Eating out
The business of food is not restricted to processed food. Today, Indian homes increasingly buy processed or packaged cereals and processed edible oils to cook food. Several steps have been added in the journey from the field to the plate. The farmer, the only producer earlier, is today seen as a mere supplier of raw material to an industry that churns out modern 'food'. Processed and packaged food, today, constitute almost 100 per cent of what is eaten in industrialised countries. This is the model Indian planners would like to emulate. In the name of the farmer, who will supply raw materials, the government is offering policy incentives in this 'sunshine' sector.
Industry is joining the food processing bandwagon -- from Reliance to the Bharti group. Reliance has entered the agri-horticulture and processed food sector and has exported fruits and mango pulp in 2005-2006. Reliance has also started more than 100 fast food joints at petrol pumps it owns along various stretches of the golden quadrilateral and north-south/east-west corridor. The Bharti group has made a big foray into food processing and horticulture.
mncs are also taking over. Nestle, Brooke Bond, the Danone group, Cadbury's, Perfetti, Heinz and Hindustan Lever control various segments of food processing. In the soft drink sector, the market belongs to just two companies, Pepsi and Coca-Cola. Coke acquired Parle brands and Pepsi Dukes.
India is the second largest producer of food in the world, next to China, despite the fact that agricultural productivity remains abysmally low when compared to industrialised and most developing nations. With a little increase in productivity, India has the potential of being the largest producer.
Although a small percentage of food produced is processed -- 2 per cent of fruits and vegetables and 37 per cent of milk-- the food-processing industry is the fifth largest industry in the country in terms of production (see table:
In the process). Estimates of industry size vary between Rs 300,000 crore and Rs 350,000 crore, representing more than six per cent of
gdp in 2003 and accounting for six per cent of total industrial investment. There are more than 7,000 food-processing units in the organised sector and thousands of small units in the unorganised sector. The sector employs 1.6 million workers and has been witnessing a growth rate of about 15 per cent per annum. It accounts for 13 per cent of the country's export. The main sub-sectors include fruits and vegetable processing, dairy, meat and poultry processing, fisheries, consumer and value-added foods including packaged foods, soft drinks and other beverages and packaged drinking water.
The government has been giving fiscal and policy incentives to the sector in successive budgets. A double-digit growth is expected to continue. Fruit and vegetable processing, currently at 2 per cent of total production, is expected to increase to 10 per cent by 2010 and 25 per cent by 2025. But the most lucrative sub-sector remains the processed/packaged food and drinks sector, between Rs 100,000 crore to Rs 120,000 crore. That is about a third of the total food processing industry. According to India Brand Equity Foundation (
ibef), value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Packed tea is the largest variety of packaged food consumed, followed by biscuits. Soft drinks are a close third. Manufacturing of soft drinks has doubled from 1999 to 2004.
ibef estimates that there are more than seven million outlets retailing soft drinks in the country. Coca-Cola has found innovative methods to penetrate rural areas, hitherto a small market (see box:
Rural revolution).
It is established that change in food habits accompany urbanisation. "Previously we used to get our wheat milled at the neighbourhood
chakki (mill) but now we get it packed," says Anita Singh, a housewife. Availability of fresh food, milk and vegetables is restricted in urban areas and usually much more expensive than packed food. Buying fresh food, cooking and then eating at home is time-consuming. Euromonitor International, a market research company, has found that the amount of money Indians spend eating out has doubled during the past decade to about Rs 22,500 crore a year. This is expected to double in only half the time. This shift in food habits is clearly visible. Indians are spending more and more on junk food. And not just in urban areas.
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