.

Challenges of the Fresh Food Market

Vinod Sawhny, President & COO of Bharti Retail, estimates the growth in Indian retail at 10-15 per cent in 2009 and spoke about the challenges of the freshness-market, with a perspective on Contract Farming and the insufficient infrastructure (Cold chain). Still 30 per cent food wastage in the supply chain and the annual occupancy of the warehouses is only 72 per cent. There are only 5.100 cold stores in India, with only 3 per cent annual capacity addition, which are furthermore very improperly distributed in the different states (6 states have 63 per cent of the all-India capacities). The Indian logistics costs are worldwide the highest with 13 per cent (in Europe: 10 per cent), the processing degree of food is at 2 per cent (USA: 80 per cent).
Sanjay Sethi of Technopak concluded on the 2nd day of the conference in the panel about „Food Infrastructure" and its difficulties, that the organized retailer does not look at the backend sufficiently before he invests in the frontend, and that the dialog between the government that still administers parts of the cool logistics, and the private sector must be taken up. Three to seven billion Euros are supposed to be invested in this sector between 2011 and 2015. N Srinivas, Technical Director, Lloyd Insulation, resumed: “Creating the unbroken cold chain is the dream everyone cherishes.”
Kishore Biyani, founder and CEO of Future Group, came on stage at the end of the second day of Food Forum India to confront the questions of the plenum eager to hear some survival recipes from a successful example in a period of slowdown, which has already taken casualties in the form of big retail chains like Subhiksha. But Biyani maintained a low profile and further said that the effects of ongoing economic meltdown are a healthy period since correction of whatever was in excess was not getting rectified otherwise. According to Biyani, food retailing is one of the safest businesses as long as the costs are kept under control. Also private labels can be a promising business, which the Future Group itself is going to strengthen in the fields of beauty, men's grooming products and ready-to-eat foods. Biyani finally appealed, “Increase wants, create needs and consumption. So far India has only been consuming daily needs. It is time to create more needs. “

Coca Cola GOLDEN SPOON AWARDS 2009

At Food Forum India the competing market leaders presented themselves in harmony, sitting next to each other in many of the panels, and so it is not surprising that two of the biggest competitors of the beverage sector supportedboth the event: PepsiCo as the beverage partner, Coca Cola as the sponsor of the Coca Cola GOLDEN SPOON AWARDS 2009. In a glittering ambience the Awards honored the forerunners of the Indian Food Business in 13 different categories, namely: Haldiram's (category „Most admired F&B retailer of the year“, Quick Service Restaurant (QSR) Indian origin), Pizza Hut ( „Most admired F&B retailer of the year – QSR, foreign origin), Café Coffee Day (Most admired F&B retailer of the year – cafes & parlours), Mainland China (“Most admired F&B retailer of the year – dine-in, Indian origin), Sagar Ratna (“Most admired F&B retailer of the year – value”), Olive Bar and Kitchen (“Most admired restaurant of the year – premium”), Blue Foods (“Most admired restaurant group of the year”), Spencers (“Most admired F&G retailer of the year – convenience/express format”), Food Bazaar (“Most admired F&G retailer of the year – large format”), Spoon (“Most admired food court of the year”), Gourmet City (“Most admired food retailer of the year – innovative retail concept”), Q Mart: “Most admired progressive food retailer of the year”), Amit Burman, Vice Chairman, Dabur India (“Most admired food professional of the year – food & beverage services”), Sadashiv Nayak, President, Food Bazaar (“Most admired food professional of the year – F&G retail”).

The Food Forum India gathered once again the Who’s Who of the Indian Food-Retail-community and had top-class partners such as the MOFPI (Ministry of Food Processing Industries), APEDA (Agricultural and Processed Food Products Export Development Authority) and the Global Cold Chain Alliance. In the exhibition accompanying the conference representatives of repute were PepsiCo, Coca Cola, Oracle, Dabur Lite Bite, Cadbury, while Wanzl (D) and JosdeVries (NL) were the foreign participants. Bäro Lighting from Germany who was present as an event delegate to evaluate the needs of energy efficient lighting remarked: „Thanks to Food Forum India we succeeded in getting a quite a good first impression of Indian food retail within two cost-efficient days only. The first contacts to the most important food retailers were established on the event. Indians always have an open ear for operating."

The next Food Forum India will come back in March 2010. The event is an excellent occasion for all international enterprises in the food sector to attain a quick and concise insight into the Indian food retail market and to get in touch with relevant market participants directly and personally. See more information, pictures and videos on www.foodforumindia.com.

Two more top events in the Indian retail sector, organized by Images Group, are coming up: on 29th/20th May 2009 India Shopping Centre Forum and on 16th/17th September 2009 India Retail Forum, both in Mumbai, Renaissance Hotel.

Images Group, established in 1992 in Delhi, specializes in the publication of trade magazines and yearbooks, in retail intelligence, online portal services and in the organization of conferences and exhibitions in the retail sector. For more details please see: ww.imagesgroup.in and www.foodforumindia.com.

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