The food and beverage industry covers many sectors, and the Ministry of Food Processing has broadly divided into the following areas: Dairy processing, Fruits & Vegetable processing, Grain processing, Fish, meat & poultry processing and lastly, Packaged goods such as beverages, snacks, bakery products, convenience/ready-to-cook foods. Currently, many units in the food processing industry work in the unorganized sector, but the share of organized industry is expected to grow, gradually. The packaged food, industry is expected to be a significant contributor to this growth. The per capita consumption of packaged foods in India is expected to rise with the increase in disposable incomes. The Indian Food and Beverage Services market is expanding rapidly. The compounded annual rate of growth is expected to be 25% and will continue to grow with similar pace in the next few years. The overall scenario of the F&B market has evolved over the few years. There was a time when handful of brands was available in the market to eat out. But today, the customers are spoilt for choices. We have witnessed immense activities in F&B Service‟s industry in the last 5 years, including exciting new concepts, food and beverage offerings and new and innovative service elements. The young Indian consumers backed by higher purchasing power have also created a fast-food revolution in the country since the last decade. This phenomenon is fast attracting the global major fast food chains to the second most populous country in the world. Global major chains like McDonalds, Yum Brands (KFC and Pizza Hut), Domino‟s Pizza and Subway have already established their presence in India. Other majors like Starbucks and Dunkin Donuts entered the market in 2012. Many others like Burger King are planning to enter the Indian market after the government announced foreign investment reforms in the retail sector. The Indian economy experienced an economic slowdown with high inflation in fiscal year 2012. As a result, India‟s food and beverage players faced margin pressure owing to rise in raw material costs. However, the outlook for the Indian F&B sector is positive due to growing sales, reforms in the organized retail sector and rapid urbanization. The ever increasing middle class will further drive growth in the country‟s F&B sector. Since the food & beverage industry includes both basic and value-added food processing, there are a wide range of jobs available. In the primary food processing industry, the roles may involve close interaction with the farm end of the food chain. At the value-added food processing industry, whereas, the focus would be greater on production and process technology as well as Research & Development (R&D). Broadly, the key roles in this industry could be classified as agriculture-related, production & process related, Testing, Safety & Quality Control, Health & nutrition related, R&D and Sales and Marketing. These are besides the general functions such as Finance, Administration and Supply Chain.
INDUSTRY EVOLUTION AND TRENDS:
Until the early 90s, the Indian food industry consisted largely of small scale units working with low-end technology and involved in low-volume production, largely for the domestic market. The packaged food industry, which included a few organised players and made products like ketchup, jams, biscuits and instant noodles, had few brands and a low level of competition. With liberalization and the rise in urban middle-class incomes, there was an explosion of brands, as existing players expanded and new players entered the market. Staple foods such as wheat, rice, pulses and cooking oil, which had till now, largely been sold on the loose, started being packaged for the first time, with some of them also getting branded. This was also the case with fish, meat and poultry products where consumers were now ready to pay for the convenience of produce that has been cleaned and was ready to use. While branded products have made an entry into almost all categories, the Indian food industry is yet to undergo many changes. The food procurement chain from farm to factory is still inefficient, due to poor transportation facilities and lack of cold storage. Some companies have tried to address these issues by putting in place systems for contract farming and procurement from farmers in specific geographical areas so that investments in cold storage, warehousing and transportation facilities can be made. They also provide technical know-how to farmers for improving yields and produce quality. Unlike developed countries, highly processed, ready-to-eat/ready-to-cook foods still form a small market in India. With the rise of women in the workforce, this market is expected to grow. India is a large exporter of food products such as grain, tea, fresh and dried vegetables; it is not yet however a major exporter of value-added products in the packaged food sector, although manufacturers have made a beginning by targeting large expatriate Indian communities in areas such as the Middle East and South East Asia. With more stringent safety norms and a greater share of the organized sector, this is expected to change. The Agricultural and Processed Food Products Export Development Authority (APEDA) has estimated that agricultural products and processed food exports from India to this region already account for about $ 3 billion, a figure that is expected to grow. Currently, some of the major players in the Indian food industry are Hindustan Unilever Limited (beverages, staples, snack foods, condiments), ITC Ltd (staples, confectionery, snack foods), Parle Products Ltd (snack foods), Britannia India Ltd (snack foods), Nestle India Pvt. Ltd (Dairy, snack foods, chocolate), Haldirams (Snack foods) and GCMMFAmul (Dairy, beverages). While the domestic market is currently the focus for most manufacturers, this may change in the future. Haldirams, for instance has begun an ambitious expansion plan, including a manufacturing plant in the UK.
India is one of the largest countries in the world, with a growing population of 1.2 billion people. India‟s GDP was US$1,843 billion in 2011 and is forecast to rise to US$1,847.billion in 2012. GDP is expected to continue growing at rates around 7–8 percent per annum for the next few years. There has been a discernible increase in purchasing power in many parts of the country and rising affluence in many urban pockets. However, income distribution in India remains uneven between a wealthy urban population and a low income rural population. Almost a quarter of the population is living on less than US$1 per day, even though GDP per capita is US$3,787. The income split essentially means that India has two separate consumer segments, which are further split by strong regional differences. Throughout India there are 20 official languages, 3 main religions and 14 main cuisine styles. India is one of the world‟s largest food producers and has a large agriculture industry. This, combined with a cultural preference for fresh food, means that India supplies the majority of its own food for consumption. However, India is a growing market for processed food imports, which are becoming more popular with the younger population, especially in urban areas. Consumption of food and beverages was estimated at US$366.8 billion in 2011.
MARKET DRIVERS :
There are a number of trends driving growth in the food and beverage industry. These include: Rising Incomes: India‟s strong economic growth is increasing consumers incomes. It is estimated that by 2025, India will have 583 million people living on incomes of above US$4,380 (around US$23,530 after accounting for the purchasing power parity). Furthermore, around 65 percent of the population are under the age of 35, which means there is an increasing number of people who are capable of earning, Rising incomes are also driving up demand for specialty and value-added food products. Urbanization: The typical Indian lifestyle is becoming more urbanized and Western. This is leading to higher consumption of processed, packaged, branded and value-added food and beverage products. Urban consumers are increasingly willing to pay for premium products. However, the majority of the population are still located in rural areas and consume only subsistence foods such as cereals and breads. Diet Diversification: Indian consumers, particularly the younger population, are becoming more accepting of different food and drink products. There is increased demand for product variety, as well as products from different countries. The number of imported food products is increasing in retail stores.
This trend is evident not only in organised retail, but also in the small familyowned stores which dominate the market. Globalization: Globalization has caused international food products to be adapted to suit Indian consumers. For example, McDonald‟s in India provide vegetarian rather than beef burgers and pizza chains serve pizzas with Indian toppings such as curry. This has resulted in greater acceptance and increased demand for international food and beverage products in India. Meal Portions & Timings: With busier lifestyles, Indian consumers are moving away from the traditional three meals per day schedule. Smaller and more frequent meals are becoming common, resulting in higher demand for convenient products and snacks. Health Consciousness: Indian consumers are becoming more careful about their health. Nutrition is starting to become an important consideration when purchasing food. In general, older and female consumers tend to be the most health conscious when making purchase decisions,
PERFORMANCE OF FOOD PROCESSING INDUSTRIES:
1. Food Products & Beverages have performed at a Much higher rate than the overall manufacturing during April – Dec 2011 and is in fact the fastest growing sub-sector in manufacturing during 2011. 2. Persons Employed under the registered food processing industries have been Increasing from 2004-05 to 2007-08. 3. There has been a fall in the growth rate of Employment in registered FPI units in 2007-08, probably because the growth had Been very high in the preceding years and also because 2007-08 was a year when There was a global slowdown in economic activity 4.As per NSSO 62nd Round Data, in the unorganized Food Processing Sector, 63,45,768 persons were employed during the year 2005-06.
EMPLOYMENT UNDER FOOD PROCESSING SECTOR:
Persons Employed under Registered Food Processing Industries. Persons Employed under the registered food processing industries have been increasing from 2004-05 to 2007-08. There has been a fall in the growth rate of employment in registered FPI units in 2007-08, probably because the growth had been very high in the preceding years and also because 2007-08 was a year when there was a global slowdown in economic activity.
Food Products & Beverages have performed at a much higher rate than the overall manufacturing during this year so far (April – Dec 2011) and is in fact the fastest growing sub-sector in manufacturing during the current year.
GROWTH RATE OF FOOD AND BEVERAGES IN MANUFACTURING INDUSTRY :
Food and Beverages
20 15 10 5 0 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 -5 -10 Food and Beverages
Avg No. Of posts per month** 35 35 75 40 n.a n.a n.a 24
Avg. No of interactions per month 21100 54000 45000 22400 n.a n.a n.a 1150
NUMBER OF TWITTER FANS:
No. Of Twitter Followers 5383 4651 3333 1227 510 289
Total No of Brand Tweets* 5393 2811 2375 156 530 640
Total No Of Brand Retweets* 929 1300 1100 13 104 28
CCD Hard Rock Cafe Dominos KFC Barista Lavazza Coca berry
4% 46% 46% 8% 20% 4%
KEY ISSUES DRIVING THE FOOD AND BEVERAGE INDUSTRY:
Key issues driving the Food and Beverage industry
80.00% 60.00% 40.00% 20.00% 0.00%
54% 54% 52% 51% 51% 49% 48% 46% 43% 40%
39% 37% 36%
KEY CONSUMER TRENDS SHAPING THE FOOD AND BEVERAGE INDUSTRY:
Regional pride Prepare food Shopping Experience Freshness Choice/Selection More out of home consumption Premiumization Convenience
11% 14% 20% 21% 23% 36% 48% 66%
Key consumer trends shaping the Food and Beverage industry
Deloitte global survey of 93 top executives at leading Food and Beverage businesses.
Food and beverage industry as a whole is prepared to respond to consumer demand, with certain dynamics between manufacturers and retailers being played out to address that. Retailers reward product differentiation and innovation because new products offer the best growth opportunities for them, in both existing and emerging markets. Manufacturers, likewise, can become more competitive by innovating and launching new products and segments that, for instance, are not easy to replicate via private label alternatives. And in the food service sector, there is an extremely valuable innovation opportunity for the manufacturer because it is a viable alternative to retail.
ALCOHOLIC BEVERAGE INDUSTRY ANALYSIS:
Liquor industry break-up
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Imported Beer IMFL Country liquor
Indian-made Foreign liquor(IMFL) industry break-up
70% 60% 50% 40% 30% 20% 10% 0% Rum Brandy Whisky White spirits Indian-made Foreign liquor(IMFL) industry break-up
Beer industry break-up
60% 50% 40% 30% 20% 10% 0% Premium Standard Strong
Beer industry break-up
Per-capita consumption: Beer
China Denmark New Zealand Germany India 0 20 40 60 80 100 120 140
Ltr/p.a/person 120 100 80 60
Per capita consumption: IMFl
Series 1 40 20 0 Australia Russia South Africa Brazil China Indai Eygpt
Market share: IMFL and country liquor
FY11 FY10 FY09 FY08 FY07 FY06 FY05 FY04 0% 20% 40% 60% 80% 100% IMFL Country Liquor
States that have banned liquor
Manipur Mizoram Nagaland Gujarat
LIMITATIONS ON BRAND BUILDING:
Ban on advertising Govt. permission required to launch products & variants Limited no. of SKUs Brand registration required in every state as well as in CCD New pricing allowed only once in a year No support through the distribution system( restricted distribution channel)
Overview of Coffee industry in India:
From ancient times India is very much a tea-drinking nation, owing to the country‟s role as one of the world‟s largest producers of tea. However, “Now the cafe culture has became big in India because of young generation most of them are below 35years. Due to this many coffee outlets are being established and offering lot of variety coffee flavor‟s. In addition to tea, India produces about 300,000 metric tons of coffee annually; Robusta makes up two-thirds of that amount. About 45,000-50,000 metric tons of the country‟s Arabica is consumed in-country. “Earlier, Robusta was hardly ever consumed except in instant coffee, but with more cafes in India now demand for Robusta coffee was increasing. Coffeehouses in India tend to use beans that were grown in country because doing otherwise would be cost prohibitive. “There is a huge financial disincentive to bring coffee in from elsewhere: there is a 100-percent import tax, so anything coming into the country becomes extraordinarily expensive,”. “There are consumers who are able and willing to pay that, but until there‟s a change in how the taxes are levied, there‟s not going to be a huge advance in specialty coffee from origins other than India within the country. There are some very nice coffees from India that you can buy and use in your own business, but you‟re limited to the flavor profile that you can serve.” In India most consumers are not more educated about the variety of coffee beans available, so that customers drink a coffee or whatever is served in the various cafes. There has been effort from certain organizations like the Coffee Board of India and the Specialty Coffee Association of India to educate the consumer, but it will take a while as coffee consumption increases.” Many people in India believe that it‟s difficult to make a cup of coffee then the tea. “This has to be corrected so that more people can prepare coffee at home. Coffee industry is targeting the middle class people because the middle class is the champion of consumer “India is developing to be more like the Western coffeehouse culture. There‟s not a huge in home consumption of coffee but there is good growth and demand for coffee in outlets. Capitalizing on this trend, chains like Café Coffee Day, Starbucks, Gloria Jean‟s
and Barista have announced plans to expand and, combined, will add thousands of new shops to India‟s marketplace.
Average Retail Prices of Arabica Coffee Beans in Major Coffee Consuming Centers, Rs. Per kilo:
Average Retail Prices of Robusta Coffee Beans in Major Coffee Consuming Centers, Rs. Per kilo:
DOMESTIC COFFEE CONSUMPTION TREND:
All about Cafe Coffee Day in India:
Parent Company: Cafe Coffee Day (CCD) Category: Coffee joints Sector: Food Products Tagline/ Slogan: A lot can happen over coffee USP: Most recognizable and affordable brand in India Segment: People looking to go to have a coffee and snacks at a hangout place Target Group: Youth in the middle and higher income groups Positioning: India's favorite coffee shop for the young and the young at heart.
PRODUCTS: Cafe Coffee Day product mix constitutes a wide range of products like: Samosa, Biryani, Masala sandwich, Tikka sandwich etc.
The best-selling item in summer is frappe, which is coffee and ice cream blended together. The young people favor it. In winter it is cappuccino. Their merchandising includes funky stuff like t-shirts, caps etc.
SERVING SIZE: The serving size of a product is a measure, not only of quantity, but also of value for money.
PRODUCT SERVING SIZE Hot Coffee - 210 ml Cold Coffee - 350 ml Smoothies - 350 ml Granitas - 350 ml
PRICE: Considering that Cafe Coffee Day knows its major customer lies in the bracket of 1529, it has tried to derive a policy whereby it can satisfy all its customers. The price for a cup of coffee ranges from Rs.45 to Rs. 80. From the time it first started its operations, there has been only minor changes in the pricing policy of Cafe Coffee Day. The changes have been more due to the government taxes than anything else.
PLACE: The strategy CCD has adapted is to place a cafe in every possible location where some business can be generated. This is a prime factor in determining the success of a retail chain. Cafe Coffee Day looks to cater to their target market with strategically located outlets. Their outlets are generally located in High Street/ Family Entertainment Centers, gas stations, near Colleges etc.
PROMOTION: Cafe Coffee Day involved in all the areas of serious consumer passion like:
Television: Cafe Coffee Day held a contest around a very popular programme on Zee English called Friends. All the six lead characters are shown often visiting a coffee shop. They have tied up with Channel [V]„s Get Gorgeous contest. Tie-ups: Besides that Cafe Coffee Day also tie up lot of the youth brands. So they have a contest going on with Levis, another one with Scooty, Liril, latest one with Airtel Friends.
Association with movies: CCD can be seen in movies like Khakhee and Mai Hoon Na. Sales Promotion: Cafe Coffee Day uses special „Cafe Citizen Card‟ for rewarding Cafe Coffee Day‟s customers. It is a loyalty program to gain new customers and retain the existing ones.
PEOPLE: Motivation and personal skill are laid emphasize upon. Their employees are like friend to the customer but at the same time they know about the international standards of hygiene and cleanliness and personal grooming.
COMPETITION: Direct competitors: Barista – This is the closest comp of CCD in the Indian market. They target the same class of upwardly mobile youth and young professionals. But barista is always viewed as a place to unwind after a hard day‟s work or an ideal setting for some business meetings. Cafe mocha-this aims at providing level of experience to the customer is hard to imitate. Inspired by morocco and turkey, mocha offers not just coffee but also sheeshas from Egypt and gourmet desserts. Mocha itself calls a coffee shop for the soul.
Qwicky-based mainly in Bangalore has a strong local hold on south India.
Also local coffee houses like Indian coffee house etc are also a major threat to the company as far as affordability is concern.
Eateries like Mc Donald‟s and Haldirams pose competition to cd as they are likely attraction for customers to be drawn to a consumer can well understand why he should spend around Rs.45 on a coffee when he can get a burger and a coffee for the same price at Mc Donald‟s. Local tea joints and coffee shops like cafe Nescafe – they are smaller places but nevertheless target the same set of consumers.
SWOT ANALYSIS: STRENGTHS: Excellent brand name and brand visibility Huge young crowd as target group Excellent ambience and service Over 1000 outlets and 300,000 visitors per day It produces/grows the coffee it serves hence reducing the cost.
WEAKNESSES: Crowd management Improper sitting arrangement. Lacks strength to maintain brand loyalty. Follow the competitor strategy
THREATS: Entry of foreign players like Starbucks Dependent on Govt commodity rates Large unorganized market.
OPPORTUNITIES: Introduce cheaper versions of coffee Tap the smaller towns/cities Merchandising. Tie ups with other companies for promotion
INNOVATION STRATEGIES: Changing the menu every 4 month to prevent food fatigue Introducing monthly special and Indian snacks Introduction of table service than self service Introducing new drinks
Growth of the Cafe Industry in India: 1. The coffee market in India has been growing due to the demand for Ready to Drink coffee and has become a part of an individual‟s daily consumption basket. Due to changing cultures, consumers are becoming aware of domestic and foreign brands, which are boosting the consumption levels. 2. The export promotion schemes and other subsidies by the GOI, and increasing trend of eating out coupled with the rising share of young population has driven the market. 3. Well-established coffee shop chains, such as Cafe Coffee Day (CCD) and Barista, enhanced their pan-India presence in the latter part of the review period. In 2010, Cafe Coffee Day and Barista had 970 and 200 stores, respectively, and they aim to continue expanding in the next few years.
4. Meanwhile, several relatively new players, such as Costa Coffee, Coffee Bean, Gloria Jean‟s and Java Coffee, are trying to establish a footing in Indian coffee retailing. 5. Both these factors drove on-trade consumption of fresh coffee beans in 2010, with volumes growing by 12%. On-trade sales have emerged as the primary sales channel for fresh coffee beans, in the absence of any appreciable off-trade consumption.
In 2010, the average bill amount at coffee outlet was between rupees 135 and 150. This is expected to rise to rupees 245 by 2016. With customers paying significant amount for their coffees, they are also expecting a lot from an outlet. Factors such as menu, ambience, service and brand name are playing an important role while choosing a coffee outlet.
Indian Coffee Chains market is quite mature which is evident from the fact that Café Coffee Day alone maintains more than 1000 Cafe‟s in 141 cities in India. This forms the main focus of this project.
Black tea consumption (Tonnes)
1200000 1000000 800000 600000 400000 200000 0 2011E 2021P Black tea consumption (Tonnes)
There are about 1000 different players in the Indian Tea Market 90% of which are small regional producers. Major brands involved in this market are – Major brands involved in this market are – 1. Tata 2. Hindustan Lever 3. McLeod Russel 4. Dhunseri Tea Some of the other small players spread all over India are 1. Duncans 2. Goodrick Tea 3. Wagh Bakri 4. Private Label
No. of Household (in millions) v’s Branded Tea penetration per cent:
No.of Household (in millions)
4 3.5 3 2.5 2 1.5 1 0.5 0 No.of Household (in millions)
Branded Tea penetration per cent
64% 91% Delhi 59% Ahmedabad Bangalore Chennai 90% 72% Kolkata Mumbai Hyderabad Pune 20% 72% 69%
1. Beverages and Alcoholic Category Review:
Trend in value of imports
350000 300000 250000 200000 150000 100000 50000 0 2006 2007 2009 248000
Trend in import value by product:
2. Processed Fruit and Vegetable Product Category Review:
Trends in volume by product (Tonnes):
Soft drinks are known as non-alcoholic beverage and it is also a part of beverage industry. Beverage industry include cold drinks, tea, milk, Juice, coffee, alcoholic drinks, mineral water etc. there are different companies which are doing business in these different product. Soft drink is known for thirst quencher and a drink of enjoyment. Today Pepsi, CocaCola and Thumps-up are the famous brands and are multinational. Soft drinks includes a variety of regulated carbonated soft drinks, diet & caffeine free drinks, bottled water juices, juice drinks, sport drinks & even ready to drink tea/coffee packs. So we can say that soft drinks mean carbonated drinks. Today, soft drink is more favorite refreshment drink than tea, coffee, juice etc. Here are the four companies of soft drinks 1. 2. 3. 4. Coca cola Dabur Pepsi co. Parle agro