Food and beverage to India

Trends and opportunities

The market

According to the Asian Development Bank, India’s middle class is expected to grow from 250 million to 550 million by 2025. Based on the high growth rates of the last decade, there has been a discernible increase in purchasing power in many parts of the country and rising affluence in urban pockets. The economic growth and rising disposable income levels of the upper middle class will continue to drive consumer demand and influence buying behaviour.

According to industry sources and the United States Department of Agriculture (USDA) food and grocery retail in India was valued at US$317 billion in 2012 and is expected to grow to US$425 billion by 2016. Food and grocery retail accounts for 60 per cent of overall retail in India. The vast majority of the food and grocery retail sector in India is unorganised e.g. street markets, kiosks and small vendors. Organised (modern) retail is only a small part of the overall food and grocery retail segment, currently worth US$9 billion and expected to grow to US$34 billion by 2016. The organised hospitality sector currently US$1.6 billion is forecast to grow to US$4.6 billion by 2016.

The imported food segment was valued at US$269 million in 2012 accounting for 10 to 15 per cent of organised retail shelf space growing at 30 per cent per annum. Imported products have had higher acceptance in urban pockets. The experimental nature of shoppers has been encouraging for the growth in imported and gourmet foods. Consumer awareness of packaged foods is increasing in India with good sales growth that is expected to continue.

Opportunities

Australian manufactured foods are establishing a reputation of ’clean and green‘ and assurance of quality, competing for shelf space along with other foreign imported food categories from Europe and North America. Austrade South Asia has been focusing on both ‘modern retail’ as well as the Hotel, Restaurant and Catering (HORECA) segment for key product lines of dairy, seafood and meat, wine and processed food. There are opportunities for Australian exporters in:

Fresh Produce

Counter seasonal fresh produce that includes apples, pears, oranges, stone fruits, grapes and grapefruit.

Blueberries

Australian blueberries are now available in India. Victorian-based company Driscoll’s Australia recently exported consignments of blueberries to Mumbai—the financial capital of India and Chennai—the largest landing point of most Australian commodity exports to India, and the capital of Tamil Nadu—India's second largest domestic economy.

The blueberries were exported by Oz Group Co-Op, through their Melbourne marketing partner Driscoll's Australia. Oz Group Co-Op is a farmer-owned cooperative involved in blueberry cultivation on the Coffs coast.

Austrade organised a visit program for blueberry producer Oz Group Co-op Ltd and its marketing partner, Driscoll’s Australia in Chennai, New Delhi and Mumbai to coincide with Australia Business Week in India 2017. Austrade also provided market insights, organised meetings with importers, procurement heads of retail chains and planned visits to retail chains.

The visits and meetings resulted in a trial order followed by repeat orders from Mumbai-based importer IG International and Chennai-based Kovai Pazhamudir Group. They are the leading retailers of fresh horticulture produce in Southern India. Australian blueberries are now available in metro cities across the leading modern retail outlets.

The market in India for blueberries is a niche market but rapidly growing based on consumption as an ingredient as well as it being in the super food category. India currently imports blueberries from the USA, Canada and Chile. India is a small but growing market for imported premium fruits and the export of blueberries to India now opens up export opportunities for other premium Australian fruit across India.

IG International has also formed a joint venture with Mountain Blue, Australia for blueberry cultivation in India.

For more information please contact Bhavin Kadakia, Vinod N and Harsh Mohan Puri

Meat

Australia formalised protocol arrangements with the Government of India in September 2012 providing access for import of lamb, pork and goat. Demand for lamb racks is growing in the HORECA and organised retail segments.

Dairy

There is a growing demand for cheese and cream in the hospitality food service and retail sectors.

Beverages

Wines are one of the fastest growing import categories in India. Wine imports are valued at US$15 million with France, Italy and Australia accounting for 60 per cent of the imports. Beer is the next fastest growing segment in India. The Indian beer market grew from 0.98 billion litres in 2006 to 1.68 billion litres in 2010, an annual growth rate of 14.4 per cent. In the same time period, beer imports grew from 1.5 million litres to 3.1 million litres.

There are also opportunities in non-alcoholic beverages such as juices.

Processed Food

The leading categories are jams, cheese, honey, pasta, ready to eat, canned meats and vegetables, breakfast cereals, health foods, baby foods and sauces.

Tariffs, regulations and customs

In India, tariffs are generally 30-50 per cent on imported food products and to 150 per cent on imported wines, which, when coupled with local excise and sales taxes, distributor margins, and transportation costs, retail prices can end up three to four times the Free On Board (FOB) value of an imported product.

In India, refrigerated warehousing and transportation facilities are limited and costly, but are gradually improving. In some cases, high electricity costs and/or erratic power supplies have constrained cold chain development. The recent decision to allow Foreign Direct Investment (FDI) in the retail sector is expected to lead to improvement in infrastructure. Currently however, the huge demand-supply gap of support infrastructure acts as a constraint in the supply chain of imported products.

Regulations

The Government of India has recently consolidated its food laws under a single regulatory authority, the Food Safety and Standard Authority of India (FSSAI). Exporters from all countries have to follow an array of food laws covering use of additives, colors, labeling requirements, packaging, weights and measures, and shelf-life. Guidelines for food imported into India are available on the FSSAI website.

Certain animal based foods are banned or considered a taboo in India. For example, imports into India of beef, or products that contain beef, are prohibited. Cheese containing animal rennet would not be preferred by a majority of Indians. Alcohol is also considered a taboo (this view rapidly changing though) and is banned in the states of Gujarat, Mizoram, Nagaland, and parts of Manipur.

Labelling requirements

The Food Safety and Standards Authority of India has recently updated the labelling requirements for food imports into India. A summary of the current labelling requirements is available (PDF, 295KB).

Marketing your products and services

India is a country of markets within markets, involving numerous languages, varying tastes and cultural preferences - posing challenges to nationwide advertising and marketing and hindering pan-Indian distribution.

Given the complexity of the market, it is advisable to engage with a partner that is reputable and to start small, ie. consolidate the business in a specific geography and demonstrate success before expanding across India

Links and industry contacts

Retailers Association of India – www.rai.net.in
The Food Safety and Standards Authority of India – www.fssai.gov.in
Forum of Indian Food Importers – www.fifi.in
The Federation of Hotel and Restaurant Associations of India – www.fhrai.com

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

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