The food processing sector in India is still in its nascent stage. As per the recent industry reports, India’s share in global food trade is expected to increase to three per cent over the next four years. The food industry is valued at USD 200 billion of which the food processing industry is estimated at USD 85 billion, according to industry reports. Out of the country’s total production of fruits and vegetables, only about two per cent is processed. The food processing sector attracted US$ 1.2 billion FDI during April 2000 to January 2011 as per the ASSOCHAM report.
Packaging plays a pivotal role
The dynamics of the food processing sector are predominantly driven by the way products are marketed. Basically, snacks, confectionary and most of the other processed food products are purchased on impulse. So, the packaging and prices plays a very important role in consumer buying decision. Packaging is important not only to prolong the shelf life and maintain the product quality but also in attracting the customers. Above all in processed foods segment, where the margins are squeezing by the day, packaging innovation is important in order to cut costs and maintain a competitive margin level.
Food processing industry dominated by small players
The food processing industry is dominated by the small and unorganised sector which accounted for 70% of the volume and 50% of value. India has a considerable supply capacity for value added products and processed food. As per ASSOCHAM Food Processing Agribusiness & Dairy 2011 report, “It is expected that value addition of food product is predicted to rise to 35% by the end of 2050 from 8% at present. Fruit and vegetable processing is expected to increase from 2% of total production to 10% by 2010 and to 25% by 2050.”
Implementation of global technology for improvement
Speaking over PepsiCo’s approach towards food processing and cold storage, Rajiv Wakhle, Director Operation, PepsiCo India, says, “Traditionally in India, foods were stored in bags in cold storage warehouses which lead to deterioration of quality of the product and mounting heavy losses for the company. We have consulted with global cold storage companies for better and innovation cold storage technology. With the new innovative cold storage facility, we are now able to maintain optimum storage condition which has helped in improving the duration of storage of products, quality and standard of products and also it has reduced losses."
International players into Indian cold storage and logistic space
To improve the food processing and cold storage facility of India, many international companies have ventured or are planning to venture in India. One of them is Food Tech Holland. It is a group of 15 different Dutch companies which delivers solution for the food processing and food logistic sector. Speaking over the food processing sector in Holland, Eric Oving, Programme Manager, Food Tech Holland says, "We have a strong position in food processing machinery. Holland produces 80% of the world’s capacity on poultry processing machinery and over 50% in potato processing machinery." The company aims to provide food processing and logistic solutions to the Indian companies so that they can improve their supply chain and logistic efficiencies. Speaking over the role and importance of food processing for companies in India, Oving added, “The role and importance of logistics in food processing is very important because if the logistics are not in place or organised, you can process the food but still you will have low efficiency and high level of waste of products. Logistic process ranges from post harvesting up to the cold store, the processing in the cold store, transporting to distribution centre and later on to the retail stores. So logistically, it is very important to have all this whole supply chain in place.
Another company, IAV, a Dutch company has recently ventured into the Indian cold storage equipment and solution sector. The company is into developing of all kinds of products and services for cold storage sector, be it – supply services, machine rooms and recruiting engineers or providing the best solution to the clients.
Talking about the supply chain and logistic issues in India, says Rober de Vries - Sales Manager, IBK Refrigeration, “In India it’s not only the cold store that has to be improved but there is problem in logistic movements too. The thing which needs to be improved in India includes the implementation of better cold storage instruments such as refrigerators with high capacity of energy saving and low input of energy which further will also help in saving money. We are here in India to help the Indian companies to improve their cold storage efficiencies with energy efficient technologies.”
Despite the country is at nascent stage in food processing sector, it can emerge as a leader in the global food processing industry says experts. With many international companies eyeing to invest into Indian food processing and logistic segment, the sector is expected to gain a double digit growth.