Ready to savour: delight for foodies

They are neatly packed with quality assurance and simple to cook. Just unwrap the pack, simmer for a few minutes and the steaming food is ready on the plate. We are talking about ready to eat/cook food products, the recent most talked-about category in the Indian food market.

The processed food market is estimated between Rs 1500-1600 crore and expected to grow at 25-30 per cent for the next five years. The main players in this category are ITC Foods, MTR Foods, Kohinoor, Amul, PepsiCo, Marico, Kellogg’s India and Tasty Bite.

In today’s urbanised environment, ready to cook (RTC) /ready to eat (RTE) breakfast meals have made its assured place in the grocery budget of working couples, travellers, bachelors and food lovers with better and nutrients-rich options and taste for every recipe. Retailers are leaving no stone unturned to bring as many varieties and brands as possible in their stores in order to provide more choices to the consumers.

 

Main reasons for its success story

Though RTE food market is growing rapidly, its share in the total grocery budget remains quite low due to limited customer base and occasional buying. According to the data given by More Hypermarket of Aditya Birla Retail Ltd, RTC products contribute to 3.8 per cent of the processed food sale and 1.5 per cent of FMCG mix, and RTE, 0.5% of processed food and 0.20% of FMCG. The following points are main reasons for the rising popularity of this product category:

  1. Globalisation of Indian food and its culture
  2. Influence of fast growing foreign brand market
  3. Modern retail  culture 
  4. Long shelf life of these foods (approx. 12-18 months), a boon for retailers
  5. Availability of varieties
  6. Long working hours (both for men and women) - an impediment for cooking
  7. Cost effective in comparison to the Indian cuisine served by the restaurants in foreign countries for the frequent fliers.

 

Products that sell

The RTE consists of vegetarian and non-vegetarian food variants. The most commonly sold variants  for RTC are breakfast mixes of upma, poha, porridge and oat; South Indian cuisine – pongal, khara bath, bisibele bath, etc and North Indian curry variants like dal makhani, dal fry, paneer butter masala, pav bhaji, rajma masala, etc; Instant health mixes - healthy veg poha, spinach upma, wheat upma, fryum, soya chunks, etc. Anand Ramanathan-Manager, Advisory services, KPMG, says, “Most of the packs fall in the range of Rs 30-50 and consumers usually buy 1-2 packs for the occasion (guests at home, etc) or 5-10 packs in case of travelling abroad.”

According to the data given by More Hypermarket, Aditya Birla Retail, RTC & RTE  products that sell commonly are shown in the table.

 

Positioning of these products

Positioning of the category plays a vital role to give it a lucrative attention. Enthused by the growing sales of the ready meals packs, several retailers have demarcated separate store sections only for RTE food items which are ideally divided into vegetarian and non-vegetarian category for easy identification by shoppers.

Some of the key places include the store entry and the shelves near the billing counters for impulse buying category like soups, noodles, etc. “Consumer research also talks of the ‘store parameter’ which is being the most important area of a store and advises consumers to take a stroll around the store perimeter for quick access to the most important as well as healthy items”, comments Ramanathan. 

According to Viney Singh, Managing Director, Max Hypermarket India Pvt. Ltd, “RTE are placed near monthly buy categories like ready and preparatory foods (eg: sauces, jams/spreads, noodles, etc).”

Ideally, the items should be placed close to shoulder height of the customers in the shelves so that they are easily accessible to the customers. This makes it more likely for the customers to be picking these items and putting them in their shopping baskets. Retailers need to check that these products are kept in proper lighting and dust-free. Such an ambience turns down to the shoppers while carrying the trolley for grocery shopping. Shelves should be appetising. Small sizes should be displayed in front and bigger sizes at the back or top shelf.

Discussing in details about the positioning of the product, KK Cariapa, Chief Buddy of Opsbuds Solutions informs that there are two ways these products are seen in the retail stores:

  1. Promotional display
  2. Regular display

Promotional display is a joint venture between the manufacturer and retailer to promote the new launch of products. This can be done by buying the floor space (depending on the store size-2 ft by 3 ft, 5 ft by 5 ft, 10 ft by 10 ft) or having a special rack display setup where the racks, colorful signage, neon signage and dangles could be designed according to the product. Another crucial point is that such promotional display is more for regional products, like south recipes, can be effective and impactful for northern regions, and northern recipes like parathas, etc for southern regions. Alongside, retailers can place the food items of other brands with similar recipes, etc.

For floor size display in a large format store a modular kitchen can be designed. This can be an L-shaped kitchen model or island kitchen with microwave to cook the products, thus giving customer the real time experience about the know-how of the product which would be available in the store for the next purchase time.

 On regular display Cariapa comments, “The challenge therefore is to create that emotion in that area, using the same real estate provided for a standard rack, usually 6 ft wide and 2 ft deep. A retailer should create a completely different dispensing unit with a back drop of really appetising food served beautifully amongst a family around the table, who are relishing it. Place half length glass racks on the back drop so packs can be displayed in a very nice way like the packaging specialists would have visualised.”

 

How staff can drive sales

As grocery food category being loaded fast with new products, training of the frontline staff is an utmost requirement. The training part should include of product training, thorough knowledge of the store layout and category index. A sales person should be acquainted with popular terms and dishes for instant connection with the customers. Adding an insight to the training part, Cariapa comments, “Ready to eat items are all acquired lifestyle, so the staff must be trained to identify those who have a real need for these products. Also, repeat purchase in this category can be very high so the frontline should be trained to connect with the same families and ask them if they’ve tried the products and what is their feedback, since positive feedback induces more sales. While demonstrating the preparation, they should be able to connect emotionally with the customer. This requires a retailer to train the staff to be emotionally intelligent.” Staff must be aware of the consumption pattern of RTE items by customers and work towards increasing that besides instigating cross selling related items, for instance somebody buying  RTE ‘paneer butter masala’ is the ideal customer for parathas or rotis, etc. and vice versa. 

 

Better margins through private labels

Citing the lucrative margins in the category, retailers themselves are cashing in on by introducing private label brands for this category to increase their revenues. Kishore Biyani’s Future Group is witnessing good response for its private label in this category (Tasty Treat and Fresh & Pure are prominent). Private labels in food and groceries carry margins of 25-35 per cent, while that of national and regional brands give margins of 10 to 12 per cent. For most of the retailers, who are still many years away from break-even, private labels can be a key factor in boosting profitability, retail consultants say.

 

Best selling sizes in private labels

Big sizes and promo packs do well in private label categories. Big family size and economical could be a reason for that.

Explains Lalit Aggarwal, MD, V Mart, “On an average 25-30 per cent customers have responded and switched to the private label in the particular category. To promote private label various activities were performed like in-store promotion through exclusive display, announcement and various promotion schemes. Apart from that hand bills, BTL activity and print medium were also used to promote our brand.”

He further avers, “Fixtures are specially designed to highlight the product and special lights and signage’s are used to create a special effect. The products are generally placed at eye level unless and until it is not odd sized.”

 

Conclusion

In the coming years, manufacturers would bring lots of varieties in the RTE & RTC product category; retailers need to draw an impactful attention of the shoppers to make them hook to these products and thus increase the sales.

 

 

POPULAR ITEMS

Ready to cook

Product Category                 Weight/size                      MRP

Gulab Jamun Mix                 200 gm                            52

Papad                                250 gm                            49

Idli Mix                               500gm                             52

Dosa Mix                            500gm                              52

 

Ready to eat

Product Category                 Weight/size                      MRP

Indian Paneer cuisine         45 gm-300gm                   35 to 50

Punjabi Cuisine                  42gm -300gm                   35 to 50

South Indian Cuisine          250gm to 300gm               26 to 32

Stay on top – Get the daily news from Indian Retailer in your inbox