Indians splurging on food and beverage

Indian food and beverage sector comprises of diverse segments and each segment has large number of product categories. Majority of the segments have been recording double digit growth rates in the last few years with some of them even growing by 30% annually. India is fast emerging as a leading producer and consumer of packaged food products, non-alcoholic beverages, alcoholic beverages, dairy products and meat and poultry products.

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.

Salient Points 

• The current regulations      and policies allow 100% foreign direct investments under the automatic      route in the food processing sector. As of August 2011, the sector      accounted for around 1.8% of total FDI inflows in India.
• India suffered from a      persistently high inflation rate in 2011 which continued into the first      half of 2012. The rate decreased slightly in February before rising again      into the double digit growth zone in April. Since then, it has remained at      around 10%.
• India is dominated by a young population; around 29.7% of the country’s population was under the age of 14. The urban population in India grew from 286mn in 2001 to 377mn in 2011. Both these factor have stimulated the growth of the Indian F&B sector.
• Out of the various industries covered by the Index of Industrial Production (IIP), food and beverage was the fifth largest one in terms of weight (7.3%). During the period FY06-12, the index rose at a CAGR of 6.4%.

ndex of Industrial Production (Base: FY05=100)

 Learn more from our EMD report: India Food and Beverage Industry 2H12

 

Indian FMCG sector holds great treasure despite decaying economy

The Indian economy experienced an economic slowdown with high inflation in fiscal year 2012. However, India’s FMCG Industry was resilient in face of slowdown with growth in both sales and profitability.

The ever increasing middle class backed by rising per capita income is driving the growth of the FMCG sector in the country.

Moreover the wide distribution network built by erstwhile major players ensures a high penetration of the FMCG products in rural India as well, which is home to more than 65% of Indian population. Hence, FMCG is one of the sectors in the country which has successfully mitigated the rural-urban divide.

Key Findings

• According to a study done  by CRISIL, the total market size of Indian FMCG sector was more than USD      13.1bn. The study also estimated the size of market to cross USD 33bn by 2015.
• Hindustan Unilever      Limited, the Indian arm of the global major Unilever was the market leader      in the Indian FMCG sector in terms of revenues with a market share of more      than 35% and leadership across several segments of the market.
• India suffered from a persistently high inflation rate through the year 2011 which continued in the first half of 2012 as well. It came down a bit in the month of February, rising again into the double digit growth zone in April. Since then it has remained around the 10% mark.
• In a survey conducted by Nielsen, India was ranked first in terms of consumer confidence in third quarter of 2012 among all the major economies. Though India came down by 3 points on q/q basis, it reported the highest index scores globally, together with Indonesia.

Chart: Consumer confidence index (Q312)

Source: Nielsen

These are only a few of the insights in the new EMD Report : India FMCG Industry.Learn more and purchase now>>

 

Romanians consuming more food now than previous year?

The revenue for food and beverage companies selected from our pool of main players [over RON 1mn in revenues] increased by over 12% on the year to RON 38.5bn [over EUR 9bn] in 2011.

The growth rate was similar in euros. Food prices increased by 6% y/y nominally on average – effectively real sales actually increased by approximately 6% on the year in 2011.

Overall net profit margin improved slightly to 1.3% in 2011 from 1.1% in 2010 – but there are wide discrepancies among separate market segments.

Generally, the profitability in beverages lags behind that in the food area.

Structure of the food and beverages market, by segment

This is only a small extract of the insights in the Intellinews Romania Agri-Food Sector report; read more and purchase>>