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India Food and Drink Report Q1 2008Published by: Business Monitor International Published: Feb. 4, 2008 - 74 Pages Table of Contents
Abstract"India’s fledgling food processing industry continues to fascinate as investors, both local andmultinational, begin ramping up their commitment to the sector in preparation for what is expected to beexplosive growth. However, as BMI examines in its newly-published Q108 India Food & Drink Report,such investment is still only targeting a minority of India’s immense population, and the effects ofeconomic growth remain unfelt by the country’s vast rural majority.BMI believes that four key features of, or events within, the new report ably sum up this trend. Localdairy major and ice cream specialist Amul Dairy has announced plans to enter India’s US$500mn snackfood market, via the addition of a savoury snack product to its predominantly dairy portfolio. Meanwhile,Italian confectionery company Ferrero SpA has unveiled plans to invest US$35mn in the construction ofa mint manufacturing plant in Maharashtra state, a plant that will later look to target the growing premiumchocolate confectionery sector. Both investments are astute. Amul plans to leverage its existingdistribution strengths to gain a foothold in what is an increasingly competitive sector, while Ferrero wantsto target a market whose small size bellies its potential. To 2012, BMI is forecasting growth of 22% invalue terms in India’s confectionery market, a forecast that could well be dramatically increased shouldmore multinationals come forward in search of opportunities. Both manufacturers, alongside the more obvious names of PepsiCo’s Frito-Lay and Britannia, arelooking to secure a slice of India’s US$69bn processed food industry, an industry growing so quickly thatthe country’s Ministry of Food Processing and Industry announced in October 2007 that it could nowboast a fairly dynamic export sector - between 2003 and 2007 the value of India’s processed food exportsgrew by around 194% to US$13.9bn, according to ministry figures. However, while this is certainly anindustry sub-sector worth getting excited about - as these latest investments show - it is also worthconsidering the risks associated with investing in such an industry. To 2012, BMI is forecasting food consumption in dollar terms to increase by just 9.4% in India, a verymodest rate when one considers the pace of the country’s economic expansion. In per capita terms thisgrowth is even more telling, with food consumption expected to rise by just 4.3% to reach US$150.50 in2012. These forecasts highlight the downside to India’s otherwise immense potential. India’s vast ruralmajority are yet to feel the benefits of economic growth and thus do not participate in consumer goodsindustries such as processed foods, snack foods and confectionery. This explains why India secures only amid-table position in our new Food & Drink Business Environment Ratings - the country’s size beingnowhere near reflected in the size of its consumer audience. Ultimately India’s sheer size means thisdownside will not affect its capacity to attract investment, but the amount of capital manufacturers will bewilling to invest without the promise of immediate and plentiful rewards remains to be seen. Get Full Details About This Report >> |
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