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Great potential in India as a trading hub in F&B
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Tuesday, 02 January, 2024, 12 : 00 PM [IST]
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Rahul Agarwal
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The Food and Beverage Services Global Market Report expects the global market to grow from $3.2 trillion in 2021 to $3.7 trillion in 2022. It's a promising outlook, given that just a few years ago, Fortune reported a $18 billion loss for the top 25 US food and beverage companies.
As the newer generations move away from processed foods in favour of seeking healthier alternatives with cleaner labels, companies are adapting and pressing forward — that trend continues to grow at an excessive pace, signaling that some demands are more of a long-term standard.
But many major food and beverage companies have shown that they are not as nimble as smaller companies when it comes to adapting to consumer preferences and there are still challenges the food and beverage industry faces.
India, the fastest growing economy in the world, is known for its rich and diverse culture and is a home to people from different religions and languages living together. Geographically also, India has varied climate and agriculture conditions. With these diversities, India offers a wide variety of traditional cuisines. These cuisines vary significantly geographically from north to south and east to west of India and are also influenced by local availability of spices, herbs, vegetables and fruits. These traditional cuisines are getting evolved over a period of time and are now served in different avatars, e.g., inclusion of new ingredients or flavours and change in the traditional preparation style. Food & beverages are considered as the fastest growing industries in India. The growth of the industry is supported by the availability of a large raw material production base. India is the largest producer of milk, bananas, mangoes, guavas, papaya, ginger, okra, second-largest producer of wheat, rice, fruits, vegetables, tea, sugarcane and cashew nut and the third-largest producer of cereals, coconut, lettuce, chicory, nutmeg, mace, cardamom and pepper globally. Further, the increased affluence of the ever-growing working population with increase in disposable income, rising urbanisation leading to changing lifestyles and less time to prepare food at home, increase in tourism in India and international travel, and increase in consumption of fast growing food and beverage segments during special occasions and celebrations are the factors that behind the growth of the Indian food and beverages market.
With India’s population skewed towards younger consumers, the majority of Indian consumption of food and beverages is driven by people between the ages of 18 and 40, which opens the opportunity for manufacturers to come with more varieties. The Government of India is pressing hard to make alternative ways for a strong industry for the food & beverage sector. The government is working on a strategy on the diversification of India's export basket in a bid to enhance its export presence in the top items of world trade as well as to increase the country’s outbound shipments, both in value and quantity. Indian government has plans to introduce measures with a view to further facilitate the trade in this sector’s products. The Government has established 60 fully equipped Agri-Export Zones (AEZs), in addition to 42 Mega Food Parks and 128 cold chains, to boost agricultural and food processing exports.
In other words, there is a great potential to conduct business in India as the Centre of South East Asia as a trading hub in food and beverages sector. India is growing as a market for new products such as breakfast cereals, pasta, infant food, bakery products, foreign liquor and different types of oils and sauces. Many international organisations have engaged with the India market by setting up manufacturing infrastructure here itself and understanding the market in depth. The Food Safety and Standards Authority of India (FSSAI) has plans to invest about US$72.3 million to strengthen the food testing infrastructure by upgrading food testing laboratories and setting up new mobile testing labs. With globalisation and increasing trade across the borders (approximately about 460 mn tonne of food valued at US$3 bn is traded annually), India has, a great potential for trade in agricultural and processed food products. India’s greater integration with the economy, increasing export with an advantage of proximity to the key export destination and expected a spike in demand as emerging markets grow at fast pace.
Indian Food and Beverages Market Key Player
1. Nestlé India 2. PepsiCo India 3. GlaxoSmithKline 4. Haldiram Foods 5. Balaji Wafers 6. Britannia Industries 7. Patanjali 8. Dabur 9. Hindustan Unilever 10. Al Kabeer Exports 11. Bambino Agro Industries 12. Gits Food Products 13. Innovative Foods 14. ITC Foods 15. Ferrero India Pvt Ltd 16. Kwality 17. Parle Agro Pvt Ltd 18. Kohinoor Foods 19. McCain Foods 20. Merino 21. MTR Foods 22. Venky's
The following includes highlights from the report:
Latest food and beverage market forecasts: The global food and beverage market size is expected to grow from $5.8 trillion in 2021 to $6.4 trillion in 2022 at a growth rate of 9.7%. The food and beverage market size is expected to grow to $8.9 trillion in 2026 at a compound annual growth rate of 8.7%.
Top distribution channels: The food and beverage market is segmented by distribution channel into supermarkets/hypermarkets, convenience stores, e-commerce, and other channels. The supermarkets/hypermarkets was the largest segment of the food and beverages market segmented by distribution channel, accounting for 58.7% of the total in 2021. Going forward, the e-commerce segment is expected to be the fastest growing segment in the food and beverages market segmented by distribution channel, at a CAGR of 13.2% during 2021-2026.
Key market opportunities: The top opportunities in the food and beverages market segmented by distribution channel will arise in the supermarkets/hypermarkets market segment, which will gain $895.4 billion of global annual sales by 2026. In addition, the organic food and beverage market and functional food and beverage market segments stand out as the health concerns of consumers continue to drive trends.
Influential food and beverage industry trends: The demand for clean label products is increasing rapidly, owing to a significant rise in awareness of healthy eating. Clean label products do not contain additives, artificial flavour enhancers, dyes, or artificial preservatives. Also, many food service and retail grocery store chains are stating lists of ingredients that cannot be present in food items in their stores or restaurants. Many manufacturers and producers are also increasingly using natural ingredients and have reduced the use of artificial colours and flavours. Another key trend is the increased demand for functional beverages, with many individuals seeking specialised drinks to stay hydrated and maintain nutritional balance. To capitalise on this segment, companies are introducing fortified beverages such as functional juices, and functional water with health benefits, such as water balance, weight management, and improved digestion.
(The author is associate professor, Department of Food Technology, JNU, Jaipur. He can be reached at rahulagarwal0108@gmail.com)
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