Modern retail is a reflection of a fast growing Indian economy and urban living. To this end, the food processing industry has gained significantly owing to growing disposable incomes, urbanisation and changing lifestyle
Modern retail is a reflection of the fast growing Indian economy and urban living. While millions of shoppers find choice and convenience in modern retail chains, thousands more gain from the employment generated from the construction of malls. By virtue of this, modern retail also builds linkages with manufacturers as well as agricultural producers, processors and farmers. A large part of the sales of modern retail is accounted for by food.
Pegged at $39.71 billion, the Indian food processing industry is relatively smaller, but is growing in double digits, and will touch $65.4 billion by 2018. Food and grocery account for about 31 per cent of India’s consumption basket.
That food is religion in India is not a hyperbole. We Indians just love food with utmost passion. Recipes are handed down from one generation to another as heirlooms and yet, we do not shy away from trying out new recipe like. We reach out for the new while embracing the old. We literally want the world on our platter.
Indian food and grocery market is the sixth largest in the world, with retail contributing to about 70 per cent of the sales. Only a small fraction now does business through organised retail chains — a figure expected to touch 24 per cent by 2020.
If estimates be true, the Indian food retail market will touch $915 billion in the next couple of years. Not an extravagant figure, considering that our annual gross income is expected to double by 2030 with overall consumer spending already at $18.5 trillion in the same time frame.
The industry has all the reasons to feel optimistic as the next decade seems to be a game-changer for India. Any forecast gives that sense. India’s gross domestic product and its contribution to the world trade is expected to triple by 2025 to six per cent and India is all set to become the world’s third largest economy by 2030.
Our 1.3 billion-strong population is one of the youngest, globally, and its fast-emerging middle class is a disruptive force in itself. In the next decade or so, India will have the lowest average population age among the Brics (Brazil, Russia, India, China and South Africa) markets, with 70 per cent of the population below the age of 45.
Retail is penetrating in tier-II and tier-III cities, creating new consumption hubs. Category expansion; brand proliferation; growing popularity of preserved and frozen food; and higher quality standards are being brought in through the Food Safety and Standards Authority of India, which is propelling food consumption towards modern retail.
An average Indian shopper is driven by higher disposable incomes and the urge to experiment. Consumers are increasingly looking for organic, natural and healthy variants on the shelves. large food manufacturing companies and some of the largest retailers in the world are actively engaging with the Indian market. The food processing sector is also a key area of focus for the Government and concerted attempt by the nodal Ministry along with easing of foreign direct investment rules for the sector is helping fuel its growth.
The Goods and Services Tax roll-out has only added to optimism in the air. The World Food India event, planned by the Ministry of Food Processing Industries of India too will be of great help to the industry. It holds promise for every stakeholder, irrespective of their position in the vast food chain. The opportunity is huge and India has just begun to warm up.
(The writer is group CEO, Future Group)