Increased supply and stock replenishment and easing of inflationary pressures will mean that the demand for food products would increase.
However, this increased and rejuvenated demand makes it pertinent to align India’s national policy with respect to agriculture and food in order to satisfy the demand arising out of an ever-increasing population that is highly discerning of quality and taste and has little time in a busy lifestyle for traditional cooking techniques. Corporates can look into the relevance and impact of the foregoing factors to their businesses and the kind of offerings that they need to develop in the emerging scenario.
Demand Drivers The key factors that have enormous importance in increasing demand for food and are expected to play a major role in the transformation of the demand are: •Rising population and incom
...es •Increasing number of nuclear families and working women •Palate and lifestyle changes The above factors are likely to impact demand for food individually as well as in combination, and result in significant changes in not only the demand for food quantitatively but also in terms of where, how, what and when food is consumed.
This is likely to translate to new and unprecedented modes of delivery mechanisms, retailing formats, packaging formulations and a range of convenience and ready-to-eat food products. Rising Population and Incomes India’s population, by the coming decade, is estimated to be 1.
3 billion out of which the predominant numbers – ~60 per cent – are expected to fall in the age group below 40 years, making it a demanding segment to cater to.
In addition, with real per capita incomes likely to nearly double in the
next 10 years and more than two-thirds of the current population still just above or below the poverty line, the first category to see increased spending will be food. The increase in population combined with the increase in the disposable income will translate into not only the likely increase in demand in value-added sectors such as meat, dairy, fresh vegetables and fruits but also an accelerated demand for primary food products.
This demand will graduate into an exponential demand for primary commodities, deriving partly from the fact that it takes greater quantities of primary food to get processed and aggregated into a value-added product.
On top of this requirement for accelerated Exhibit 1: usage or absorption of primary commodities or Crop Productivity Levels - A Comparison (MT/ha) food conversion from raw to processed form, the Crops India Other Countries consumption demand for basic commodities would Paddy 3. 3 9. 71 also increase with the growing population. Wheat 2. 69 0. 60 0.
25 60. 70 8. 89 5. 14 4. 29 122.
70 The net effect of this would be the combined demand for both primary and value-added food products from the same natural resource region or even smaller in size than it exists today. This necessitates policy making and research efforts towards areas Pulses Edible Oilseeds Sugarcane F;V: Fruits ; Vegetables Source: Ministry of Food Processing Industries, Government of India 3 | India’s Food Vision: The Next Decade perspective | Volume 04 a quar terly repor t by Vo l u m e 0 4 / 2 0 1 0 that focus on increasing the productivity of crops, increasing water-usage efficiencies, dryland farming and
high yielding yet non-lodging strains of crop varieties. It is important that such initiatives are taken in earnest as the results of research and their application has a similar gestation period.
This also highlights the need to bring about productivity enhancement Exhibit 2: in existing crops and farming situations through Food Processing Levels - A Comparison improvements and, more importantly, application of Food Category India Other Countries the recommended package of agronomic practices F;V 2% USA (65%), Philippines (78%), to attain global benchmark levels (see exhibit 1). China (23%) Similarly, the explosion in the demand for processed food would trigger the requirement to increase the level of processing presently being undertaken in India (see exhibit 2).
The present processing levels are far lower than other countries and the demand for such products is expected to outstrip supply if adequate steps are not taken.
Milk Buffalo Meat Poultry Marine 35% 21% 6% 26% 60-75% in developed countries 60-70% in developed countries 60-70% in developed countries 60-70% in developed countries F;V: Fruits ; Vegetables Source: Ministry of Food Processing Industries, Government of India This would cause a shift in the nature of the industry – from largely unorganised today to the organised.
The challenge for the industry would be to undertake capacity and skill-building in the food processing sector in order to facilitate not only upgrades in the standards of food production but also to provide employment to the large population of workers engaged with this sector. Increasing Nuclear Families and Working Women Liberalisation of the economy and the incentives to private sector development have led to a rise in new trade formats and increased employment creation.
align="justify">This has translated into the migration of both the skilled and unskilled workforce from rural areas to major cities resulting in an increasing proportion of nuclear families combined with higher employment possibilities for women. The rural-to-urban migration trend coupled with other factors such as increased exposure to the media and paucity of time has not only led to changes in awareness of gender equality and rights but also changes in the habits of people towards traditional household chores such as grocery-shopping and cooking.
The trend towards preferences for ready to eat or frozen food is bound to intensify with improvements in packaging technology and infrastructure.
Exhibit 3: Enrolment of Women in Different Faculties 16 51 44 37 39 40 33 44 37 47 12 35 38 10 8 21 16 22 17 20 6 4 2 Art Science Medicine Agriculture Veterinary Engineering Commerce Sciences ; Technology Management 1995-96 2001-01 CAGR Law Education Others 0 CAGR (%) 14 60 50 Women as % of total enrolment 40 30 20 14 10 0 41 17 18 Source: Selected Education Statistics, 2004-05; Ministry of Human Resource Development, 2007; Technopak Analysis
India’s Food Vision: The Next Decade | 74 perspective | Volume 04 a quar terly repor t by Vol u me 0 4 / 2 0 1 0 In 1981, the number of women entering the workforce was estimated to be 20 per cent; this grew to 23 per cent in 1991 and further rose to 26 per cent in 2001. Currently, it is estimated to be around 30–35 percent of the total working population amounting to ~150–170 million women. Indian women are increasingly seeking greater participation in
the organised workforce, accounting for 20-25 percent of the total organised workforce of 30-35 million (refer exhibit 3).
A good example is the huge success of instant noodles in India. Popularised by Nestle, the instant, 2-minute noodle carved out an entirely new category and the non-ethnic and quick cooking practice (as opposed to traditional Indian cooking) was welcomed and adopted by the Indian consumer.
The emergence of newer categories as well as eating formats such as roadside restaurants, food courts, cafes, kiosks, lounges, etc. are some of the other examples. The new enabler to this change is the Internet, which offers the quickest and easiest channel for routine work such as ordering food and groceries besides other items.
Exhibit 4: Changing Food Habits of the Indian Consumer Types of Changes Become more health conscious now, regarding food consumed Eat more junk food now Eat less often at roadside eating joints or carts Eat more food now Eat out at hotels more often now Eat western cuisine more often now Source: Technopak Healthcare Outlook % 51 15 15 14 5 5 Palate and Lifestyle Changes Rising income and growing urbanisation have contributed to a shift in traditional Indian food habits. Driven by higher disposable incomes, Indians are increasingly travelling within India and globally and are exposed to diverse lifestyles.
This has given birth to a new generation of consumers with a global orientation in food habits.
According to a Euromonitor report, it is anticipated that there would be a dramatic rise in the number of Indians travelling abroad – 132 per cent between 2006 and 2011. It is also expected that the total number of outbound
travellers is set to reach 16. 3 million in 2011 alone. Exhibit 5: Allocation of Shelf Space to Imported Food Products Locations South India South India Chennai and Bangalore (South India) Bangalore Chennai (South India ) Across India Mumbai NCR-Delhi % 10 12 5 4 40 3 7 25
Retailer Foodworld Nilgiris Vitan ABG-More Nuts n Spices Food Bazaar Reliance Crossroads Source: Industry Sources, Technopak Analysis High-income urban dwellers are seeking variety in their choice of foods and are willing to spend more on international cuisine, including fast food. Indians have become open to experimenting with newer tastes and multiple cuisines have found a way into Indian kitchens, leading to a diversification in the Indian palate (refer exhibit 4). This has created opportunities for imported food products such as pasta, sauces, salad dressings, dairy products such as yoghurt and cheese, etc.
refer exhibit 5). Adoption of higher energy density diets, sedentary work and leisure habits coupled with reduced physical activity have resulted in an increase in incidences of non-communicable diseases, thus making consumers aware of the importance of health, food and exercise, and driving the demand for more nutritious and fortified health foods (refer exhibit 6). As a result, Indian consumers have now become more sensitive to the health quotient of food consumed and the market for health and wellness food has been rising.
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