Feeding a billion Role of Food Processing Industry

As India’s population crosses one billion mark, the challenge to feed the country also grows. The food processing industry has a vital role to play in the solution.
Feeding a billion Role of Food Processing Industry

Food processing industry – accounts for 32 percent of the country’s total food market, 14 percent of manufacturing GDP, 13 percent of India’s exports and 6 percent of total industrial investment – has emerged as a sunrise sector of the Indian economy. Growing at a CAGR of 15 percent, the share of processed and packaged foods is expected to increase to about 40 percent of overall intake by 2025-2030.
Besides, the sector is catching eyeballs of international players too. According to the Department of Industrial Policies and Promotion (DIPP), the food processing sector in India received around USD 6,215.46 million worth of foreign investments during April 2000-January 2015 – which is a sign of growing international interest in this sector.

Likewise, India’s exports of processed foods amounted to Rs 31,563.43 crore in 2014-15, as per the Agricultural and Processed Food Products Export Development Authority (APEDA).
The value of the exports from the sector has been on the rise, with an average annual growth rate (AAGR) of 20.53 percent for five years ending 2013-2014. The value of processed food exports during 2013-14 was about USD 37.79 billion (of the total exports worth USD 312 billion), constituting 12.1 percent of India’s total exports. (Directorate General of Commercial Intelligence and Statistics (DGCI&S), Kolkata). With the AAGR of 20.53 percent of the next five years, the sector is expected to touch the 100 billion mark by 2020.

While the sector remains on a growth trajectory, to achieve the projected figure it needs to innovate to satisfy the evolving needs of the discerning consumer.

Innovation is the key

Changing lifestyle, higher disposable income, growing nuclear families, working women, and the trend towards healthy food options are making the food players to offer innovative and healthy solutions to the consumer.

Siraj Chaudhry, Chairman, Cargill India, says, “Customers are evolving faster than ever before and they prefer consuming healthier options. With the fast-maturing consumer, the pressure would be on companies to provide them with the global innovation.”
Harsimrat Kaur Badal Hon’ble Union Minister for Food Processing Industries, GOI, says, “A change in the consumer’s mindset about health and nutritional aspect of packaged food is critical for driving further growth.
Talking about the innovation, Siva Nagarajan, MD, Moter Dairy, states, “We are looking at adding some nutrition value into the existing food item and putting them back in pack. Making it socially relevant and how can we bring back these nutritious items to our consumers are the main concerns.”

Yogesh Bellani, CEO, FieldFresh Foods, shares that looking at the go-to-market strategy differently and looking at what the opportunity provided us – using that as a model to create awareness of our brand, was something where we did innovation.”

VL Rajesh, CEO, Food Division, ITC, shares, “We take the culinary expertise of our chefs and put it in a pack. The innovation was offering the same thing you taste in hotels in the pack as well.” A lot of our latest range coming is done by the hotel chefs, he informs.
With growing awareness, health consciousness, need for convenience and improving lifestyles, the share of processed food is gradually and steadily increasing in the consumer’s food palate. These trends indicate that in future, consumers will become more and more demanding to know what they are consuming. Therefore, it is essential for the food processing and retail industry to understand how the consumer preference is changing with time and what are the key ingredients that constitute consumer trust, says Sangeeta Pendurkar, MD, Kellogg India.

Meeting International food safety challenges

The Indian food processing industry has not been able to match up to the international food safety and quality aspects due to various challenges unique to the country such as dynamic policy regulations, lack of infrastructure and lower levels of monetary aspects.

Dynamic policy regulations: Although, efforts have been made by the Food Safety and Standards Authority of India (FSSAI) to unify various legislations and regulations under the Food Safety and Standards Act, 2006, many aspects need further clarification. However, there is still lack of clarity about the roles of various stakeholders, believes industry experts.

Lack of infrastructure and lower levels of processing: The food processing sector has witnessed many infrastructural developments during the last five years, still we are far behind developed countries. There is a need to constantly develop food processing, storage and transportation infrastructure, especially transportation and logistics-related infrastructure which is growing at a sluggish rate.

Monetary aspects: The Indian consumer is price-sensitive, cost hikes may render businesses non-competitive many a time. With the increasing awareness, many consumers are willing to pay for better quality, however, the larger section is still not ready to shell out more until there are visible quality differences.

The way forward

Despite the challenges, the future of the food processing sector looks promising with the growing demand due to change in the consumer’s lifestyle and consumption patterns including food habits. The sector is expected to play a key role in bridging the gap between demand and supply, and addressing the key concerns of the sector – rising food prices and high levels of food wastages. However, efforts are required from both industry and regulatory bodies to streamline the food safety and quality landscape in India.

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