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Sumit Saran (SS): The SCS Group is an agribusiness consulting firm specializing in marketing, international trade and communications strategy and offer services related to food, beverage and agricultural products.
The firm helps international companies and agencies set up and implement market entry and sustainability strategies which the emphasis is on defining a long term strategy for the market, identifying the constraints that are present in the market and designing activities accordingly to meet those constraints.
FP: How would you summarize the market situation for imported fruits in India?
India’s import of fresh fruits was valued at US$ 272.86 million in 2009-10, with an increase of 26.78% over the previous year. Fruit imports in India have witnessed a steady growth in the last 5 years owing to sustained demand from both the consumers as well as the HRI sector.
Growth drivers for imported fruits are – increased disposable income, growing interest towards premium food categories substantial growth in health awareness among Indian consumers, mega events and parties in metropolitan, and relaxation in trade policies.
In the last 5 years, the United States has been the largest exporter of fresh fruits to India with its varieties of apple and pear categories having the largest share. China, Chile, New Zealand and Australia are the other major fresh fruit exporters to India.
FP: What are the main reasons for this growth? How do you foresee the growth in the near future?
From a food marketing perspective, these seemingly extremely straight forward and simple statements have huge ramifications.
The growing Indian economy combined with the media revolution has meant that more Indians are aware of global consumption patterns and trends. Their aspirations towards a better and healthier life are bringing about fundamental changes in food consumption patterns.
Where traditional markets of North America and Western Europe are stagnating, the impetus for growth is coming from the developing economies such as India’s and this is a trend that is most certainly going to continue in the near to long term future.
In that sense India is a classic growth market at present. Tremendous growth rates can be seen in products that can sustain themselves comparatively better in non refrigerated environments like apples, pears and oranges. Import volume of very temperature sensitive products like fresh grapes, stone fruits (peaches, plums and nectarines), etc. is also growing as modern retail establishes its footprints and gradually creates the necessary infrastructure for these fruits.
As far as the future is concerned, it is extremely bright. The growth we are seeing currently is still only the tip of the iceberg. The infrastructure challenge in India confines the opportunities for imported fresh produce to only the more prosperous areas of India. There are tremendous opportunities in the small and medium cities of India. The real growth in the market will come, when importers and retailers are able to reach the consumers across the country.
FP: What is the size of the market according to you, for imported foods in India?
Supplementary foods are those that our country needs to import to meet the demands of a one billion plus population. Products like cereals, pulses, edible oil and sugar fall in this category. Complementary foods are those that are imported to cater to the demands of a burgeoning Indian middle class and its aspirations to be a part of the global consuming family.
According to various trade reports and analysis, market size for imported food products in India for complementary foods that excludes the essential bulk import items like cereal grains, edible oil, pulses etc. is estimated to be close to US$ 1.5 billion. Fresh fruits, dry fruits and nuts, certain type of oils like olive oil and processed foods like confectionery items, beverages and pasta products etc. are the fastest growing import items in this category.
FP: As per your experience, what categories of imported foods find takers in India?
FP: Do you think that imported foods can be a threat to domestic food items?
India is a market that provides ample opportunities for coexistence and mutual growth. Indian consumer to me is one of the most underserved consumers in the world. Look at what the Indian upper middle and middle class can afford and what choices it is being given. With processing levels at less than 2%, the fact remains that all of Indian food industry put together is having tough time getting the SKUs to fill a 6,500 sq. feet grocery store. Hence, there is no question of competition. As we say – in India, it is still not about the piece of the pie, it is about the size of the pie.
Earlier in the nineties, when India lifted its import restrictions from most of the food items, market for imported food items was treated in line with the luxury items. The consumers who bought these products were mostly the elite class with high incomes and retailers of these products were few. However, things are drastically changing as affluence becomes more widespread in India. High disposable income in a comparatively young consuming population base that is aware of global food patterns because of media and Internet provides the ideal platform to launch and sell complementary foods.
However, suppliers must spend time and effort in researching the market and understanding the target consumer base. Only then they can define correct promotion strategies. India to me is a tough but a very rewarding market. This is if you have done your homework and if you are prepared to work with the various stakeholders over a period of three to five years.
FP: What is the impact of organized retail on the trade and consumption of imported fruits?
However, if we look at the present, organized retailing in India is still in its infancy. Overall, the total sales of fresh produce through the modern retailers will be less than 5%. In case of high value imported, the percentage may go up slightly higher, but the fact remains that at present, the small shop owners and the roadside vendors play a critical role in distribution of fresh produce.
Organized retailers will eventually offer the best potential for the sale of imported fresh produce due to their improved infrastructure and distribution systems. The organized retailers forecast that fresh produce retail through organized formats have the highest growth possibility once the cold chain and other infrastructure falls in place.
FP: What improvements do you foresee in infrastructure and supply chain issues of fresh fruit & vegetables as a result of growth in the organized retail sector?
FP: What kinds of challenges are faced by major conglomerates in terms of handling and retailing fresh produce?
Hence the question of how to tie the loose ends at the farm level is what is pegging people down. I feel that most retailers disregarded the extent of this challenge. Lack of trained manpower who understood fresh produce business also impacted a number of retailers.
I envisage that we will see an increase in space allocation for fresh produce by these stores once they start to grip a firm hand on the hitherto fragmented supply chain..
FP: How can foreign companies best tap into the new opportunities that are emerging in the Indian fresh produce market and what is the best route to expansion?
The SCS Group simple mantra for success in India is – Enter, Establish and Persevere
Publication date: 6/7/2011
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