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INTERVIEW

“Localisation is a cornerstone of McCain’s India strategy”
Monday, 12 December, 2011, 08 : 00 AM [IST]
Headquartered in Toronto, Canada, McCain Foods Limited is the world’s largest producer of French fries and potato specialties with 53 plants on six continents and sales of over CAD$6 billion. McCain Foods India Pvt. Ltd is a wholly-owned subsidiary of McCain Foods Canada. The company has set up a potato processing plant in Mehsana district of Gujarat with an elaborate India strategy. K S Narayanan, MD, McCain Foods India Pvt. Ltd, shares details with Archana Aroor in an email interview. Excerpts:



How is the frozen food market in India? What is the growth rate and the opportunities involved in the segment?

The frozen food market in India is at a nascent stage with few products, low consumer awareness levels, underdeveloped frozen food distribution network, and lack of freezer space at the retail end.

The key to grow such markets is a range of high quality affordable products made available close to consumers. These can help stimulate demand and address other issues like development of cold chain facilities.

In the last few years, consumers in India have gone through a dramatic transformation in lifestyle by moving from traditional spending on food and groceries to lifestyle and convenience food products thus leading to growth in home consumption of frozen foods.

This demand for ‘convenience food’ has also supported good growth in frozen foods, with consumers appreciating the convenience of stocking up and keeping easily prepared food at hand. This is evident by the rise in the number of frozen food products being offered in the Indian market today. Moreover, increasing penetration of organised retail chains has aided in the demand for frozen food products. Apart from convenience in cooking at home, quick service restaurants have equally contributed to the growth of frozen foods.

Mention some of the challenges that the frozen food sector is facing today. Suggest ways for improvement from the company's point of view.

The frozen food market in India is at a nascent stage and is faced with numerous challenges:

Few players in the segment: First and foremost there are very few players in the frozen food segment in India and therefore frozen foods (excluding frozen vegetables) penetration as a category is extremely low.

Low consumer awareness: Second, as mentioned earlier, there is low consumer awareness about frozen foods. For the Indian consumer, frozen foods is a new category altogether and they are still getting familiar with it. Our research with consumers shows that consumers do have misconceptions about frozen foods, particularly they are not aware of the benefits that freezing as a method of preservation offers. The fact that freezing is a natural method of food preservation without the use of any preservatives or chemicals and that it locks freshness and maintains the nutritive value of food is not known to most consumers.

Inadequate frozen food distribution network: Third, the lack of good cold chain facilities is proving to be a disadvantage for companies like us to grow the market for frozen foods.

Limited freezer space: In addition to the above, lack of freezer space at the retail end is also presenting a challenge to frozen food companies.

McCain Foods India is planning to drive the frozen food market in India through the following initiatives:

The frozen foods category in Indian market is evolving gradually and is very crucial for us. Affordability, variety and availability are the cornerstones of our marketing strategy.

In fact, localisation is a cornerstone of McCain’s India strategy. We continuously work with our customers and keep track of the evolving trends and based on the assessed requirements, we attempt to develop customised products and solutions. This is done by our research and development arm which is continuously engaged in trials of new product offerings in the market.

In the retail space, our research with consumers has shown that they have certain misconceptions about frozen foods, particularly they are not aware of the benefits that freezing as a method of preservation offers. The fact that freezing is a natural method of food preservation without the use of any preservatives or chemicals and that it locks freshness and maintains the nutritive value of food is not known to most consumers. Interestingly our research also shows that once consumers taste McCain frozen food products, not only are the misconceptions about freshness and taste removed instead they are delighted with the taste.

We believe, the mindset will gradually change with trial and experience of frozen foods. McCain is today actively engaged in organising large-scale sampling and consumer contact programmes in various cities to not only enhance trials, but also to break barriers towards adoption of frozen foods.

We have also introduced trial packs at Rs 25 which enable the consumer to try out different products and significantly reduce the cost of trial and reduce the risk of failure.

Frozen foods are a low penetration category and require continuous efforts and engagement with consumers. We actively participate and engage in industry-specific seminars and forums. We also showcase our range in trade shows. Further, we have launched our first advertising campaign in India (using both print and electronic media). McCain’s first ever TVC was aired on August 14, 2011, nationally. The ad campaign is just an extension of the communication that we have been doing in building the nascent but small category of frozen foods in India. The ATL efforts are another dimension in this consumer engagement programme, and will complement the ongoing BTL efforts.

1. Mother Dairy is venturing into frozen snacks segment.

a) How successful is the frozen snack segment in India?


The frozen food market in India is very nascent and is typical of a market, which is in the early stages of development. For the Indian consumer, frozen food is a new category altogether and they are still getting familiar with it.

McCain’s local range of frozen food offerings are growing well and products with local tastes are registering good acceptance. Aloo Tikki, the most popular of McCain’s local product, introduced in 2008 is gaining good acceptance in the retail and food service channel and it also won the coveted SIAL d’OR Country Award 2010 for the best ethnic adaptation.

The evolving market demand made us introduce McCain 3-minute Idli, which marked our foray into non-potato-based frozen product in India. Made of real rice and lentils, the product offers great convenience as it gets ready in microwave in just 3 minutes.

Today, McCain products are being used by leading fast food chains, hotels, restaurants and catering companies in India and abroad, and are also very popular with retail consumers. McCain Foods India also exports Made in India products across the world.

b) What are the setbacks in the Indian frozen foods R&D sector?

First, limited or non-availability of core infrastructure like high-tech controlled production facilities, grading, packaging, warehousing, integrated processing units, poor transportation and erratic power supply are the major concerns for efficient supply of frozen foods in India.

In addition to the above, lack
 
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