Changing Landscape Of F&B Industry
The changing consumer demand is leading to major changes in the retail industry to tap into this demand and diminishing frozen sales
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Globalization has significantly influenced various aspects of Indian society, including the change in the food habits of Indian consumers over the last two decades. Aided by several economic developments, increasing spending power and openness to new diets & lifestyle habit, the development of production, processing, distribution and marketing of the FMCG and F&B Industry has seen tremendous growth in India.
One of the major shifts in the food industry is the increasing number of Indians shifting to a non-vegetarian diet despite India having a reputation as a vegetarian nation. According to the sample registration system (SRS) baseline survey 2014 released by the registrar general of India, 71 percent of Indians over the age of 15 are non-vegetarian. India consumes close to $30 billion meat annually where 90% is handled by the unorganized market.
In this fast growing industry, a prodigious shift has been seen towards consumption of fresh & chilled ready to eat meats including sausages and cold cuts. The Indian Market for non-vegetarian products has been primarily dominated by frozen ready to eat meat products unlike International Markets where fresh & chilled ready to eat non-vegetarian products are more prevalent with decreasing frozen sales. Fresh ready to eat products (including sausages & cold cuts) are superior in taste, nutritional value and texture. Due to these reasons, globally, in most developed countries, the focus is on fresh with very few brands available in the frozen range.
However, a shift towards consuming fresh sausages, deli products, ready to eat products are increasing with consumers in their 20s and 30s, in particular, are driving the changes in frozen food as they grew up in an era of heightened awareness about nutrition, intense scrutiny of the food industry and the advent of the Internet and social media to fuel that fire. Consumers are becoming more aware of the food ingredients and look for "better-for-you" high quality ingredients. TV shows like "Master Chef", easy cook recipe books and columns appealing viewers for pre-chopped vegetables/meat or other prepared meal components aid them to cook fresh meals quickly.
The changing consumer demand is leading to major changes in the retail industry to tap into this demand and diminishing frozen sales. Even globally, Kroger Co. (the 2nd largest food retailer after Wal-Mart Stores Inc. in the US) said frozen sales have weakened over the past few years. At the center of the supermarket and the heart of kitchen convenience, freezer-aisle items are struggling today as consumers shift their tastes to fresh food that they see as healthier. Retail stores have sought to capitalize on the desire for fresh meats, ready to eat products and deli products by sprucing up the perimeter of the store with investment in chillers and infrastructure as this is critical differentiator against competition.
On the supply side, the challenge also remains given the complex nature of managing chilled temperatures unlike frozen meats & ready to eat products and supply chain proves to be the hindrance in providing high quality fresh food. With very few manufacturers having the expertise and technical know-how in the fresh meat & fresh ready to eat products - creating high barriers for entry, leading to limited choices in brands to choose from. Also, the focus on infrastructure for fresh & chilled meats & deli products remains a major roadblock. Thankfully retailers now understand the change and are moving towards Fresh meats.
The cold-cut retail/e-tail sector has experienced positive growth in Indian markets, yet there is considerable untapped marketing potential. The meat market is expected to reach US$65 billion by 2022. This reflects the appetite and high interest level of meat lovers. It will be interesting to see what 2020 has in store needless to say more players are expected to join the race.
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