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Poha, upma, dal chawal, biryani - ready anytime
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Monday, 16 July, 2018, 08 : 00 AM [IST]
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Ruchit Mahendru
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The ready-to-eat food products are gradually becoming a daily essential food item in urban households in India. The bonus of convenience in preparation and availability of ready-to-eat traditional Indian meals such as poha, upma, dal chawal and biryani, are attracting an increasing number of consumers towards opting for ready-to-eat food products in the country.
Few other factors boosting adoption of ready-to-eat products include eliminating the need to spend long time in preparation, which appeals to the working population, especially working women; changing demographics and rising discretionary income.
Ready- to-eat food market in India is still a niche segment as the major consumers of ready-to-eat foods are majorly restricted to urban regions. However, the market is expected to witness a healthy growth over the next five years, owing to numerous factors such as expanding sales and distribution network, growing organised retail coupled with easy availability and affordability of convenience food items.
CAGR of over 15%
Ready-to-eat food market in India was estimated to be around US$450-500 million in 2017. The market is forecast to witness a double-digit CAGR of over 15% over a period of next five years. Market forces and demographic trends are continuously influencing supply and demand. Moreover, increasing disposable income along with changing lifestyle and awareness regarding the convenience of preparation and storage is also expected to drive the market during the next five years.
India ready-to-eat food market has been majorly segmented into ready-to-eat noodles and pastas, ready-to-eat meals, ready-to-eat soup mixes, and ready-to-eat chicken and meat along with other categories. Ready-to-eat meals captured the largest share of around 45% of the country’s ready-to-eat market in 2017. The market is dominated by Capital Foods Ltd, MTR Foods Ltd, ITC Ltd, Nestle India Pvt. Ltd, and Gits Food Products Pvt. Ltd, among others.
The market is majorly dominated by the organised sector and is highly regulated by governing authorities such as Food Safety and Standards Authority of India (FSSAI). The rising number of nuclear families and bachelor population is also a strong compelling factor for the growth of India ready-to-eat food market.
A study conducted by ASSOCHAM in 2015 reveals that about 89.5% of nuclear families in the country spend minimal amount of time in the kitchen and nearly 73% of the bachelors, whether they are college students or single working professionals, prefer convenience food.
Factors such as economical prices, availability of a variety of products and less usage of time and energy has made ready-to-eat products a popular product among the mentioned consumer categories, which constitute a significant portion of the entire consumer base of ready-to-eat food products in India.
Domestic companies are dominant in India ready-to-eat food market owing to factors such as long presence, which has helped them to gauge the consumer’s consumption patterns, tastes & flavours, thus offering them an advantage over international players trying to foray the market.
Convenience products
Ready-to-eat food products in India are mostly economically priced since these are convenience products and are not focussed on indulgence or experience. Market players are constantly increasing their focus to innovate product offerings to increase acceptability among consumers. The average unit price is predicted to marginally increase during the forecast period, mainly because of rising packaging costs and price competition among players.
Also, major manufacturers such as MTR Foods Ltd are increasingly focussing on catering to the population of Tier-II and Tier-III cities by limiting their quantities and price rises in the meals category. MTR Foods Ltd., in April 2017, launched a breakfast range of products called the MTR 3 Minute Breakfast.
The products are available in six dishes such as poha, khatta meetha poha, vegetable upma, magic masala upma, oats homestyle masala and kesari halwa, which are priced at Rs 20 for a single-portion size and Rs 80-85 for multiple-portion sizes.
The traditional grocery retail is the major retail channel for sales of ready-to-eat food in India due to the deep geographical penetration of this retail channel. However,
supermarkets/hypermarkets are expected to expand their reach to tier-II cities in India and are anticipated to compete with other store-based retailing formats for sales of ready-to-eat food over the forecast period.
Market Trends Convenience Food Popular
The rising urban population and the growing labour force of the country is slowly bringing about a change in the food industry. The rising working population has led to an increase in the preference for ready-to-eat foods due to less availability of time and energy to cook food. Manufacturers have acknowledged this issue and have included traditional Indian meals and snacks. MTR Foods and ITC are two of the top manufacturers of ready-to-eat foods in the industry and offer a range of wholesome traditional and Western ready-to-eat meals, instant noodles and instant soup mixes. For instance, Tata Group in 2017 announced that they are exploring the ready-to-eat industry as the market is offering high potential for growth for the upcoming manufacturers as it is still largely underpenetrated.
Moreover, the increasing population of working women, millennial population and retail chains are the key contributors in increasing the awareness about the ready-to-eat products.
Routes to the Consumer
In order to increase the product penetration as well as shelf space of ready-to-eat food, the manufacturers are constantly putting efforts to innovate and analyse existing distribution channels as well as explore new routes to reach the consumers. Distribution and delivery play an important role in ready-to-eat food market, as the proper logistic support enables the producer to transport his products in the market at the right time.
Ready-to-eat food is not a price-sensitive product, and competition is also high, which is why manufacturers are exploiting new distribution channels to maximise margins as well as increased reach to the consumers.
Advent of online grocery stores such as Grofers, Big Basket and ZopNow are catering to the convenience needs of the consumers shopping for ready-to-eat food products in India, allowing manufacturers to increase shelf space as well as making products available in geographies where the manufacturers have no retail presence.
Moreover, manufacturers are positioning their products where the visibility of products is low. For instance, companies like Capricorn Food Products India Ltd and Melting Foods India Ltd have started promoting their products at trade fairs, retail outlets, malls and public gatherings.
Driven by Innovation
Over the last few years, convenience foods have become widely popular notion among the working-class people, teenagers, people living in hostels and so on. Bread is a widely preferred convenience food as consumers do not have to cook it before consuming. This offers a huge advantage as it would offer a complete nutritional profile a normal meal should have, besides reducing spoilage, waste and the preparation time by a great extent.
In order to make the meal more durable and shelf-stable, manufacturers are developing packaging technologies and are carefully administering the manufacture of such products minutely to ensure high durability and safety. Techniques such as vacuum sealed packaging, freeze-drying and dehydration are some of the preservation techniques that have been trending in the India ready-to-eat food market over the last few years.
(The author is consultant, consumer goods & retail, research manager, TechSci Research. He can be reached at info@techsciresearch.com)
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