Food-Retail-Ppt.ppt

Presentation
on
Indian Food Retail
Trends & Tasks
by
Anand Kumar
JU07019
NSB School of Business
New Delhi

India Food Retail: Trends & Tasks 2
We will talk about…
• Retailing in India
– Indian economic snapshot
– Retailing
– Food retailing
• Trends
– Evolving consumer preferences
– Consumption shift
– Drivers
• Tasks
– Hurdles
– Tasks for suppliers
• Reliance Industries Snapshot

Happening times !
• Indian GDP growth at 9.4
% for 2006-07 is the
highest in 18 years
• Analysts across the globe
find Indian growth
sustainable
• Economic outlook for India
is positive
• Indian working population
is confident
Source: Indian Express

India is growing !
• India will be the third largest economy by 2040
• India will be the 5th largest consumer market by 2025
Source: Economist

Most attractive retail market !
India’s retail market has grown by 10% on average for past 5 years
…steadily rising to top position in GRDI
Source:
AT Kearney
Global Retail
Development
Index (GRDI)

Organized retail is still in its infancy !
• With just 2 % organized retail …
….India is a big opportunity
Source:
JM Morgan Stanley

With robust economy,
sustained GDP growth and
booming stock exchange,
there are several emerging
sectors in India waiting to be
tapped . . .
…Organized Retail is at the forefront of these opportunities
Organized Retailing is big opportunity !

Growth in Organized Retail
• India is in 2nd phase of retail growth
• Increasing Range, Portfolio and Format options
• Food retailing leads the growth in Indian organized retail
Source: Ernst & Young

Food is the largest segment in Retail !
• At 77 % Food & Grocery is the
largest segment in Retail sales
Source: Ernst & Young
Source: KPMG

Food Retail Sales in India
• Total food sales to cross US$ 250 billion by 2008

Modern formats in Food Retailing is low !
• Lowest among major retail markets...
…But growing due to evolving consumer preferences

Indian consumers are evolving…
• From traditional to…
… modernized traditional
• From globalize to…
… Indianise
• From functional to…
… lifestyle
Evolving consumer preferences !

Indian consumers are evolving…
• From value for money to…
… value for time and convenience
• From cautious to…
… experimentation
• From over-the-counter to…
… touch-and-feel
Evolving consumer preferences !

Consumption shift !
• Beverages
 Rise in coffee drinkers
 More fruit drinks and bottled water
 Wines and Liquor sales on rise
• Processed food consumption
 Increasing ready to eat food
 Growing premium foods
 Increasing private label
 From “packaged as stale” to “packaged is hygienic and high quality”
 Increased tendency towards disposability
 Shift from price consideration to design and quality

Consumption shift !
• Lifestyle
 Frequent eating out
 Growing health and dietary supplements
 Growing organic produce
 Greater focus on looking and feeling good
Source: AT Kearney

Drivers of this shift !
• Demographic advantage : Young population

• Increasing discretionary income

• Increasing retail space
• Credit availability is also fuelling this shift

Still there are hurdles !
Local and Global players’ concerns
• ‘Unorganized’ sector
• Nascent Supply Chain
• Low Technology Penetration
• Infrastructure
• Bureaucracy
…work with these profitably by
focusing on following tasks…

Tasks for suppliers !
Most important task
 Understand consumers
• 29 States + 6 Union Territories
 Even within each state,
tremendous diversity in customs,
traditions, attitudes
• 22 official languages and 1600 minor
languages and dialects
• 70% Rural population – India lives in
its 600,000 + villages ( < 20,000
population)
 However, accounts for more than
half of sales of many FMCG and
Consumer Durable products
• 35% still illiterate, not accessible by
mainstream media
• India is a not a homogenous market

 Innovate & invest
• Products
– Not just customize but Indianize
» McDonalds and Pizza Hut
– Processing
» Nestle
• Marketing
– Market research
– Advertising
» Coca Cola and Pepsi
– Encourage experiments
» Kellogg’s
• Distribution
– Packaging
» Sachets & Smaller pack sizes
– Channels / Network
» Frito Lays and Anheuser-Busch

 New agriculture supply chain
is emerging India removing
non-value adding
intermediaries
 Partnership with value
adding intermediaries of the
supply chain
• Technology transfer
• Streamline processes
• Maintain Quality

 Participate in Agri Infrastructure: Logistics

 Participate in agri related activities

 Focus on emerging markets (Tier 3 and 2 cities)

 Tap the rural retail market
• Rural India consists of 720 Million consumers
across 627,000 villages
– 17% of these villages account for 50% of the
rural population and 60% of the rural wealth
– Extensive reach is required as to cover 50%
market 100,000 villages must be catered
– Immense opportunity amounting to US$ 125
billion
• Rural Retail is growing @ 7% p.a.
• Rural consumption is also shifting from basic
food grains to fruits, vegetables, dairy and
poultry products, as well as beverages
• Demand for better quality food leading to
huge demand for basic foods

All these can be done only if you …
 Establish franchisee
 Forge joint ventures
 Licensing agreement
 Strategic partnerships
 Explore other avenues
… Act & Join !

• Revenues US$ 19.9 billion
• Cash Profit US$ 2.9 billion
• Net Profit US$ 2 billion
• Total Assets of US$ 20.8 billion
India and Reliance
• Revenues equivalent to 2.8% of India’s GDP
• 8.2% of India’s total exports
• Contributing 8% India’s indirect taxes
• 4.7% of the total market capitalization
• 11.5% weightage in Bombay Stock Exchange Sensex
• 9.3% weightage in National Stock Exchange Sensex
 US$ 20 billion enterprise created in 30 years
Reliance: Contribution to Indian Economy

Global Rank
Net Sales 342
Net Profit 194
Net Worth 226
Assets 351
Amongst the fastest 25 growing
companies in Fortune 500
 India’s only private sector company
to list in fortune global 500 list
11
19
06
75
Reliance: Global Ranks

Reliance: Recent Major Initiatives
 Exploration & Production
 Refinery – Jamnagar
 Special Economic Zones
 Reliance Retail

To be the most admired and successful organized retail company in
India that materially enhances the quality of life of every Indian
By
 Providing unprecedented affordability, quality and choice
 Being the partner of choice in creating prosperity for Indian farmers
and other vendor partners
 Unleashing the power of the Indian workforce through the
generation of new & attractive employment opportunities
Reliance: Retail Vision

Food-Retail-Ppt.ppt

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