Opportunities in the Indian Food Processing Sector

May 2020

MILKGlobal rank: #1176.35 million

metric tons Processed: 35%

PHL: Up to 0.92%

MEATGlobal rank: #17.7 million tons

annuallyProcessed: 21%

PHL: Up to 2.71%

POULTRYGlobal rank: #3

4.2 million tons & 95.2 billion eggs annually

Processed: 6%PHL: Up to 6.74%

MARINEGlobal rank: #2

12.6 million metrictons

Processed: 23%PHL: Up to 10.52%

Source: MoFPI data, CII (Indian Food Processing Sector –

Trends & Opportunities 2019)

CEREALSGlobal rank: #2284.95 million

tons Processed: NA

PHL: Up to 5.99%

FRUITS & VEGETABLESGlobal rank: #2

311.7 million tons Processed: 2%

PHL: Up to 15.99%

WHY INDIA? OVERVIEW

USD 51 billionGross value of

plant and machinery by

2024-2025

USD 535 billionFood processing

output by 2025-2026

Valued at USD 258 billion in 2018.

Contributes to 14% of manufacturing GDP

of India. 36

30 31

36 35

FY 2015 FY 2016 FY 2017 FY 2018 FY2019

TREND of FOOD PROCESSING EXPORTS

(USD billion)

Source: Ministry of Food Processing Industry, GoI, 2018-2019

516 506727

905628

FY 2015 FY 2016 FY 2017 FY 2018 FY2019

TREND of FDI INFLOW in FOOD PROCESSING SECTOR (USD

Million)

Source: Department for Promotion of Industry and Internal Trade

USD 35.3 billionIndia’s food export

USD 19.56 billion

India’s food import

Processed Food Categories Export Value (USD million)

Cereals 8,162

Fish and related products 6,257

Meat and related products 3,723

Coffee, tea, and spices 3.200

Residues and waste from the food industries

1,918

Processed Food Categories Import Value (USD million)

Animal and vegetable fat 9,994

Edible fruits 3,628

Edible vegetables 1,189

Beverages, spirits 787

Residual and waste from the food industries

644

TOP 5 PRODUCTS EXPORTED FROM INDIA

TOP 5 PRODUCTS IMPORTED INTO INDIA

USD 64 billionCapital Investment

in 2018-2019

Source: Ministry of Food Processing Industry, GoI, 2018-2019

INDIAN FOOD PROCESSING: MARKET OVERVIEW

0

5

10

15

20

25

0

0.5

1

1.5

2

2.5

2013-14 2014-15 2015-16 2016-17 2017-18

Food Manufacturing GVA (in billion USD)

Manufacturing Sector GVA Growth (%)

Food Manufacturing GVA Growth (%)

GVA

(Val

ue in

USD

GVA

Gro

wth

Rat

e in

%

ANDHRA PRADESH

TAMIL NADU

MAHARASHTRA

KARNATAKA

GUJARAT

PUNJAB

UTTAR PRADESH

TELANGANA

>5000 registered units2000-5000 registered units

>USD 1 billion GVA(Gross Value Added)

Index

MAJOR MANUFACTURING HUBS (BY REGISTERED UNITS AND VALUE)

Source: ASI 2016-2017

FOOD MANUFACTURING INDUSTRY –CONTRIBUTION TO ECONOMY

Source: Ministry of Statistics and Programme Implementation

INDIAN FOOD PROCESSING: MANUFACTURING OVERVIEW

NATIONAL FOOD POLICY

NATIONAL FOODPOLICY

Increasing value addition

Reducing wastage

Guarantying fair price to farmers

Ensuring quality produce to end consumer

WHA

T?HO

W?

Installing a single-window clearance system

Promoting mega food parks and food parks

Encouraging fruit processing clusters

Strengthening agriculture marketing infrastructure

Facilitating land allotment

Supporting development of logistic infrastructure

Ensuring compliance with food safety regulatory requirements

Supporting business units having established backward integration

PRADHAN MANTRI KISAN SAMPADA

Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters

WHA

T? H

OW

?

Mega Food Parks

Integrated cold chain and value addition infrastructure

Creation/expansion of food processing and preservation capacities

Infrastructure of agro-processing clusters

Creation of forward and backward linkages

Food safety and quality assurance infrastructure

Human Resources and institutions

INDIAN FOOD PROCESSING: GOVERNMENT INITIATIVES

THREATS

Financing

USD 285 millionSpecial fund set up in

National Bank for Agriculture and Rural

Development (NABARD)

Customs Duty

5% Concessional basic duty under Project Import for cold storage (including pre-cooling unit, pack houses, sorting and grading lines and ripening chambers)

5% Customs duty reduced from 10% for refrigerated containers

0% For import of raw material/intermediate food items against the export of finished products under Advance Authorization Scheme

Source: Department for Promotion of Industry & Internal Trade and CII (Indian Food

Processing Sector – Trends & Opportunities 2019)

5% Uniform assessment for all goods imported as part of Project Import irrespective of tariff classification

Goods and

Services Taxes

INDIAN FOOD PROCESSING: FISCAL INCENTIVES

37Mega Food Parks under SAMPADA

14 operational

4completed

19 Under

implementation

PUNJAB: 7.31%2’906 units

MAHARSHTRA: 7.06%2’808 units

TELANGANA: 9.99%3’969 units

Geographic Distribution of Mega Food Parks under SAMPADA

ANDHRA PRADESH: 14.75%5’861 units

TAMIL NADU: 12.77%5’077 units

INDIAN FOOD PROCESSING: MEGA FOOD PARKS

Fortified health food, Traditional Indian food Convenience food

Processed organic food especially baby food Confectionery and bakery items,

Packaged local/ traditional Indian drinks

New Product Development

01 02 03 04 05

Food and Vegetable Processing Current processing levels in the segment are less than 2%

Need of new technology in processing Opportunity to develop extensive product line

Food Manufacturing and Infrastructure

Packaging technology for enhanced shelf life Energy efficient technologies

R&D infrastructure Food testing labs

Grain and Dairy Segments Upgradation of milling technology

Fortification of products Automation and integration of

supply chain for Grain and Milk Product segments

Meat and Marine Products Opportunities in cold chain,

export, packaging innovations Growing market for processed,

cleaned and frozen meat and poultry products

INDIAN FOOD PROCESSING: OPPORTUNITIES

Premium Foods Segment

Source: Ministry of Food Processing Industry report: High-Growth Segments of Indian F&B Industry, CII report: Indian Food Processing Sector

PRODUCTS SEGMENTS

33.59%

19.23%

18.57%

12.36%

10.98%

10%

8.80%

7.92%

SavourySnacks

BreakfastCereals

Confection-ery

Ready Meals

Bakery

OrganicFood

Dairy Food

Ingredients

The bakery segment is evolving with the introduction

of premium variants such as croissants and filled muffins.

Premium confectionery products such as chocolates saw an increase in demand

whilst the availability was low.

Savoury snacks such as nuts, especially almonds, fresh

fruits are among the fastest growing segment.

Olive oil, rapeseed oil, palm oil are the most preferred

premium edible oil consumed in the Indian market.

Expected CAGR of high growth segments in

premium food, 2016-2021

USAUSD 420 million

AustraliaUSD 67 million

CanadaUSD 361 million

ItalyUSD 86 million

FranceUSD 64 million

UKUSD 144 million

UAEUSD 92 million

TOP COUNTRIES EXPORTING TO INDIA

PREMIUM FOODS: OVERVIEW

Premium food products

Per KG price in Foodhall (USD)

Per KG price on e-commerce (USD)

Red Quinoa 16 8

White Quinoa 13 4

Black Quinoa 16 7

Tricolour Quinoa 15 7

Avocado 16 4

COST OF PREMIUM FOOD IN E-COMMERCE AND FOODHALL STORE

Source: Bloomberg Quint, Flipkart

Segments

Manager

Institutional Buyers

Restaurants

Food processors

Hotel chains

Retail BuyersE-commerce

Modern retail chains

Mom and pop stores

Supermarkets/stores

Cash and carry stores

MODERN RETAIL/ONLINE CHAINS

PREMIUM FOODS: DISTRIBUTION CHANNELS

Industry Scenario• Walmart has increased its stake from 77% to 81.3% in Flipkart. It invested USD 16 billion in

the Indian e-commerce giant to explore online retail space in food & grocery.

• Amazon launched its grocery service “Pantry” in 30 cities and has already expanded to 110cities. The firm is looking to invest USD 500 million in food retail in years to follow.

• BigBasket raised another USD 50M from Alibaba after it has raised USD 300 million fromSoftBank & Alibaba to battle with Amazon and Walmart.

Total retail: USD 800 billion

Food and grocery retail: USD 500 billion

Food and grocery retail growth rate: 30%

E-grocery expected growth rate: 60%

Imported food share in organized retail: 18%

Share of vegetable, fruits and nuts in food imports: 80%

0 5 10 15

Delhi NCR

Bangalore

Hyderabad

Mumbai

Online grocery monthly GMV in top 4 cities in millionDaily essentials and

express delivery driving the growth

Private label growth has remained constant around

30%

Big Basket driving growth through FMCG and

Groefers through staples

1.22.1

3

8.7

0

2

4

6

8

10

USD

bill

ion

Calendar Year

E-grocery Y-O-Y

CY18 CY19 CY20 CY23E

2019 (USD Bn)

2020-E (USD Bn)

Growth rate

33.5 35.5 6%

Expected growth of online grocery in 2020

76%

Online grocery segment is driving growth of e-commerce in 2020.

Source: Forrester, Redseer, Economic times

INDIAN ONLINE FOOD & GROCERY: OVERVIEW

Thank You