Food Industry in India has a happening time!
  Jan 5, 2016  0 Comments

Food Industry in India has a happening time!

Many entrepreneurs wonder about the fact that some food industries are just unable to stabilize. They stumble, decline, and fall. It is quite surprising in an environment where not only government policies but market demands are also favorable. Experts say that there are two fundamental reasons for this fiasco. Firstly, these ventures do not gather a thorough understanding of the Indian environment and consumers. Secondly, they launch the business with a poor timing. History confirms that projects launched with serious research and development created a history.

Consumers in India are open to new concepts and ideas. They don’t mind experimenting new things. Hence, there are unlimited opportunities for expanding and growing through innovation. Consumers are literally waiting for innovation.

It isn’t tough running food business in India
There is some uncertainty in the market but not fear. Indian norms for innovation, food safety and environment-friendliness become further clear and precise with time. The government is keen to support entrepreneurs in planning the investment systematically. Concepts like “Make In India” encourage local and small-scale industrialists to invent and innovate. Those who have the mission to bring international quality products to the Indian consumers, find the market quite positive and supportive. They can achieve unprecedented heights by applying market processes that are robust and simple. It gives high thrust to their confidence level.

Multinational companies are supposed to follow high standards
One thing is quite clear that the government of India doesn’t allow violation of standards by any company, even the multinationals. They are supposed to build a trust by adhering to the norms and fulfilling legal and statutory requirements. Keeping a high standard of product is mandatory. Regulatory authorities cooperate up to the maximum extent, but they expect a robust ecosystem and high quality of products by following standard norms. Certainly, there is a big change in the attitude of the Indian government and it becomes further open and positive towards food industry. It is a good sign from the industry and Indian economic perspective.

The vital statistics
Reports say that Indian food industry is growing with a phenomenal rate of 11 percent per annum and expected to reach 70 Billion USD by 2018. Since food and grocery capture one-third of the total consumption pie, the growth is simply mind boggling. It is quite different from other economies where people spend quite less percentage of their income on food and grocery (typically it is 10 percent in the US and 25 percent in China). Food constitutes a large segment in the retail sector also. According to statistics, it is more than 500 billion. Since the retail market shows trends of becoming double in next ten years, the share of food and grocery is also expected to become double.

Foreign investment increases with an exponential rate
Since Indian economy and food industry show such a bright future, no wonder international giants invest heavily in India. It gives a thrust to employment creation and rotation of money. Since foreign investors invest huge money in infrastructure and work with farmers directly, it is a win-win condition for both. Foreign industries establish backward linkage and add to the country’s economy. Also, foreign companies bring international standards of safety, production and waste management. They put technologies that are environment-friendly and innovative. Therefore, indigenous industries are also forced to follow the similar norms. It improves standards across the industry.

How to deal with controversies?
There were incidents when Indian and international food companies faced controversies. Whether it is the case of alleged contamination of Cadbury chocolates sometime back or the latest case of Maggie noodles where a company like Nestle also forced to stop production for a few months. However, as per food experts, such cases can be avoided if local and international food companies follow rules and regulations. Regular inspection of products and timely renewal of license avoid unwanted legal complications. Following food safety norms and acquiring standardization from international organizations like ISO establish the trust of consumers and government authorities.

There are state and national level norms and regulations in India. A food industry has to keep a balance between the two. The rules of the game are different and extra attention is required by the entrepreneurs. They have to collaborate with several stakeholders at a time. Protection of consumer interests and authorities together, is a skillful task.

India is a growth market
Studies indicate that Indian food market is highly dynamic. There is a huge potential in the packed food segment. Though per-capita consumption is significantly low as compared to the developed countries, the demand is increasing day by day. The industry expects a hike of 30 percent in next five years. Thus, it is a growth market where investment will give phenomenal returns.

For example, milk and milk related products are in a high demand. Being the largest producer of milk in the world, there is a potential for domestic and export markets. As hygienically packaged and produced beverages are preferred by consumers, local producers also invest in good-quality equipment and machines. Certainly it puts an additional burden on the bottom lines, competitive pressure makes it inevitable.

There is a great change in the customer management today. Food industries realize the importance of customers in the business, and they strive hard to offer the best services to them. They focus on maintaining high product quality and timely delivery. As a result, customers get good value for money.

In a country where a small percentage is processed earlier, today food processing industries become exceedingly successful. Definitely, it is a drastic change in the scenario. Economic growth, globalization, and change in lifestyle are predominant reasons for the change. As people are exposed to an international range of products, indigenous industries have to offer products with matching class. It will be quite exciting to see the battle in the coming years. However, consumers will have a great time because they will get world-class products at affordable rates. It is a good thing from the market perspective. A win-win situation for producers and consumers both.