Demand for food brands to surge in India

27 May 2010

NEW DELHI: Competition between food brands is set to greatly intensify in India in the next five years, as category sales in the country double.

According to Datamonitor, the ready-to-eat food (RTE) category in India is currently worth $28m (€22.8m; £19.4m) a year, having recorded a compound annual growth rate of 15% during the last five years.

The research firm argued this sector still has "tremendous potential" for expansion due to changing tastes among shoppers and broader shifts across society as a whole.

In the first instance, urbanisation and the "blurring" of gender roles - as women take a more prominent place in the employment market - will fuel a surge in demand.

The busy lives of young professionals and other, similar, demographics also mean many people are looking to the convenience offered by packaged food to "maximise leisure time".

"The recent rise in demand in the local market is substantial one", Pinaki Mukherjee, of Datamonitor's consumer markets unit, said.

"With the increasing involvement of women in India's labor force, rising number of nuclear families and a desire to maximise 'me' time, the Indian RTE foods market size is poised to double by 2014."

As Indian consumers are more knowledgeable about their brand options than ever before, they are now confident enough to be "experimental with respect to their food and drink choices".

Such a trend has been further encouraged by the fact that manufacturers including PepsiCo have developed products specifically tailored for local preferences.

Elsewhere, over half of Indians in all age groups were found to be influenced by "better for you" claims when making purchases, indicating the importance of issues like health and nutrition.

A majority also revealed that factors such as cholesterol levels and the amount of sugar or fat contained by goods in the food and beverage segment shaped their decisions.

"Both Indian men and women are equally interested in knowing the relationship between food and health, but more women tend to use on-pack nutritional information," according to the report.

Products which emphasised their "freshness" typically out-performed rival brands that prioritised values such as being "authentic", "home-made" or "original", it added.

"The outlook for RTE foods in India looks quite promising, as all the necessary drivers to create a demand in the market for this kind of products is in place," Mukherjee concluded.

"It could just be a matter of two to three years for this market to attain the critical mass, which would induce mass consumption in urban India".

Data sourced from Datamonitor/Aus Food News; additional content by Warc staff