EXPLOSION IN FOOD BRANDS
In fact, the consistent increase in agricultural output, combined with India’s second largest in the world arable area, have worked to a large extent to support easing of raw material sourcing issues for RTE and RTC products, a big reason for global giants to enter India. A FICCI estimate this year says that the year 2009 has been a record year for India’s food retailing industry as at least 20 convenience food brands have entered the Rs.9,900 billion Indian agri-retail sector. Who all are we talking about here? Starting from global giants like Walmart, Hershey to Indian players like Capital Foods, Mother Dairy, Kohinoor Foods, the list seems to be growing by the month.
The Ministry of Food Processing Industries reports that the food processing industry in India grew at 14% ytd as on October 2009, irrespective of the economic recession. The convenience food market, in consequence, has seen incredible foreign direct investments of $143.80 million. As mentioned before, international biggies have not only resorted to the acquisition route but also at the same time have attempted to create sturdy sourcing hubs for their global food businesses. MTR Foods Ltd is a brilliant example of how an Indian convenience food brand was simply lapped up by a global behemoth for such reasons. The Norwegian branded food major Orkla SA acquired the Bangalore-based MTR Foods Ltd for $80 million to get a snapshot entry into the Indian market. At the same time, Orkla is now using MTR as the sourcing hub for its overseas food business. And as Hemendra Mathur, Managing Director of Small Enterprise Assistance Funds, tells us, in cases of foreign acquisitions like Dr.Oetker, Orkla or even the much known HUL acquiring Modern Food, the biggest advantage is the transfer of R&D technology to the Indian hub.
Therefore, supporting such efforts of foreign companies is the Indian government, which is actually encouraging foreign giants to enter India. Consider the ‘Vision 2015’ approach undertaken by the Ministry of Food Processing Industries and CII, which is driven by a mission of overseeing a ‘three-fold’ growth in the size of the processed food sector by increasing levels of processing of perishables from 6% to 20% of total production. Apparently, a huge focus is also being driven into plans and policies that go on to ensure that value addition in food production is raised from 20% to 35% overall, including packaging and branding.
But one critical aspect that is being forgotten by the Ministry is that many Indian companies, even larger ones, sometimes do not come up to global process and production benchmarks. For example, bullish on the lucrative exports market, not many know that the UK based Rotschild’s FieldFresh had tied up with the Bharti group much before Walmart had. Some members of that venture reveal to 4Ps B&M that Rotschild’s extremely demanding speed of sourcing was really hard for the Bharti group to match up to – and the obvious result, the members disclose, was that Bharti last year bid adieu to Rothschild and embraced Walmart.
At the same time is the case of North America’s leading chocolate and confectionery manufacturer, Hershey, which tied up two years ago with Godrej Beverages and Foods Ltd. Christened as Godrej Hershey Foods and Beverages Ltd, this JV in a time span of two years has not only grown by 20% but has become a major supplier to other players like HUL (for its Kissan brand). In a symbiotic relationship, the JV gives Godrej international technology to grow its food and beverage business and gives Hershey a platform to launch its brands in the attractively fast growing Indian confectionery market.
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.
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The Ministry of Food Processing Industries reports that the food processing industry in India grew at 14% ytd as on October 2009, irrespective of the economic recession. The convenience food market, in consequence, has seen incredible foreign direct investments of $143.80 million. As mentioned before, international biggies have not only resorted to the acquisition route but also at the same time have attempted to create sturdy sourcing hubs for their global food businesses. MTR Foods Ltd is a brilliant example of how an Indian convenience food brand was simply lapped up by a global behemoth for such reasons. The Norwegian branded food major Orkla SA acquired the Bangalore-based MTR Foods Ltd for $80 million to get a snapshot entry into the Indian market. At the same time, Orkla is now using MTR as the sourcing hub for its overseas food business. And as Hemendra Mathur, Managing Director of Small Enterprise Assistance Funds, tells us, in cases of foreign acquisitions like Dr.Oetker, Orkla or even the much known HUL acquiring Modern Food, the biggest advantage is the transfer of R&D technology to the Indian hub.
Therefore, supporting such efforts of foreign companies is the Indian government, which is actually encouraging foreign giants to enter India. Consider the ‘Vision 2015’ approach undertaken by the Ministry of Food Processing Industries and CII, which is driven by a mission of overseeing a ‘three-fold’ growth in the size of the processed food sector by increasing levels of processing of perishables from 6% to 20% of total production. Apparently, a huge focus is also being driven into plans and policies that go on to ensure that value addition in food production is raised from 20% to 35% overall, including packaging and branding.
But one critical aspect that is being forgotten by the Ministry is that many Indian companies, even larger ones, sometimes do not come up to global process and production benchmarks. For example, bullish on the lucrative exports market, not many know that the UK based Rotschild’s FieldFresh had tied up with the Bharti group much before Walmart had. Some members of that venture reveal to 4Ps B&M that Rotschild’s extremely demanding speed of sourcing was really hard for the Bharti group to match up to – and the obvious result, the members disclose, was that Bharti last year bid adieu to Rothschild and embraced Walmart.
At the same time is the case of North America’s leading chocolate and confectionery manufacturer, Hershey, which tied up two years ago with Godrej Beverages and Foods Ltd. Christened as Godrej Hershey Foods and Beverages Ltd, this JV in a time span of two years has not only grown by 20% but has become a major supplier to other players like HUL (for its Kissan brand). In a symbiotic relationship, the JV gives Godrej international technology to grow its food and beverage business and gives Hershey a platform to launch its brands in the attractively fast growing Indian confectionery market.
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.
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
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