The document provides an overview of India's food and beverages sector, highlighting several key points: 1) India has significant potential for growth in food processing and value addition given its large agricultural output but high levels of food waste. 2) The overall market is large at Rs. 2,50,000 crore annually and growing at 20% for value-added products. Major segments like dairy, edible oils, and packaged foods are growing rapidly. 3) Opportunities exist in health and nutrition segments as well as exports as companies look to regional markets. However, lack of infrastructure like cold storage poses challenges to the industry's development.

1. Food & Beverages Sector

2. An Introduction to the Sector
India is fervently poised for the Food Revolution
This will ensure agricultural diversification and large investments
in food processing.
The concept of food security has two dimensions – availability of
food and access to food.
30% of the food produced in the country is wasted.
There is a need to increase the range of foods available to improve
overall nutrition.
Special foods for patients suffering from hypertension, diabetes
gives health benefits.
Packaging of food products has become important to ensure safety
and hygiene.

3. A comprehensive view
The Indian food market is approximately Rs 2,50,000 crore ($69.4
billion)
Value-added food products comprise Rs 80,000 crore ($22.2 billion).
The food processing industry is witnessing a 20% annual growth rate.
Post-Green Revolution, it is essential that agricultural research
reoriented to address new challenges. Application of
biotechnology, RNA use, and molecular biology.
Nutritional research and improved cost-effective vaccine
programmes

4. Target Segment Profile
Higher growth during 2005-06 in almost all the products belonging
to Food and Beverage segment
The overall industry has achieved a growth rate of about 8 % in
terms of value during 2004-05
Government’s high priority for development of food processing
industry to encourage commercialization and value addition to
agricultural produce.
Agro based l00 percent export oriented units allowed sale up to 50
per cent in Domestic tariff area.
India’s middle class segment continues to hold the key to success
of the processed food market in India.

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Indian food and beverage companies are making a beeline for regional
overseas markets like Bangladesh, Pakistan, Nepal, Middle East
The market is seeing players like Heinz, Mars, Marico, Pepsi, ITC,
Dabur, Britannia, Cadbury, HLL, Pillsbury, Nestle and Amul.
Both public and private players operate in the market, e.g., Hindustan
Lever, Nestle and NDDB, NAFED.
The price stability throughout the year has contributed to the increase
in domestic liquor sales.
Branded products are preferred in the Edible oil segment as the urban
consumers are increasingly becoming health conscious and looking
out for low cholesterol cooking medium.

6. Basic Issues & Constraints
Lack of adequate infrastructure.
Absence of a strong and dependable cold chain system which is
very vital
There is a need for a review of the Agricultural Produce and
Marketing Act to ensure freedom to farmers
Some commodities in one segment are used as inputs in another
segment of the food processing industry
Excise Duty on all Value Added food products like Nutritional
and health foods
Ice –creams and Non-alcoholic beverages dispensed by vending
machines are exempt from excise duty

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Packaging material for match sticks is exempted from excise
duty.
The higher railway freight has pushed up cost of raw materials
and inputs such as sugar, edible oil and all these add to cost of
production.
FICCI has highlighted some areas of concern impacting the
overall Food and Beverage Industry

8. The Industry survey
India is among the world's major producer of food and produces
over 600 million tonnes of food products every year
India’s food consumption market is expanding rapidly to attract
global food and drink giants
India is the second largest producer of rice and wheat and the
largest producer of pulses.
Indian food processing industry is poised for further growth in
view of the liberal policy measures and government’s
commitment for reforms and development of food and agro-
processing industries.

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Health food, health food supplements, Convenient Food and
Branded Food are rapidly gaining vast popularity with the
changing life styles of the consumers.
The unorganized, small players account for more than 75% of the
industry output in volume terms and 50% in value terms
Since liberalization in 1991 till January 2004 proposals for projects
of over Rs.87715 crores have been proposed in various
segments of the food and agro-processing industry.
The Government has provided many liberal incentives to
encourage the Food Processing industry.

10. Segment-wise Analysis
BRANDED FLOUR (ATTA)
The grain-processing sector is largely un-organized, although there
are a few large players in the market.
Brands like "Captain Cook", some large players, like Hindustan
Lever (with its Annapurna brand) and Godrej Pillsbury
(Pillsbury), Agro Tech (Healthy World), Nature Fresh and ITC
(Aashirvaad) re players of the market
Increased competitive activity is spurring market growth
The segment, which had been growing with excellent rate of 40-
50% till 2000 grown by 12% in 2004-05.
BAKERY INDUSTRY
The annual production of bakery products was 50 lakh tones in
2004-05 with estimated value of Rs 69 billion.

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The organized sector has a market share of 45 per cent and the
balance 55 per cent is with the unorganized sector in the baked
products.
Bread Industry:
The large organized sector players who are prominent in the high-
and medium-price segments include Britannia, Modern
Industries Ltd.
Local manufacturers with numerous local brands cater to populous
segment and contribute considerably in the bread segment.
Biscuit Industry:
The major brands of biscuits are – Britannia, Parle, Bakeman, Priya
Gold etc
The per capita consumption of biscuits in our country is about 1.52
kg as compared to more than 12 kg in developed countries

12. Semi processed/ Cooked/ Ready to Eat
The market for semi-processed/cooked and ready to eat foods was
around Rs 82.9 billion in 2004-05.
HLL has entered the ready to eat segment through Indus Valley
rice meals in seven flavours
ITC ‘s more than 50 packaged branded food products under
Kitchens of India and Aashirvaad brands with different varieties
of ready to eat/ cooked food is gaining popularity in the market.
CULINARY PRODUCTS & SNACK FOOD
The total production of culinary products and snack food was
around Rs 1750 crore in 2004-05 and is growing at a moderate
rate of 8 per cent
The culinary products including mainly wheat based products
comprising of noodles, vermicelli, macaroni and spaghetti is
gaining popularity

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HLL (Kissan and Knorr range) and Nestle
(Maggi) dominate this segment. Heinz and
Top Ramen are also strong players.
Frito Lay's India, Pepsico’s Snack Food
Division having snack foods plants in
Channa (Punjab) and Pune (Maharashtra) ,
and going for another in (Sakrail) West
Bengal with investment of Rs 75 Crores.
FRUIT JUICES / PULP &
CONCENTRATES/ SAUCES/ KETCH
UPS
India is the second largest producer of both
fruits and vegetables in the world.
The market has immense potentialities
provided some infrastructural facilities for
efficient transportation and marketing of
fruits and vegetables are created.

14. Sugar Industry
The largest agro-processing industries of the country with an
annual turnover of Rs 200 billion.
Indian sugar industry uses sugar cane as the only input
The sugar industries have sprung up in states like Uttar Pradesh,
Maharashtra, Punjab, Gujarat, Andhra Pradesh, West Bengal.
The leading players in Indian sugar industry are Balrampur Chini
Mills Ltd, Bajaj Hindustan Ltd, Andhra Sugars Ltd, Thiru
Arooran Sugars Ltd and, Dhampur Sugar Ltd.
The Government controls sugar capacity additions through
industrial licensing, determines the price of the major input
sugarcane, decides the quantity
Inadequate sugar cane availability, uneconomical size, bad
condition of plant and machinery are responsible for closure of
many mills in the country.

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Central Government has also
provided inland transport
subsidy for sugar export.
Dual Pricing System is adopted in
the Indian sugar industry, which
includes sugar price in Public
distribution system and the free
sale sugar price.

16. Edible oil
The growth of the Rs. 250 billion edible oil industry in India has
been somewhat stagnant at around 5% per annum.
NDDB has emerged as a major player in the sector with its
"Dhara" brand of edible oil.
Even small growers and co-operatives having crushing units or
solvent extraction units have started branding their products.
In Edible oils, National Dairy Development Board (Anand), ITC
Agro-Tech (Secunderabad) , Marico Industries (Mumbai),
Ahmed Mills, (Mumbai) are the major players.
The main issues in the edible oil segment is the rising cost of raw
materials.
Raw material cost account for 70 per cent of sale price.

17. Alcoholic Beverages
The alcoholic beverages industry in India is generally divided into
two main categories-Industrial Alcohol and Potable Alcohol.
The price stability throughout the year has contributed to the
increase in domestic liquor sales.
United Breweries Ltd, Shaw Wallace, MC Dowell & Co Ltd (part
of the UB Group) Radico Khaitan, Seagram India Ltd are
among the familiar names in the alcoholic beverage industry in
the country.
The Indian wine market, estimated at 5 lakh cases annually, has
witnessed robust 30% growth over the past few years.
Several Indian brands have made inroads into the foreign markets
including British market.

18. Malted Food & Health Beverages
The Rs. 14.4 billion malted foods market is composed of two
segments - brown and white.
Malted beverages with nutritional attributes control around 70% of
the total market and energy drinks (brown beverages) account for
the rest.
The malted food drink industry is dominated by few players. These
include brands such as ' Horlicks, 'Complan' and 'Viva', which are
mainly known as white beverages. 'Boost', 'Bournvita', 'Milo' and
'Maltova' on the other hand are classified as brown drink.
The consumption pattern of malted beverages differs according to
usage patterns across geographic zones

19. MILK AND DAIRY PRODUCTS
India is the largest milk producing country with production of
about 92 million tonnes.
Efficient production and marketing can bring about more than
200 per cent value addition in the Indian dairy segment.
The National Dairy Development Board (NDDB) is a major
player in the market with its major brand, Amul.
Leading brands like Amul, Nestle, Mother Dairy and Britannia
are in the race to tap the growing market.
The milk and dairy products segment is set for up gradation of
cold-storage chains for expansion.

20. …continue
Mother Dairy brand through retail
outlets across the country in
addition to its own 300 outlets
with provision of cold storage
and cold chains.
Rising standards of living and
popularity of convenience
foods, the industry is expected
to witness strong long-term
demand growth potential.

21. Confectionary Industry
The entire market can be divided into 7 major categories, namely
Hard Boiled Candies (HBC), Toffees, Eclairs, Chewing gums,
Bubble gum, mints and Lozenges.
It is dominated by 2 major players, Cadbury India Ltd and Nestle
India Ltd, which together account for about 90% of the total
chocolate market.
The perishable nature of the product and the fact that India lacks a
cold chain distribution network are among the major problems
that inhibit market expansion.
The private dairies have raised the prices including the prices of
Skimmed Milk Powder (SMP), the essential ingredient for
manufacturing milk chocolates and ice cream mixes in addition
to biscuits and confectionery products.

22. Study on TEA Industry
Tea has brought cheer to people across the world for over 4500
years.
Chinese first drank it for its medicinal value, and later, from the
third century onwards, as a refreshing beverage.
India has a vast domestic market. The Industry has achieved a
production of 878 million kg in 2005 from 820.5 million Kg in
2004 with a growth of about 7 percent.
Tea plantations in India are concentrated in the North-East
(Upper Assam, West Bengal) and the South (Kerala, Tamil
Nadu).
Tea trading in the domestic market is done in two ways-auction
and private selling

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Tea imports surged from a mere 7
million kg in 2003 to
whopping 30 million kg in
2004.
Lower availability of tea in the
domestic market may continue
in short run, as tea production
falls in January seasonally
Assam produces around 53
percent of the country's total
production, but also employs
more than 10 percent of the
state’s work force or around 12
lakh people.

24. Tea Cultivation and Production Process
Rainfall: More than the total amount, the distribution of rainfall
matters a lot for sustained high yield of tea throughout the
season.
Temperature and RH: Temperature affects tea yield by
influencing rate of photosynthesis and controlling growth and
dormancy.
In general, the ambient temperature within 13°C and 28-32°C is
conducive for growth of tea
Day length: Day length influences growth and dormancy in tea
bushes.
Soil: Tea grows well on high land well drained soils having a good
depth, acidic pH in the range 4.5 to 5.5 and more than 2%
organic matter

25. OPPORTUNITIES AND PROJECTION
The Food and Beverage Industry is projected to have overall
growth between 8% -8.5 %
The sectors which are projected to achieve excellent growth of
20% and above are –Semi Processed/Cooked Ready to eat
(22%), Ice-Cream(20%), Edible/Vegetable oil
(20%),Wine(22%) .
Development of rural infrastructure, rural extension services,
agro-based and food processing industries have been given
high priority.
The process of setting up of Food Parks in various key locations
of the country with the involvement of the various state
governments and other allied institutions is on.

26. Thanks for your attention
Presented by:
Monika Bansal