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Challenges of Food & Grocery Chains

March 26, 2009


Grocery IndiaYesterday, we covered the Key Trends from Food Forum India – 2009. Today we will see the key challenges faced by Food and Grocery Retail Chains in India.

Retailers argued that the principal advantage of food and grocery shopping with organized retailers is the assurance of quality that is normally not the case with most of the kiranas and road-side vendors in India. Government & Retailers to work towards maintaining Food Quality at all points across the value chain. India currently is at a nascent stage where food quality and safety technology is concerned when compared to its Western counterparts. The European market, where hygiene is a prime concern, the Indian and Chinese products are treated on par as both are Asian countries.

Creating a Large Consumption Market – Key Retailers argued that in the case of a growing country like India, consumers should be moving towards fulfilling their daily needs to daily wants, which is not happening in proportion to the growing income levels. This is one of the biggest challenges facing not just the Food Retailers in particular, but the Retail Industry as a whole too. This far, India has only been consuming its daily needs.

Massive Investment in Cold Chain & Logistics – Food infrastructure is an important concern with more and more state-of-the-art technologies and processes coming into place. Manufacturing a good product is rendered useless if the food infrastructure is not in place to make the food available fresh to the consumers through the Retailers. Though the cold chain in India has the potential to grow to Rs20,000cr by 2011, there is a need for logistics, good infrastructure, proper transportation, etc.

Few Key Challenges in Food Value Chain include quality of produce, lack of standardization in the supply chain, inefficient usage of infrastructure and logistics cost.

Manufacturers vs Retailers – Retailers urged the Manufacturers to introduce more brands and innovative products to satisfy the growing consumer demands, Manufacturers voiced their concerns about Retailers asking for huge Margins and Placement fees for the products. Mutual hlp is essential – Retailers can help manufacturers to gain insights on the shopping behaviour of consumers by sharing their consumer data.

Finally, there exists scope for Foreign Premium Food in India, we believe that in the current scenario, the consumers would opt for inexpensive substitutes rather than go for the premium or foreign food. The big challenge MNC companies face is the complex legal procedures for foreign brands to enter India.

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