PRATEEK

18-Apr-10

Indian Retail :
Food Industry
Submitted By –
Prateek Shrivastava (031)
AmmarJuzar (006)
AnkurDubey (023)
 Contents

1.Segment Profile – Overview

2.Market size and Economic Contribution
3.Product and Service profile
4.Indian Major Players in the segment
5.Consumer mindset and purchase behavior
towards this category
6.Future Outlook
Segment Profile – Overview

Our country India is one of the major food producers in the world. Food
has the largest consumption in the Indian economy and will remain the
largest in its category. Though with a population of a billion and a
middle class population of over 300 million organized retailing (in the
form of food retail chains) is still in its infancy in the Country. This was
largely due to the excellent food retailing system that was established
by the kirana (mom-and-pop) stores that continue meet with all the
requirements of retail requirements albeit without the convenience of
the shopping as provided by the retail chains; and also due to the
highly fragmented food supply chain that is cloaked with several
intermediaries (from farm-processor-distributor-retailer) resulting in
huge value loss and high costs.

One of the main characteristic feature of Indian food market is that it

includes different co-existing formats and types. Initially food items
were sold in small road side grocery shops &mandis, now being sold
through supermarket stores.

In all we can categorize Indianmarket as a combination of Unorganized

& Organized food retail stores. The Unorganized sector is as follows -

1. The road side hawkers and the mobile (pushcart variety) retailers.
2. The kiranastores (mom-and-pop), within which are:
a. Open format more organized outlets
b. Small to medium food retail outlets.

But along with these unorganized players, a group of organized players

are also present in the market. However these organized players are
fewer in comparison to the unorganized one.
They are categorized as follows:

1. The discounter (Big Bazaar, Apna Bazaar, Margin Free)

2. The value-for-money store (Nilgiris)
 3. The experience shop (Foodworld, Trinethra)
4. The home delivery (Fabmart)

Market size and economic contribution

Size
The food retail comprises of about two third of the total Indian retail
industry. The retail food sector in India is likely to grow from around
US$ 70 billion in 2008 to US$ 150 billion by 2025, accounting for
a large chunk of the world food industry, which would grow to US$ 400
billion from US$ 175 billion by 2025. In 2020 the approximate size of
the Indian retail market is about US$ 78 billion.

Economic Contribution
✔ Contribution of Retail Industry in Indian GDP – 10%approx.
✔ Contribution of Food Retail Industry in Indian GDP –4 to 5 %
approx.
✔ Food Retailing is growing at 30% rate which makes it a major
driving force of the economy.
✔ There are about 14 million street vendors in India, of which
nearly8 million only sell food.
✔ Modern state of the food retailing is not a demand led but the
supply led one.
✔ Indian consumers are happy with store goods than branded
goods.
✔ Food accounts for the largest share of consumer spending.

Product and service profile

The food industry in India mainly consists of a number of sectors. In other words the
food industry serves the people via different sectors. Some of the well-known sectors
which are doing well in the market are:
• Dairy and food processing
• Canning
• Frozen food refrigeration
• Thermo processing
• Specialty processing
• Fast Food/ Junk Food/ Snacks
Some of the other sectors which are expected to grow more and be a very lucrative option
of business in the coming years are:
• Fruits and vegetables
• Confectionary
• Aqua culture and fishing
• Meat and poultry
• Ready to eat food
• Additives
• Health food and grains
• Health food supplements
The above listed food segments are doing very well in the current
market.

Indian Major Players in the segment

About 60-70 % of the Indian Food retailers are unorganized. The food retail giants are
fewer in number in India but their development is fast.
The major food retail giants of India are –
1. Reliance Fresh
2. Big Bazaar
3. Food Bazaar
4. Spencers
5. Food World
6. More Retail
7. Nilgiris
 8. Margin Free
9. Giant
10. Varkey’s
11. SabkaBaazar
12. Big Apple
13. Haico
14. Radhakrishrna Food World
15. Adani
16. ITC
17. HUL

Consumer mindset and purchase habits

towards this category
Food retailing has come of age from a period when food items were sold in small road
side grocer shops &mandis, haats and bazzars by vendors to a stage when food products
(processed and groceries) are retailed through supermarket stores where consumers can
inspect, select and pick up the products they like in a comfortable ambience and still pay
a fair price for the product and the merchandise and sometimes even pay less than the
price they would have paid at the nearest food stores. Shopping for groceries is no longer
a strenuous and uncomfortable affair.
In olden days the consumer was more concentrated on doing shopping based upon a
paper list. But now it is replaced by mind lists. There is an arising tendency of Impulse
purchase in today’s customer. Earlier customers spent a huge portion of their income in
fulfilling their food requirements still the hygiene and development was not enough due
to lack of technology and mis-management of supply chain and also the production cycle.
But now the people are more conscious about their time and health. They spent equally in
food, clothing and their comfort items. But still the food industry is growing at a very
high rate due to improved technology, better Supply Chain Management etc. Also In
today’s world consumer is more concentrating in the consumption of Ready-to-Eat food
items. Also the market of Junk food and snacks has developed up to a great extent in
recent days. The habits of consumer have also changed a lot; an average Indian family
goes out for having meals at least twice in a week. The increase in the consumption of
fast food and change in the consumer mindset is clearly visible in today’s youth which
comprises of about 70 % of the India’s population.
There are various factors paving the way to revolutionizing food retailing in India.
Among them few are:
• Changing life styles and tastes
• Growing need for convenience
• Increasing disposable income
 • Increasing numbers of working women
• Change in consumption patterns
• Higher aspirations among youth
• Impact of western lifestyle
• Plastic Revolution – Increased use of credit cards and debit cards

Future outlook
The future of Indian Food Industry is very bright. The food retail has the highest
development rate of about 30%. It is estimated to emerge as a US$ 150 billion market by
2025. Thus it is an emerging retail sector whose contribution in the Indian GDP and
economy cannot be neglected.
The past 4-5 years have seen increasing activity in food retailing. Various business
houses have already planned for few investments in the coming 2-3 years. Though the
retailers will have to face increasingly demanding customers and intensely competitive
rivals, more investments will keep flowing in and the share of organized food sector will
grow rapidly.Organized food retailing in India is surely poised for a takeoff and will
provide many opportunities both to existing players as well as new entrants.
The emerging trends in the Indian food retail which may enhance the growth of food
retail are -
✔ Rise of organic foods and health and wellness segment
✔ Increasing focus on private labels thus leading to high level of
competition
✔ Innovation on Retail format; Hypermarket, Supermarket, Malls
etc.
✔ High technology will facilitate the food retail
✔ Changing lifestyle and improving the quality of life
Thank You