Food and Beverage Industry India

Basic Facts
(i) The market size of the Food Processing Industry ($ Bn)

2008-09 Market Size 70

2009-10 200

2014-15(Projected) 330

Basic Facts (Contd.)

(ii) Production (Million Tones)
2006-07 Fruits Vegetables 59.56 114.96 2007-08 65.58 128.45 2008-09 68.47 129.08 2010-11 66.9 131.1

Milk Meat
Marine

101.00 5.50
7.60

104.80 6.50
8.00

108.50 7.15
8.50

110.1 7.95
9.10

Basic Facts (Contd.)

(iii) The present rate of growth of the Food Processing sector is 15% annually, an increase from the growth rate of 6% annually. (iv) The Industry employs 1.6 million workers comprising 19 % of Indias industrial force; the sector creates the maximum number of jobs estimated at 120 direct and indirect jobs for every $ 25000 of investment into the sector

Basic Facts (Contd.)

(v) India is the second largest vegetable and fruit producer accounting for 8 % of the world's production

(vi) Foreign Direct Investment (FDI) in the Food Processing Sector ($ Mn):

2007-08 140

2008-09 103

2009-10 210

Basic Facts (Contd.)

(vii) Export of Processed Foods ($ Bn)
2006-07 20.50 2007-08 25 2008-09 30

Market overview
During this period, the number of registered The size ofunits the food processing industry in India has increased from US$ 57 billion (INR operating increased from 24,000 to 2,736 billion) 25,725 units. in 2004 to US$ 75 billion (INR 3,600) in 2007.

80 15% 70 62 60 US$ billion 50 40 7% 43 46 9% 8% 57 68

75

16% 14% 12%

53
10%

10% 10%
8%

Y-o-y growth

30
20 10 0 2001 2002 2003 2004 2005 2006 y-o-y growth 2007 Output of processed food

6%
4% 2% 0%

Market overview (contd.)

India Advantage

Vision 2015
-Size of the upper class will increase by 300 percent between 2005 and 2015

Live Stock Base

-largest livestock population Favorable Climate & Location - India accounts for 1/5th of the world milk production. - tropical climate favours the cultivation - 98.7 million buffaloes Large Consumer Base of several exotic food and flower - 176 million cows -India is the largest producer of crops. - youth population (age group 15 25) in - largest producer of milk and several fruits and vegetables. peninsular coastline drives the growth Indiamilk is expected to grow by 11perInfrastructure cent Development products second largest producer of rice, of -the marine industry. by 2011 wheat, sugar and cotton - The establishment of 60 fully equipped AgriExport Zones (AEZs), Key Producer of Agricultural Products in addition to food parks, is expected to attract foreign investment.

Food Processing

AgriProducts

Milk and Milk Products

Meat, Poultry and Marine Products

Fruits and Vegetables

Dairy Products

Meat and Poultry

Beverages

Fisheries

Food & Food Processing

Basic Facts
India is the second largest producer of Fruits & Vegetables
Major fruits grown in India are Mangos, Grapes, Apple, Orange, Banana etc.

Trends & Opportunities

Potato based snack India's Snack market is estimated to be worth $3.5 billion
About 72 % of the Fruit and Vegetable production of the country goes waste

Major vegetables grown are Potato, Onion, Tomato, Cauliflower

Contributes more than 30 % to the Agricultural GDP

Fruit based drinks would replace Carbonated drinks

Meat & Poultry

Basic Facts
Growth rate of 10% per annum
Slaughter houses have poor hygiene and sanitation facilities Cattle (6%), buffalo (10%), pigs (99%), sheep (30%) and goat (40%) Goat and lamb meat are small segments

Trends & Opportunities

Emergence of organized retail

Indigenous meat products

There is a change in the consumer mindset Processing capacity in India is over 1 million tons per annum

POULTRY PROCESSING

Basic Facts
4th largest poultry meat producer 5th largest egg producer Growth rate of the sector is 12-15% per annum

Trends & Opportunities

Government is gradually banning cutting of live birds Sheep and Goat meat has no religious taboos Organized retail growth would also increase Poultry consumption

FISHERIES (MARINE)
Basic Facts
The processing capacity is only 2.5 million tonnes/annum

Trends & Opportunities

from Raw Packs to Ready to Eat packs

Less than 10% of the products are processed

Demand of processing machinery is greater than the supply

Growth rate is 5 7 % per annum

More IQF) facilities would be in demand if this trend continues

MILK PROCESSING
Basic Facts
Estimated Market value in 2011 $14.44 billion Bulk of Indian milk is utilized for drinking Rest for making sweets or other traditional products Per capita availability of milk in India is 245 Milli litres/day

Trends & Opportunities

Production of Milk is growing at only 3 5 % Whereas consumption is growing at 6% Per capita availability of milk will increase by only about 1.5 % per annum
Processed Items will be in demand in near future

Opportunities
Potential to become an outsourcing hub for the world by 2012

Potential global outsourcing hub

Ministry of FPI has announced various incentives and schemes to support new venture.

Vision 2015

Development of food parks

assistance of USD 23 million t Approved 50 food parks for assistance across the country

Opportunities (Cont.)
Abundant resources in terms of raw material.

Establishment of production bases

Presence of a skilled workforce and low labour costs are key factors.

Investment in

infrastructure through
public-private partnerships

Indias marketable surplus will increase to 870 million tonnes per annum.
The Central Government envisages an investment of US$ 21.89 billion by the private sector in FPI by 2015.

Opportunities (Cont.)
Investment in supply chain infrastructure
Use of sophisticated techniques and applications Expansion of storage facilities is expected

Processed food

Investments worth US$ 30 billion will boost the overall output by 10 percent by 2015. GOI initiatives

Domestic demand
Ready-to-eat Potato chips meals Societal Potato changes chips in(or India wafers), (more a popular snack nuclear item families), in India, as are well manufactured as evolving on a large consumer scale, preferences, not only byare big driving firms but also by the demand cottage for industries ready-to-eat and home-grown foods. players.

Agri-based Products

Domestic demand (contd.)

Flavoured milk Milk features prominently in the Indian diet. With consumer tastes evolving, flavoured milk is gaining popularity, especially among the urban population. Currently, medium and large-scale cooperatives and private companies dominate the manufacture of milk. Popular flavours include cardamom, saffron and chocolate.

Milk and Milk Products

Domestic demand (contd.)

In India, the consumption of chicken is increasing more rapidly than any other category of meat. Currently, small- and medium-sized firms undertake poultry processing, with the presence of a few organised players

Meat and Marine Products

Food Safety and Standard Act, 2006

FSSA will be headed by Scientific Panels and a central advisory committee to lay down standards of food safety The law will be enforced through State Commissioners of Food Safety and local level officials Everyone in the food sector is required to get a license or a registration which would be issued by local authorities Every distributor is required to be able to identify any food article to its manufacturer, and every seller to its distributor

Growth Drivers
Household consumption is expected to double by 2020
By 2015, the Indian Food 1400 industry is estimated to 1200 grow by around 40% over 2007 1000 Two key factors are expected to drive this growth: 800 600 400 384 Growth In Household Consumption 1235

920 592

Socio- economic changes in Indias population base

Evolving lifestyle trends

200 0 2005 2008 2015E 2020E

Industry Infrastructure

Apples and walnuts

Vegetables, potatoes and basmati rice Coriander and cumin Fresh and processed ginger Potatoes, Litchi onions and garlic,

Apples

seed spices, wheat, lentil Mangoes and vegetables, Grapes and grape wine, and grams and oranges dehydrated onions and Ginger and turmeric mangoes including Kesar sesame seeds mango, flowers, onions, pomegranate, banana and Mango pulp and fresh oranges vegetables, grapes, mangoes, Gherkins, rose onions, flowers gherkins and chillies and vanilla

Horticulture products and medicinal plants

Investments
Acquisition of the Eastern Condiments Pvt. Ltd, by McCormick & Co Inc, for US$ 35.0 million. Shree Renuka Sugars Ltd acquired Equipav S.A Acar e lcool for US$ 1,160.0 million
Cumulative FDI inflow Period: April 2000 to August 2010 M&A scenario detail Sector Amount of FDI inflow (US$ Period : January 1, 2009 to November 1, million) 2010 Agricultural services 1,538.18 Deal type No of deals Deal value Food processing industries 1,086.01 (US$ million) Fermentation industries 786.72 Inbound 5 43 Agricultural machinery 150.25 Outbound 7 Vegetable oils and vanaspati Domestic Tea and coffee Sugar Total 17 1,402.8 185.65 85.1 94.57 41.74 3,883.12

Deal

Deal type

Date Announced

value (US$ million)

Target name

Target country

Acquirer name

Acquirer country

Domestic
Domestic Inbound

ACQ
ACQ ACQ

Oct 12, 2010

Sep 14,2010 Jun 29, 2010

11.2
42.6 35

Candico India Ltd

Millennium Beer Indst Ltd Eastern Condiments Pvt Ltd

IND
IND IND

Keventer Agro Ltd

United Breweries Ltd McCormick & Co Inc

IND
IND USA

Inbound

PE

INVESTMENTS (CONTINUED)The Carlyle Jun 7, 2010 N/A Tirumala Milk IND

Products Pvt. Ltd Group BK Birla Group Mar 22,2010 24.7 MP Chini Indst. IND

USA

Domestic

ACQ

IND

Outbound

ACQ

Feb 22,2010

1,160

Equipav S.A Acar e lcool

Agro Dutch Industries Ltd Vale Do Iva SA Acar e lco

BRZ

Shree Renuka Sugars Ltd

Penta Homes Pvt Ltd Shree Renuka Sugars Ltd

IND

Domestic Outbound

ACQ ACQ

Jan 21, 2010 Nov 11,2009

85.4 240

IND BRZ

IND IND

Policy & Regulatory Framework

FDI in the Indian food processing industry is allowed under the automatic route* in food products except the following (broadly): repatriation of profits and capital is permitted. The Proposals that require an industrial licence and cases where foreign investment exceeds 24 per cent equity in units that manufacture items reserved for the small-scale Automatic industries. approvals for FDI and technology transfer in most cases. that are 100 per cent export -oriented are allowed sell Agricultural Proposals inproducts which the foreign collaborator has a previous venture or tieto -up in up to 50 per cent the domestic market. as on January 12, in 2005. importfalling duty on capital goods and raw material 100that per are cent export No Proposals outside notified sectoral policy orfor those generally oriented units. restricted/prohibited. Earnings from export activities are exempt from corporate taxes.

* Note: The entry of foreign/large players is restricted for a few food items

BEVERAGE INDUSTRY IN INDIA

In 2006, food and beverages together represented $232 B in retail sales or 74% of the total Indian retail market. The non-alcoholic beverage market however is much smaller. Approximately 120 billion litres of non-alcoholic beverages are consumed by Indians every year. There is a large untapped market opportunity for store-bought non alcoholic beverages, particularly in the carbonated drinks and juice or juice based categories (estimated to be currently worth $1.5 Billion and $ 25 billion respectively).

GROWTH DRIVERS
Growth in the non-alcoholic beverage market is driven primarily by the following factors --:

Rapid economic growth leading to an increase in disposable income

Indians under the age of 35 which represents the largest consumer group for non-alcoholic beverages. Two thirds of the population is below the age of 35

This segment is expected to grow by over 100 million between 2006 and 2010
Infrastructure development for distribution and penetration of retail especially in rural regions Increasingly westernized dietary preferences

Product Categories

Carbonated Drinks
Pepsi
Coke Thumbs Up Miranda

Fruit Drinks/Juices
Frooti
Maaza Slice Real

Energy/Sports Drink
Red Bull Gatorade Burn

Alcoholic, Beer and other sprits

Beer
Wines Spirits

Sprite
Fanta Limca 7up

Tropicana
Minute Maid Jumpin Safal

Cloud 9 Monster

Raw material Cheap Labor Vast network of manufacturing facilities Vast domestic market

Inadequate infrastructural facilities Outdated Quality control and testing methods

High requirement of working capital.

Opening of global markets Favourable demographic profile Setting of SEZ/AEZ and food parks

High inventory carrying cost High taxation High packaging cost

Is India Food Industry moving towards the same trend?

http://www.youtube.com/watch?v=5eKYyD14 d_0

Thank you
Ahsan Ahmad Anupam Sabat Deepak Raj Divesh Anand Farhaan Siddiqui Nishan Chhatwal Sach Sehgal Suhail Utsav Anand