Angshuman Paul takes you on the most exhaustive, yet critically inquisitive treatise of why global food giants – hunting for indian food company acquisitions – now think that this sector will be the biggest contributor to the retail sector growth in India
This was really what caught our eyes! Last year, the Delhi based Fun Foods completed its 25 years of being in the business. The way the promoters celebrated this event was pretty unexpected. This ‘convenience food’ company (‘convenience food’ refers to ‘ready to cook’ and ‘ready to eat’ product categories), which to its credit has all quick service restaurants as its institutional clients, was sold off to a German company, the $12 billion giant Dr. Oetker. The question over here is, why did promoter Rajiv Bahl sell off a brilliantly performing business? Especially when Rajiv and his son, 29 year old Viraj Bahl, were clearly very passionate about creating a convenience food brand of national repute. It didn’t take us long to find the answer – Rs.111 crores! That’s the amount the Bahls got for the sale.
But the fact is that if not Dr.Oetker, the Bahls would have got a similar offer from some other global giant, as India is seeing a huge influx of foreign players entering the convenience food industry in a clear attempt to either set up JVs or simply to acquire companies lock, stock and barrel. And that forms the crucial crux of our cover story, which on one hand provides a most concise update on recent foreign entrants in the sector, and on the other provides a critical analysis of whether this industry can sustain the growth expected by the players in the future! To put all doubts at rest at the start itself, it is a fact that the Rs.3.6 trillion Indian food and beverage industry is decisively surging ahead, with sectoral analysts extrapolating figures for the coming five years for the convenience food sector. A KPMG ‘Food Report’ forecasts that rising incomes will increase domestic consumption of ready-to-eat (RTE) and ready-to-cook (RTC) food over the next five years in India. There’s more! Indian RTE and RTC brands are now increasingly finding prime shelf-space in the retail chains of US and Europe. For example, the Bentonville giant Walmart, after rolling out its first store with Bharti in India in May 2009, is now working on a pilot project with the Gujarat Co-operative Milk Marketing Federation, the promoter of the Amul brand, to market ethnic processed food products overseas. In the same league, Satnam Overseas, one of India’s major food exporters, is investing $4.4 million for setting up a rice mill near London to boost sales of its Kohinoor brand of food.
‘Food’, clearly, has become the appetizer driving India’s retail revolution. According to Retailers Association of India (RAI), food and beverage sectors’ share in overall retail in India is now at a staggering 65%; and majority of this 65% share comes under the ambit of processed foods and vegetables. Further, according to consulting firm McKinsey & Co., the retail food sector in India is likely to grow from $70 billion now to $150 billion by 2025 (a forecast many analysts say is very conservative) with 60% of this market belonging to the convenience food category. Even McKinsey stresses that the Indian FMCG segment’s gen-next growth will be driven by the food segment only – findings that are literally forcing FMCG players like Cavin Kare and more to make their entry into the packaged food business.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM Related Links
Detail of all IIPM branches
IIPM, GURGAON
IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
This was really what caught our eyes! Last year, the Delhi based Fun Foods completed its 25 years of being in the business. The way the promoters celebrated this event was pretty unexpected. This ‘convenience food’ company (‘convenience food’ refers to ‘ready to cook’ and ‘ready to eat’ product categories), which to its credit has all quick service restaurants as its institutional clients, was sold off to a German company, the $12 billion giant Dr. Oetker. The question over here is, why did promoter Rajiv Bahl sell off a brilliantly performing business? Especially when Rajiv and his son, 29 year old Viraj Bahl, were clearly very passionate about creating a convenience food brand of national repute. It didn’t take us long to find the answer – Rs.111 crores! That’s the amount the Bahls got for the sale.
But the fact is that if not Dr.Oetker, the Bahls would have got a similar offer from some other global giant, as India is seeing a huge influx of foreign players entering the convenience food industry in a clear attempt to either set up JVs or simply to acquire companies lock, stock and barrel. And that forms the crucial crux of our cover story, which on one hand provides a most concise update on recent foreign entrants in the sector, and on the other provides a critical analysis of whether this industry can sustain the growth expected by the players in the future! To put all doubts at rest at the start itself, it is a fact that the Rs.3.6 trillion Indian food and beverage industry is decisively surging ahead, with sectoral analysts extrapolating figures for the coming five years for the convenience food sector. A KPMG ‘Food Report’ forecasts that rising incomes will increase domestic consumption of ready-to-eat (RTE) and ready-to-cook (RTC) food over the next five years in India. There’s more! Indian RTE and RTC brands are now increasingly finding prime shelf-space in the retail chains of US and Europe. For example, the Bentonville giant Walmart, after rolling out its first store with Bharti in India in May 2009, is now working on a pilot project with the Gujarat Co-operative Milk Marketing Federation, the promoter of the Amul brand, to market ethnic processed food products overseas. In the same league, Satnam Overseas, one of India’s major food exporters, is investing $4.4 million for setting up a rice mill near London to boost sales of its Kohinoor brand of food.
‘Food’, clearly, has become the appetizer driving India’s retail revolution. According to Retailers Association of India (RAI), food and beverage sectors’ share in overall retail in India is now at a staggering 65%; and majority of this 65% share comes under the ambit of processed foods and vegetables. Further, according to consulting firm McKinsey & Co., the retail food sector in India is likely to grow from $70 billion now to $150 billion by 2025 (a forecast many analysts say is very conservative) with 60% of this market belonging to the convenience food category. Even McKinsey stresses that the Indian FMCG segment’s gen-next growth will be driven by the food segment only – findings that are literally forcing FMCG players like Cavin Kare and more to make their entry into the packaged food business.
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM Related Links
Detail of all IIPM branches
IIPM, GURGAON
IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
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