PROJECT REPORT ON

ANALYSIS OF FOOD INDUSTRY OF INDIA

Submitted in the Partial Fulfillment for the Requirement of Post Graduate Diploma in Management (PGDM)

Submitted byLove Mahajan Pallav Bajaj Mohit Verma Pooja Rajput

For us, this Mini Project has been a rich and rewarding experience. We owe a debt of gratitude to all those who have given us guidance and support. We take this opportunity to express our deep sense of gratitude and respect for our guide Mrs. Sanjeela Mathur who not only encouraged us through this venture with his timely and valuable guidance but also took a great pain in going through this work, Without his valuable advice and suggestion at every stage of our endeavor, this work would not have been feasible. We would like to express our sincere thanks to everyone who directly or indirectly contributed in making our endeavor feasible through their critical comments and valuable suggestions.

Love Mahajan Pallav Bajaj Mohit Verma Pooja Rajput

PGDM VA

DECLARATION

We the undersigned, students of trimester VA P.G.D.M. studying at JIMS Kalkaji, New Delhi, declare that the Project entitled

ANALYSIS OF FOOD INDUSTRY OF INDIA

was carried out by us as a part of the BPSM Project and is submitted to MRS. SANJEELA MATHUR This project was taken up as a part of the academic curriculum. It does not have any commercial interest or motive. This is our original work and is not submitted to any other organisation for any other purpose.

Love Mahajan

Pallav Bajaj

Mohit Verma

Pooja Rajput

P.G.D.M. VA

Date: 20Th Sep. 2012

Place: New Delhi

Jagannath International Management School, Kalkaji, New Delhi

Certificate

This is to certify that

Love Mahajan Pallav Bajaj Mohit Verma Pooja Rajput

The students of P.G.D.M. Trimester VA have worked on the project under my supervision and this is their own work.

It is a part of their academic curriculum and is not intended for any other purpose.

Date: 20th sept. 2012 New Delhi

Mrs. Sanjeela Mathur

General Introduction of food Industry

India is the world's second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food.

The Indian food services industry is expected to grow at a compound annual growth rate (CAGR) of around 12 per cent during 2012-2015, according to a RNCOS research report, 'Indian Food Services Market Forecast to 2015'. According to another report, the industry is estimated to be nearly worth Rs 75,000 crore (US$ 13.56 billion) and is growing at a healthy CAGR of 17 per cent. The food services sector in India is expected to reach Rs 1,370 billion (US$ 24.77 billion) by 2015, according to a Franchise India report released at the Indian Restaurant Congress. "In the future, the organised market is expected to grow even faster - at around 20 to 25 per cent per annum," says Mr Gaurav Marya, President of Franchise India. India has emerged as the fifth most favourable destination for international retailers, according to A T Kearney's Global Retail Development Index (GRDI) 2012. The country is fast becoming an important investment destination for foreign players with companies such as Starbucks and American brand Dunkin' Donuts marking their entry into the country. India has also been recognised as one of the largest potential market for organic food consumption worldwide. The organic food is invariably increasing among the Indian retailers, especially with the niche retailers, as per RNCOS research report titled, Indian Organic Food Market Analysis. The report further expects that the sector will post significant growth during 2011-2013, growing at a CAGR of 15 per cent.

Key Players

The major players operating in the Indian food and beverages industry include Dabur India Ltd, Godrej Industries Ltd, Hindustan Lever Ltd, Britannia Industries Ltd, ITC Ltd, Nestle SA, PepsiCo, Inc, Cadbury Schweppes PLC, Future Group, RPG Enterprise and Godrej Agrovet Ltd.

India has emerged as the fastest growing market for Domino's, outpacing US. In India, the firm recorded an annual growth rate of nearly 50 per cent for the fifth consecutive year McDonald's India plans to invest Rs 1,000 crore (US$ 180.83 million) in the next three years, taking up its total outlets to 500. The informal eating-out (IEO) industry in India is growing steadily at 15 per cent per annum Emerging foods categories such as muesli, oats and olive oils are getting increasingly competitive with more food marketers aiming at capitalising on the increasing demand for health food. Edible oil major Marico will extend its Saffola brand into the Rs 100 crore (US$ 18.08 million) muesli market soon, and is expected to be followed by GlaxoSmithKline Consumer Healthcare (GSKCH)'s within few months. Meanwhile, the Rs 350 crore (US$ 63.29 million) packaged olive oils segment, meanwhile, is growing faster than oats and muesli. Last year, olive oil consumption increased 49 per cent, on top of a 46 per cent growth in the previous year Frozen yogurt chain, Red Mango plans to expand across the country by launching 15-20 outlets in metro cities by next year. According to Technopak, the Indian market frozen yogurt will grow to US$ 5 billion over the next three years, fuelled by the entry of new players and growing demand for health foods Korea-based frozen yoghurt maker, Yogurberry plans to set up seven new stores in the country by end of next year and another 100 over the next five years. "The expansion plan will begin with new stores in Chennai and Bengaluru, and additional stores in cities like Delhi-NCR and Mumbai," according to a company official

According to a new research report by RNCOS, the demand for various fast food items is consistently rising in India. The most delectable of them all is Pizza, which has now emerged as one of the most favourite fast food items of the Indians especially the young generation. As per market estimation, the Indian organised pizza market will surge at a CAGR of more than 27 per cent during 2012-2015. Furthermore, management consulting firm Tecnova estimated the Indian packaged food market at US$ 10 billion in 2010 and expects it to grow 20 per cent CAGR to US$ 30 billion by 2015.

Food Processing Industry

With a huge agriculture sector, abundant livestock, and cost competitiveness, India is fast emerging as a sourcing hub of processed food. India's food processing sector covers fruit and vegetables; spices; meat and poultry; milk and milk products, beverages, fisheries, plantation, grain processing and other consumer product groups such as confectionery, chocolates and cocoa products, soya-based products, mineral water, high protein foods etc. India is the worlds largest milk producer, accounting for around 17 per cent of the global milk production, according to RNCOS research report titled, Indian Dairy Industry Analysis. The study anticipates that the milk production in India will grow at a CAGR of around 4 per cent during 2011-2015. The food processing industries attracted foreign direct investments (FDI) worth US$ 1,456.20 million between April 2000 to June 2012, according to the latest data published by Department of Industrial Policy and Promotion (DIPP).

Beverages

Juice production in India is witnessing a consistent increase in 2012. Production in January 2012 climbed t 20.4 million litre, as per Centre for Monitoring Indian Economy (CMIE) data.

Coca-Cola plans to invest US$ 5 billion over the next 10 years as it expands its capacities in India. The company expects India to be among its top five markets worldwide by 2020, according to Mr Muhtar Kent Chairman and Chief Executive Officer (CEO), Coca Cola.

"With the growing popularity of the food and beverage businesses in India, the investment community has made significant investments here. Last year, these businesses received US$ 256 million of funding overall while this year has already seen US$ 43 million being invested," highlighted Mr Sandeep Kohli, who, as the former India Head of Yum Restaurants, brought brands like KFC and Pizza Hut to the country.

Government Initiatives
According to the recently announced Union Budget 2012-13, following initiatives will be taken by the Government under the National Mission on Food Processing:

A new centrally sponsored scheme titled National Mission on Food Processing to be started in 201 13 in co-operation with State Governments Steps taken to create additional food grain storage capacity in the country Subsidies fully provided for effective administration of the proposed Food Security Legislation To promote private sector activity and invite foreign investments in the sector the Government allows 100 per cent FDI in the food processing & cold chain infrastructure

Some of the other initiatives include:

South Africa seeks investment for its flourishing food processing sector from India. The country ranks among the top 10 investing countries in South Africa, with investments estimated at over US$ billion to date India and Taiwan are looking to expand tea trade between the two countries. A business delegation from India visited Taiwan from June 28 to July 1, 2012. The delegation held meetings with importan stakeholders of the Taiwan tea industry and discussed ways and means to increase cooperation between tea companies of the two nations South East Asia has become the largest buyer of Indian marine products with a share of 40 per cent volume and 25 per cent in value (in terms of US$). The marine products exports touched 862,021 tonnes valued at US$ 3.51 billion in 2011-12 Spices exports from India stood at 575,720 tonnes in 2011-12, as against 525,750 tonnes in 2010-1 The total export earnings rose by 43 per cent at Rs 9,783 crore (US$ 1.77 billion) as compared to Rs 6,841 crore (US$ 1.24 billion) earlier, according to Spices Board of India

Road Ahead
With massive scope for value addition, growing trend in the consumption pattern of processed food products in India and many fiscal incentives being planned by the Government, this sector is capable of maintaining the growth momentum in the future.

Food suppliers and retail companies plan to scale up business and stay competitive by tapping the large potential of the domestic market. Out of the total investments worth US$ 750 million in 2012, about US$ 1 million has gone into purely front-end retail, such as fast moving consumer goods (FMCG), food and beverage firms.

Foreseeing the future growth, many big international players are entering the Indian market by making deals with domestic players. This trend will emerge more strongly by 2015, providing opportunities to loc players to widen their product portfolios.

Growth Prospect
Large Market India has a population of more than 1.150 Billions which is just behind China. According to the estimates, by 2030 India population will be around 1.450 Billion and will surpass China to become the World largest in terms of population. FMCG Industry which is directly related to the population is expected to maintain a robust growth rate. Spending Pattern An increase is spending pattern has been witnessed in Indian FMCG market. There is an upward trend in urban as well as rural market and also an increase in spending in organized retail sector. An increase in disposable income, of household mainly because of increase in nuclear family where both the husband and wife are earning, has leads to growth rate in FMCG goods.

Advantages To The Sector

Governmental Policy Indian Government has enacted policies aimed at attaining international competitiveness through lifting of the quantitative restrictions, reducing excise duties, automatic foreign investment and food laws resulting in an environment that fosters growth. 100 per cent export oriented units can be set up by government approval and use of foreign brand names is now freely permitted.

Retail Industry In the wake of liberalization, many international business houses, attracted by the sheer volume of over 250 million buyers have flooded the Indian market. The landscape in many urban commercial centers has come to be dominated by big shopping malls, plazas and multiple entertainment complexes, displaying the latest in consumer and fashion goods, not to speak of global fast food chains. These retailers have opened their outlets in India mainly in urban and sub urban areas. The customers are attracted by them because they are providing better environment for purchasing. These are giving tough competition to the small retailers. Fisheries: The fish production rate in India has witnessed a remarkable growth since 1995-96. The National Program of Developing Fish Seeds, Fish Farmers' Development Agencies and Brackish Water Fish Farmers' Development Agencies have been the major contributors to the growth in fisheries in rural India. A diversified range of fishing methods along with processed fish products have been introduced in the Indian rural market through an Integrated Fisheries Project.

Poultry: Poultry Business is one of the major contributors to the growing economy of rural and semi-urban India. India has witnessed a remarkable growth in the egg and poultry meat industry in the recent period. States of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu contribute to around 45 percent of the total egg production in India whereas the eastern and central parts of India contribute to around 20 percent of the same. India is the seven largest poultry producer all over the world. Food Processing Industry: India is the world's second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The total food production in India is likely to double in the next ten years and there is an oppo rtunity for large investments in food and food processing t e c h n o l o g i e s , s k i l l s a n d equipment, especially in areas of canning, dairy and food Processing,Specialty Processing, Packaging, Frozen Food/Refrigeration and Thermo Processing. Fruits &Vegetables, Fisheries, Milk & Milk Pro d u c t s , M e a t & P o u l t r y , P a c k a g e d / C o n v e n i e n c e F o o d s , Alcoholic Beverages & Soft Drinks and Grains are important sub -sectors of the food processing industry. A health food and health food supplement is another rapidly rising segment of this industry which is gaining vast popularity amongst the healthconscious.I n d i a i s o n e o f t h e w o r l d s m a j o r f o o d p r o d u c e r s b u t a c c o u n t s f o r l e s s t h a n 1 . 5 p e r c e n t o f international food trade. This indicates vast scope for both investors and exporters. Food exports in1 9 9 8 s t o o d a t U S $ 5 . 8 b i l l i o n w h e r e a s t h e w o r l d t o t a l w a s U S $ 4 3 8 b i l l i o n . T h e I n d i a n f o o d industries sales turnover is Rs 140,000 crore (1 crore = 10 million) annually as at the start of year 2 0 0 0 . The industry has the highest number of plants approved by the US Food and D r u g A d m i n i s t r a t i o n ( F D A ) o u t s i d e t h e U S A India's food processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc. We cover an exhaustive database of an array of suppliers, manufacturers, exporters and importers widely dealing in sectors like the -Food Industry, Dairy processing, Indian beverage industry etc. We also cover sectors like dairy plants, canning, bottling plants, packaging industries, process machinery etc. The most

promising sub-sectors includes -Softdrink bottling, Confectionery manufacture, Fishing,a q u a c u l t u r e , G r a i n milling and grainbased products, Meat and poultry processing, Alcohol i c beverages, Milk processing, Tomato paste, Fast-food, Ready-to-eat breakfast cereals, Food additives ,flavors etc. This section analyses the performance of the Indian food processing industry. Currently, processed food accounts for merely 2% of total food production in India, which is very low as compared to the western countries. Taking market forces such as rising income level and changing consumer behavior due to rapid economic growth into consideration, it is expected to reach a growth rate of 10% in 2010& 25% in 2020. In food processing sector, dairy products (include s milk, Ethnic sweets etc) and packed food provides immense opportunities for investment. Currently, the Indian food processing industry is basically export oriented. Although domestic consumption of processed food is low but it is fast picking up with rising income levels& changing consumer behavior due to economic growth. Indian processed food industry provides competitive advantages over other countries due to cheap workforce, government initiatives (tax holidays) & availability of raw materials. Existence of untapped large consumer base with rising income levels. Indian food processing level as compared to countries like USA, France & Malaysia continues to remain very low. However, with the emerging positive market forces, it is all set to boom .During the period 2006-07, the Indian food processing industry witnessed growth from 7% to 13.1%.As a result it is hailed as the sunshine industry in India. The food processing industry has emerged as one of the major driver of economic growth and is expected to continue in future. Growing economy, surplus food and a shift in the consumption pattern, from cereals to more varied and nutritious diet of fruit and vegetables, milk, fish, meat and poultry products has been the key factors behind the growth of the sector. At present, the industry is seeking for investments to create necessary infrastructure, state-of-the-art-technology and expand production facilities to match the international quality and standards. Additionally, Indian Governments proactive measures like de-licensing of the sector, several duty and tax relief, financial assistance for infrastructure building and setting up of food processing units is expected to benefit the sector.

FMCG Sector in India:

Introduction Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. These products are purchased by the customers in small quantity as per the need of individual or family. These items are purchased repeatedly as these are daily use products. The price or value of the products is not very high. These products are having short life also. It may include perishable and non perishable products, durable and non durable goods. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals; consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. A subset of FMCGs is Fast Moving Consumer Electronics which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc.

Current scenario of food and beverages in India

Indias Food Revolution will guarantee an agriculture diversification along with providing huge investments in the food processing sector. The economics of the food industry has been changing due to the easy access of multinationals, rise of commodity branding and low cost of technology. The augment of regional players venturing into categories, where entry barriers are low, a boom in the Indian FMCG (fast moving consumer goods) markets and the rising need for these products are the main causes for growth and expansion in the food business. Owing to the structural changes in the Indian Economy, the Indian agriculture is in the run for an exemplar shift. In addition, as India is achieving selfreliance in grains production, the priority has changed from subsistence farming to commercialization opening up vast opportunities for value-addition, packaging and exports with strikingly high level of technological involvement. Yet, Food Security has two dimensions, which includes availability of food and access to food and even as the former has been achieved, the same is not the case with the latter. Regardless of bumper crops, allocation of food grains continues to be faulty and almost 30 % of the food produced in the country is wasted. In such a situation, it is imperative that we reorient our historical agricultural policy framework, right from handling shortages to endorsing efficiencies and value addition. Whats more, there is a need to increase the range of foods available to improve overall nutrition. The advantages in terms of health, vitality and productivity are obvious and cannot be underestimated. The promising sectors of the food market of India are inclusive of fruits and vegetables, milk and dairy products, grains, confectionary, fishing, meat and poultry, junk food, ready to eat meals, food additives and such. Another upcoming sector of the Indian Food Market is the segment dealing in healthy food and healthy food supplements. Along with this, the Food Retailing Sector is also a continuously growing market in our country. Although this is still in its inception, there is a wide scope for many large Indian corporates entering and extending their business. This mostly results in possibilities of new retail outlets like hyper and super markets that emerge country wide Consequently, the low brand loyalty and price-sensitive consumer is putting off the Indian market from unfolding its full prospective. It will require balanced brand portfolio strategies, comprising of diverse product mix with a superb level of quality and that too at an affordable price. This is expected to result into an overall market progress in which the consumer will be benefited the most. The Indian food market is approximately Rs 2, 50,000 crore ($69.4 billion), of which valueadded food products comprise Rs 80,000 crore ($22.2 billion).

Various Sectors In The Food Industry

Grain Processing Bakery Products Cocoa Products Soft Drinks Fruits And Vegetables Milk And Milk Products Meat And Poultry Fish Organic Food Industry

RELIANCE RETAIL

Date of Establishment Revenue Market Cap Address Branches Management Team

2006 Rs 2500-5000 Crores US $ 27.4 billion RCP STTC Industrial Area, Tanabelapur Road, Ghansoli , Mumbai - 400701 Over a 1000 stores across India Mukesh D. Ambani - Chairman & Managing Director Nikhil R. Meswani - Executive Director Hital R. Meswani - Executive Director H.S.Kohli - Executive Director Ramniklal H. Ambani Mansingh L. Bhakta Yogendra P. Trivedi Dr. D. V. Kapur M. P. Modi S. Venkitaramanan Prof. Ashok Misra Prof. Dipak C Jain Dr. Raghunath Anant Mashelkar Reliance Retail Limited (RRL), a subsidiary of Reliance Industries Limited under Mukesh Ambani, is Reliance Groups foray into organized retail. RRL is based on the growth strategy of backward integration, and it generates inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers. RLL is the second largest retailer in India. Its retail outlets offer foods, groceries, apparel and footwear, lifestyle and home improvement products, electronic goods, and farm implements and inputs. The companys outlets also provide vegetables, fruits, and flowers. Subsidiaries & division under Reliance Retail are:

Overview

These are spread across formats such as Reliance Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness, Reliance Trendz, Reliance Autozone, Reliance Super, Reliance Mart, Reliance iStore, Reliance Home Kitchens and Reliance Jewel. During the year 2011, RRL opened 51 new stores pan India, taking the total to 100 stores across key markets in the country. Across India, Reliance Retail serves over 2.5 million customers every week. Its loyalty programme, "Reliance One", has the patronage of more than 6.75 million customers. RLL has employee strength of above 5001.

RELIANCE FRESH
Reliance Fresh is the convenience store format which forms part of the retail business of Reliance Industries of India which is headed by Mukesh Ambani. These stores sell fresh fruits and vegetables, staples, groceries, fresh juice, bars and dairy products and they have their headquarters in Mumbai. A typical Reliance Fresh store is approximately 3000-4000 square feet and caters to a catchment area of 23 km.

Product range of reliance fresh

Vegetables and fruits: This is the specialty of the store as they provide fresh fruits and vegetables at a rate lower than the market price.

Households Items:

In the stores we can get items which are at slight premium rate than market price, but usually of high quality.

Food and Beverages: This area of the product line they stock all the premier brands and also their private label.

Groceries: In this sector reliance is promoting its private label as they are promoting their own brands and they do the packaging of the product and then label it privately and then sell it at premium as compared it to the loose items.

Dairy Products: The dairy products in some locations are procured from the farmers themselves and some places they procure it from the manufacturers.

Refrigerated products: This product line is dominated by the brands available in market and very less private labeling is done.

Non food items Here we get many petty non food items at a premium than market price.

BRAND IDENTIFY AT RELIANCE FRESH In this part of brand identity the outer core level is taken in consideration. The majorlevels are as follows: Brand Identify The brand name consists of two parts one is Reliance which means the name of parentcompany Reliance Industries Limited and secondly the Fresh means provides fresh merchandise. Design: The design of the brand reflects which it wants to communicate to its customers. In Reliance fresh being a store its design of reflects that it is a low cost because the fixtures and the cost of the store looks very low and gives a feel of budget shopping and use of graphics throughout the store and outside the store attracts the customers and communicate the deliverables of the store. Logo/Symbol: The logo of Reliance fresh includes a leaf structure which represents freshness. Brand name: The brand name consists of two parts one is Reliance which means the name of parent company Reliance Industries Limited and secondly the Fresh means provides fresh merchandise. INTEGRATED MARKETING COMMUNICATION (IMC) It is a concept of marketing communication planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication discipline and combines these disciplines to provide clarity, consistency and maximum communication impact. In short combine the disciplines to provide clarity, consistency and maximum communication impact. The main reasons behind the growth in importance of IMC tools are shift from media advertising to other forms of marketing communication, rapid growth of database marketing, and increasing importance of branding. IMC program situation analysis: The situation analysis of IMC program includes the external factors which includes the environment analysis and competitive analysis. The study of environmental analysis is done by endeavoring on the technological, demographic, Socio/Cultural and economic aspects and they are as follows:

SWOT Analysis- Reliance Fresh

STRENGTH:
Reliance is the first to enter in this unorganized sector of vegetables and fruits. Over 60% of the floor space has been dedicated to fresh fruits and vegetables, the rest to other food products like staples, spices, bakery, etc. Most of the staples are under its own private label brand Reliance Select. Reliance does contract farming which is beneficial to them. Reliance fresh has a strong financial back up. Network of more than 1600 channels in the village. High brand equity. Experienced management team. Backward integration.

WEAKNESS:
Multi format presence. Presence at only prime locations. Losses due to joint ventures. Lack in supply chain. Inventory is not properly controlled by staffs. Lack of well trained staffs. (Slow billing, Lack of Information)

OPPORTUNITIES:
Growing retail market. Increasing buying power of Indian consumers. Many untapped markets in India. Reliance wants to build a high-profitable business and food is perhaps, the best venture to start. Eliminate intermediaries and reduce the cost.

THREATS:
Increasing competition due to entry of many national and global players. They also have a threat from the existing supermarkets which provides all the services to its customers. Low price competition from players like Subhikhsha, Safal etc. Govt. restriction on the concept of contract farming in some states. Increasing operating cost.

PORTERS MODEL- Food Industry

1. THREAT OF NEW ENTRANTS : The threat of entry of new competitors into the food retail industry is low. It requires huge capital investments in order to be competitive and to establish a brand name. Gaining planning authorisation from local government takes a considerable amount of time and resources to establish.

2. BARGAINING POWER OF SUPPLIERS : The bargaining power of suppliers is fairly low. A contract with a large retailer such as Wal-Mart can make or break a small supplier.

3. POWER OF BUYERS: The bargaining power of buyers is fairly high. In cases where products have a slight differentiation and are more standardised, the switching cost is very low.

4. AVAILABILITY OF SUBSTITUTES: The threat of substitutes in the grocery retail market is considerably low for food items and medium to high for non-food items. What one store offers you will likely find at another store.

5. COMPETETIVE RIVALRY: Retailers always face stiff competition. The slow market growth for the retail market means that firms must fight each other for market share.

COMPETITIVE ANALYSIS: RELIANCE FRESH vs MORE

Points of Comparison 1. About the company RELIANCE Reliance Retail subsidiary Fresh Limited of the MORE Reliance more. Aditya Birla Retail (RRL), a Limited is the retail arm of Corporation. The Indian Aditya Birla Group, a USD 28 Retail billion

conglomerate

Industries Limited, launched Company ventured into food its first convenience store in and grocery retail sector in November 2006. RRL has 2007 with the acquisition of a grown rapidly and operates south based supermarket supermarkets over 900 stores across 80 chain. more.

cities in 14 States, which cater to the daily, weekly and include over 750 Reliance monthly shopping needs of Fresh stores. Reliance Fresh consumers. is the convenience store group has Currently a the national

format which forms part of presence The store, has been the retail business of Reliance aptly named more. As it Industries of India . It is promises positioned as a pure play everyday categories like food, FMCG, home, consumer durables, IT and wellness , with food accounting for the bulk of the business. to change the shopping

super market focusing on experience for consumers

2. Place

Generally located in small Generally more. is located in commercial complexes close a series of conveniently neighbourhood Currently it to 3-4 big residential areas located Observation: found close to supermarkets view from the road

Crossroads Enjoy a clear has 18 stores in Ahmedabad Located in areas of high footfalls like movie theatres, shopping malls, restaurants, etc. 3. Promotion The main idea behind every Large size promotional offer effort is to make a bulk banner purchase Saturday and Special at the on entrance private visual offers Audio

Sunday are considered as labels displayed near the discount and scheme day entrance Two types of offer: BOGO promotion of private label BXGY Rebates and Premiums products New concept: Color focusing on bill value Audio Slips visual tools been employed based on product pricing Introduction of $ store concept Promotional schemes parasite 4. Product combined Attractive with offer vodafone Mobile store kiosk names like July mein Dhulai Strictly vegetarian Product The product offerings of the Mix consists of Fresh Fruits, more supermarkets include a Vegetables, Dairy products, wide range across fresh fruits Frozen cosmetics products Items, and Less Groceries, and Daily vegetables, groceries, Use personal care, home care, range of apparels

Assortment general merchandise and a

but focus on specific product basic

categories

like

vegetables, Hypermarket general

stores

also and

dairy products, detergents, have a strong emphasis on fruits and daily use items merchandise apparels more. also has a range of products from its own stable available across value, premium and select ranges Variety is a promise delivered across the store 5. Presentation The pure foods convenience bright and clean stores, at store model of Reliance Fresh convenient full-fledged supermarket navigation locations The with requires far less space than a layouts that allow ease of product Most of these outlets need display is well organised and around only 2,000-5,000 sq. facilitates ease of choice The ft Simple, colorful but stores have been designed by the retail Higher leading design air cramped Separate entry and Fitch,

exit point Chocolates and international cash counter Vegetables and points near entry gate 6. Pricing Discount length thereby turn on of bulk Supply

other kids items were nearby firm Separate entry and exit Fruits items were in display conditioning levels at the front end of the store buying marked down by a Low prized Private labels Private label products were Measures taken to reduce the substantial margin Intelligent Chain pricing strategies for private directly labels were defined so that purchase to

from farmers, which is in customers could not compare sent distribution with usual goods promises in market pricing. centre. Two times supply of best

vegetable and fruits daily to Linking ensure fresh.

up

directly

with

farmers to source fresh fruits, vegetables and staples ensure great quality as well as great price provides customised the membership convenience, shopping program Clubmore., which

solutions and savings.

Competitive analysis
Reliance fresh has following competitors at national level: S no. 1. 2. 3. Brand name Food bazaar Spencers More Outlet supermarket supermarket supermarket Level of operation national national national ownership Future group RP Group Aditya birla

Key elements 1. Product range 2. Prices 3. Positioning 4. Store format 5. Brand Image 6. Strengths

Food bazaar Grocery perishable Less than Mrp

Spencer Grocery perishable, apparels Mrp

More Grocery perishable Mrp

Neighbourhood Stores/ Grocery perishable Mrp

Reliance fresh Grocery perishable Mrp Quality Touch and feel offered Fresh quality at reasonable price Strong financial support poor

Discount/value quality store Touch and feel offered Low price and best quality Strong financial support and huge assortment Okay Touch and feel offered quality Strong financial support and huge assortment Good

convenient Mom and pop store Touch and No touch and feel feel offered convenient Trust and relationship Local presence Customer relationship and credit provided poor

7. Quality

Okay

Strategies followed by Reliance 1. Marketing Strategies: Bold and effective store front and signage. Feedback from loyal customers & working according to their needs. 2. Growth Stretegy: New stores and acquisitions of small owner-managed chains in desirable markets. 3. Operational Strategy: Team-based management of store operations Many personnel, merchandising, and operating decisions made at store level Buying responsibility at the national and regional levels for volume discounts Own and operate many distribution centers 4. Business Strategy: Identifying business objectives and decide where to invest to best achieve those objectives. Reliance Fresh can move from direct sales model to online sales. 5. DIFFERENTIATION STRATEGY: In order to survive because of price competition from retail giants, Reliance Fresh must stress target marketing i.e. Instead of pleasing everyone decide which segment to please and then differentiate from the market.

PEST Analysis- Food Industry

POLITICAL FACTORS: Most of the processed food item has been exempted from licensing except alcoholic beverages. FDI up to 100% is permitted through automatic route. Custom duty has been substantially reduced. Corporate taxes are also reduced. Food industry is one of the growing areas identified for exports. No industrial license is required for almost all of the food & agro processing industries except Alcohol. Income tax rebate allowed. Fruit, vegetable & Dairy machineries are completely exempt from Central Excise Duty. All profit from sales are exempted from Corporate Tax.

ECONOMIC FACTORS: Food industry is growing at 13% despite of economic slowdown. Indias share in global food trade is increasing from 1.5% to 3%. Declared priority sector in 1999. It is expected to witness 50% increase in investment in 2012(investment in infrastructure of retail industry). Income of consumer: higher the income more is the consumption of food. Inflation: more inflation leads to search for close substitute. Population growth which leads to more production.

SOCIAL FACTORS: Eating habits of Indians are changing. Growing middle class. Increasing personal health consciousness among Indians . Increase in nuclear families. Shift in product and service preferences. Increase in working women proposition. Life style changes.

TECHNOLOGICAL FACTORS: Technological development for fast billing and service. Better applications of IT in modern retail industry like supply chain, store management, CRM, oracle. Introduction of organic fruits and vegetables by changing the means of agriculture to organic family.