Report to the Southern United States Trade Association on Food Opportunities in India, by i2i Consulting

1. Helping southern U.S. companies export food & agricultural products around the world.
www.susta.org
India
Activity No. 12AS55
Opportunity Awaits

2. India: Opportunity awaits…
§ The third largest economy (over trillion dollar).
§ Consistent GDP growth even during Global economic slowdown.
§ India: second-most attractive destination for FDI in the world.
UNCTAD's World Investment Prospects Survey 2010-2012
§ Imports grew to US$ 34.6 billion in 2012.
§ Disposable income is showing consistent increase.
§ Among youngest nations with an avg. age of 25 years.
§ The Indian retail market is USD 396 billion growing at 12% making
India fifth largest retail destination globally: AT Kearney

3. MINI - METROS
• Goa
• Nagpur
• Pondicherry
• Chandigarh
• Agra
• Ludhiana
• Pune
• Lucknow
• Varanasi
• Ahmedabad
• Amritsar
• Jaipur
• Kanpur
• Udaipur
METROS
• New Delhi
• Mumbai
• Kolkata
• Chennai
• Bangalore
• Hyderabad
Major cities where the retail activities are
targeted

4. The Indian Middle Class
• The Indian consumer market is drawing global attention
not just because of its promise of sheer volumes but also
because of the shift happening in the nature of demand.
• By 2025 the size of middle class will increase to about
583 million people, or 41% of the population.

5. Indian Consumer Feasting on Value Added Food
products
• The Indian food market stands at 69.4 billion USD and
imported food products comprise 22.2 billion USD out of
it.
• Food and food products are the biggest consumption
category in India.
• Spending on food constitutes more than a 51% share of
wallet.
• The young Indians prefer buying or eating out quality
convenience and processed foods.
•

6. • Indian economic and demographic indicators suggest a market with strong potential for
U.S. agricultural exports.
• The largest opportunity for imported food products comes from supermarket and
hypermarket formats.
• Nevertheless, the Ma and Pa stores contribute almost 90% of the retail market.
• India s snack food and snack food ingredient import market has trebled since 2002.
• Indian consumer is increasingly looking at health aspects in food items.

7. Key Drivers for the food industry
» Economic growth
» Demographics
» Urbanization
» Rising income levels
» Growing need for convenience food
» Higher aspirations and brand consciousness
among youth
» Plastic Revolution – Increased use of credit cards
and debit cards
» Increasing numbers of working women
» Changing life styles and tastes
» Change in consumption patterns
» Impact of western lifestyle

8. FDI in multi brand retail…!
• Foreign FDI was prohibited in food retail
except for single brand retail.
• In January 2006, up to 51 per cent foreign
investment was allowed in single-brand
retailing.
• The GOI has recently allowed 51 per cent
FDI in multi-brand retail and allowed
100% FDI in single-brand retail.

9. FDI open gates for new opportunities for imported food
• The opening up of multi brand retail will lead to the entry
of major retail giants like Wal-Mart, Tesco and Carrefour.
• This step would lead to greater competition and greater
need to differentiate. The retailers, both Indian as well as
foreign will focus on offering specialty foods coinciding
with changing consumer tastes.
• The entry of these major players will encourage stocking of
processed and packaged food along with wines, nuts,
specialty foods etc.

10. Category wise analysis of the food industry in India
• Processed food
• Fresh Produce
• Seafood
• Horticulture
• Pulses
Emerging Potential Categories
• Chocolate and Chocolate Confectionary
• Dairy
• Carbonated drinks
• Edible oils

11. Indian Processed Food Market

12. Market Analysis
• Packaged food industry valued at US$25.4 billion.
• Snacks and Confectionery industry is estimated to be worth
US$ 3 billion.
• A variety of imported foods such as confectionery items,
beverages, jams, jellies, health foods, biscuits, cookies,
wafers, processed fruits and vegetables, soups, syrups and
seasonings, fresh and dried fruits / nuts, pasta and noodles,
etc can be easily found on the shelves of retail stores.
• Emerging New Categories
– Health-focused Snack Foods
– Frozen Ready-to-eat Segment
– Pet Foods

13. • The West and North India region has the highest value sales of packaged foods in India.
• Consumer awareness of packaged foods is also high in North India and metros in the South like
Hyderabad and Bangalore which are the IT hubs of the country and population has high
disposable incomes and good lifestyle due to good salaries.
• North is one the most affluent regions in the country with areas such as New Delhi, NCR,
Chandigarh, Jaipur and Lucknow.
• Demand for imported specialty foods such as chocolates, dry fruits and nuts, cakes, pastries, and
fresh and exotic fruits is significantly increasing during festivals like Diwali, Eid, and Christmas.
• Hence, October to December is the best time to introduce new-to- market products in India. This
is also the best time to organize promotions for new products.
Trends and Buying Habits

14. Key Partners in the Market
• Importers, Retailers and wholesalers
• Retail Channels
• Hotels, restaurants and institutions (HRI)
• Fast food outlets
• Imported foods are procured by high-end grocery stores or
organized retail stores and grocery stores catering
primarily to high-end customers in urban areas.
• Indian retailers highly value in-store promotions to
highlight international food products.

15. Fresh produce in India

16. Market Analysis
• Out of the total production of fruits, nearly 76 per cent is
consumed in fresh form.
• India is the sixth largest consumer of apples in the world.
• Apple imports have grown rapidly since the removal of
quantitative restrictions in 1999.
• India has very low domestic production of pears. So,
pear is a relatively new fruit for India.

17. Trends, Buying Habits and Consumption patterns
• Factors contributing to increased consumption of Fresh Fruits
and vegetables
• Rising income / Economic growth
• India s burgeoning middle-class
• Demographical changes
• Health awareness
• Increased literacy
• New diseases prevalence like diabetes and heart problems
• Cities in North and South increasingly are offering Fresh Fruits
and Vegetables in nearby shops, Supermarkets and
neighborhood stores.
• The children in the family are encouraged to consume more
fruits and vegetables as healthy habits.
• Exotic fruits and vegetables are increasingly finding space in
the kitchen of middle class consumer as the households are
preferring international cuisines and mainly salads

18. Seafood

19. Market Analysis
• There is limited market for seafood in India.
• It is mainly the food service sector where there is major
consumption of seafood.
• The coastal states of south India and the west coast of the
country prefer seafood . However, consumption of seafood
has increased in metros also.
• Canned fish is mainly imported from Korea, Singapore,
Thailand, Japan, and increasingly the UAE.

20. Horticulture

21. Market trends and Import procedure
• There is limited scope for the Horticulture produce.
• Hospitality sector has reasonable scope for them
• 'Import Procedure'
• Issue of Import Permit
• Inspection of imported agricultural commodities
on arrival at the port of entry
• Undertaking Post Entry Quarantine Inspection
in respect of identified planting materials

22. Pulses and Lentils Market

23. Market Analysis
• Pulse is an important group of crops in India and is
the major sources of protein in the diet.
• India is one of the major importers of pulses owing
to a large population largely dependent on pulses
and imports 2-3 million MT.
• Historically, chickpeas have been India s single
largest pulse import. Recently, however, peas have
overtaken them.
• India also offers market potential for various types
of beans and lentils, as long as pricing is
competitive.

24. Consumer trends
• Pulse consumption in India differs by region:
– Throughout country: Chickpeas, green peas, yellow peas,
and black eye beans.
– Northern India: Kabuli chickpeas, lentils, and kidney
beans.
– Southern India: Pigeon peas and lentils.
• Most pulses in India are either split or used in the
production of flour. Except chickpeas and green peas.
• Split and whole pulses are usually cooked and served as
part of a meal with rice or traditional Indian bread.
• All are important ingredients used in the preparation of
snack foods in India.
•

25. Potential of U.S. Pulses in India
• Pulses, such as beans, lentils and chickpeas, are the "meat" of India–the
main source of protein for most of its 1 billion people.
• Indian importers acknowledge that U.S. peas are superior due to their
stricter grading and more sophisticated processing.
• The US pulses are costlier as compared to the other imported varieties

26. Chocolate confectionary Industry

27. Market Analysis and Consumption
trends
• Chocolate consumption in India has almost doubled since 2008,
with sales of $857 million in 2012.
• Luxury and premium chocolate increasingly preferred by
Indians.
• Chocolate assortment boxes considered more hygienic and
longer-lasting than traditional Indian sweets.
• Increased popularity of seasonal gifting of chocolate,
particularly during Diwali.
• As the chocolate confectionery category suffers from being
associated with negative health, brands are working to manage
this perception and introduce elements of enhanced health
messaging.

28. Dairy

29. Market Analysis and Consumption trends
• India has experienced strong growth in demand for dairy products
• the Indian consumer preferences and trust for branded milk products
• The Indian processed dairy sector is expanding.
• Industry estimates project 15 percent growth in the processed dairy segment in the next five years.
• Products such as yogurts, ice creams, dairy drinks, and western-style cheeses, as well as dairy products with
enhanced nutritional properties are growing in popularity.
• FSSAI sets standards for the safety of domestically produced and imported milk and milk products into India.
• The Ministry of Agriculture s DAHD is responsible for issuing sanitary permits for milk and milk product imports
into India.
•

30. Carbonated drinks

31. Market Analysis
• The market for carbonated drinks in India is worth
US$ 1.5 billion
• The juice and juice-based drinks market is worth
US$ 0.25 billion.
• Fruit-drink market is growing at the rate of 25%.
• It is the one of the fastest growing in the beverage
market.
• Sports and energy drinks too have a good market
in India.
• The market for alcoholic drinks has been growing
consistently.

32. Edible oils

33. Market Analysis
• Total vegetable oil imports stands at 7.1 million
tons .
• The import forecast includes palm oil, soybean and
sunflower seed oil and other edible oils.
• Anticipating a rise in consumption demand vegetable
oil imports in 2012/13 could surpass 10 million tons.

34. Products performing well in the market
— Juices
— Jams
— Mustards
— Jellies
— Snack foods
— Apples
— Dairy Products
— Preserves
— Dressings
— Canned fruits and vegetables
Chocolates and candies
Products with longer shelf life, have more opportunity in Indian market.
— Salsas
— Candies
— Chips
— Cookies
— Mayonnaise
— Pasta Sauce
— Non-alcoholic Beverage
— Ready – to – eat food
— Cake mixes
— Pears

35. Challenges to Exports

36. Challenges before Southern Exporters in 2012
• Competition from countries with closer geographic
proximity to India, which enjoy shorter shipping times and
low cost freight advantage.
• Competition from Domestic Products in terms of pricing
• Competition from products imported via grey market
• Lack of education on labeling requirements with US
exporters
• Diverse food preferences throughout the country.

37. • India works on the basis of relationships and
they take time to form.
• Cold-chain infrastructure and
transportation facilities in their nascent
stage.
• Constraints of U.S. exporters to meet Indian
importers requirements like mixed
shipments (consolidation).

38. Ingredients restricted in India
• Import of Beef is Prohibited
• Meats allowed with Sanitary Permits.
• Import of Poultry is Restricted
• Phyto-Sanitary Regulations for Agricultural produce needs to be
followed.
• Import of Alcoholic Beverages is Regulated.
• Food Products must have 60% shelf life at the time of import.
• Products containing cow renette are not allowed.

39. Roadmap for Market Entry in India
• U.S. exporters should survey existing and potential
markets for their products before initiating sales.
• A visit to India to gain a first-hand feel of the Indian
market, preferably coinciding with any major food
shows or outbound trade missions could be useful.
• The successful introduction of a new product to India
depends on good local representation and an effective
pricing strategy.
• The local representative should preferably be the
importer or distributor.

40. • Most Indian processed food importers prefer to:
– Purchase mixed containers with smaller
quantities of individual products.
– Seek exclusive agreements from exporters.
– Use the services of freight consolidators to
handle their orders from various exporters.
• The key to success is to focus on a reasonable entry
pricing strategy as Indian consumers are price
sensitive.
• Potential exporter should be familiar with India s
varied food laws.

41. Market channels in food retail sector
Helping southern U.S. companies export food & agricultural products around the world.
www.susta.org

42. Cost margins of the intermediaries
On what margins importers, distributors and retailers work on?
Importers 15-20% apx
Distributors 12 – 14% apx
Retailers 20% apx
Big Retailers 30 – 35% apx
Helping southern U.S. companies export food & agricultural products around the world.
www.susta.org

43. Customs Duty Structure
• Basic Duty: The value is different for different
products ranging between 20-30%
• CVD: Includes the excise duty to be payed in the
local market and is variable
• Custom educa2on Cess on CVD: 3% (fixed)
• Addi2onal duty: 4% (for some specific products)

44. Import Documentation
i) B/L,
ii) Invoice
iii) Packing List,
iv) Certificate of Origin,
v) Insurance Certificate
vi) Import Permit
vii) Phytosanitary Certificate*

45. Labeling Requirements.
Goods must be labeled at the time of Import.
All prepackaged commodities, Imported into India,
shall in particular carry the following declarations.
• Name and address of the importer;
• Generic or common name of the commodity
packed;
• Nutritional content details

46. • Net quantity in terms of standard
unit of weights and measures.
• Month and year of packing in
which the commodity is
manufactured or packed or
Imported;
• Maximum retail sale price
inclusive of all taxes local or
otherwise.

47. Indicators for Meat or Animal Products
Items containing Meat or Animal products must be
Marked as per labeling norms for domestic sales with
help of visual indicators.
Vegetarian & Non Vegetarian products must be marked
Veg & Non Veg & include respective Color Dots in
Green & Brown.

48. Food Service Industry

49. • The Indian hotel industry, at Rs.131 billion in 2012
• India has many excellent hotel chains, including Indian
Hotels Ltd. (Taj Group); East India Hotels Company
Limited (Oberoi group); ITC Limited (Welcome
Group); Asian Hotel; and Leela Venture.
• Several international chains have also established a
presence through franchising.
• The Indian restaurant sector has shown impressive
growth in recent years through franchises.
• While leading hotels appreciate the excellent reputation
of U.S. food products, higher costs are a constraint.
•
The Food service industry…..the new buzz

50. • Coffee shop culture has spread throughout major cities and poised for further growth.
• This should provide an opportunity for U.S. companies to supply products such as
syrups, and ingredients like dried fruits and nuts etc.
• Hotels are increasingly coming out with Gift hampers for festivals and wedding season
with US food products.
• US imported foods as beverages, packaged food, snack items and nuts finding space in
the Mini bars in the rooms of the hotels.

51. • The hotels source their products from local importer/distributors who have the
expertise in clearing, storing and transporting products.
• Most hotel chains purchase through centralized procurement offices on annual
contracts with local importers, ordering small quantities of food products as needed and
minimizing food storage at hotels.
• Restaurants also rely on local distributors for their needs and some require importers to
become an approved supplier.
• Fast food chains source most of their raw materials locally, products such as French
fries, specialty cheeses, some meat and fishery products, flavors, condiments, and
ingredients, are often imported.
• Duty free imports is allowed to Food Service Sector based on their foreign currency
earning.
Sourcing pattern of Food Service industry

52. Mode of import and associated cost margins
10%
20%
20-25 %

53. Best product prospects for food service
sector
• Beverages
• Snack foods
• Fresh fruits & vegetables
• Sauces, spreads, salad dressings, condiments, soups, broths
• Frozen French fries, vegetables
• Fish and marine products
• Chocolates, chocolate syrups & other cocoa products
• Jams, jellies, fruit juices, etc
• Preserved, dried vegetables
• Kitchen Ingredients

54. Retail V/s Food Service
Description Retail Food Service
Opportunity Excellent with FDI in
multibrand retail and
changing patterns of the
consumer
Excellent with greater
eating out patterns among
consumer and preference
for international cuisines
and ingredients
Value added Preferred preferred
Seafood Low Preferred
Horticulture Low Preferred
Fresh fruits and vegetables Preferred Preferred
Steps to enter Discussed in detail earlier Discussed in detail earlier
Costs associated Discussed in detail earlier Discussed in detail earlier

55. Events
Category Event Details
Value Added Trade Shows: Annapoorna, Fine food, Aahar.
Trade Missions and reverse trade Missions
In- store promotions in retails outlets
Sea food Trade Shows: India International Seafood Show IAI Aquaculture
Expo
Trade Missions and reverse trade Missions
In- store promotions in retails outlets
Horticulture Trade Shows: International Nursery, Horti and Landscape Expo,
Landscape & Gardening Expo
Trade Missions and reverse trade Missions
Fresh Fruits and
vegetables
Trade Shows: International Horti Expo, Aahar, Fine Food India,
Annapoorna
Trade Missions and reverse trade Missions
In- store promotions in retails outlets

56. Events that generated export sales in 2012:
– Trade Mission
– Trade shows
– In store Promotions
– Public Relation activities and media outreach

57. Thank you!!!

58. AFRIS. AsianFoodRegulationInformationService.
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FREE to use.
We publish a range of communication services, list a very large number of
food events and online educational webinars and continue to grow our Digital
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