Food Processing Industry

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Food Processing Industry - India
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December 2009
Executive Summary
Market
Food processing industry in India is valued at USD 70 bn and is growing at a 14% annual rate Diary products, fruits & vegetables and meat processing are the most attractive segments Government of India is leading from the front to ensure multi-fold growth in this segment Exports in food processing are expected to grow further in the near future Drivers: Increasing consumer spend on processed foods Competitive edge in food processing Government support Growth in food processing exports Adoption of contract farming Increasing food retailing in India Growth in terminal markets Challenges: Lack of integrated supply chain and scale of operations Limited use of technology in food processing Low level of penetration in domestic market High taxes on branded agricultural products
Drivers & Challenges
The sector is highly competitive with many foreign players and large unorganized segment
Major Domestic Players Major Foreign Players Agro Tech Foods Unilever PepsiCo Nestle
Competition
Dabur Foods Gits Food Products
Haldirams MTR Foods
FOOD PROCESSING INDUSTRY INDIA.PPT
Market Overview Drivers & Challenges Government Initiatives Competition Key Developments
Food processing is a large sector that covers many activities like agriculture, horticulture, animal husbandry etc.
Diary Sector Processed milk products like butter, cheese, ghee, ice cream etc. Raw fruits and vegetables, pulps, canned fruits, juices and pickles
Fruits & Vegetables
Meat & Poultry
Cattle, buffaloes, sheep, pigs and poultry
Food Processing
Fisheries
Marine fisheries, frozen and minced fish products
Packaged Foods
Noodles, vermicelli, tomato ketchup, jam , soups etc.
Beverages
Carbonated drinks, fruit-based drinks and hot beverages
Staples
Sugar, wheat, bread, flour and salt
Food processing industry in India has huge untapped potential and offers scope for large investments
Source: Ministry of Food Processing Industries, IBEF articles & KPMG Research FOOD PROCESSING INDUSTRY INDIA.PPT
Market Overview
Industry is valued at USD 70 bn and is growing at 14% annually India is one of the top producers of milk, pulses, sugarcane and tea in the world Government has taken major initiatives towards ensuring multi-fold growth in this sector that has an investment opportunity of about USD 24 bn by 2015 Mega Food Parks are coming up in India to integrate the supply chain and promote food processing States like Andhra Pradesh, Uttar Pradesh and Madhya Pradesh are highly attractive for food processing industry Huge foreign direct investments have been made in 2007-08 totalling ~USD 143 mn
Market Size & Growth

USD bn +14%
91 70 80 104 120 100 80 60 40 20 0
2009
2010e
2011e
2012e
Market Penetration of Segments

Diary Sector 10% 6% 10% 12% 3% Range 6 10% 37%
Fruits & Vegetables Meat & Poultry Fisheries
Packaged Foods
Diary products and fruits & vegetables are the most attractive segments for investments
Source: Press articles; Ministry of Food Processing website; IBEF & KPMG research report Food Processing- market & opportunities, Apr 2008 FOOD PROCESSING INDUSTRY INDIA.PPT
Dairy Products
India is the leading producer of milk in the world, about 108 mn tonnes in 2007 ~37% of the produced milk is processed and ~676 diary plants are registered with the government Growing segments
Branded butter market is valued at USD 133 mn and is estimated to grow at 8-10% per annum Cheese market is valued at USD 110 mn and is growing rapidly in urban areas at about 15% Ghee is growing at a rate of 8% annual rate with 24.1% penetration across country Ice cream market is valued at USD 199 mn in India and is growing at 20% annual rate Growth Rate +15%
Other emerging segments include are Ultra Heated Treatment (UHT) and flavored milk
UHT milk is gaining popularity and the market is estimated at USD 33.4 mn Fruits and Vegetables (F&V)
Globally, India is second and third largest producer of vegetables (100 mn tonnes) and fruits (50 mn tonnes) respectively
India accounts for 8.4% of the worlds F&V production
Area under fruit cultivation is about 4.8 mn hectares and that of vegetables is 7.59 mn hectares Less than 2% of total vegetables produced are processed commercially in India Share of organized sector in fruits processing is ~48%; ~20% of processed F&V are exported
Mango and its other products alone constitute 50% of the total F&V exports
Growth Rate +20%
Meat processing is less penetrated in India and fisheries are majorly export oriented
Meat & Poultry
India has the largest livestock population (470 mn) globally (50% of buffaloes and 16% of goats) Processing of meat in India is licensed under MFPO (Meat Food Products Order) act, 1973
Registered under MFPO are 3,600 slaughter houses, 9 modern abattoirs and 171 meat processing units
About 5 mn tonnes of meat is produced per year in India
Per head consumption of fresh and processed meat is as low as 1.5 kg in India against world average of 35.5 kg
Majority of animals in India are not bred for meat, the processing percentage for meat is as follows Buffaloes (11%), Cattle (6%), Sheep (33%), Goat (38%) The annual poultry production in India is 450 mn broilers and 33 bn eggs growing at 20% and 16%
Major poultry exports are to Maldives, Oman , Japan, Malaysia, Indonesia and Singapore Fisheries
Growth Rate +10%
Fisheries sector is classified in to marine, in-land and aquaculture and India ranks third in fish production in the world, it also ranks second in in-land fish production About 60% production comes from marine resources and fish processing in to canned and frozen forms and is primarily targeted for export markets
Frozen shrimp contributes to 34.62% of exports in terms of volume and 63.5% in value Growth Rate +20%
India has about 369 freezing units with daily processing capacity of 10,226 tonnes and 499 frozen storage units with a capacity of 134,767 tonnes
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Packaged foods, beverages and staples are restricted to urban areas, characterized by high volumes and low margins
Packaged Foods
Packaged foods primarily includes ready-to-eat snacks, chips, namkeen, bakery products etc.
India has around 60,000 bakeries; 20,000 traditional food units
Growing segments
Noodles growing at over 15% annually and branded noodles is estimated to be 230 mn servings/yr Soups market is at a nascent stage and is valued at USD 14 mn Confectionaries market pegged at USD 484.3 mn while biscuit market at USD 373.4 mn growing at 5.7% & 7.5% Biscuit market is estimated to be USD 373.4 mn and is growing at 7.5% Culinary products is growing at 18-20% per annum, also tomato ketchups and jams at 20% per annum Beverages
Growth Rate +8%
Primarily comprises non-alcoholic beverages like aerated soft drinks, fruit juices and hot beverages 100 plants across India under aerated soft drinks segment and exports in soft drinks are valued at USD 156 mn per annum; attracted highest foreign direct investments valued at more than USD 1 bn India is the largest tea producer in the world accounting for 28% of global production and 5th largest coffee producer accounting for 4% of total production in the world
Beverages Growth Rate +27%
Second largest wheat producer globally with an output of 70 mn tonnes valued at USD 195 mn Bread production is growing at 7.5% and organized market accounts for ~55% of the market 10,000 pulse mills with 14 mn tonnes milling capacity per annum
Growth Rate +85%
Drivers & Challenges

Drivers
Increasing consumer spend on processed foods Competitive edge in food processing Government support Growth in food processing exports Adoption of contract farming Increasing food retailing in India Growth in terminal markets
Challenges
Lack of integrated supply chain and scale of operations Limited use of technology in food processing Low level of penetration in domestic market High taxes on branded agricultural products
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Rising disposable income and increasing spend on food will boost the processed food market in India
Source: FICCI - E&Y study Flavours of Incredible India Opportunities in the Food Industry, Oct 2009 FOOD PROCESSING INDUSTRY INDIA.PPT
Increasing consumer spend on processed foods
Impact
In the last 5 years an increase in per capita disposable income of 8% has led to an increase in per capita consumption expenditure on food by over 20% Consumption of primary and secondary processed foods has grown rapidly over the past few years owing to the following factors:
Four-fold growth in size of households in middle to very rich segment Increase in the youth (age group 15 25) in the country Growing migration of population from rural to urban India
In agro-products, fruits & vegetables is the largest consumption category accounting for 50% of the total consumption Expenditure on Food by Indian Consumers
Milk & milk products, meat & marine products 30% Others
34% 70% Agri-products
66%
Primary & secondary processed foods
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Low cost of production, favourable conditions and government support gives India a competitive edge
Source: Ministry of Food Processing Industries, India; Indian Brand Equity Foundation report 2008 FOOD PROCESSING INDUSTRY INDIA.PPT
Competitive edge in food processing
Impact
India has a competitive edge in food processing as it has the largest irrigated land and livestock population in the world India is also the largest producer of milk, tea and pulses and is one of the leading countries in the production of fruits and vegetables India is a favorable market to set-up large low cost production base with effective utilization of available cheap workforce Cost of production in India is 40% lower than many of the locations in Europe and about 10-15% lower to that of United Kingdom
Government support
Impact
The government of India has taken several initiatives to promote investments in this sector 100% FDI as well as technology transfer is allowed in this sector and grants are given by the government for setting up common facilities in Agro Food Park Institutional and credit support is provided for new industries in fruits & vegetables and income tax rebate is allowed for 100% of profits for first 5 years and 25% for next 5 years Central excise duty on meat, poultry and fish is reduced to 8%, customs duty on packaging machines has also fallen Custom duty on food processing machinery and its parts is reduced from 7.5% to 5% Custom duty on packaging machinery is reduced from 15% to 5% and on reefer vans from 20% to 10% Diary machineries are completely exempted from central excise duty
12
Exports of processed food and the adoption of contract farming will drive the market
Source: APEDA (Agricultural and Processed Food Products Export Development Authority) India report; Financial express Contract farming did no good to farmers, says IIM-A study FOOD PROCESSING INDUSTRY INDIA.PPT
Growth in food processing exports
Impact
Exports from India in food processing sector is growing every year at a significant rate Processed foods contribute to about 5% of the total exports from India Targets set by the government are will be a major driving force for the market Food Processing Exports Growth in Volume
mn metric tonne
4 2 0
+15% 1.97 1.30 2004-05 3.22 1.48 1.74 2005-06 3.26 2.00 1.26 2006-07
2.08 1.29 2003-04
0.79
0.67
3.65 1.72 1.93
Fruits & Vegetables Diary, Poultry & Meat Products
2007-08
Adoption of contract farming

In contract farming
Impact
Food processors gets into an agreement with the farmer who is contracted for planting a particular crop and produce an agreed yield of certain quality at a pre-agreed price The food processor provides the required support in terms of technology and training to the farmer so as to get the agreed results
This eliminates the supply shocks for farmer and generates steady source of income and assures good quality farm inputs, to the processor, which is crucial in this business This model minimizes risks for processors and producers and is expected to lead to a larger demand for processed food due to the enhancement of quality of the food processed
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Growing food retail formats and outlets in India is a major driving force for processed food products
Source: Chilli Breeze article Food Retail in India Growth, Growth and More Growth; Business Line Food retailing needs to perfect franchise recipe , Apr 2009 FOOD PROCESSING INDUSTRY INDIA.PPT
Increasing food retailing in India
Impact
The Indian consumers have various outlets in the neighbourhood to purchase food products Food retailing formats are growing in India ranging from neighbourhood stores, supermarkets, hypermarkets to cash and carry stores All these outlets contribute to the growth in food trade and hence many corporate houses are moving to food retail HUL, ITC and Dabur has already forayed in to this space and are planning to increase their outlets and have a pan-India coverage Established players are planning to tap the backward linkages and expand their geographies
Players include Reliance Fresh, More, Spencers Daily, Food Bazaar, Subhiksha, Food World, Nilgiris etc.
The food retail business in India is growing at a 30% annual rate, thereby providing huge scope for food processing players to reach end-users Government of India is also promoting this business by allowing 51% FDI by single brand companies and in future plans to increase this limit in order to promote food processing industry There is also a growing trend of franchising food retail outlets in India especially the quick serve joints like KFC, McDonalds, Pizza Hut, Nirulas etc. which enables deep penetration in less time
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Development of terminal markets creating linkages with aggregators and logistics providers
Source: Maharashtra State Agricultural Marketing Board Projects: Terminal Markets, IBEF and other press articles FOOD PROCESSING INDUSTRY INDIA.PPT
Growth in terminal markets
Impact
Terminal market is an assembly and trading place for agricultural commodities

The produce is either sold to end consumer or food processor, packaged for export or stored in a cold storage for future disposal The infrastructure of terminal markets include electronic auctioning facility, pre-cooling, cold storage, ripening chambers, grading packaging facilities, processing units and other allied infrastructures like banks, post office etc These terminal markets operate on a hub and spoke model with market being the hub and collection centers which are located close to the production areas act as spokes
In order to integrate the domestic produce with retail chains the government of India is promoting terminal markets
It plans to set-up 8 terminal markets with an investment of USD 131 mn 21 more terminal markets are proposed for future
Cities under consideration are Mumbai, Nashik, Nagpur, Chandigarh, Rai, Patna, Bhopal and Kolkata
This will allow the market to develop due to stronger integration between food producers and processors
Terminal Markets Mumbai Nashik Nagpur Project Cost (USD mn) 43-54 13 12 Handling Capacity (Metric Tonne) 3000 1000 750 Area Required (Acres) 125 100 100
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Small scale of operations and limited use of technology are the major challenges for this sector
Lack of integrated supply chain and scale of operations
Due to lack of proper value chain for food processing in India, produce worth USD 10 bn is wasted every year in India Nearly 20-25% of the fruits & vegetables production in India is lost in spoilage at various stages of harvesting Lack of technology, poor quality of seeds and planting material is one of the reasons for this, scale of operations is also a key factor About 90% of the units are small scale and hence does not reap the benefits of economies of scale, this also applies to land holdings A proper integrated supply chain is needed along with scale of operations to improve efficiency in this sector
Source: IBEF report 2008; igovernment article India to set up 30 food parks, May 2008 FOOD PROCESSING INDUSTRY INDIA.PPT
Impact
Limited use of technology in food processing
Impact
Food processing in India is majorly a manual process with limited use of technology like precooling facilities for vegetables Technology plays a major role for storing fruits & vegetables for a long period in order to enable further processing There are about 3600 licensed slaughter-houses in India but due to lack of technology, meat processing is low in India considering the large animal population available in the country India has to bring in modern technology for food processing in order to improve process efficiency and quality of end product
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Low penetration levels in domestic market and high taxes on branded products affects this industry
Source: Economic Times Food processing can create more jobs, Jul 2009; igovernment article India to set up 30 food parks, May 2008; Yahoo news High taxes hitting food processing sector: Assocham Nov 2009 FOOD PROCESSING INDUSTRY INDIA.PPT
Low level of penetration in domestic market
Impact
The penetration levels in the domestic market are low in India because majority of processing units are export oriented Share of ghee in branded milk products is still as low as 2%, penetration of culinary products is 13.3% with major emphasis is given to sales in cities Packaged biscuits consumption is as low as 0.48% in India while it is about 4% in the US India has large untapped domestic potential Processing % of Food Produced Across Countries
%
80 60 40 20 0
80%
78%
70% 40%
30% 5% India
Malaysia Philippines
Brazil
China
Thailand
High taxes on branded agricultural products
Impact
Besides 12.5% of value-added tax, branded processed products are subject to a 2% central sale tax and also attract local entry tax and octroi up to 4% On the other hand, unbranded products are in many cases exempted from tax or often taxed at a 4% confessional rate, this is adversely affecting the competitiveness of the sector
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18
Financial Support
Mega Food Parks Scheme
Key Initiatives
Manpower Training
Tax Benefits
Vision 2015
Trends
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Government expects a 100 fold growth in food processing in line with the high growth experienced by service sector
Source: Ministry of Food Processing India; Economic Times Interview with Food-processing minister Food processing can create more jobs, Jul 2009; The Financial Express Food processing min plans Rs 1,200-crore VC fund Sep 2009 FOOD PROCESSING INDUSTRY INDIA.PPT
Government Initiatives
The main priorities for the government in this sector is to encourage and increase food processing activities It expects to create 10 mn jobs by 2015 in the food processing sector in India It plans to promote partnership between agricultural and industrial sectors, to help farmers move up the value chain Tripling the size of industry from the current USD 70 bn to nearly 210 bn Raising the level of processing of perishables from 6% to 20% Increasing value addition from 20% to 35% Enhancing Indias share in the global food trade from 1.5% to 3%
Vision 2015
Provides an investment opportunity of USD 24 bn Plans to set up a dedicated venture capital fund to support the investment requirements Financial Support
The venture capital fund would be set up with a corpus of about USD 250 mn by Apr 2010 Fund could be either a government initiative or under public-private-partnership model
Participation from NABARD, IDBI, SIDBI, other banks and the private sector is expected Plans to approach RBI to include food processing under the priority sector lending
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India to emerge as regional hub for food processing through the Mega Food Parks Scheme by the government
Government plans on establishing 30 mega food parks in all states enabling integration of the fruit and vegetable sector from farm gate to the retail outlet Mega Food Parks Scheme (MFPS)
Operations towards developing 10 parks has begun All parks are expected to be established by 2015
Source: Ministry of Food Processing India; Economic Times Interview with Food-processing minister Food processing can create more jobs, Jul 2009 FOOD PROCESSING INDUSTRY INDIA.PPT
Government is supporting these parks by providing a portion of total capital investment subject to a maximum of USD 11 bn It also plans to extend special economic zone benefits to food parks
Tax Benefits
Government is planning to declare a tax holiday for all food processing units It also plans to extend 100% depreciation benefit for infrastructure projects in the sector from first year onwards Plan for rationalization of duties for the industry
Manpower Training
Government plans to design a curriculum for skill development programmes in consultation with HRD ministry, Labour ministry and institutions Plans to collaborate with aid agencies like World Bank and Asian Development Bank to raise funds for running large-scale skill development programmes Prepare a blueprint for Skill Development Mission and collaborate with Industrial Training Institutes (ITI) to focus on training the workers at various levels of food processing
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22
Indian food processing sector is highly competitive with many foreign players in the market
Note: Based on latest available data from the Ministry
Source: D&B articles Emerging SMEs of India- Food Processing; IBEF report Food Processing- market & opportunities, Apr 2008; Press articles FOOD PROCESSING INDUSTRY INDIA.PPT
Competition
A highly competitive market with many domestic players and their MNC counterparts fighting for market share
Competitive pricing, expansions, aggressive advertising campaigns and efficient packaging are the strategies used by firms to gain market share
Segments Share
Other products 24% Diary Products 5% 11% Staples 20% Beverages Meat, Fish, Fruits, Vegetables, 40% Oil
More players are planning to tap the mass market in basic foods like fruits & vegetables, meat & poultry and fisheries
Food Processing Units in Organized Sector

Flour Mills Fish Processing Food and Vegetable Meat Processing Sweetened and Aerated Water Milk Products Sugar Mills Solvent Extract Rice Mills + Modernized Rice Mills 516 568 5293 171 656 266 429 725 174,296
Segment-wise Organized Share

Packaged Foods Beverages Staple Foods 50% 48% 15% 5% 80% 77%
Fruits & Vegetables Diary Sector Meat & Poultry
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Major Domestic Players (1/6)

Company Business Description
Source: Company Websites and Articles FOOD PROCESSING INDUSTRY INDIA.PPT
Britannia
Nusli Wadia group and Groupe Danone, a French food company, share 48.5% promoter holding equally in Britannia Leading player in organized biscuit market with about 30% market share Plans to strengthen its position by launching new products and improving volumes and introducing variants of the existing products Financials: Annual sales turnover of USD 565.2 mn in 2008 Dabur foods is a 100% subsidiary of Dabur India. Started in 1997 with the launch of packaged fruit juices The company caters to beverages and culinary segment with products including fruit juices, lemon drink , cooking pastes, coconut milk, tomato ketchup, corn flour etc. Major brands include Real, activ, BuRRst, HOMMADE, LEMONEEZ, CAPSICO etc. In addition to the retail sales, Dabur Foods is looking at increasing institutional sales to hotels, restaurants and caterers Financials: Turnover of Dabur Foods in 2005 was USD 27.9 mn
Dabur Foods
Note: This list is not exhaustive
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Gits Food Products
Founded in 1963 as a small family enterprise and caters to snack food and diary segment Products include snack mixes, dessert mixes, papads, namkeen, ready-to-eat meals, desserts, biscuits and cookies, and diary products It has two factories in Pune District of Maharashtra Exports about 45% of its products to USA, Canada, UK, Australia, Asia, the Middle East and Europe The company is strategically broadening and growing its export market and it launched a new international style of export packaging Financials: Sales turnover of USD 6.5 mn in 2005 (including other income) Established in 2006 when Godrej Tea Ltd. acquired foods division of Godrej Industries Ltd. Acquired Indias leading confectionery player Nutrine Confectionary Company Private Limited in June 2006 Product portfolio includes
Confectionery: Brands like Mahalacto, KokoNaka, Nutrine Eclairs, Superstar, Aasai & HoneyFab Non Carbonated Beverage: Includes Jumpin (Fruit drink), Xs (Juice & nectar) and Sofit (Soymilk) SmartCook Tomate Puree in the Cooking Aids Category and Godrej Cooklite, Godrej Oil and Godrej Vanaspati in the Edible Oil segment and Godrej Tea in the Packet Tea category
Godrej Hershey Foods & Beverages Limited
It is targeting sales revenue of INR 10 bn by 2010 through organic as well as inorganic growth
25

Gujarat Cooperative Milk Marketing Federation (Amul)
Established in 1946 It is is India's largest food products marketing organisation The company has a range of products in various segments namely Cheese, UHT milk, ghee, milk powders, sweetened condensed milk, curd products, ice-creams and confectionary Exports its products to USA, Gulf Countries and Singapore It plans on expanding its outlets Amul Parlour from 4,000 to 10,000 by 2010. Financials: Annual sales turnover of USD 1.5 bn in 2008-09 Started in 1936, as a shop in Bikaneer, expanded to Delhi in 1982 and to USA in 1993 It caters to snack food products like namkeen, syrup, sweets, crushes, chips and papads Major presence in North India and especially New Delhi Also exports its products to countries like US, UK, Canada, Australia, Singapore and UAE Follows competitive pricing strategy and caters to Indian palette with labour intensive products
Haldirams
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ITC Ltd.
Entered the branded & packaged foods business in 2001with its Kitchens of India brand Expanded to other brands namely Aashirvaad, Sunfeast, mint-o, Candyman and Bingo! Its product portfolio includes staples, biscuit, confectionary, snack foods and packet food in the ready-to-eat format It has presence in USA, Canada, Switzerland, Mauritius and Germany Financials Gross turnover was INR 231 bn in 2008-09 Established in 1989 Product portfolio includes staples, ready to eat Indian curries, cook-in sauces, cooking paste to spices, seasoning and frozen food Marketing their products by tying up with the major retail chains not just in the domestic market but in the international markets Presently boasts of a distribution network of more than 200 thousand retail outlets, 100 super distributors and 600 stockists Exports its products to USA, UK, Dubai, Canada, Japan, Australia, Singapore and other European countries. Financial Net in FY 08 stood at INR 6.4 bn
Kohinoor Foods Ltd
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Mother Dairy
Set up in 1974 under the Operation Flood Programme and is now a wholly owned company of the National Dairy Development Board Product portfolio includes liquid milk, dahi, ice creams, cheese and butter, Dhara range of edible oils and the Safal range of fresh fruits & vegetables, frozen vegetables and fruit juices at a national Recently developed a state-of-the-art fruit processing plant at Bangalore with fruit handling capacity of around 250 MT per day Top five processed food companies in India, MTR is an ISO 9002 and a HACCP certified company Recently MTR is acquired by Orkla, a Norway-based company for USD 80 mn It caters to snack foods and ice cream products including ready-to-eat curries and rice, readyto-cook gravies, frozen foods, ice creams, instant snack and dessert mixes, spices, pickles etc. About 10% of the total sales comes from export market MTR which is established in south is developing its brand in the west and north India markets It also plans to expand its product line rapidly Financials: Annual turnover of USD 40.6 mn in 2008
MTR Foods
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Parle Agro
Major brands include Frooti, Appy Classic in fruit-based drinks; Bailley in packaged drinking water; Mintrox and ButterCup in confectionaries Parle Agros flagship product Mango Frooti has 75% market share in fruit based drinks Parle Agro has entered snack market recently with the launch of its brand Hippo It started Hippo with 5 flavours and plans a bigger portfolio in snacks segment Broad strategy is backward integration and aggressive media campaign during product launches Financials: Plans to increase its revenues from USD 206.6 mn to USD 761.3 by 2011 Established in 1971 Major market presence in the meat and poultry segment Financials Net sales pegged at INR 5.2 bn for FY 08
Venkys India Ltd.
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Major Foreign Players (1/2)

Agro Tech Foods
Affiliated to ConAgra Foods Inc, USA which is a major foods company in the world ConAgra Foods along with Tiger Brands of South Africa holds a majority stake of 52.3% in Agro Tech Foods Ltd, through CAG Tech Holdings A major player in edible oil and branded foods in India, it has a flagship brand Sundrop Product portfolio includes edible oil, vanaspati, atta, popcorn, french fries and green peas Plans to diversify its product portfolio and enter new markets with focus on product and brand differentiation Financials: Annual sales turnover of branded foods segment was USD 117.1 mn in 2007 HUL is Indias largest FMCG firm with 51.55% stake holding from parent company Unilever Caters to Food and Beverages segment with products like jam, salt, wheat flour, soup, tea, coffee and ice creams Major brands include Broke Bond and Lipton in Tea, Bru in coffee, Kwality Walls in ice cream, Kissan jam, Knorr soup and Annapurna salt and wheat flour Foods segment contributes to 20% of the total HUL sales HUL divested its non-core businesses and focussed on its food business for driving growth Financials: Annual sales turnover of USD 940 mn for HUL Foods segment in FY 2008-09
Hindustan Unilever Limited
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Major Foreign Players (2/2)

PepsiCo
PepsiCo started its operations in India in the year 1989 Caters to beverages and snack foods including soft drinks, fruit juice and chips It has 43 bottling plants in India, and its Frito Lay foods division has 3 plants PepsiCo is planning to invest USD 200 mn to set-up four new plants out of which 3 would be for beverages and one for foods Major focus is on high volume scales, it is planning to set-up new greenfield plants and is looking for new franchisee bottlers Started in 1959 as Food Specialities by Nestle SA which has 51% stake holding It caters to diary products, beverages and snack foods with products including instant coffee, condensed milk, diary whitener, infant food, chocolates and confectionaries Nestle India is planning to launch new products in all its product segments Financials: Annual sales turnover of USD 965.5 mn in 2008
Nestle India
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Key Developments
Date Nov 2009 Oct 2009 Sep 2009 Aug 2009 Apr 2009 Feb 2009 Development
Source: Press articles FOOD PROCESSING INDUSTRY INDIA.PPT
PepsiCo to invest USD 200 mn to set-up 4 new greenfield projects and expect them to be operational by 2012. One of the 4 would be for making food products while other 3 would be for making beverages. An Indo-French joint working group (JWG) on agriculture is set-up to promote co-operation and France is ready to help Indian food processing sector with latest technology. Indias largest sea food processing plant with a daily capacity of 40 ton has come up at Jankia, 50kms from Bhubaneswar. The unit has a cold storage capacity of 1800 ton per day. Government to provide food processing training to 500,000 women in collaboration with industrial training institutes (ITI) as part of its efforts to create 10 mn jobs by 2015. Worlds largest food park to come up in Haridwar, Uttarakhand state. It is called Patanjali Food and Herbal Park and will have 32 processing units for fruits & vegetable products. Indian Farmers Fertiliser Cooperative Limited (IFFCO) to set-up a farm-based food processing SEZ with an investment of USD 512.7 mn at Nellore, Andhra Pradesh.
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Thank you for the attention

The Food Processing - India report is a part of Research on Indias Food and Beverage Industry series. For more detailed information or customized research requirements please contact: Natasha Mehta, CFA Gagan Uppal
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