BMI's Executive Summary

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India's fledgling food processing industry continues to fascinate as investors, both local and multinational, begin ramping up their commitment to the sector in preparation for what is expected to be explosive growth. However, as BMI examines in its newly-published Q108 India Food & Drink Report, such investment is still only targeting a minority of India's immense population, and the effects of economic growth remain unfelt by the country's vast rural majority.

BMI believes that four key features of, or events within, the new report ably sum up this trend. Local dairy major and ice cream specialist Amul Dairy has announced plans to enter India's US$500mn snack food market, via the addition of a savoury snack product to its predominantly dairy portfolio. Meanwhile, Italian confectionery company Ferrero SpA has unveiled plans to invest US$35mn in the construction of a mint manufacturing plant in Maharashtra state, a plant that will later look to target the growing premium chocolate confectionery sector. Both investments are astute. Amul plans to leverage its existing distribution strengths to gain a foothold in what is an increasingly competitive sector, while Ferrero wants to target a market whose small size bellies its potential. To 2012, BMI is forecasting growth of 22% in value terms in India's confectionery market, a forecast that could well be dramatically increased should more multinationals come forward in search of opportunities.

Both manufacturers, alongside the more obvious names of PepsiCo's Frito-Lay and Britannia, are looking to secure a slice of India's US$69bn processed food industry, an industry growing so quickly that the country's Ministry of Food Processing and Industry announced in October 2007 that it could now boast a fairly dynamic export sector – between 2003 and 2007 the value of India's processed food exports grew by around 194% to US$13.9bn, according to ministry figures. However, while this is certainly an industry sub-sector worth getting excited about – as these latest investments show – it is also worth considering the risks associated with investing in such an industry.

To 2012, BMI is forecasting food consumption in dollar terms to increase by just 9.4% in India, a very modest rate when one considers the pace of the country's economic expansion. In per capita terms this growth is even more telling, with food consumption expected to rise by just 4.3% to reach US$150.50 in 2012. These forecasts highlight the downside to India's otherwise immense potential. India's vast rural majority are yet to feel the benefits of economic growth and thus do not participate in consumer goods industries such as processed foods, snack foods and confectionery. This explains why India secures only a mid-table position in our new Food & Drink Business Environment Ratings – the country's size being nowhere near reflected in the size of its consumer audience. Ultimately India's sheer size means this downside will not affect its capacity to attract investment, but the amount of capital manufacturers will be willing to invest without the promise of immediate and plentiful rewards remains to be seen.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Business Environment Rankings

SWOTs

India Food & Drink Industry SWOT

Macroeconomic Outlook

Table: GDP And Population

Chapter 2 – Retail

Regional Overview – Private Labelling In Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: India MGR Sales By Format - Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Structure Of India's Mass Grocery Retail Market By Number Of Outlets

Table: Structure Of India's Mass Grocery Retail Market - Sales By Format (US$mn)

Table: Average Outlet Sales By Format (US$mn) - 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy In Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Food And Drink Indicators

Industry Developments

Company Developments

Market Overview

Table: Agriculutral Sub-Sector Production - Historical Data

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales - Historical Data & Forecasts

Industry Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In India's Mass Grocery Retail Sector - 2005 Estimated Sales (US$mn)

Table: Key Players In India's Food & Drink Sector – 2005 Estimated Sales (US$mn)

Asia Pacific Regional Company Case Studies

AEON In Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil In Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken In Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft In Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

Pantaloon Retail India

Hindustan Lever

Nilgiris

RPG Enterprises – Retail Arm – Foodworld & Spencer

Subhiksha Trading

United Breweries Ltd (UBL)

Cola-Cola India

Tata Tea

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: