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Food Industry

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Food Industry

June, 2012


The food services sector in India is expected to witness a 50 per cent increase in investments in 2012 to about US$ 750 million, as food suppliers and retail companies plan to scale up business and stay competitive by tapping the large potential of the domestic market. Of the total investments of US$ 750 million in 2012, about US$ 165 million has gone into purely front-end retail, such as fast moving consumer goods (FMCG), food and beverage firms.

India is the world's largest milk producer, accounting for around 17 per cent of the global milk production, according to RNCOS research report titled, 'Indian Dairy Industry Analysis'. The study anticipates that the milk production in India will grow at a compound annual growth rate (CAGR) of around 4 per cent during 2011-2015.

Further, India has emerged as one of the largest potential markets for organic food consumption globally. The organic food is invariably catching up pace among the Indian retailers, especially with the niche retailers owing to wide awakening among Indian consumers towards leading a healthy life, as per RNCOS research report titled, 'Indian Organic Food Market Analysis'. We anticipate that the sector will post significant growth during 2011-2013, growing at a CAGR of 15 per cent.

Indians spend US$ 64 billion annually on eating out, which includes $13 billion on eating in quick-service restaurants (QSRs) such as McDonald's and Costa Coffee, propelling the industry to grow at 25-30 per cent annually, according to Euromonitor.

Key Players

The major players operating in the Indian food and beverages industry include Dabur India Ltd, Godrej Industries Ltd, Hindustan Lever Ltd, Britannia Industries Ltd, ITC Ltd, Nestle` SA, PepsiCo, Inc, Cadbury Schweppes PLC, Future Group, RPG Enterprise and Godrej Agrovet Ltd.

Among recent investments, World Bank arm IFC has reportedly put in US$ 6.5 million into food-supply chain firm Snowman Logistics. Other similar investments include Swastik Roadlines (India Equity Partners) and JICS Logistics (IL&FS Private Equity) and Staragri Warehousing and Collateral Management Ltd (IDFC Private Equity).

The world's largest fast-food chain - Mc Donalds, is shedding its familiar red and yellow colours for more muted tones as it goes for its biggest and costliest revamp in India, in line with its global strategy of attracting more adults. The red and yellow company logo will be replaced with white across 240 restaurants.

Food Processing Industry

With a huge agriculture sector, abundant livestock, and cost competitiveness; India is fast emerging as a sourcing hub of processed food. India's food processing sector covers fruit and vegetables; spices; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups such as confectionery, chocolates and cocoa products, soya-based products, mineral water, high protein foods etc.

India has emerged as world's top rice exporter overtaking traditional leaders, Vietnam and Thailand. India's total rice export in 2011-12 is expected to be 6.5-7 million tonnes (MT), which is around 7 per cent of the country's total production. However, with a bumper harvest in excess of 100 MT in 2011-12 and record stocks of a little over 34 MT in state-run warehouses, India will continue to remain a major player in the global market till at least June 2013.

The food processing industries attracted foreign direct investments (FDI) worth US$ 1,409.60 million between April 2000 to March 2012, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).


Food and beverage contributes a big portion to the revenues of hotels in India. "This is as much as 30-40 per cent in some five-star hotels, compared to 15-20 per cent internationally," says Dilip Puri, Managing Director of Starwood Hotels India.

According to a report titled 'Indian Non-Alcoholic Drinks Forecast to 2012' by research firm RNCOS, the Indian non-alcoholic drinks market was estimated at around Rs 216 billion (US$ 3.88 billion approximately) in 2008 and is forecasted to grow at a CAGR of around 15 per cent during 2009-2012. The report covers numerous factors driving the growth of non-alcoholic drinks market in India.

The report highlights that the highest growth will be seen in the fruit/ vegetable juice market, which is estimated to grow at a CAGR of around 30 per cent in value terms during 2009-2012, followed by the energy drinks segment at a CAGR of around 29 per cent during the same period.

Green Mountain Coffee Roasters (GMCR) and Eight o' Clock Coffee Company, a Tata Global Beverages brand, have announced a multi-year agreement to make Eight o'Clock Coffee, Tetley Tea, and Good Earth Tea available in different formats throughout the US and Canada by next year.