Changing
lifestyles across the globe have transformed food consumption patterns.
This may be related to the rising disposable income of the middle-class,
where many families, today, are double income, nuclear families. Nowadays,
an average middle-class housewife can afford to spend more on convenience
and luxury to save time and energy. This has provide a big boost to
the convenience, instant and ready-to-eat segments of processed foods.
This transformation in consumer patterns is a remarkable breakthrough
for the processed food industry and also for the export market. Constantly
increasing consumer demand has given rise to new ideas in research and
development. Now, all major companies have started investing in R&D,
which is a constant process of need-based developments.
Are
we lagging behind in technology?
Technically,
we are in no way behind international brands. The government should
confer benefits to the nascent food industry which will promote local
captive consumption and efficient manufacturing systems. This, in turn,
will give a much-needed fillip to exports.
Challenges
ahead
The big
challenge that lies ahead of the Indian food industry is to prepare
its infrastructure to become an ‘industrial kitchen’ to feed our huge
population. India, the second largest populous country in the world,
second only to China, statistically crossed the one billion mark in
May 2000. The entire population must become the industry’s target consumer
audience.
If we look
at the demographics of the average Indian market, about 8 million people
fall in the affluent class and about 250 million are emerging consumers
of ‘premium foods’. Another 300 million are the industry’s consumer
audience in the near future and a further 250 million, who consume ‘basic
foods’, are the future target audience. ‘Subsistence foods’ are consumed
by nearly 300 million people; not all of them poor, but slowly rising
above the poverty line. This class also includes the ‘no choice’ class
of consumers. So the number of real target consumers are currently about
350 to 400 million.
Impact
of Budget 2001
To promote
captive consumption, the government should adopt a liberalised policy
and offer subsidies on packaging cost, which is very high in India,
and relief in taxes and levies.
The government
has removed excise on processed foods. However, this will not make a
substantial impact on MRPs (maximum retail prices) since the manufacturer
will still have to pay excise on raw materials and packaging materials,
and cannot claim MODVAT on the final product since he does not pay excise.
So the advantage of the price reduction is very slight.
Outlook
for the Indian industry I see companies with high quality products adopting
GMP (good manufacturing practices). Gradually, people will realise the
importance of the HACCP (Hazard Analysis and Critical Central Point)
system in the manufacture of processed foods. These contribute to elevating
the brand image to international standards.
All these
indirect investments will pay off in the long run. Ultimately, the consumer
is the king in the market. Every company is sensitive to his preferences.
A discerning consumer will understand that for a well-branded product,
one has to pay extra, but the quality is assured.
The future,
therefore, looks bright for food industries. By the year 2015, India
should become the largest food processing kitchen in the world, with
an output exceeding US $ 400 billion.
-
S Sajan
