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Ready-to-eat industry in India- Effects of globalisation
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Thursday, 30 September, 2021, 13 : 00 PM [IST]
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Karan Chechi
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Ready-to-eat food products are pre-cleaned, pre-cooked, and generally packed foods that are ready to consume without any prior preparation or cooking. Ready-to-eat food includes canned food, convenience food, fast food, frozen food, instant product, dry food, preserved food, and so on.
These food products have specific guidelines to ensure that there is no contamination or risk of bacteria growing after the food products have been prepared. For a long time, the concept of ‘ready-to-eat food’ has been popular in the West. Perhaps as a result of the effects of globalisation, the eating patterns of Indians have shifted. The ready-to-eat food industry in India has grown dramatically in recent years due to the factors such as a rise in gross family income and the growing popularity of nuclear families.
The convenience and the year-round availability of ready-to-eat meals also have a favourable impact on their demand. Another factor contributing to the growth of this industry is the hectic lifestyles of the millennial workforce. Working people do not get enough time to cook proper meals. Due to busy schedules, on-the-go convenience meal products that require little time and ingredients are becoming increasingly popular.
The rising number of working women is also one of the main factors driving the market. Moreover, greater job prospects have prompted a migration of individuals from tier 1 and tier 2 cities to metropolitan areas, resulting in the expansion of the readyto-eat business. Additionally, microwaves and other technological advancements are other factors that have raised the demand for ready-to-eat food products. Furthermore, due to the rise in media awareness, literacy rates, and living standards, people have become more receptive towards health and cleanliness standards in terms of food products. The emergence of large retail businesses has also aided the rising demand for ready-to-eat food products in the country.
Indians spending on ready-to-eat food outside the home has doubled in the last decade. The ready-to-eat industry of India stood around USD300 million in FY2020. The demand for these food products is also being driven by the expanding number of quick-service restaurants and the emerging café culture. In recent years, there has been a shift in consumers’ priorities from price to quality.
Consumers are willing to opt for enriched ready-to-eat products that are hygienically packed over loosely packed ones. Moreover, this market has a wide variety of nutritious food items to choose from, and they have become a part of everyday life. In the coming years, ongoing innovation in functional ingredients, convenience, and organic food items will open new options for the market.
Furthermore, the rise in demand for healthy foods has led to the development of a whole new category of packaged foods, including immunity-boosting foods, whole grains, seeds, and nuts. For instance, Britannia offers Nutrichoice digestive wholesome wheat cookies with a low glycemic index and high dietary fibre. Similarly, Kellogg’s offers muesli which is made with nutritional grains such as wheat, corn, rice, barley, and oats.
Also, meat consumers are more concerned about the wholesomeness of meat and demand meat and poultry products produced in a clean and hygienic environment due to emerging health hazards from diseases transmitted to humans through the meat. Therefore, there is an increase in demand for convenience items such as semi-cooked, readyto-eat, and ready-to-cook meat food products in metropolitan areas.
However, consumers are becoming aware of the fact that ready-to-eat food items are heavily preservative-laden to ensure longer shelf life. The expansion of this market is being hampered by rising health awareness, particularly among the younger generation. Consumer awareness of long-term health risks linked to irregular diets and junk food intake has increased.
Therefore, companies are fortifying their products to meet consumers’ demand such as, Nestlé, which launched a line of FreshlyFit ready-to-eat meals in 2020. The offerings are gluten-free, have a clean label, are produced with whole-food components, and can be heated and served in under three minutes. The meals had 14 grams of net carbs on average, more than 30 grams of protein, and 550 calories or less. Furthermore, more than a third of the meals do not contain any added sugars.
India’s ready-to-eat industry has also benefited from the Covid-19 pandemic as ready-to-eat food is considered safer for consumption than outside food. The market saw a significant increase in demand, particularly in the first half of 2020. People preferred to cook at home due to restaurants restricting the dine-in services and the concern of a rising number of coronavirus cases, which further resulted in increased usage of ready-to-eat products. The surge in sales of these products can also be attributed to the expansion of distribution channels.
The sector is undergoing significant changes, including increased advertising spending and the provision of free samples, emphasising increasing the distribution network to establish a strong position in the Indian market. Companies are partnering with online food ordering platforms such as Swiggy and Zomato to sell their products.
For instance, in 2020, Marico tied up with Swiggy and Zomato to provide Safola and Coco Soul products to consumers. Moreover, companies are coming up with attractive promotional strategies to enhance the growth of this market further. For instance, in June 2021, Nestlé decided to launch a consumer campaign to reassure consumers about the nutritional value of its product portfolio.
In the advertisements, Nestlé also emphasized that it had drastically decreased sugar and sodium content in its products during the last two decades. Additionally, Nestlé also announced to mask up the trademarks of its popular brands such as Maggi, KitKat, Nescafe, and Everyday to raise awareness and enforce Covid-appropriate behaviour among the general public.
The company will run a print and digital marketing campaign to tell customers about the package changes and raise awareness. Furthermore, companies are always coming up with new products in response to consumer interests and preferences, such as Britannia’s launch of a new line of biscuits, the ‘5050 Potazos,' in 2021, under the 5050 brand. Additionally, retailers are offering enticing offers in the form of combo packs, day-specific discounts, seasonal deals, flat discounts, and coupon discounts to enhance the sales volume of ready-to-eat products.
Government is also taking certain initiatives to promote the ready-to-eat food industry. Recently, the Indian government approved the Production Linked Incentive scheme for the food processing sector in April 2021, with a budgeted incentive outlay of $1482.99 million over the next six years. The scheme's objective is to promote local production and sales, establish worldwide Indian food manufacturing brands, expand off-farm job options, and increase Indian farmers' income.
Eligible players in areas such as ready-to-eat/ready-to-cook, millet-based foods, marine goods, processed fruits and vegetables, and mozzarella cheese will be eligible to receive incentives. Government also wants Indian companies to compete in the international market and will assist them in branding through this scheme. It would provide an additional grant of up to $6.80 million for branding and marketing initiatives, based on a 5-year plan presented by the applicant. The ready-to-eat industry is gaining popularity among Indian consumers at a higher rate and will continue to do so in the future.
(The author is research director at TechSci. He can be reached at sales@techsciresearch.com)
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