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Market research on frozen foods


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Market research on frozen foods

  2. 2. Table of Contents S.No Topic Pg. No 1 Background Study i. India’s Food Processing Industry ii. Frozen foods & snacks market in India iii. Key market players iv. Frozen food demand drivers v. Major sources of attraction for Instant food products 1 2 Exploratory Research i. Objective ii. Methodology a. Retailer & Distributor Survey b. Customer survey iii. Results & Analysis 9 3 Conclusions 20 4 References 21
  3. 3. Introduction India is the world’s second largest producer of food next to China and has the potential of being biggest industry with food and agricultural sector contributing 26 per cent to Indian GDP, but, only a small percentage of the farm produce is processed into value-added products. For instance, even though the country is the second largest producer of fruits and vegetables, hardly two per cent of the production is processed. This underlines the enormous scope for investing in the processed food sector in the areas of infrastructure, packaging and machinery. The potential for investment in this sector is further accentuated by the following factors: • The upper and middle class segment consumes processed and packaged food • Well-developed infrastructure and distribution network. • Increase in per capita income and purchasing power. • Large pool of scientific, technical and skilled manpower. • Introduction of series of investment friendly initiatives by the Government including strengthening and augmenting of road and rail network, modernization of ports, prioritization of infrastructure for post harvest management, logistics (including cold chain), markets, retailing, food processing. • Introduction of a number of liberal policy initiatives by the Government to boost food processing activities. • Food parks approved to enable small and medium food and beverage units to set up and to use capital intensive common facilities such as cold storage, warehouse, quality control labs, effluent treatment plant, etc. India’s Food Processing Industry India's food and beverage industry currently stands at US$ 40.3 billion and is expected to touch US$ 66.3 billion by 2018, registering a growth of 18 per cent. With a huge agriculture sector, abundant livestock, and cost competitiveness, India is fast emerging as a sourcing hub for processed food. Estimated to be worth US$ 121 billion in 2012, the Indian food processing sector is poised for excellent growth in the coming years. It is ranked fifth in terms of production, consumption and exports. Anticipating the future growth, many big international players are entering the Indian market by partnering with the domestic players. There are tremendous opportunities for large
  4. 4. investments in food and food processing technologies, skills and equipment, especially in the areas of canning, dairy and food processing, specialty processing, packaging, frozen food/refrigeration and thermo processing. The packaged food sector in India is likely to double by 2015 to touch US$ 30 billion from the current US$ 15 billion, owing to the rise in income, changing urban lifestyle and modern retail trade. Residents in urban areas are the largest consumers of processed food, consuming 78 per cent of all packaged food in 2011. Companies like ITC, MTR, Kohinoor Foods and Haldiram emerged as the market leaders in instant food category. However, entry of large international companies like Tyson Foods, McCain, etc. is expected to play a significant role in the growth of this market. The share of food processing export in total exports from India is 12 per cent. Indian agricultural and processed food exports in the period April 2013–October 2013 stood at US$ 12,797.65 million as compared to US$ 11,827.50 million during the same period last year, according to data released by the Agricultural and Processed Food Products Export Development Authority (APEDA). The food processing industries in India attracted foreign direct investments (FDI) worth US$ 3,776.57 million during the period April 2000–September 2013, according to the latest data published by Department of Industrial Policy and Promotion (DIPP). Food processing industry in India is a sunrise sector that has gained prominence in the recent years. Availability of raw materials, changing lifestyles and appropriate fiscal policies has given a considerable push to the industry’s growth. This sector serves as a vital link between the agriculture and industrial segments of the economy. Strengthening this link is of critical importance to reduce waste of agricultural raw materials, improve the value of agricultural produce by increasing shelf-life as well as by fortifying the nutritive capacity of the food products; ensure remunerative prices to farmers as well as affordable prices to consumers. Ministry of Food Processing Industries will include items under food processing industries, pertaining to these two processes: (a) Manufactured Processes: If any raw product of agriculture, animal husbandry or fisheries is transformed through a process [involving employees, power, machines or money] in such a way that its original physical properties undergo a change and if the transformed product is edible and has commercial value, then it comes within the domain of Food Processing Industries. (b) Other Value-Added Processes: If there is significant value addition (increased shelf life, shelled and ready for consumption etc.) such produce also comes under food processing.
  5. 5. FROZEN FOODS & SNACKS MARKET IN INDIA Frozen foods have won the hearts of Indians by offering a variety of ready-to-eat foods which can be cooked in the least possible time. Frozen foods are available in a wide spectrum of flavors which are consumed heavily by majority of the Indian middle class households. The advent of frozen foods in the Indian food industry led to a massive change in the lifestyle of the Indian middle class. Earlier it used to take hours in kitchen but frozen foods have ensured mouthwatering dishes in no time. With the emergence of frozen food in the Indian food industry, there has been an upsurge of processed foods in the domestic markets. The income of the middle class people in India has grown in recent years. This gave rise to the increasing consumption of processed foods in India as it provides good food with lesser cooking time. Frozen food has now become a demand driven industry in India and occupies a huge market in the country. Around 30 million Indians which comprise of both upper and middle class consume packaged foods in high quantities. This figure is likely to reach 200 million within the next three years. Tata Strategic Management Group has reported that the Indian frozen food market is likely to touch USD 727.09 million by the year 2015. Some of the biggest contributors to this growth are ITC Foods, MTR Foods, Kohinoor, Amul, Rajbhog Foods, Ethnic Kitchens and Tasty Bite. The changing Indian lifestyle is creating a multitude of opportunities for market players, across industries. The rise in the number of women in the workforce, and the resultant time-paucity, along with the increasing at-home socializing, the preference for nuclear families, or that of young professionals for living alone; the growing acceptance of western food, and the need for on-the-move freshly-cooked food are often cited reasons given by firms while launching frozen/ready-to-eat meals (or microwaveable meals), ranging from mutter paneer to cheese nuggets. The frozen/convenience food industry, which started by offering basic frozen vegetables and fries, today offers a wide range of products, from fruits & vegetables to frozen meats and ready-to-cook, snacking and full meal options. The segment has recorded a healthy growth, at a CAGR of 15-20%, thanks to increasing customer appetite and acceptance, complemented by an increase in selling points, deeper penetration by organized retail players, as well as an increase in available freezer space in the retail domain. However, data released by India’s Ministry of Food Processing indicate that the Indian frozen foods market is much smaller than even China’s, which is also not considered a well-developed market.
  6. 6. Key Market Players In terms of product categories, Frozen Vegetables and Frozen Snacks together make up a more than 65% share of the market and their collective volume share consumption for 2012 exceeded 85%. The market is dominated by organized players, e.g. Mother Dairy stands out with a ~50% market share in the vegetables segment as a result of the widespread popularity of its Safal brand. The other key brands in the market are Venky’s (V.H. Group), Al-Kabeer (Al-Kabeer Group), Sumeru (Innovative Foods), Everfresh (Temptations Foods), Meatzza (Darshan Foods), and McCain Foods (McCain Foods India). The frozen snacking market, which has registered a double-digit growth, is characterized by vegetarian and non-vegetarian spontaneous buys that often do not need prior planning by the consumer. From a B2C perspective, these products are positioned as saviors in a contingency, of either non-planned get-togethers at home or as an easy alternative for city-dwelling commuters and office-goers who prefer quick/instant food due to the paucity of time. In B2B terms, these products are now finding a place in the menus of various restaurants, far from being considered fallbacks they are now considered ready reckoners and standardized offerings by various F&B brands. With the growth of Cafés and Quick Service Restaurants (QSRs) wherein shop floor kitchen skill levels are a major challenge, these frozen foods ensure consistency, speed of service, and assured quality. This creates a vast business opportunity for market players from institutional sales to QSRs and HORECAs (Hotels, Restaurants, Caterers/ Canteens). The consumer preference for frozen non-vegetarian items is rising, in part due to the hygiene issues associated with making available fresh products. At present, the product offerings in the market, from brands such as McCain, Yummiez, Quick Treat, and Venky’s, include cold cuts, meatballs, hot dogs and sausages, samosas, kebabs, jalapeno and cheese sticks, spring rolls, nuggets, French fries, fillets, breaded fingers, patties and cutlets, among others, some of which are available in vegetarian, chicken, and mutton variants. The introduction of products more friendly to the Indian palate, such as the Idli Sambar Combo by McCain, is expected to be a boost for further, similar offerings. These usually come in pack sizes starting from 200-250 grams. The price, which depends on the product and its variant (i.e. vegetarian or non- vegetarian), can be as low as INR 25- the cost of the McCain Foods trial pack.
  7. 7. The increasing penetration of frozen snacks, from the deep-freeze displays at retail marts into home refrigerators, is also an outcome of the proactive initiatives taken by brands to ensure awareness about, and the usage of, their products. Mother Dairy, which was concentrating solely on frozen vegetables until recently, has also added such snack offerings to its portfolio as frozen corn cobs, cheese cutlets, tikkis, and French Fries. Similarly, McCain Foods has also organized customer awareness programs, while also going for celebrity endorsement. For example, the company has organized McCain Nights, where the brand offers free product sample, in various cities. In Delhi, McCain has also tied up with several residents' welfare associations and, like Mother Dairy, has been conducting in-home kitty parties to reach out to women. A McCain retail kiosk was launched in a Delhi as a pilot to promote the product-tasting experience and to drive the consumer’s purchase decision at the retail end. Godrej Tyson foods, a JV between Godrej Group and Tyson Foods USA, has also undertaken consumer awareness programs through several consumer touch points in order to educate consumers on how their products can be used directly. The other entrants in this segment are Vadilal Group, Vimal Foods, Maiya Group, ITC, and Kohinoor Foods, among others; these are test-marketing and building capacities at both the front- and back-ends. Despite the various offerings available, and the promising growth in this category, penetration is still at a nascent stage, representing low product usage and a lack of consumer awareness about frozen foods. Also, impacting the market are such logistical hurdles as the relative lack of necessary back-end infrastructure, as a result of which frozen foods manufacturers are not assured of delivering their products to retail points without compromising on food quality. Transportation and utilities-related woes have further exacerbated this issue. To overcome this, manufacturers have resorted to supplying their own equipment to transporters and retailers.
  8. 8. Despite the challenges faced by the industry, the frozen snacking market is expected to double in the next 5 years largely due to consumer demand and many new market entrants both in terms of the number of players and the variety of products offered to fulfill this demand. Innovation and differentiation will be the key for brands vying for the market share; more “glocal” (Indian and western) products will be offered in the market and find greater space in refrigerators. The investment in developing distribution and supply chain capabilities, in not just the metros and mini metros but in the Tier towns as well, will convert non-consumers to consumers, enhancing product usage. Frozen Food Demand Drivers: The changing Indian lifestyle is creating a multitude of opportunities for market players, across industries. The rise in the number of women in the workforce, and the resultant time-paucity, along with the increasing at-home socializing, the preference for nuclear families, or that of young professionals for living alone; the growing acceptance of western food, and the need for on-the-move freshly-cooked food are often cited reasons given by firms while launching frozen/ready-to-eat meals.
  9. 9. MAJOR SOURCES OF ATTRACTION FOR INSTANT FOOD PRODUCTS Majority of working couple inclined towards Instant food There has been a major shift in food habits in the metropolitan cities, as about 86% of households prefer to have instant food (canned, instant mixes, baked, pasta, etc.). Reasons are the steep rise in dual income level and standard of living, convenience, influence of western countries etc., according to a survey undertaken by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The survey on “Ready to Eat Food in Metropolitan cities” is based on responses from 3,000 representative households with children or without children, nuclear family and bachelors. Many consumers in metros lead time-pressured lifestyles and have less time available for formal meals, as a result of which demand remains high for products which can be eaten on the go. In the survey, ASSOCHAM claims that the Indian food processing market will show a fast growth in the next five years. It is also estimated that this food processing industry would show an annual growth of 40-60% in next five years. This all will be encouraged by changed trade rules and increased demand among the people. The survey points out that these convenience foods are preferred (86%) mainly by nuclear families where both husband and wife are working or by bachelors who wish to avoid hotel food or people who do not have time, patience or the expertise to prepare in a traditional method. According to the survey, metropolitans are the largest consumers of processed food and are going to be the biggest consumers of processed food because of their ever increasing per capita income and lifestyle which is also changing very rapidly, points out D S Rawat, Secretary General, ASSOCHAM.
  10. 10. Major metropolitan cities in which respondents were interviewed include Mumbai, Cochin, Chennai, Hyderabad, Indore, Patna, Pune, Delhi, Chandigarh and Dehradun. It had been observed that there has been a surprising rise in the demand of packaged food within the Indian market, and that all happened because the lifestyle of people there has changed drastically as well as the consumer’s opinion regarding their eating habits. The majority of the working class also mentioned that it’s a boon to save time, energy and money by using these foods. Various foods helped to prevent the age-old traditional method of long preparation of grinding, cooking or fermenting for hours and hence making the work faster. Even the manufacturers prepared the instant foods according to the taste of the consumers. The survey highlights that 85% of parents with children less than five year are serving these easy-to-prepare meals at least 7-10 times per month due to increased pressures at work, and increasing complexity in other household management areas- They would be actively looking for ways to simplify and save time, a majority of parents said. 92% of the nuclear family feel that they have less free time than before they had kids, it is now a common fact that they are spending less time in the kitchen, and are turning to takeout, delivered food, and semi-prepared meals to help feed the family at mealtime. 72% of bachelors prefer the convenience food because of less cost, time and energy saving, convenience in preparation and consumption in the busy and hectic life. The very term 'instant” means simple, fast ,convenient and affordable food which is easy and fast to prepare besides being hygienic, free from microbial contamination and also convenient to eat, say the bachelors. 67% of working women revealed that the present trend changed the habits to foods which are simple and easy to digest. Hence, the existence of these foods fulfilled all the needs of modern human being. Even though after being economical and convenient, 34% of the consumers prefer the traditional types of foods which are fresh and natural without any preservatives or artificial ingredients. 42% of the respondent said that another advantage of instant foods that occupy less space in the kitchen or pantry, the amount of drudgery involved is less and there is a tremendous potential for commercial exploitation as it is a "rising industry".
  11. 11. EXPLORATORY RESEARCH OBJECTIVE: To study the factors influencing consumption of frozen food products. METHODOLOGY To evaluate the objective of the study, secondary data was collected using internet and primary data using survey method. The data required for the study was collected from the 8 retailers and distributors by personal interview method using well-structured schedule and by 62 customers using questionnaire. Information on the following aspects was collected: 1. Information regarding the brands available in the visited stores and about the most preferred ones among consumers. 2. Information about the type of frozen food products available in India 3. Information regarding the consumption pattern of frozen food products. 4. Purchase pattern of frozen food products and factors influencing the purchase. 5. Information about the influence of discounts/offers and festive season sales on frozen food products. RETAILER & DISTRIBUTOR SURVEY Questionnaire for Retailers & Distributors 1. Which brands are available in your store? 2. Which is the most preferred brand? 3. Which are the most preferred frozen food products by your customers? 4. Which is more preferred – veg or non-veg frozen food products ? 5. Which age group people buy frozen food and who makes the final buying decision? 6. How many consumers are influenced by your salespersons? 7. Which are the negative brands in frozen food industry? 8. How discounts/offers affect the percentage of sales? 9. Do people buy in small quantities or large quantities? 10. Do sales increase during festive seasons? 11. Which is the most important factor according to you which influence the buying decision of people?
  12. 12. Interview with the Store Manager of Nature’s Basket When we interviewed Mr. Francis, Store Manager of Godrej Nature’s Basket, Kandivali East, about the frozen food products, he gave us detailed information about the following frozen food brands available in his store: Yummiez, Zorabian, Mc-Cain, Alfarm, Tannys, Sumeru, IFB, Delicious, Cambay Tiger, Al-Kabeer and Venky’s. Almost all the famous brands were available in the store. When asked about the most preferred brand by customers, he told first choice being Yummiez, followed by Zorabian and Mc-Cain. One interesting comment he made was that most of the sales are in the Non-veg category. Prawns, Kabaab, Nuggets and Chicken Salamies are the favourite frozen food products among his customers. In the veg category, Mc-cain snacks section is the most appreciated one, especially Smiles and Aloo tikki. Mr. Francis told us that no particular age group people prefer frozen food as such, but Working women and old people buy more frequently than others. Also many times it happens that children who come with their mothers demand it, so mothers buy it. Youngsters mostly prefer Cheese items. Consumers are generally not influenced by the salespersons, except the times when the brand asked by customers is not available with them. No complaint about any frozen food brand is reported to Mr. Francis yet. He said quality maintenance is responsibility of salespeople and store manager. Temperature should be maintained between -18 to -40 degree Celsius. He told that the Discounts/Offers, given by respective companies, have little influence on the quantity of sales. But, during festive seasons, sales generally increase. He sells 10-12 packs per day, but during festivals, it goes to 18-20. The most common factors according to him that influence the buying decision of customers are Quick-to-Cook, Brand name, Advertising and Influence by people especially Kids. He shared that Godrej is working on a No profit-No Loss state in frozen food category. Any frozen food company needs to stay for more than 2 years in India in order to make profit in this section. He also told that frozen food is most liked by Parsee and Christian community in India. According to him, now-a-days Europeans prefer Boneless food, so the foreign companies tie up with Indian retailers to sell Chicken legs and Drumsticks items, because Indians do eat and like such food.
  13. 13. The other shops that were visited for the purpose of the exploratory research are as follows 1) Swastik cold storage 2) Cash and Carry 3) Silmart 4) Apna bazaar 5) Star bazaar 6) Sahakari bhandar 7) Good luck The research was conducted at these stores and the questionnaire was answered by the Store Manager and salespeople of these shops. There were various brands which were available in these stores which are as follows Yummiez, Zorabian, Mc-Cain, Alfarm, Tannys, Sumeru, IFB, Delicious, Cambay Tiger, Al- Kabeer and Venky’s. These are the brands which were available throughout these 8 stores. Some of these brands like Yummiez and Mc-cain were available in almost all the shops. Apart from these two major brands, other brands like Sumeru, Zorabian, Cambay Tiger, Delicious and Venkys were also available in more than 2 stores. Also in certain stores non- branded frozen foods were also available On further questioning it was found that the most preferred brand by the customers who visited these stores was Yummiez, Zorabian, Mc-Cain. These are also the brands which are widely available and also are the most preferred by the consumers. The reasons why consumers prefer these brands are that they are very well advertised and promoted and also certain brands like Mc-Cain have a famous brand ambassador. These brands also have a better shelf place in most of the stores we visited. Amongst these preferred brands, consumers have preference for certain products. In vegetarian products the consumers mainly prefer smiles, aloo tikkies, cheese balls and mozerrella sticks. Hence we can see that in case of vegetarian foods mainly snacks are preferred. In case of non vegetarian foods consumers mainly prefer chicken nuggets, chicken salamis, sausages, and frozen fish, prawns and frozen chicken as well. Hence we can see that in case of non vegetarian food, not many snacking foods are preferred. It was found that the non veg frozen items were sold more than the veg frozen items in most of the stores but some stores even mentioned that the sales of both vegetarian as well as non vegetarian food was almost the same. The major consumers who purchase such frozen food was mainly working women , youngsters and hostelites. Even housewives have started making purchase of frozen foods.
  14. 14. The main reason for this could be that the older generation has still not accepted the concept of frozen foods. The reason for younger generation preferring it more is because it is more convenient and it saves time as well. The next question was if the salespersons have any influence on the choice of the consumer, the answer to this was that the sales person did not have an influence on the choice of the consumers, that is they themselves only made the purchase decision according to their belief and perception about the brand and produce. However in some of the stores it was found that incase the brand which the consumer wanted was not available then in that case the recommendation of the sales person had an impact on the purchase made by the consumer. The next question was if there were any negative brands i.e. if they received any complaints against a specific brand, there was no such brand but a brand called Bigsam was closed, also they mentioned that Godrej is not doing very well. The sales of these products are not very much affected by sales and discounts. Most of these sales persons of these shops said that the sales did not go up if there was a special price or any discounts were given and even if the sales went up in some of the stores it was not a very great increase in the sales. The consumers usually buy these frozen foods in small quantities and not large quantities. They mostly purchase it in small quantities of 2 to 3 packets at a time. However during festive season like Christmas and new years the sales do go up and the consumers usually buy in larger quantities like 4-5 packets. The main reason why consumers purchase these frozen foods according to the sales persons is that it is time saving, convenience, word of mouth from friends and relatives, working people prefer more, the fact that servants are not available and also the advertisements have an influence on children.
  15. 15. DEPENDENT AND INDEPENDENT VARIABLES From the interview with retailers and distributors, following dependent and independent variables are recognized which influences people to buy frozen food products. Quick to cook Brand image Quality Advertising Consumer Satisfaction Packaging Comfort Taste Discounts/Offers Influence of children, friends, etc
  16. 16. CUSTOMER SURVEY Sample size: 62 customers Method used: Questionnaire RESULTS & ANALYSIS of Consumer survey: Ques 1) Age: Response: Target audience: Between 16-35 years. Out of 62 respondents, 54 were between age of 16-35years. Ques 2) Gender: Response: Out of 62 respondents, 32 were female and 30 were male. We collected response almost equally from male and female customers.
  17. 17. Ques 3) Marital status: Response: Our survey is more focused on Unmarried people. Out of 62 respondents, 50 were single. Ques 4) Which is your most preferred Frozen food product? Response: The most preferred frozen food is french-fries followed by cheesy pops, smileys and chicken nuggets and the least preferred product is pork. Hence it can be said that the foods that can be consumed as snacks are more preferred by the consumers.
  18. 18. Ques 5) Rate the importance of factor which influences you to buy frozen food? Response: The reason for which most of the consumers prefer to purchase frozen foods is that they the time saving whereas taste is given the least importance as compared to the other two factors.
  19. 19. Ques 6) Rate the importance of factor which influences to buy a particular brand of frozen food ( 1 being the lowest and 5 the highest)? Response: When a consumer is buying the product of a particular brand the quality of the product is extremely important as 63.33% people have rated it as very important. Second important factor is taste followed by the brand image. A good advertising of the product packaging and influence from children and family members and friends is rated as moderately important. Ques 7) Which of the following brand you would buy? Response: The most preferred brand in case of frozen foods is McCain followed by Venkys and Yummiez. They are the brands which have a variety of snacks and this could be one of the most important reasons that they are the most preferred. Secondly these are well known brands and the brand image is rated as very important
  20. 20. Ques 8) Frequency of purchase: Response: Most of the consumers purchase the product just once a month. Ques 9) Does discounts/offers have any effect on your purchase? Response: 62% people would purchase the product more if there were any special discounts or offers.since the frequency of purchase is very less that is just once a month any special discounts and offers can have a positive influence on the sales volume
  21. 21. CONCLUSIONS  The most preferred frozen food product among the respondents is French fries. The other snack products like chicken nuggets , smiles , cheesy pops are also preferred and hence we can say that most of the respondents prefer frozen snacks  The most important reason why consumers purchase frozen foods is that is saves a lot of time.  Quality is the most important factor which a consumer considers before buying the product of a particular brand  McCain’s is the most preferred brand among the respondents  Most of the respondents purchase the frozen products once a month  The respondents would purchase in larger quantities if there would be any special discounts or offers
  22. 22. REFERENCES 1. 2. 3. 0couple%20inclined%20towards%20instant%20food&id=878 4. 5. 6. International journal of Research and computational Technology, Vol.2 Issue 2, May, 2012 ISSN: 0975-5465