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Challenges faced by Indian frozen food sector today
Saturday, 17 August, 2013, 08 : 00 AM [IST]
Vikas Mittal
The demand for ‘quick & tasty’ meal in India is led by increasing urbanization, change in the lifestyles and the emergence of the mall culture. Exposure to myriad food trends transcending traditional cuisines has fuelled the desire for variety amongst Indian consumers.

Today, the QSRs, hotels, pubs & bars from not only metros, but even from tier-II and tier-III cities are gearing up to offer their patrons the finest in food & service along with the ambience . The need of the hour is to offer variety to customer while simultaneously maintaining hygiene along with quick and efficient food service standards. Hence the Indian F&B industry has started using ‘Frozen Foods’ which can be easily customized to suit the new Indian palate without spending much time and are available at all times of the year.

Currently, the Indian frozen food market is estimated at Rs 1,500 crore and is expected to reach Rs 3,750 crore in the next five years, as per the research report by Frost & Sullivan. However, the full potential of the frozen foods is still to be realized in India due to the presence of several impediments.

Inadequate cold chain, infrastructure & transport facilities

Frozen food is normally kept at -18°c and below. Any increase in the temperature of the environment may lead to deterioration in food quality. Cold supply chain transports frozen products in a particular time-frame while maintaining the required temperature. As a result, frozen foods penetration in any country is fully dependent on the support from cold chain facilities.

The cold chain in India is in nascent stages of development. The segment is largely dominated by fly-by-night suppliers and small businesses with poor networks. As the services are not integrated, it leads to wastage and damage to food due to frequent handling and transfer. Chefs also have to wait their turn in longer delivery cycles as suppliers try to reduce their costs by combining multiple deliveries on a route.

Today, there are very few specialized distribution companies providing refrigerated transport and warehousing for perishable produce/processed food products. Prime reasons for the low adoption of cold chain facilities has been high costs and little knowledge of technical skills to conceptualize and execute. As a result, there are not many players operating in this segment.

Lack of sufficient space at the distributors’ end is also a hindrance for frozen food companies. India is a challenging market to operate in, considering that each operator must have a separate cold room and 24-hour uninterrupted supply of electricity. Unfortunately, most distributors may not have access to such facilities.

McCain has been devising new strategies, and is closely working with third party cold chain operators to develop better cold storage systems; ensuring better conditions of warehouses; employing sophisticated refrigerated transportation systems to avoid food wastage.

The company has been using third-party GPS enabled reefer trucks to deliver products from its plant to cold stores/warehouses and retailers. With their sophisticated temperature control technology, reefer trucks maintain a required temperature for frozen products. GPS technology helps to track the trucks on all roads (even in transit) across the country, thus ensuring on time delivery of  the products in the  right condition to its customers. We are looking forward to introduce mechanized pallet handling at our third-party storages . This helps in achieving higher efficiency in loading and unloading reefer containers in a time-bound manner.

The development of robust cold chain with efficiently designed infrastructure with the right network and a strong IT backbone would contribute to an immediate reduction in waste, and improved product availability across the country.

Frozen over fresh
An Indian chef is generally inclined towards using ‘best’ ingredients in all food preparations. He not only considers the speed of cooking, nutritional value but also the food availability, guest preferences and cost aspect when he decides to serve fresh or frozen foods.

Till recently, frozen food usage in F&B industry was limited to frozen peas, vegetables, non-vegetarian products and ice-creams. With the opening-up of the domestic market, chefs have been exposed to exotic frozen food options in world cuisines from all over the world that are not readily available in the market, especially in non-metro cities.

The mindset for using frozen foods is changing slowly. Chefs have started perceiving frozen products as replacement of labour and effort. They are realizing the significant advantages that frozen foods offer: nutritious than fresh food, as they are processed and frozen within hours of being picked, versatile usage, uniformity in taste, all-year availability and even reduced overhead costs (perfect portions, high piece count and no wastage).

We are working in close collaboration with our institutional clients. We try and understand their needs and work on customizing our offerings accordingly. We have a sophisticated R&D department with food specialists working on different business formats. As, we deal with a number of food service brands, hotels, caterers etc, we do a lot of interaction with chefs too. This helps us get feedback and unique product innovation ideas.

With passage of time and our efforts towards generating trial and experience of frozen foods, this category has considerably improved over the years.

McCain is today actively engaged in organizing large-scale samplings at points-of-sale, meets for chefs, HORECA and caterers, participation in B2B Food events (Aahar, Hosts etc) and customer advertising through B2B magazines to enhance trials and provide impetus to expansion of frozen foods in India. Recently, we have also started monthly newsletters for food service operators, hoteliers,
restaurateurs and chefs.

Growing demand for frozen foods

As the economy evolves and new life styles get entrenched, current impediments are expected to erode away. There is already a growing demand for frozen foods in India today. An increased policy support from the government in terms of investment for cold chain projects, import duty reductions, preferential taxes as well as 100% FDI in cold chain facilities, will see more private sector investing in supply chain infrastructure (cold chain, storage, preservation and better transportation) and skill development.

This is an opportune time for frozen food companies to invest in expansion facilities and develop innovative products with features that appeal to the growing Indian consumer base and the export markets.
(The author is MD, McCain Foods India and subcontinent region)
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