FICCI Pegs Food & Beverage Growth At 10 Per Cent

Ashok B Sharma - New Delhi

A study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) has estimated a 10 per cent growth in the food and beverage sector in the current fiscal year (till December 2004).

The study has shown positive growth trends both in volume and value. It stated that with the changing lifestyles of consumers and rising disposable incomes of the growing middle income group, branded food, health food and convenient foods are gaining popularity and the market for these items are growing at the rate of 10 to 15 per cent. Semi-processed foods and ready-to-eat foods are growing by 20 per cent.

This observation of the FICCI study relates to the urban elite classes and does not take into consideration the rural areas, which constitutes over 70 per cent of the population.

That this observation relates to the urban elite class is clear from the study which says the unorganised, small players (in the food and beverage sector) account for more than 70 per cent of the industry output in terms of volume and 50 per cent in terms of value.

It is to be noted, in context, that the country's Planning Commission has made several studies which suggest that the food habits of people in the country are changing from the staple of cereals, to meat, poultry, fruits and vegetables.

But what the Planning Commissions study failed to note was that the rural poor in the country, unable to purchase wheat and rice in adequate quantities, were traditionally consuming a mix of fruits and vegetables, fish and poultry and dairy products and are continuing to do so even today.

The change in food habits, therefore, as noted by the Planning Commission's studies again relates to the urban elite class. The FICCI study noted that Indian food and beverage companies are making a beeline for regional overseas markets in Bangladesh, Pakistan, Nepal, West Asia and CIS countries owing to similar lifestyles and consumption habits.

Some companies have achieved growth by lowering their price points to make their products more affordable to a bigger consumer class. The study further states that the sector is witnessing a large-scale transformation as there is amplified spending on advertisements, awareness campaigns and brand promotions.

Key factors to success are distribution in rural marketing and advertising in urban markets, innovation and the launch of a variety of new brands. Big companies have started sourcing their products from local manufacturers and contractors as cost saving measures to enter the mass consumer segment.

The market is now seeing players like Heinz, Mars, Marico, ConAgra, Pepsi, ITC, Dabur, Britannia, Cadbury, HLL, Pillsbury, Nestle, Amul, SmithKline Beecham, Surya Food and Agro Private Ltd and a host of local manufacturers competing with established brands on a national scale.