Food Forum – Key Trends

You are Reading this First HereOur analyst attended the Food Forum India 2009 and here are the key takeaways from the forum.

Growth to be fueled by Small Wallets – India’s Retail Sector will witness the best period between 2009-14 when the industry will continue to grow, and consolidation would set in with most of the top global retailers having a presence in India. India currently is the fourth largest economy on Purchasing Power Parity terms and is all set to become the third largest by 2013, leaving Japan behind. It is expected that there will be around 300 million middle class consumers in India by 2013 propelling growth of the Organized Food Retail in India and facilitate it to capture market share of 3.9% of the Total Retail Sector by CY2013E.

Slowdown in Food Industry – Economic slowdown has marginally affected or not affected the Food Industry & Food Retailing in India. Consumer spending on Food Industry has increased on account of savings in big-ticket purchases. Lifestyle segment of the Food business that comprises generous corporate meals has been hit the most.

Scope for Foreign and Premium Food Retailers in India – Foreign & Premium food demand in India on account of quality products. Any product imported from abroad has the scope to do well in India, provided the right atmosphere, ambiance and retail format is provided for its sale was another interesting point that was brought forward by Industry members.

Another major indicator of increasing potential of Foreign and Premium Food Retailing in India is the changing consuming patterns, which are directed towards more healthier and hygienic alternatives in packaged and processed food. The key to the success of such food items, however, still lies in having a right value that suits the palette of the consumers.

Finally, Product positioning is also very important for marketing premium brands in India. Premium products require specialised retail chains or niche stores and it is important to bring out the exclusivity of the product.

Private Labels find acceptability with consumers – Indian consumers prefer private labels as they provide more value for money to them. Success of the Private Labels in the Retail industry, especially the F&G segment, can be gauged from the fact that Private Labels for many key retailers are doing pretty well. Private Labels of Pantaloons, for example, have been able to garner market-share ranging from 16% to as high as 30% in the categories they are present in.

Another advantage of Private Labels is that they provide high margins to Retailers compared to the branded products. Margins are as high as 20% in the FMCG space. Future Group is the leader in this space and will enter the space of beauty, men’s grooming products and ready-to-eat foods.

In the next part, we will post the key challenges faced by Food Retailers in India.