Processing 01

PROCESSING AND PACKAGING FOOD INDUSTRY

Researched By :Aashish Gupta

METHODOLOGY Research Media: personal interview focused to generate required information from the retailers , consumers and related articles manufacturers issued in the various locally available magazines and newspapers. Research Instrument: structured questions were asked and the available figures were compared to conclude the overall research work. Data Collection: The report analyses the data given in various magazines and on Internet, about the retail business regarding packaged foods in the daily chores of life. The various magazines concerned are: Newspapers ( The Times Of India and Hindustan Times ) Femina, Brunch and Xplore, etc…

Data Analysis: The research work was not merely to give inputs on the observations but also to compare the data collected from various newspapers and magazines, to bring out the similarities and to figure out the vast dominance of the Packaged Food in Indian consumer goods market. Also, I am very obliged to thank Neeru Mam, lecturer (Food science and nutrition) and Mr Rakesh Goel (M.D. VIBGYOR INTERNATIONAL), who provided me the guidance and required material.

WHY THIS PROJECT ? To conduct a comprehensive study on the concept of Processed and Packaged Food Industry. To see how the concept of packaged food has been implemented and adopted so far. What companies are offering as packaged food to the consumers.

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To analyze the success figures achieved by the top companies of India.

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To see what could be the future picture of the packaged food industry.

Definitions 

Food Processing is the set of methods and techniques used to transform raw ingredients into food for consumption by humans. The food processing industry utilizes these processes. Food processing often takes clean, harvested or slaughtered and butchered components and uses these to produce attractive and marketable food products. Or in other words, The process of treating and handling food in such a way as to stop or greatly slow down spoilage to prevent food borne illness while maintaining nutritional value, texture and flavor.

Packaging the enclosing of a physical object, typically a product that will be offered for sale. Labelling or labeling refers to any written or graphic communications on the packaging or on a separate label. Packaging materials Commonly used packaging materials includes jute, paper, plastics. The type of material chosen depends on: the sensitivity of the product; the types of damage that are likely; the value of the product; the size of the product; the weight of the product; the length of time the product will be packaged. Packaging types The above materials are fashioned into different types of packages and containers such as Boxes, Bags, Bottles, Cans, aseptic packages, wrappers, etc

Methods of Food Preservations Drying Freezing Vacuum Packing Curing Sugar Pickling

Canning and Bottling Jellying Irradiation Modified atmosphere Clamps Biological processes

INTRODUCTION In this fast moving and ever growing world everyday new things are invented and developed. Invention of microwaves, dishwashers, super trendy treadmills, home theatres speak for the world we are living in. As the times have changed, so are the needs. Today we don not spend too much time in cooking our favorite food because of the availability of Packaged Foods Packaged Food is a boon for everybody. Be it housewives, working women, students or professionals.

With Packaged Food survival has not only become easier but also healthier. Packaged Food comes in two categories:  Ready To Serve  Ready To Cook.

 Ready

to serve have a variety of nearly all food items ranging from Dal Makhni to Chicken Changezi , from Boiled Rice to Hyderabadi Biryani. Everything is available in the market. Reputed brands like MTR, ITC, Godrej, and many more are into this business which gives us satisfaction on quality of production.

 In

the Ready to cook category comes Frozen foods like peas, cauliflower, chicken, cheese, etc. These are par boiled and take just a few minutes to cook. With the availability of different gravies and ginger-garlic paste in the market the art of cooking is being adopted by all sections of society.

Sub sectors Fruit & Vegetable Processing, Fish-processing,  Milk Processing,  Meat & Poultry Processing, Packaged/Convenience Foods,  Alcoholic beverages  Soft drinks etc.  

Sectoral Overview : Product Wise  MEAT

Details in terms of quantity and value of meat food products manufactured under MFPO, 1973 is as follows:-

Year

Quantity (in MTs)

2000-2001

3041

Value (Rs.in Lakhs) 3946

2001-2002

3221

4173

2002-2003

2865

3812

2003-2004

3016

4247

Details of exports in terms of quantity and value of meat food products are given as under: Year

Quantity (in MTs)

2000-2001

195

Value (Rs.in Lakhs) 215

2001-2002

168

189

2002-2003

32

36

2003-2004

79

68

FISH With its long coast line of over 8000 kms., 50600 sq, kms. of continental shelf area and 2.2 million sq. km. of Exclusive Economic Zone, India is endowed with rich fishery resources. Fish production (both marine and inland) since 1997- 98 are given below: Year

Marine

Inland

Total

1997-98

2.69

2.09

4.78

1998-99

2.70

2.24

4.94

1999-2000

2.96

2.38

5.34

2000-01

2.95

2.44

5.39

2001-02

2.69

2.56

5.25

2002-03

2.83

2.82

5.65

2003-04

2.81

2.84

5.65

2004-05*

-

-

5.65

Export of marine products from India at present is about $ 1.3 billion. Indian marine products are exported to over 64 countries. India is ranked 17th among the marine products exporting countries. The export of fisheries products during the next 5 years could be increased US$ 3 to 4 billion with intensive efforts.

Fruit And Vegetable Processing Sector The installed capacity of fruit and vegetable processing industry has been increased from 11.08 lakh tons on 01.01. 1994 to 23.28 lakh tons as on 01.01.05. The utilization of fruits and vegetables for processing in the organized & unorganized sectors is estimated to be around 2% of the total production. As on (1st January)

1994

1 995

1 996

1 997

1 998

1 999

2000

2 001

2002

2003

2 004

Capacity (Lakh tons)

11.0 8

12.6 0

14.0 2

17.6 0

19.1

20.4

20.8

21.0 0

21.1 0

21.9 8

Production (Lakh tons)

4.69

5.59

6.76

8.50

9.6

9.1

9.4

9.8

9.9

10.3

Growth in Prod. over the previous year (%)

30.2 8

20.0 0

20.9 3

25.7 4

12.9 4

-5.2

3.3

4.26

1.0

4.04

2 3.2 8 1 0.7 2 4 .08

Soft Drinks The soft drinks constitute the 3rd largest packaged foods regularly consumed after packed tea and packed biscuits. The estimated production of soft drinks has registered a gradual increase as follows: Year

Bottles (in Million)

1998 - 1999

5670

1999 - 2000

6230

2000 - 2001

6450

2001 - 2002

6600

2002 - 2003

10000

2003 - 2004

11040

The aerated soft drinks industry in India comprises over 100 plants across all States. It provides direct and indirect industry related employment to over 125,000 employees. It has attracted one of the highest foreign direct investments in the country amounting to around Rs.4700 crore. It contributes over Rs.1200 crore annually by way of excise duty, sales tax and related taxes. It has strong forward and backward linkages with over Rs.1000 crores relating to glass, plastic, refrigeration, sugar and transportation industry. Total export earnings are over Rs.700 crore per annum. Presently there are more than 7000,000 outlets in the country.

Exports MFPI has been encouraging the new processing capacities for agro-food products through its various policy initiatives and Plan schemes providing financial incentives for setting up of new units and modernization of existing units. It is conscious of the fact that the tremendous potential for manufacturing of processed food products should be harnessed not only to meet the domestic demand but also to take advantage of the export potential that is available in the international market. The export of processed food items for the last five years has been as under: ITEM

1998-99

1999-00

2000-01

2001-02

2002-03

Processed fruits and vegetables

705.6

993.6

1345.5

1100.57

1206.93

Animal products

851.7

905.0

1637.1

1500.93

1800.53

Other Processed Food (Guar Gum, Ground nut, Alcohol, Beverages, milled products etc.

1134.5

1494.4

1798.0

1780.07

1720.11

Rice

6279.4

3125.8

2943.3

3174.14

5895.85

Walnuts

68.9

60.5

109.94

117.98

121.23

Marine Products

4626.8

5095.7

6443.89

5957.05

6881.31

Total

13666.9

11675.0

14277.6

13629.57

17625.96

Growth of Packaged Foods in India Sales of packaged food in India grew in 2002, as demand for better quality products increased among the affluent urbanites. Although unorganized sales in the form of unbranded food sold loose still pose strong competition. Demand for packaged food achieved significant growth as a result of four main factors :The increased number of dual-income families , Greater willingness to experiment with new food products , A rise in ownership of refrigerators , and Increased demand for convenience. These trends, which were particularly evident in the latter part of the review period, provided impetus for growth in convenience foods like instant noodles, savoury snacks, baby food, pickles, soups, ready to eat meals, ketchup, bread and cereals. They also spurred sales of previously unknown products like frozen foods, which in 2002 saw volume sales increased by an estimated 12%, albeit from a low sales base. Total packaging volumes for consumer packaging in India reached a total of 37,906 million units in 2002. The packaging industry in India is still growing and the market is dominated by flexible packaging formats.

Laws relating to food processing industries There are a number of food laws being implemented by various Ministries/Departments. These are primarily meant for two purposes namely (1) Regulation of Specifications of food and (2) Regulation of Hygienic condition of Processing/Manufacturing. Some of these food laws are mandatory and some are voluntary. The details of various food laws in operation in India is as under:-

A FOOD LAWS: 1. Prevention of Food Adulteration Act (Ministry of Health) The Act lays down specifications for various food products and is mandatory. The Ministry of Health in 1995 had constituted a Task Force under the chairmanship of Shri E.S. Venkataramaiah, Chief Justice of India (retired). The Task Force recommended that there should be emphasis on good manufacturing practices instead of detection of adulteration and prosecution. It also express concern about lack of laboratory equipments and quantified persons. In addition it also suggested that the name of PFA Act be changed to Food Safety Act.

2. Agriculture Produce (Grading & Marking) Act (Ministry of Rural Development) This Act is commonly known as AGMARK and is voluntary. The Act lays down the specifications for various agricultural commodities including some processed foods. 3. Laws being operated by Bureau of Indian Standards (BIS) BIS is the largest body for formulating standards for various food items. These standards are also voluntary.

4. Essential Commodities Act A number of quality control orders have been issued under Essential Commodities Act such as FPO, MMPO, Meat Product Order and Vegetable Oils Control Order. These orders are mandatory and primarily meant for regulating the hygienic conditions. They need to be clubbed under one order which may called Food Products Order.

Research process flow:

Processing industry Some facts 





India is one of the world’s major food producers but accounts for less than 1.5 per cent of international food trade. This indicates vast scope for both investors and exporters. • The Indian food industry’s sales turnover is Rs 140,000 crore (1 crore = 10 million) annually as at the start of year 2000. The industry requires about Rs 39,000 crore in investment over the next five years to 2010 to create necessary infrastructure, expand production facilities and state-of-the-arttechnology to match the international quality and standards.

Packaging industry At a glance 



Overall consumer goods packaging demand experienced a healthy rise of nearly 14% or 390.3 billion units over the review period to reach almost 3,200 billion units in 2003. Main contributors to growth were flexible as well as rigid plastic packaging formats, which saw their usage increase by more than 140 million units each, thanks to strengthening demand from the packaged food and beverages markets respectively. Flexible packaging clearly dominated the packmix and accounted for almost half of all unit sales in 2003. Responsible for over one third of sales were tobacco products. Some way behind followed rigid plastic packaging with a share of 17%, followed by paper-based containers and metal packaging. All other pack types accounted for less than 10% of global consumer goods packaging in 2003.

Surveyed research findings

The Indian Market Indian Market with 1 Billion People is in Transition A growing consumer class Changing life styles characterised by expanding urban population, increasing numbers of nuclear families and dual income families Changing attitudes & tastes with increasing modernisation High level of savings

An Overview Market size € 26 bn Importance to economy 6.3% of GDP Export € 5 bn Domestic market € 21 bn Of which packaged foods € 7 bn Principal home consumption items: cereals, milk, edible oils, meat, horticulture, spices Principal exports: cereals, marine products, tropical fruits & concentrates, spices, tea and coffee

Consumption Structure in India Domestic Expenditure on Food € 140 bn Processed Food Sector € 26.3bn Per capita consumption/ yr € 140 Packaged foods domestic market € 7 bn Food accounts for 53% of private consumption Packaged processed products share less than 5% of final consumption

India therefore a nascent market for processed food products waiting to be tapped

From A Recently Concluded High Profile Study…. Investment Environment in India A. Dominant majority say 1.“India is the country where you have to be” 2. “Environment difficult but not so different from other developing countries and requires knowing the rules” B a. 55% say they are in successful business b.20% very successful business

Investment Friendly Policy Initiatives Automatic approvals for foreign investment up to 100%, in major areas. Foreign investment also allowed in sectors reserved for small scale sector, subject to certain conditions. Export earnings exempted from corporate tax likely to be phased out in next five years. QRs on all food products removed. Customs duty on majority of the products at 35%. All Fruit and Vegetable Products exempt from Central Excise Duty

Investment Friendly Policy Initiatives New Exim Policy to set up exclusive Agro Export Processing Zones with fresh incentives Ministry of Food Processing Industries promoting Food Parks an integrated processing concept with common facilities and marketing Specific Concessions for EOUs Full duty exemption on all imports Tax holiday for any 5 consecutive years Permissions to have upto 100% foreign equity. Use of foreign brands freely permitted. Allowed to sell 50% in domestic area

Problems: Unique as they Come Huge Post Harvest losses Requirement in Indian food chain to procure raw material from open market as opposed to the practice of complete backward linkage in developed economies Leading to Indian food players focus entirely on the processing end ignoring procurement, quality of raw material and farming practices. Much larger number of intermediaries in the system than one would see in food chains elsewhere.

Problems: Unique as they Come An overly prescriptive Prevention of Food Adulteration Act facing problems of equivalence and harmonisation Poor rural credit and insurance facilities for farmers Lack of sound knowledge base & technical expertise of Banks and financial institutions Lack of alternative avenues for financial support to industry High Taxes on processed products.

Areas Seeking Solutions…... A substantial amount of fresh produce estimated at around Rs 7000 Crores wasted every year. The reasons: Lack of proper Post harvest Management, storage & Transportation facilities. Low demand for processed foods due to high costs in comparison to the fresh produce Low level of Processing & Packaging Technology impeding acceptance of “Made in India” Weak Marketing Linkages - Lacking Organized Retailing Insufficient Financial Support

Industry Trends Increasing consumption of convenience food/ meals Expected to continue as society becomes more time challenged By 2010, 65% of the food dollar will be spent on convenience food Consumers are becoming increasingly health -conscious Increasing demand for more healthy, home -cooked food However, packed home cooked meals are cold and unappetising by the time they are eaten Heat containers are heavy and inconvenient to carry around

Industry Gap Consumers want nutritious and hot convenience meals, But no easy efficient way of heating food on-the-go What they want is a portable food packaging device, allowing them to heat up food on demand But no such product is available in the market as yet

Market Strategies: Market Analysis

Target market Main target market: young working adults and students; these sectors combined, drive 60% of the demand fo convenience foods in Singapore Secondary markets: campers, commercial players, the military.

Long way to go ahead…..