Explosive growth predicted for Indian packaged food sector

Changing demographics, improvements in packaging and processing, along with greater urbanization and rising incomes will all combine to drive impressive growth in the sub-continent, according to research from The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The group said current and future foreign investment would play a key role in fuelling expansion in the sector.

Growth areas​

Snacks, bakery products, ready-to-eat foods and processed dairy and meats along with frozen foods, condiments and probiotic products are all predicted to see demand hikes as increased affluence, better production and distribution chains develop, said the body.

“Factors that have fuelled this industry’s growth are the arrival of food multinationals, rising popularity of quick-service restaurants, modern retail trade, technological advancement, changing urban lifestyles,”​ said an ASSOCHAM analyst.

Key global players already established in the country include Hindustan Unilever (tea, instant coffee, biscuits, pulses, instant beverages), Nestle (instant coffee, milk and milk products, ready-to-eat foods), PepsiCo (aerated drinks, fruit juices, cereals, snacks) and Haldirams (sweets, namkeens, syrups)

The increasing sophistication of India’s consumers is also pushing demand for “upscale flavours and ingredients", said trade body secretary general DS Rawat.

He added the Indian food processing market was one of the largest in terms of production, consumption, and export and import prospects.

A booming economy had led to the emergence of similar trends as seen in Western Europe and North America over the past decade – convenience, healthy eating and surge in demand for functional ingredients both in food and beverage products.

Urban and rural divide​

Perhaps unsurprisingly, the report highlighted a stark divide between urban and rural consumers – with the former accounting for 78% of all packaged goods sold in 2011, while rural residents consumed just over 22%.

A survey conducted by the industry association last year found that 82% of the working consumers favoured packaged food over eating street food or preparing meals themselves.

The group estimated the country’s food processing industry would experience annual growth of between 40% and 60% over next five years - thanks in part to the government changing trade rules that would encourage greater investment and a larger presence from foreign companies.