Food & Beverage News: F&B Specials - Need to evolve high quality RTE food

Datamonitor estimates the convenience food retail sales market in India to be around Rs 250 billion in 2008 and is expected to reach Rs 360 billion by 2012 growing at a CAGR of 10%.

The bakery & cereals market dominates the convenience food industry in India contributing around 56% of the value share followed by confectionary products at 16%.

The biscuits and bread which forms the bulk of the bakery & cereal market are an ideal snack items for many of the adults, a complete nutritional pack for kids and a meal supplement to the Indian consumers.

The rapidly changing Indian urban middle class lifestyle has led to the expansion in the "Ready to Eat" convenience products market in India. The double income families with busy schedules, along with school going children, have created a time crunch for many families living in the Indian cities. This trend has created the demand for convenience food products in India and vastly expanded the market. This phenomenon is evident with the success of segments such as breakfast cereals, cookies, dried noodles, bread, chocolates etc.

The savoury and dried food are the fastest growing categories in the Indian convenience food market and they are estimated to be doubled by 2012. The potato chips and dried noodles segments are expected to be most dynamic and would drive the future growth in this sector.

Consumer demand for healthy and nutritional products is also on rise which has led to the trend of urban consumers gradually trading up to premium products such as digestive biscuits, backed snacks etc.

While the ready to eat cooked meals are still at the nascent stage and currently consumed by small niche consumers in urban cities. The instant snack products like noodles have become popular and well accepted among many Indian consumers. The popularity of two minute noodles by Maggi has been successful evening snack items among kids and a wonderful convenience option for working mothers to treat their kids. This convenience snack products have shifted trend of traditional snack items which required longer preparation time to convenience of just two minute preparation.

This success has been carried forward through subsequent product innovations such as cup-noodles which can be consumed by simply adding hot water, is another successful convenience snack product among Indian adults recently.

Future of Convenience food
Low packaged food penetration levels, rapid urbanisation, favorable demographics and changing consumer perception towards packaged foods will augur well for the growth of convenience food industry in India.

Though convenience food Industry will be a high growth area, there are concerns around health related issues which can affect its growth. With increased awareness around health, high nutritional value in daily diet - Indian consumers are becoming more selective in what they buy. Products launched with less sugar, oil, low on fat are more popular especially in urban consumers. So, products with more nutritional value and health benefits will be the focus area for companies looking for high growth in the future.

In the recent survey conducted by Datamonior in India, product freshness and quality is a major factor influencing the convenience food purchases in India. Also the survey revealed that the consumers have shown great interest in products which provide health benefits in terms of heart, digestive and physical stamina. Strong opportunities for food firms will also lie in the crossover trend between health and convenience (health on-the-go), an area that clearly bears high growth potential.

As consumer demand for healthy products grows and the market expands, ample opportunities will be created for introducing new products. This huge market will create opportunities to the industry participants which includes food supplier, food processing equipment companies, manufacturing units and marketing companies to provide high quality convenience foods.

While the economies of scale and lack of integration is a concern in the Indian food processing industry, however we believe the use of advance processing technologies and abundant consumer demand would make the industry evolve and offer high quality convenience food products in the future.

In the recent past we have seen many international players such as Pepsi, Nestle, and Unilever etc increasing their investments in the convenience food sector in India and are optimistic on the future growth potential.

In brief, Indian convenience food sector has witnessed strong growth and there will be ample opportunities for the companies who invest in developing convenient, tasty, healthy & nutritional food products in the future.

(The author of the report is Naveen Varma Datla, Consumer Markets Analyst - Datamonitor India.)