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Indian Food Processing Industry

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Marketing of Processed Food
[Type the document subtitle]

Sakshi Sethi
Roll no. 53

The food processing Industry in India is of fundamental importance, holding as it does the vital link between agriculture and industry. This industry provides nearly 60 percent of all job opportunities by directly employing around 1.6 million workers. It is the fifth largest industry in the country in terms of production, consumption, export and growth. The worth of the Indian processed foods sector stood at USD 157 billion in FY2012; it is expected to touch USD 255 billion by FY2016 with 13 percent growth rate per annum.
The availability of raw materials, changing lifestyles and relaxation in regulatory policies is fuelling the growth of this industry. India is the highest producer of milk in the world at 90 million tonnes per annum and the third largest producer of fish. With an arable landmass of 184 million hectares, it is the second largest producer of fruits & vegetables and the third largest producer of food grains. It has the largest livestock population as well.
In addition to its large and wide-ranging raw material base, India has a huge consumer base of over one billion people. All these are positive factors that add vigour to the processed foods industry, which holds tremendous opportunities for large investments. With enormous scope for value addition, increase in the consumption of processed food products in India and many fiscal incentives being planned by the government, this sector is poised to maintain the growth momentum in the future. Moreover, the advent of the WTO regime and the possibility of reduced subsidies in developed countries can add to India’s strengths in food production and processing industry.
It is estimated that the food production in India is likely to grow two-fold in the next ten years. Thus, there is ample of opportunities for investments in food and food-processing technologies, equipments, especially in areas of canning, dairy & food-processing, specialty processing, packaging, frozen food and thermo processing, cold chains and in the area of food retail.
Ministry of food processing in its Vision 2015 document has estimated the size of processed food sector to treble, processing level of perishable to increase from 6% to 20%, value addition to increase from 20 % to 35% and India’s share in global food trade to increase from 1.5 % to 3%. The government’s focus towards food processing industry as a priority sector will ensure policies to support investment in this sector and attract more FDI.

Structure of Indian Processed Food Industry
Food-processing industry is significant for India’s development because it has important link and synergy with industry and agriculture, the two main support of the economy.

SOURCE: FAIDA / Ministry of Food Processing Industries
India's food-processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, soya-based products, mineral water, high protein foods etc. The most promising sub-sectors includes- soft-drink bottling, confectionery manufacture, fishing, aquaculture, grain-milling and grain-based products, meat and poultry processing, alcoholic beverages, milk processing, tomato paste, fast food, ready-to-eat breakfast cereals, food additives, flavours etc. Health food and health food supplement is another rapidly rising segment of this industry, which is gaining vast popularity amongst the health conscious.

Food Processing Segments Product-wise Opportunities within Each of the Food Processing Industry Segments- 1. Baked goods-White flour, White rice, Salt, Baking powder ,Bread, Macaroni, Pasta, Cakes, Cake mixes, Pies, Pie crust mixes, Cookies 2. Processed fruits-Canned fruit, Frozen fruit, Fruit sauces, Jellies, Jams, Pie fillings, Fruit juice 3. Processed vegetables-Canned vegetables, Frozen vegetables, French fries 4. Convenience foods- Pizza, Precooked foods, Frozen dinners, Breakfast cereal, Granola, Energy bars 5. Processed meat-Canned meat, Cured meat, Ham, Lunch meat, Sausage, Bacon, Gelatins, Fresh meat with additives 6. Processed Dairy Foods- Cheese, Cheese food, Milk (homogenized, pasteurized, skim, low-fat, etc.) 7. Processed fats and oils-Refined oils, Cooking spray, Margarine, Salad dressing, BBQ sauce, Mustard, Ketchup, Mayonnaise, Peanut butter 8. Drinks-Soft drinks, Fruit drinks, Instant breakfast drinks 9. Confections-White sugar, Brown sugar, Corn syrup, Rice syrup, Honey (unless raw),Syrups, Candies, Soft candies, Pudding, Dessert mixes, Ice cream, Frozen desserts,
Whipped cream, Chocolate, Marshmallows, Shredded coconut, Sugar substitutes

Broadly processed food can be categorised into the following sectors-

Sectors | Products | Dairy | Whole milk powder, skimmed milk powder, condensed milk, ice cream, butter and ghee, cheese | Fruits &Vegetables | Beverages, juices, concentrates, pulps, slices, frozen & dehydrated products, potato wafers/chips, etc | Grains &Cereals | Flour, bakeries, starch glucose, cornflakes, malted foods, vermicelli, beer and malt extracts, grain based alcohol | Fisheries | Frozen & canned products mainly in fresh form | Meat & Poultry | Frozen and packed - mainly in fresh form, Egg Powder | Consumer Foods | Snack food, namkeens, biscuits, ready to eat food, alcoholic and non-alcoholic beverages | Several global food giants and leading Indian industrial enterprises are already making their presence felt in a big way in the sector. Some of them are Nestle India, Cadbury's India , Kelloggs, Hindustan Unilever, ITC-Agro and MTR Foods, Glaxo Smith Kline, Gujrat Co-operative milk marketing federation, Mother dairy.

Player | Brands | Products | Nestle India | Milkmaid, Cerelac,Lactogen, Milo,Everyday | Sweetened condensedmilk, malted foods, milkpowder and Dairy whitener | Cadbury India | Bournvita, Dairy milk,éclairs,gems,celebrations | Milk powder, chocolates | HUL | Kissan, Knorr,Annapurna, | Jams, Ketchups, wheat flour,Fruit Beverages, soups | ITC-agro | Sunfeast | Biscuits | MTR foods | MTR | Frozen Foods, Pickles, spices &masala | Glaxo Smith Kline consumer health care | Horlicks ,boost | Malted milk food, ghee, butter, powdered milk | Gujrat co-operative milk marketing federation | Amul | Milk, butter ,cheese, ghee, ice cream | Mother dairy | Mother dairy, Safal | Milk, ice cream. milk products, frozen fruits and vegetables, jam, pickle |

Marketing Strategies for a new Processed Food –

Marketing mix-

* Product- It’s a high quality luxurious product, status symbol, precious and delicate. Further products will be available in other colours too beside black & silver. This processed food saves a lot of time while cooking and does not need refrigeration at times.

* Price-It will be available into the market with a price range of Rs. 20- 25. Such food is very price competitive because of various established brands which are already available such as Amul and Mother Dairy.

* Place- Initially it will launch its products to major centre of Delhi & Mumbai where most of the female population is working and therefore look forward to more and more of such processed food. . In the later years of operation, it would be available in smaller cities as well keeping in pace the development of smaller cities in India and the changing lifestyle of people in these cities.

* Promotion- It can be promoted using the following mediums:

1. Promotion during International exhibition on processed foods and beverages - World of Food
This exhibition is organised by Cidex Trade Fairs at the Hitex fairgrounds in Hyderabad. The four-day exhibition in which over 80 exhibitors, including 50 from outside India participates, showcased a range of processed foods and beverages from countries such as Germany, Thailand, Singapore, Malaysia and the UAE, in addition to a number of exhibitors from India, including government organisations.
Bakery items, gourmet foods, health foods, frozen foods, fruit drinks and beverages as well as spices and ingredients on display attracted the attention of visitors looking for entry into food processing or distribution or as diversification from existing business.
Several food products from both Indian and overseas producers are on display. Of particular interest to visitors are pickled vegetables, frozen cake and extruded snacks. Some of the foreign exhibitors attend this exhibition to test market their product or look for a suitable Indian partner to commence business. The belief that India is emerging as a major market for processed foods and in turn, transfer of food processing technology and processing machinery, is rapidly gaining ground. 2. Advertising
When selling processed foods, a transparently simple, three-step business model based almost totally on advertising can be used. Here’s how it goes:

* Spend tons of money drowning consumers with repeated advertising and branding messages * Charge those consumers a premium price when they shuffle mindlessly and zombie-like to the store to buy food products, * Repeat.
It may be simple, but this business model works well — exceptionally well. Some of the most successful and long-lived companies in modern economic history (Proctor & Gamble, Colgate-Palmolive, General Mills, Kellogg, Pepsi, just to name a few) use this model to earn juicy profit margins across recessions, depressions, booms and busts.
This advertising-consumption cycle works for one reason only. Because the consumers enable it. Sure, the companies make the foods and run the ads — that is the first part of this equation. But when consumers pull their money out and buy these products, they complete the advertising-consumption cycle.
One of the most important sources to advertise is through the Processed Food Industry(PFI)- monthly trade magazine. The online medium to market the new processed food can be though its 3. Promotional campaign in Food and agri events
There are year round events in almost every part of the country where processed food can be marketed and promoted. Certain such events are-

* Jaivik India 2012-Conference on Organic and Natural Products, New Delhi * Aahar Chennai 2012 * FoodEx 2012, Bangalore * Fi India 2012, Mumbai- International Exhibition & Conference on Food Ingredients

The event is a driving force to India`s processed food sector and plays a fundamental role in the industry`s development. With a strong and rapidly expanding economy, this is your opportunity to achieve future growth on the Indian market. * Foodtech India 2012, Kolkata * International FoodTec India 2012,Mumbai

4. Free samples, Competitions and Shows, Articles in newspapers, Special promotions, In-shop displays

5. Tie up with cooking shows
Cooking shows on television are a very powerful source to promote processed food. It's a curious phenomenon that television food shows have been enjoying a bumper crop of viewers for years.
Television shows like Master Chef can be used to promote new processed food. The view point that cooking programs have a readymade audience of women homemakers who are normally the decision makers when it comes to selecting food items for their family, can be banked on .
Besides learning newer dishes, people get to know about different ingredients, flavors and textures from various food shows. Food channels have effectively created a successful category. Such specialty channels give relevant advertisers space to invest their funds, promote their goods and create value addition for the customers through demonstration of innovative usage of their products. Knorr successfully showed audience how to use its ready - to - eat mixes to make interesting dishes that the brand would have otherwise found it difficult to communicate with their target audience.
There is a growth of food processing industry and an easy availability of exotic ingredients. The manufacturers and suppliers of these are pushing the increase of food programming forward as sponsors.

6. Promotional events in Food & Beverage Trade Shows in India such as sugar tech,up and food ingredients India, Maharashtra

7. Mega food parks
Mega food parks are comprehensive industrial estates for food processing units where the industries would have provision of common facilities. The objective of these food parks is to impart training to entrepreneurs, house wives, farm women etc. on processing of products like squashes, jam, jelly, pickle etc. on commercial scale and to expand the existing teaching and research activities on post harvest operation, processing and preservation of fruits and vegetables.
The Current activities are Commercial production of squashes, jam etc.and imparting training on fruits and vegetable preservation. The government plans to open 30 mega food parks by the end of the 11th Five Year Plan (2007-2012). These food parks can also be used as a medium to market new processed food.

8. Food retail
Retail, one of the largest sectors in the global economy (USD 7 Trillion), is going through a transition phase in India. One of the prime factors for non-competitiveness of the food processing industry is because of the cost and quality of marketing channels. Globally more than 72% of food sales occur through super stores. India presents a huge opportunity and is all set for a big retail revolution. This medium of marketing is very powerful and successful. Major players are into their own food retail brands such as- PLAYER | FORMAT | Aditya Birla Group | More Trinethra super retail | Bharti Walmart | Wholesale stores | Heritage Foods | Fresh | Pantaloon | Big bazaarFood bazaar | Reliance Retail | Reliance fresh | RPG | Spencer’s |

References 1. 2. 3. 4. 5.

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