Food Retail Ppt

Presentation on

Indian Food Retail Trends & Tasks by

Anand Kumar JU07019 NSB School of Business New Delhi

We will talk about… • Retailing in India – Indian economic snapshot – Retailing – Food retailing • Trends – Evolving consumer preferences – Consumption shift – Drivers • Tasks – Hurdles – Tasks for suppliers • Reliance Industries Snapshot India Food Retail: Trends & Tasks

2

Happening times !

Source: Indian Express

•

Indian GDP growth at 9.4 % for 2006-07 is the highest in 18 years

•

Analysts across the globe find Indian growth sustainable

•

Economic outlook for India is positive

•

Indian working population is confident

India Food Retail: Trends & Tasks

3

India is growing ! Source: Economist

• •

India will be the third largest economy by 2040 India will be the 5th largest consumer market by 2025 India Food Retail: Trends & Tasks

4

Most attractive retail market !

Source: AT Kearney Global Retail Development Index (GRDI)

India’s retail market has grown by 10% on average for past 5 years …steadily rising to top position in GRDI India Food Retail: Trends & Tasks

5

Organized retail is still in its infancy !

Source: JM Morgan Stanley

•

With just 2 % organized retail … ….India is a big opportunity India Food Retail: Trends & Tasks

6

Organized Retailing is big opportunity !

With robust economy, sustained GDP growth and booming stock exchange, there are several emerging sectors in India waiting to be tapped . . .

…Organized Retail is at the forefront of these opportunities India Food Retail: Trends & Tasks

7

Growth in Organized Retail

Source: Ernst & Young

• • •

India is in 2nd phase of retail growth Increasing Range, Portfolio and Format options Food retailing leads the growth in Indian organized retail India Food Retail: Trends & Tasks

8

Food is the largest segment in Retail !

Source: KPMG

Source: Ernst & Young

•

At 77 % Food & Grocery is the largest segment in Retail sales

India Food Retail: Trends & Tasks

9

Food Retail Sales in India

•

Total food sales to cross US$ 250 billion by 2008 India Food Retail: Trends & Tasks

10

Modern formats in Food Retailing is low !

• Lowest among major retail markets... …But growing due to evolving consumer preferences India Food Retail: Trends & Tasks

11

Evolving consumer preferences ! Indian consumers are evolving… • From traditional to…

… modernized traditional • From globalize to…

… Indianise • From functional to…

… lifestyle India Food Retail: Trends & Tasks

12

Evolving consumer preferences ! Indian consumers are evolving… • From value for money to…

… value for time and convenience • From cautious to…

… experimentation • From over-the-counter to…

… touch-and-feel India Food Retail: Trends & Tasks

13

Consumption shift ! •

Beverages  Rise in coffee drinkers  More fruit drinks and bottled water  Wines and Liquor sales on rise

•

Processed food consumption  Increasing ready to eat food  Growing premium foods  Increasing private label  From “packaged as stale” to “packaged is hygienic and high quality”  Increased tendency towards disposability  Shift from price consideration to design and quality

India Food Retail: Trends & Tasks

14

Consumption shift ! •

Lifestyle  Frequent eating out  Growing health and dietary supplements  Growing organic produce  Greater focus on looking and feeling good

Source: AT Kearney

India Food Retail: Trends & Tasks

15

Drivers of this shift !

•

Demographic advantage : Young population India Food Retail: Trends & Tasks

16

Drivers of this shift !

•

Increasing discretionary income India Food Retail: Trends & Tasks

17

Drivers of this shift !

•

Increasing retail space

•

Credit availability is also fuelling this shift India Food Retail: Trends & Tasks

18

Still there are hurdles ! Local and Global players’ concerns •

‘Unorganized’ sector

•

Nascent Supply Chain

•

Low Technology Penetration

•

Infrastructure

•

Bureaucracy

…work with these profitably by focusing on following tasks… India Food Retail: Trends & Tasks

19

Tasks for suppliers ! •

India is a not a homogenous market •

• •

•

29 States + 6 Union Territories  Even within each state, tremendous diversity in customs, traditions, attitudes 22 official languages and 1600 minor languages and dialects 70% Rural population – India lives in its 600,000 + villages ( < 20,000 population)  However, accounts for more than half of sales of many FMCG and Consumer Durable products 35% still illiterate, not accessible by mainstream media

Most important task

 Understand consumers India Food Retail: Trends & Tasks

20

Tasks for suppliers !  Innovate & invest • Products – Not just customize but Indianize » McDonalds and Pizza Hut

– Processing » Nestle

• Marketing – Market research – Advertising » Coca Cola and Pepsi

– Encourage experiments » Kellogg’s

• Distribution – Packaging » Sachets & Smaller pack sizes

– Channels / Network » Frito Lays and Anheuser-Busch India Food Retail: Trends & Tasks

21

Tasks for suppliers !  New agriculture supply chain is emerging India removing non-value adding intermediaries  Partnership with value adding intermediaries of the supply chain • Technology transfer • Streamline processes • Maintain Quality

India Food Retail: Trends & Tasks

22

Tasks for suppliers !

 Participate in Agri Infrastructure: Logistics India Food Retail: Trends & Tasks

23

Tasks for suppliers !

 Participate in agri related activities India Food Retail: Trends & Tasks

24

Tasks for suppliers !

 Focus on emerging markets (Tier 3 and 2 cities) India Food Retail: Trends & Tasks

25

Tasks for suppliers ! •

Rural India consists of 720 Million consumers across 627,000 villages – – –

17% of these villages account for 50% of the rural population and 60% of the rural wealth Extensive reach is required as to cover 50% market 100,000 villages must be catered Immense opportunity amounting to US$ 125 billion

• •

•

Rural Retail is growing @ 7% p.a. Rural consumption is also shifting from basic food grains to fruits, vegetables, dairy and poultry products, as well as beverages Demand for better quality food leading to huge demand for basic foods

 Tap the rural retail market India Food Retail: Trends & Tasks

26

Tasks for suppliers ! All these can be done only if you …  Establish franchisee  Forge joint ventures  Licensing agreement  Strategic partnerships  Explore other avenues … Act & Join !

India Food Retail: Trends & Tasks

27

Reliance: Contribution to Indian Economy •

Revenues US$ 19.9 billion

•

Cash Profit US$ 2.9 billion

•

Net Profit US$ 2 billion

•

Total Assets of US$ 20.8 billion

India and Reliance •

Revenues equivalent to 2.8% of India’s GDP

•

8.2% of India’s total exports

•

Contributing 8% India’s indirect taxes

•

4.7% of the total market capitalization

•

11.5% weightage in Bombay Stock Exchange Sensex

•

9.3% weightage in National Stock Exchange Sensex

 US$ 20 billion enterprise created in 30 years India Food Retail: Trends & Tasks

28

Reliance: Global Ranks Global Rank

75

Net Sales Net Profit

342 194

11

Net Worth Assets

226 351

06

19

Amongst the fastest 25 growing companies in Fortune 500

 India’s only private sector company to list in fortune global 500 list India Food Retail: Trends & Tasks

29

Reliance: Recent Major Initiatives

 Exploration & Production  Refinery – Jamnagar  Special Economic Zones  Reliance Retail

India Food Retail: Trends & Tasks

30

Reliance: Retail Vision

To be the most admired and successful organized retail company in India that materially enhances the quality of life of every Indian By  Providing unprecedented affordability, quality and choice  Being the partner of choice in creating prosperity for Indian farmers and other vendor partners  Unleashing the power of the Indian workforce through the generation of new & attractive employment opportunities India Food Retail: Trends & Tasks

31

Thank you !