EXECUTIVE SUMMARY

In the changing environment of world economy, where all boundaries are open for trade and business, its era of globalization where market is open for more opportunities and more competition. People lives are changing with time. As a country like India which is a developing country has a great potential to be a developed economy in the world and compete with its developing countries. There is massive change in the Indian market for a decade, the reason behind that are increasing GDP rate, improving life styles of its citizens, education sector is growing, increasing number of higher educated people, increasing disposable income, great improvement in women empowerment, women contribution in each sector of the society. Any market depends on its customers and food processing industry is not an exception.It is such important industry which affects every part of our society. It can be called an industry From farm to fork. In my study title An Exploratory Study of challenges and Opportunities for Indian food Processing industry I have tried to search out the new dimensions in the study which can strengthen the industry. Through this research it is tried to show the linkage and importance of basics of processed food industry with its supporting system industries. The research methodology is used as an exploratory research and cross-sectional research. The survey has been conducted to understand the consumers behavior towards processed foods, their buying decisions, role of different media and sale ratio of different brands in each category of processed foods. The survey location was Lucknow city and interviews conducted of both retailers and consumers too. The sample size is 100 consumers and 50 retailers including departmental store, retail outlets, specialty stores and general stores. The recommendation and conclusions of the study represent the true picture of Indian food processing industrys strengths, weaknesses, threats and opportunities. The major points which is

made on challenges for food processing industry are consumers psyche about foods that fresh food is only healthy food, quality concern for processed foods, technology up gradation, marketing functions problems, packaging of processed foods etc. for the opportunities doors that are huge international and domestic market for processed foods, big Export opportunities, Government initiatives to promote food processing industry. The industry which is at nascent stage has a huge potential to grow in future. But the main task is to improve and update the business environment through proper management, using of technology and increasing consumer awareness and interest to expand the market and be compatible at global stage.

INDEX
GUIDE CERTIFICATE 1 2 3 i ii iii 4 5 6 EXECUTIVE SUMMARY Introduction Objective of the study Research Methodology Use of the study Importance of the study Theoretical Concept Data Analysis and Interpretation Finding and Suggestion Conclusion Bibliography Annexure

INTRODUCTION
INDUSTRY & SERVICES FOOD PROCESSING Food processing involves any type of value addition to agricultural or horticultural produce and also includes processes such as grading, sorting, packaging which enhance shelf life of food products. The food processing industry provides vital linkages and synergies between industry and agriculture. The Food Processing Industry sector in India is one of the largest in terms of production, consumption, export and growth prospects. The government has accorded it a high priority, with a number of fiscal reliefs and incentives, to encourage commercialization and value addition to agricultural produce, for minimizing pre/post harvest wastage, generating employment and export growth. India's food processing sector covers a wide range of products fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc.

Trebling of the size of processed food sector in India An increase in the level of processing of perishables from 6% to 20% Increase in value-addition from 20% to 30% Increase in India share in global food trade from 1.5% to 3%.

Sectoral Overview

India has arable land of 184 million hectares and produces annually 90 million tonnes of milk (highest in the world), 150 million tonnes of fruits and vegetables (second largest), 485 million livestock (largest), 204 million tonnes food grain (third largest), 6.3 million tonnes fish (third largest), 489 million poultry and 45,200 million eggs. India's agricultural production base is huge. However, processing level is very low i.e. around 2 per cent in fruits and vegetables, 26 per cent for marine, 6 per cent for poultry and 20 per cent for buffalo meat. The share of India's export of processed food in global trade is only 1.5 per cent. Hence, there is immense potential for investment in this sector. To facilitate the prompt growth of food processing industry, the Government has implemented the scheme for infrastructure development comprising a food park scheme, establishing packaging centers, integrated cold chain facility, value added centers, Irradiation Facilities and Modernized Abattoir. Advantage India

India is one of the largest food producers in the world India has diverse agro-climatic conditions and has a large and diverse raw material base suitable for food processing companies

Investment requirement of around US$ 15 billion exists in the food processing sector India is looking for investment in infrastructure, packaging and marketing India has huge scientific and research talent pool A largely untapped domestic market of 1000 million consumers 300 million upper and middle class consume processed food 200 million more consumers expected to shift to processed food by 2010 Well developed infrastructure and distribution network

Rapid urbanization, increased literacy, changing life style, increased number of women in workforce, rising per capita income- leading to rapid growth and new opportunities in food and beverages sector

50 per cent of household expenditure by Indians is on food items Strategic geographic location (proximity of India to markets in Europe and Far East, South East and West Asia)

Fruits and Vegetable Processing The installed capacity of fruits and vegetables processing industry has increased from 11.08 lakh tons in January 1993 to 21.18 lakh tons in January 2006 and 24.74 lakh tons in January 2007. The utilization of fruits and vegetables for processing is estimated to be around 2.20 per cent of the total production. Over the last few years, there has been a positive growth in ready to serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience veg-spice pastes, processed mushrooms, and curried vegetables. Meat and Meat Processing In meat and meat processing sector, poultry meat is the fastest growing animal protein in India. The estimated production is 1500 thousand tones growing at a CAGR of 13 per cent through 19952010. Buffalo meat production has been growing relatively less rapidly at a CAGR of 5 per cent in the last six years. The current production levels are estimated at 1.9 MT. Of this about 21 per cent is exported. Mutton and lamb is relatively small segment where demand is outstripping supply. The production levels have almost been constant at 950,000 MT.

India exports more than 500,000 MT of meat of which major share is buffalo meat. Indian buffalo meat is witnessing strong demand in international markets due to its lean character and near organic nature. India is the fifth largest exporter of bovine meat in the world. Indian buffalo meat exports have the potential to grow significantly and hence present an opportunity for exporters in the food processing segment. Processing of meat products is licensed under Meat Food Products Order (MFPO) 1973 which is being implemented by Ministry of Food Processing Industries w.e.f. 14.05.2004. The main objectives of the MFPO 1973 are to regulate production and sale of meat food products through licensing of manufacturers, enforce sanitary and hygienic conditions prescribed for production of wholesome meat food products, exercise strict quality control at all stages of production of meat food products, fish products including chilled poultry etc. To develop necessary infrastructure for processing of meat and meat food products for domestic market as well as for export market, Ministry of Food Processing Industries is providing financial assistance by way of grant-in-aid. During the year 2006-07 MFPI assisted seven projects for manufacture of meat and meat food products.

Dairy Processing India ranks first in the world in terms of milk production. Indian production stands at 91 million tones growing at a CAGR of 4 per cent. This is primarily due to the initiatives taken by the Operation flood programmes in organizing milk producers into cooperatives; building infrastructure for milk procurement, processing and marketing and providing financial, technical and management inputs by the Ministry of Agriculture and Ministry of Food Processing Industries to turn the dairy sector into viable self-sustaining organized sector. About 35% of milk produced in India is processed. The organized sector (large scale dairy plants) processes about 13 million tones annually, while the unorganized sector processes about 22 million tones per annum. In the organized sector, there are 676 dairy plants in the Cooperative, Private and Government sectors registered with the Government of India and the state Governments. India has a unique pattern of production, processing and marketing/consumption of milk, which is not comparable with any large milk producing country. Approximately 70 million rural households (primarily, small and marginal farmers and landless laborers) in the country are engaged in milk production. Over 11 million farmer are organized into about 0.1 million village Dairy Cooperative Societies (DCS)(about 110 farmers per DCS). The cumulative milk handled by DCS across the country is about 18 million kg of milk per day. These cooperatives form part of a national milk grid which links the milk producers through out India with consumers in more than 700 towns and cities bridging the gaps on account of

seasonal and regional variations in the availability of milk. The Ministry of food Processing Industries is promoting organized Dairy processing sector to accomplish upcoming demands of processed dairy products and helping to identify various areas of research for future product development and quality improvement to revamp the Indian dairy

export by way of providing financial assistance to the dairy processing units. 32 Units have been sanctioned financial assistance (Rs.591 lakhs) under the plan scheme of the Ministry during the year 2009-10 (Up to December 2010). Fish Processing With its long coast line of over 8000 kms., 50600 sq. kms of continental shelf area and 2.2 million sq. km. of exclusive economic zones, India is endowed with rich fishery resources. Fish production (both Marine and Inland) during last five years are given below:

(Figure in Million tons) Year 2005-06 2006-07 2007-08 2008-09 2009-10 Marine 2.81 2.83 2.99 2.94 3.01 Inland 2.84 3.12 3.21 3.45 3.50 Total 5.65 5.95 6.20 6.39 6.51

Source: Annual Report 2009-10, Ministry of Food Processing Industries Considerable infrastructure facilities for processing of marine products have been developed over a period of 50 years. At present, there are over 369 freezing units with a daily processing capacity of 10266 tons out of which 150 units are approved for export to EU. 499 units are engaged in production of frozen fish with a total storage capacity of 134767 tons. Apart from the above there are 12 surimi units, 5 canning units and 473 units are engaged in pre-processing and dry fish storage. The quantum of marine products processed and exported and revenue thereof during the last five years is as follows:

Year 2005-06 2006-07 2007-08 2008-09 2009- 10

Quantity (MT) 440473 424470 467297 412017 461329

Value (Rs. Crore) 6444 5957 6881 6092 6647

Source: Annual Report 2009-10, Ministry of Food Processing Industries Consumer Food Industries Consumer food industry includes pasta, breads, cakes, pastries, corn flakes, ready to eat and ready to cook products, cocoa products, biscuits, soft drinks, beer, alcohol beverages, mineral and packaged water and segment of consumer foods. Their production is about 4.00 million tons per year. Manufacturing of bread is reserved for small-scale industry (SSI). Out of the total production of bread, 40 per cent is produced in the organized sector and the remaining 60 per cent in the unorganized sector. Similarly, production of biscuits in the organized sector is about 80 per cent and quantity of biscuits produced in the unorganized sector is about 20 per cent. During the year 2006-07 (up to January, 2007) 75 food processing units relating to consumer industries were sanctioned financial assistance by MFPI and Rs.16.34 crore has been released so far.

Investment The total inflow of FDI in FPI sector up to 2005-06 (up to November 2005) is highlighted here:

Year

FDI inflow received in Food Processing Industry sector (USD Million)

2006-07 2007-08 2008-09

36.42 113.49 38.77

2009-10 (upto Dec, 10) 35.11 Exports The Ministry of Food Processing Industries has been encouraging the new processing capacities for agro- food products through its various policy initiatives and plan schemes providing financial incentives for setting up of new units and modernization of existing units. Export of Processed Food products (2009-10)

Items Processed Fruits and Vegetables Dried and Preserved Vegetables Mango Pulp Pickle and Chutney Other Processed fruits and Vegetables Total for Processed Fruits and

Quantity 566238 134613 135382 107335 501826

Value 1459.17 364.24 260.98 370.21 1359.54

Vegetables Animal Products Buffalo Meat Sheep/ Goat Meat 459938 7177.51 2629.57 80.37

Poultry Products Dairy Products Animal Casings Processed Meat Total for Animal Products Other Processed Foods Groundnuts Guargum Jaggery and Confectionary Cocoa Products Cereal Preparations Miscellaneous Preparations Milled Products Total for Other Processed Food Grand Total Investment Opportunities

145889 76515 1125.82 256.04 690901 190053 186718 107197 2147.09 76880.6 49606.7 50901.5 713092 1905819

167.58 668.50 17.51 2.43 3566.96 513.69 1049.23 227.57 21.83 393.96 117.20 225.77 64.68 2613.93 7539.43

Alcoholic and Non-Alcoholic Beverages 49587.9

Mega food parks Agri infrastructure, supply chain aggregation, logistics and cold chain infrastructure Fruit and vegetable products Animal products, meat and dairy Fisheries and seafood Grains and cereals Packaged/ convenience goods/ready to eat food Wine and beer Machinery/Packaging Establishing infrastructure, cold chain, etc.

Indias Farm and Food Potential Cattle/Milk/Marine Sector

Sixth in poultry production (842 millions) 53% of World Buffalo and 43% of Sheep Seventh largest in marine landings ( 5.8 million tonnes) Largest producer of milk (84.5 million tonnes)

Indian Agriculture

One of the worlds largest food producers at 601 million tonnes after China (856 million tonnes) and USA (608 million tonnes)

Second largest producer of fruits (46.64 million tonnes) after Brazil Second largest producer of vegetables (78.19 million tonnes) in the world, next to China (13% of worlds production) Agriculture Production Base

Spices

India is a veritable treasure house of medicinal aromatic plant species. 9500 spices of medicinal and aromatic plants have been classified and documented More than 50 types of spices with annual production of 3.02 million tonnes, India is the largest producer consumer and exporter of spices. Major spices produce are black pepper, cardamom (small & large), ginger, garlic, turmeric, chilli etc.

Thanks to its varied agro production profile, India has a highly diversified agri export basket that accounted for earnings worth US$ 9414 in 2009-10

The overall potential embodied by the food processing sector, coupled with the policy initiatives of the Government, has facilitated the entry of leading global players with sizeable investments into this sector. Among them are Nestle, Pepsi, Coke, Kelloggs, Conagra, Unilever, Perfetti, Glaxo Smithkline, Heinz, Wyeth, Ajinomoto, Nissin Met and Walmart. Likewise, the leading Indian name in the business include ITC, Dabur, Britannia, Parle, Amul, Haldiram and Godrej to name a few. The entry of such major players is essentially a pointer to the opportunities and spin-offs offered by the sector for investments.

Policy Initiatives

Most of the processed food items have been exempted from the purview of licensing under the Industries (Development and regulation) Act, 1951, except items reserved for smallscale sector and alcoholic beverages.

Food processing industries were included in the list of priority sector for bank lending in 1999. Also, the new trade policy places greater thrust on agro-based industries.

Automatic approval for foreign equity upto 100 percent is available for most of the processed food items except alcohol, beer and those reserved for small-scale sector subject to certain conditions.

Fruits and vegetables products, condensed milk, ice cream, meat production, fist/poultry, pectin, pasta, dairy machineries completely exempt from Central Excise Duty

Excise duty on processed fruit and vegetables has been brought down from 16 percent to zero level in the budget, 2009-10

In the Budget 2009-10 excise duties have been waived on condensed milk, ice cream, preparations of meat, fish and poultry, pectin, pasta and yeast. Excise duty on ready to eat packaged foods and instant food mixes like dosa and idli mixes have been reduced from 16% to 8%. Excise duty on aerated drinks has been reduced from 24% to 16%. Fruit and vegetable processing units are already exempted from payment of excise duty. To ensure easy availability of credit, Government has included food processing industries in the list of priority sector for bank lending. NABARD has created a refinancing window with a corpus of Rupees one thousand crore for agro processing infrastructure and market development.

Licensing powers delegated to regional offices under Full Product Order, 1955.

Setting up of 60 agri zones for end-to-end development for export of specific product from geographically contiguous areas

53 food parks approved to enable small and medium food and beverage units to set up and to use capital intensive common facilities such as cold storage, warehouse, quality control labs, effluent treatment plant, etc.

Vision 2015 adopted by the Ministry of Food Processing Industries envisages:

Trebling the size of the processed food sector Increasing level of processing of perishables from 6 per cent to 20 per cent

Value addition to increase from 20 per cent to 35 per cent Share in global food trade to increase from 1.5 per cent to 3 per cent

Major Indian and Overseas Players in the Food Processing industry

ITC Limited Parle Products Pvt. Ltd. Agro Tech Foods Amul Perfetti India Ltd. Cadbury India Ltd. PepsiCo India Holdings Nestle India Pvt. Ltd. Britannia Industries Ltd. Hindustan Lever Limited

Milkfood MTR foods limited Godrej industries Limited Gits Food Products Pvt. Ltd. Dabur India Ltd.

Food Processed Industrys Major Information in brief

India is one of the worlds major food producers but accounts for less than 2 per cent of international food trade. This indicates vast scope for both investors and exporters. Food exports in 1998 stood at US $5.8 billion whereas the world total was US $438 billion. The Indian food industrys sales turnover is Rs 140,000 crore (1 crore = 10 million) annually as at the start of year 2000. The industry requires about Rs 29,000 crore in investment over the next five years to 2010 to create necessary infrastructure, expand production facilities and state-of-the-arttechnology to match the international quality and standards. The office of the Agricultural Affairs of the USDA / Foreign Agricultural Services in New Delhi says that one of Indias proudest accomplishments has been achieving a tenuous selfsufficiency in food production and that the country produces a wide variety of agricultural products at prices that are at or below world values in most cases.

The Indian palate is accustomed to traditional foods, mostly wheat and rice-based, rather than potato and corn-based western palate. In marketing perspective, this is considered an important factor for foreign marketers.

The USDA report says initially consumer-ready food products may have to be tailored to include Indian spices and traditional ingredients. In addition to traditional tastes, there are

other social factors which affect consumption in India. Hindus account for approximately 80 per cent of Indias population, and while only 25 or 30 per cent are strict vegetarians, beef slaughter is prohibited in all but two states (Kerala and West Bengal) and consumption of other meats is limited. Incidentally, India is the only country where the US-based MacDonalds sells its burgers without any beef content and even offers purely vegetarian burgers.

Indias middle class segment will hold the key to success or failure of the processed food market in India. Of the countrys total population of one billion, the middle class segments account for about 350-370 million. Though a majority of families in this segment have non-working housewives or can afford hired domestic help and thus prepare foods of their taste in their own kitchens, the profile of the middle class is changing steadily and hired domestic help is becoming costlier. This is conducive to an expansion in demand for readyto-eat Indian-style foods.

Indias food processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc.

Indias food processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product groups like confectionery, chocolates and cocoa products, Soya-based products, mineral water, high protein foods etc.

Indias food processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product Indias food processing sector covers fruit and vegetables; meat and poultry; milk

and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product.

Indias food processing sector covers fruit and vegetables; meat and poultry; milk and milk products, alcoholic beverages, fisheries, plantation, grain processing and other consumer product juices, dehydrated vegetables and frozen fruits and vegetables.

Another potential processed food product is meat and poultry products. India ranks first in world cattle population, 50 per cent of buffalo population and one-sixth of total goat population of the world. Buffalo meat is surplus in India. There is vast scope to set up modern slaughter facilities and cold store chains in meat and poultry processing sector. Indias current level of meat and meat-based exports is around Rs 8,000 million. In last six years foreign investment in this segment stood at Rs 5,000 million which is more than 50 per cent of the total investment made in this sector.

Compared with meat, poultry industry has registered significant growth. India ranks fifth in the world with annual egg production of 1.61 million tones. Both poultry and egg processing units have come in a very big way in the country. India is exporting egg powder, frozen egg yolk and albumin powder to Europe, Japan and other countries. Poultry exports are mostly to Maldives and Oman. Indian poultry meat products have good markets in Japan, Malaysia, Indonesia and Singapore. While meat products registered a growth of 10 per cent, eggs and broilers registered 16-20 per cent growth.

There are about 15 pure line and grand parent franchise projects in India. There are 115 layer and 280 broiler hatcheries producing 1.3 million layer parents and 280 million broiler parents. They in turn supply 95 million hybrid layer and 275 million broilers, day-old chick. Presently there are only five egg powder plants in India which is considered insufficient in view of growing export demand for different kind of powder - whole egg,

yolk and albumen. The scope of foreign investment and state-of-the-art technology in this field is therefore tremendous.

Milk and milk products is rated as one of the most promising sectors which deserves foreign investment in a big way. When the world milk production registered a negative growth of 2 per cent, India performed much better with 4 per cent growth. The total milk production is around 72 million tonnes and the demand for milk is estimated at around 80 million tonnes.

By 2007, the value of Indian dairy produce is expected to be Rs 1,000,000 million. In last six years foreign investment in this sector stood at Rs 3600 million which is about oneforth of total investment made in this sector. Manufacture of casein and lactose, largely being imported presently, has good scope. Exports of milk products have been decanalised.

Grains could emerge as a major export earner for India in coming years. Indias food grains production is now at around 225-230 million tones. These include rice, jawar, bajra, maize, wheat, gram and pulses. Indian basmati rice enjoys command in the international market. Besides growing Middle east market for basmati rive, many other countries are showing interest for this food grain. In 1998-99 export of basmati and non-basmati rice stood at Rs62000 million. There is a total rice milling capacity of 186 million tones in the country.

Among plantation, tea emerged as major foreign exchange earner. India is the largest producer and exporter of black tea. However, the most worrying factor for Indian tea industry is that from early next year with the implementation of tea imports into the country, India tea may face a stiff competition within the country as well, specially threat of Sri Lankas presence in the Indian market is looming large.

The current years tea export prospect is not that very good in terms of forex earnings because international prices has fallen significantly this year . India exports between 150-

170million kilograms of tea per annum. Of course, the scope of foreign investment in this sector is good and the multinational tea companies would either be trying for marketing joint ventures with the Indian producers or acquire stakes in Indian tea companies. There are strong possibilities of third country exports through such joint venture as quality wise still Indian teas are ruling the international market.

Alcoholic beverages are another area where India witnessed substantial foreign investment. Foreign investment in this sector stood at Rs 7000 million which about 70 percent of the total investment made so far. The IMFL (Indian Made Foreign Liquor) primarily comprises wine, vodka, gin, whisky, rum and brandy. Draught beer is a comparatively recent introduction in the Indian market. The Indian beer market is estimated at Rs7000 million a year. One of the major advantages for any investor eyeing the Indian liquor market is that India offers enough raw materials like molasses, barely, maize, potatoes, grapes, yeast and hops for the industry.

Yet another catchy investment sector is fisheries. There is growing canned and processed fishes from India. The marine fish include prawns, shrimps, tuna, cuttlefish, squids, octopus, red snappers, ribbon fish, mackerel, lobsters, cat fish etc. In last six years there was substantial investment in fisheries to the tune of Rs 30,000 million of which foreign investments were of the order of Rs 7000 million. The potential could be gauged by the fact that against fish production potential in the Exclusive Economic Zone of 3.9 million tones, actual catch is to the tune of 2.87 million tones. Harvesting from inland sources is around 2.7 million tones.

The biggest bottleneck in expanding the food processing sector, in terms of both investment and exports, is lack of adequate infrastructure.

Without a strong and dependable cold chain vital sector like food processing industry which is based mostly on perishable products cannot survive and grow. Even at current

level of production, farm produce valued at Rs 70,000 million is being wasted every year only because there is no adequate storage, transportation, cold chain facilities and other infrastructure supports. Cold chain facilities are miserably inadequate to meet the increasing production of various perishable products like milk, fruits, vegetables, poultry, fisheries etc.

Prevention of Food Adulteration laws is not only stringent one but time consuming also. It is considered as an archaic and no industry friendly food law. It substantial varies from Codex standard. Harmonization of multiple food laws is an urgent necessity.

The international market, as most of the processed food is in the hands of big retailers (example US, top ten retailers contribute 60% of the food sales) there is need to link the Indian producers and farmers to the big retailers. He listed out a number of steps taken by APEDA to make the Indian exports visible and competitive in world market.

Food Retail With large sections of the retail industry getting organised, food retail has been receiving a lot of attention. At present, only 1 per cent of food retailed in India flows through the organised retail channel. This situation is expected to change with changing lifestyles, increasing number of nuclear and dual income families, changing consumer tastes and increasing disposable incomes. Some players who have shown a keen interest in this segment are Reliance, Tatas, ITC Group, Lohias-promoted Indo Rama, Mumbai-based RK Hospitality, Kishore Biyani with his Big Bazaar and the RPG group. Currently, the size of the domestic food retailing market is estimated to be US$ 6 billion.

Ready-to-eat food A growing number of nuclear families, rising household incomes, increased urbanization and a significant rise in the number of working women have led to a rise in the demand for ready-to-eat food. And with rising income levels and changing consumer tastes, this segment is likely to see rapid increase in market size. According to a study by Tata Strategic Management Group, the Indian RTE market is estimated to grow to US$ 727.09 million by 2015 from the current level of US$ 32.09 million. Some major players in the ready to eat market are ITC Foods, MTR Foods, Kohinoor, Amul, Rajbhog Foods, Ethnic Kitchens and Tasty Bite. Government Initiatives The Government has introduced a number of progressive measures to set up and modernize food processing units, create infrastructure, support research and development and human resource development. 100 per cent FDI in most of the processed food items except alcohol, beer and those reserved for the small-scale sector. Enactment of the Food Safety and Standards Bill 2005 has created a regulatory body for the food-processing sector and also brings together 13 food legislations under a common umbrella. Permits 100 per cent tax deduction on profits for five years and 25 per cent of profit in the next five years in case of new agro-processing industries set up to package and preserve fruits and vegetables. Exemption from licensing on most of the processed food items, except on items reserved for the small-scale sector and alcoholic beverages. In a bid to boost the food sector, the Government is also developing 30 mega food parks which would cover the entire food processing cycle "from the farm gate to the retail outlet". While the Government would provide a grant of US$ 12.53 million for each of them, private investment to the tune of US$ 75.21 million would be encouraged in these parks. The first five such parks would be set up in Punjab, Maharashtra, Andhra Pradesh, Jharkhand and the North-East region in the first phases.

Strategy Note Submitted to Cabinet for Food Processing Industry

Addressing the FICCI FOODWORLD INDIA 2005 meeting in New Delhi, Mr. A.N.P. Sinha, Additional Secretary for Ministry of Food Processing Industries said that a strategy note for the Indian Food Processing Industry has been submitted to the cabinet, which lists out a number of issues to be addressed to make the Industry competitive in International market in the next ten years. Mr. Sinha was addressing the FICCIs Session on India - The Next Link in the Global Food Value Chain in New Delhi. Mr. A.N.P. Sinha said that the note addresses a number of issues like Food Safety laws, taxation issues especially at state level, reducing cost of the product, state level reforms required, supply chain issues etc. to make the processed food industry competitive in world market. He pointed out that most of the cost in food processing is due to intermediaries and inefficiencies in supply chain in India. This needs to be brought down urgently and is very much in the agenda of his Ministry, said Mr. Sinha. Other issues that his ministry intends to address for the industry is how to enhance quality of products, technology and how to capture the world market. Stressing the importance of exports for the industry, Mr. Sinha urged the exporters to increase their exports, as it will be the driver of growth in this industry. Currently, India exports close to one percent of world export of processed food products and our exports have grown by only 4% per annum over the last three-four years. Mr. Sinha also said that Indian exporters are not consistent in grain exports. Exporters are basically bulk producers and suppliers and most of their exports are going to select countries like Gulf. Even in these countries Mr. Sinha said that Brazilians are competing against Indian exports. Mr. Sinha also emphasized the need for higher value addition in Indian food processing industry, which is less than 2% at present vis-a-vis the world average of 6%.

Dr. V. Prakash, Director, CFTRI in his presentation said that value addition in aggregate terms does not have much meaning and we need to consider the value added product wise. He

emphasized the importance of strengthening the Food Processing grid by intensifying the partnership from the stage of innovation to the market. Mr. K S Money, Chairman, APEDA also said that export would be the driver of growth in this industry but many problems need to be addressed to make our exporters competitive. One of the major problems highlighted by Mr. Money was of linking farmer with the market to ensure that farm products reach out to the market. He said that APEDA has proposed to the Govt. to encourage the retail industry for the growth of food processing Sector. Also for the international market, as most of the processed food is in the hands of big retailers (example US, top ten retailers contribute 60% of the food sales) there is need to link the Indian producers and farmers to the big retailers. He listed out a number of steps taken by APEDA to make the Indian exports visible and competitive in world market.

STATEMENT OF THE PROBLEM

Problem under the study of the topic An Empirical Study of challenges and opportunities for Indian food processing industry was to analysis various factors, which affect the sale and consumption of processed food products. Under this topic a comparison has to be made on different ground among the various processed food products. Under this the various issues that formed the base for the research are pointed out below. Without any given problem it is very difficult for anyone to carry out the research. There should be some direction in which one has to take the step, this direction is decided or guided by the problem to which research is conducted. Under the topic, problem that has been discussed, and solution is presented as follows; Find out the consumption ratio of processed food in Indian household. Find out the factors which directs and affects the consumers behavior. To analyze the different comparison of food products. What are the companies target consumer on which it should focus its attention. Technology and quality concern of processed food products. Linkage of agriculture and horticulture sector with processed food industry. Role of Governments Rule & Regulations and Export potential for processed food industry. The first and foremost question, which arises in any industrys mind, is to analyze their current market situation. They want to know what fraction of market share is under their control so that they can take appropriate step in deciding their target sale. Every industry should have close watch on their consumers, changing trends, technology up gradation, new and innovative ideas and expansion of the industry which can be beneficial for their industry.

It is very essential for success of any company to understand their consumers well. Companies change their marketing strategies according to their consumers need. In conducting the research, beside the above problem, which has been laid before, there were many such problems, which arouse in the process of conducting the research. They include problem in the collection of data, problem in analyzing the consumer mind, since our research was on food processing industry, so the responses, which has been gathered, are vague as the respondent are not always free or supportive for answers.

In conducting the comparative analysis a deep insight has been kept over the various issues which is important from the industrys perspective and which can have a deep impact over the research findings.

OBJECTIVE OF THE STUDY

Objective of the research study defines the direction in which we have to proceed, what is the purpose of the study, why are we going for the research or what we want to achieve through research.

The objectives on which the focus has been made these are following: o Current state of food processing industry. o Opportunities and challenges face by the industry. o Consumption habits of the Indian consumers. o Role of value addition for processed food industry. o Effect of Government policies on food processing industry. o Contribution to economic growth of the country.

By taking these points in mind a collective approach has been made towards the research project so that the research objectives can be achieved.

RESEARCH METHODOLOGY
Research methodology may be treated as the heart of the projects. Without a proper and wellorganized plan it is impossible to complete the projects and draw conclusive and prepare result. This project was based on survey plan. The main objective was to collect the appropriate data, which works as a base for drawing conclusion and getting result.

Research methodology is a systematic way, which consists of series of action or steps necessary to effectively carry out research and the desired sequencing of these steps. The research is a process of a number of inner related activities, which overlap and rigidly follow a particular sequence. It consists of following steps: 1. Formulating the objective of the study. 2. Designing the methods of data collection. 3. Selecting the sample plan. 4. Collecting the data 5. Processing and analyzing the data 6. Reporting the findings.

RESEARCH DESIGN

A research design specifies the methods and procedures for conducting a particular study. Broadly speaking research design can be grouped into three categories- exploratory research, Descriptive research and casual research. An exploratory research focuses on the discovery of ideas and is generally based on secondary data. It is primarily investigation. A researcher engaged in an exploratory study may have to change his focus as a result of new ideas and relationship among the variables. A descriptive study is undertaken when a researcher wants to know the characteristics of certain groups such as age, sex, educational level, income, occupation, etc. In contrast to exploratory studies, descriptive studies are well structured. A cross-sectional study is undertaken when a researcher concern with sample of elements from a given population. Thus it may deal with household dealers, retailers, retail stores or other entities. According to research problem I have done Exploratory and Cross-sectional study for the project work. SAMPLE DESIGN In this project, I have selected the sample survey to determine and achieve the desired result. For this I took small samples of customers from the Delhi and Ghaziabad area and conducted research with the help of simple random sampling.

SOURCE UNIT It is also known as sampling frames from which sample to be drawn it contains the names of all items (in case of finite universe unit only). If source list is not available, the researcher will has to prepare it. This list should be Comprehensive, correct, and reliable and appropriate. It is extremely important for the source list to be as representative of the population as possible. THE UNIVERSE OF STUDY

The first step in developing any sample design is to clarify deigns the set of objectives. Technically called the universe to be study. The universe can be finite or infinite. In infinite universe the numbers of items is certain but incase of infinite universe the number of items is infinite. The population of city, the number of workers in the factory is examples of finite universe. My universe was finite and area was Delhi and Ghaziabad city.

SAMPLING There are two ways of doing research. The first one is to study the whole population, which called census method. The second method is to study a few unit of that universe who represents virtually the whole universe. These units are called samples and this method is called sampling method. In present study due to the initiation of time only 100 consumers (mainly women age group betwee 25-50) and 50 retailers including retail stores and departmental stores were surveyed by me. In this survey simple random technique is used to choose the respondent (samples). The reasons for selecting this technique are 1. It is free from any type of bias. 2. The respondents give true and actual information. 3. It is possible to accurate information.

SAMPLING UNIT A decision has to be taken concerning a sampling unite before selecting a sample. Sampling unit may be geographical one such as a state, district, village etc. on a construction unit such as house, Beat etc. or it may be a social unit such as family, club etc. or it may be individual. I decided such units that have to select for this study. I targeted the families (mainly women) in these cities as women are considered the decision maker for food and health issues for their family members. .

SIZE OF SAMPLE This refers to the number of items to be selected from the universe to constitute a sample. This was a very important task for me. The size of sample should neither excessively large nor too small, it should be optimum. The parameters of the research in interest study must be kept in view while deciding the size of sample.

In this research study, Sample size was 100 consumers and 50 Retail outlets including departmental stores and retail stores in Lucknow city.

METHOD OF DATA COLLECTION

There two methods available for data collection one is Observational method and second is Survey method. Once the decision in favor of collection of primary data is taken, one has to decide the mode of collection.

Observation method suggests that data collected through ones observation and while in Survey method field surveys are commonly used to collect the primary data from the Respondents. In this research I have used survey and observation method both. I have done survey with the help of Direct Personal interviews to get the detailed information about problem of research and for this purpose I prepare a structured Questionnaire form to elicit the necessary data from the Respondents (Consumers and retailers).

Collection of primary data

This was an exploratory research projects. The information required for fulfilling the objective was collected from both primary and secondary sources. The primary data was collected using questionnaire and a short interview to know various factors from consumers as well as retailes. The questionnaire was a structured, non-designed which has opened as well as close ended questions. Collection of secondary data

For the collection of the secondary data in this report different information sources were taken as a base. The major sources of information were the Internet and business magazines.

PREPARING QUESTIONNAIRE The method of data collection through Questionnaire is very popular. For achieving the objective of this study I prepared two questionnaire, one for consumers and second for retailers. I filled it by asking the questions with a request to answer by respondents. This method is vastly used in various

economy and business surveys. There are various benefits of conducting a survey with the help of a questionnaire and these are as follows1. There is a low cost in conducting a field survey when population is less in number. 2. It is free from the bias of the interviewer; answers are in respondents own words. 3. Respondents have adequate time to give well thought out answers. 4. Results that are found from this method are most reliable and dependable.

CONDUCTING THE FIELD SURVEY After making the suitable questionnaire according to the research problem I conducted the field survey in some part of Lucknow to collect the necessary data for the research.

PRESENTATION OF DATA
Through Questionnaire, I have got large amount of data which I have described with the help of suitable diagrams in summarized way. I have taken sample of 100 consumers and 50 retailers and conduct a survey for them, to find out the consumptions habits towards processed food, liking and disliking, changing trends, income effects, food products availability, quality concern etc. all I have presented through pictorial diagrams and analyzed and interpreted the data in precise way.

USE OF THE STUDY

By my research project which is centralized on Indian food processing industry under the title An Exploratory Study of Challenges and Opportunities in Food Processing Industry, I have tried to focus on the following issues, by which this researchs utilization can be measured, These are as followso As in the report methodology both secondary as well as primary data are used so the findings of the report may help the food processed companies to understand the market share brands presence, consumers opinions, their feed backs which can give ease to formulate their marketing strategies. o The survey of the selected location can help the marketers to understand their target customers well. o The findings of the report can be used as secondary data in another research project related with food processing industry. o Figure out challenges can send an alarming massage to the industry so that they can take proactive decisions to face them. o Given suggestions of Utilization of waste materials of food items can generate new manufacturing facilities and optimum utilization of raw materials. o A good research always shows the leading pathways of business avenues, so this research is also adding some steps in this concept by providing a clear image of Indian food processing industry, its potential to explore so that new entrepreneurs could come in this field and could create more wealth, more employment and a bigger market which can give a good contribution in countrys economical growth.

IMPORTANCE OF THE STUDY

Utilization of any thing defines its importance. This is a simple concept of importance. If utilization and uses reach benefits to various functions its importance increases obviously. Here I have tried to present the studys importance through its uses and recommendations given in the report. In my recommendations I have focused weaknesses of food processed industry and also given suggestions to eradicate these shortcomings. If the industry, entrepreneurs and government ponder on these recommendations its sure that many problems can be remedied by taking appropriate actions. Where I have given a comparative analysis of different processed food in selected locations, I also analyzed the consumers behavior toward processed food products, which certainly can be a useful tool for those companies that are operating in these markets. As food processing industry in India is in its nascent stage, it requires more research and development in this sector. So that more and more benefits can be reaped out for this industry and all those can be get benefited by this growth, including small and mid-size enterprises, retailers, distributors, consumers and countrys farmers. So times requirement to make our strong portion stronger and work out on weaker areas so that the industry can be strengthened and new opportunities can be created with focusing the following areas likeso Technology Up Gradation o Increase productivity in farming o Improving Distribution system o Flexible government policies to flourish the industry. Theses are some important areas by improving it we can make bigger and important contribution to the countrys GDP and improve the life style of our countrys lower section and farmers who are directly related to food processing industry.

THEORETICAL CONCEPT
The new economy is based on the digital revolution and the management of information. Information has a number of attributes. It can be infinitely differentiated, customize and personalized. It can be dispatched to a great no. of people who are on a network and it can reach them with great speed. To the extent that the information in public and accessible, people will be better informed and able to make better choice. Buyers today are only a click away from comparing competitor price and product attributes. They can get answer on the internet in a matter of seconds. They dont need to drive to store, park, wait on line, and hold discussion with salesperson. Todays person can order almost any thing over the internet. People can place orders from home, office or mobile phone and order will be delivered to their home and office quickly. Companies are having very close watch on the consumers, their consumption patters, population growing, educational and income level, changing environment of society and culture.

ANALYZING THE MACRO ENVIRONMENT

Successful organization and industry recognize and respond to unmet needs and trends. Need The marketer must try to understand the target markets need, want and demand. Needs are the basic human requirements. People need food, air, clothing and shelter to survive. People also have strong needs for recreation, education, and entertainment. These need become wants when they are directed to specific objects that might satisfy the need. Wants are shaped by ones society. Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few are able and willing to buy one.

Trend A trend is a direction or sequence of events that has some momentum and durability. Trends are more predictable and durable than fads. A trend reveals the shape of the future and provides many opportunities. For example the percentage of the people who value the physical fitness and wellbeing has risen steadily over the years, especially in the under-30 group, the young women and upscale group, and people living in the west. Marketers of health foods and exercise equipment cater to this trend with appropriate products and communications. The Demographic Environment The demographic trends are highly reliable for the short and intermediate run. The main demographic factor that marketers monitor is population, because people make up market. Marketers are keenly interested in the size and growth rate of population in the city, regions, and nations; age distribution, ethnic mix; educational levels; household patterns; and regional characteristics and movements. World wide Population Growth The world population is showing explosive growth: it totaled 6.1 billion in 2000 and will exceed 7.9 billion by the year 2025. The population explosion has been a source of major concern. Unchecked population growth and consumption could eventually result in insufficient food supply, depletion of key minerals, overcrowding, pollution, and a overall deterioration in the quality of life. Explosive population growth has major implication for business. A growing population does not mean growing markets unless markets have sufficient purchasing power. Nonetheless, companies that carefully analyze their markets can find major opportunities.

Population Age Mix A population can be subdivided into six age group; pre-school, school-age, children, teens, young adult age 25 to 40, middle aged adults age 40 to 65, and older adults age 65 and up. For marketers, the most populous age group shapes the marketing environment. Educational Groups The population in any society falls into the five educational group; illiterate, high school drop outs, high school diplomas, college degree, and professional degrees. Household Patters The traditional household consists a husband, wife, children and grandparents. As in modern time nuclear families are increasing. In metros and urban areas single family patters are increasing but in remote and semi-urban, towns and villages joint family exist in large and dominant percentage. Geographical Shift in Population This is a period of great migratory movement between and within countries. Forward-looking companies and entrepreneurs are taking advantage of the growth in immigrant populations and marketing their wares especially to these new members of the population. Within countries, population movement also occurs as people migrate from rural to urban areas, and the suburban areas. Location makes a difference in goods and services preferences.

OTHER MAJOR MACRO ENVIRONMENT

Other macro environment forces profoundly affect the fortunes of the markets. Here I review the developments in the economic, social-cultural, natural, technological, and political-legal environment. Economic environment Markets require purchasing power as well as people. The available purchasing power in in an economy depends on the current income, prices, saving, debt, and credit availability. Marketers must pay attention to trends affecting purchasing power because they can have a strong impact on business, especially for companies whose product are geared to higher income and price-sensitive consumers. Income Distribution Nations vary greatly in level and distribution of income and industrial structure. There are four type of industrial structure: subsistence economies ( few opportunities for marketers); rawmaterial-exporting economies like Zaire (copper) and Saudi Arabia (oil), with good markets for equipment, tools, supplies, and luxury goods for the rich.; industrialization economies, like India, Egypt, and the Philippines, where a new rich class and a growing middle class demands new type of goods; and industrial economies, which are rich market for all sorts of goods. In a global economy marketers need to pay attention to the shifting income distribution in countries around the world, particularly countries where the affluence levels are rising. Social-Cultural Environment Purchasing power is directed toward certain goods and services and away from others according to peoples taste and preferences. Society shapes the beliefs, values, and norms that largely define these taste and preferences. People absorb, almost unconsciously, a world view that defines their relationship to themselves, to others, to organization, to society, to nature, and to the universe.

Natural Environment The deterioration of the natural environment is a major global concern. In many world cities, air, and water pollution have reached dangerously level. There is a great concern about greenhouse gases in the atmosphere due to the burning of fossils fuels; about the depletion of the ozone layer due to certain chemicals, and about going shortage of water. In the same way as we are facing food security all over the world, soil fertility is decreasing, unfertile lands and land for farming is decreasing. A large number of grains are used to produce bio-fuel these causes unavailability of proper food for population. A country like India whose agriculture depends on whether directly affects the food industry. Technological Environment One of the most dramatic forces shaping peoples life is technology. Technology has released such wonders as penicillin, open-heart surgery, and the birth control pill. It has released such horrors as the hydrogen bomb, nerve gas, and the submachine gun. it has also released such mix blessings as the automobiles and videogames. Every new technology is a force for creative destruction. Transistors hurt the vacuum-tube industry, xerography hurt the carbon paper business, auto hurt the railroad, and television hurt the newspapers. And their business declined. Yet is the essences of market capitalization to be dynamic and tolerance the creative destructions of technology as the price of progress. The economys growth rate is affected by how many major new technologies are discovered. New technologies may also create major long-run consequences that are not always foreseeable. The marketer should monitor the following trend in technology: pace the change, the opportunities for innovation, varying R&D budgets, and increased regulation. Political- legal Environment

Industrial decisions are strongly affected by development in the political and legal environment. This environment is composed of laws, government agencies, and pressure groups that influence and limit various organizations and individuals. Sometimes these laws also create new opportunities for business. For example- mandatory recycling laws has given the recycling industry a major new boost and spurred the creation of dozens of the new companies making new products from recycle materials. Two major trends deal with the increase in business legislation and the growth of special interest groups. Business legislation has three main purposes: to protect companies from unfair competitions, to protect consumers from unfair business practices, and to protect the interest of the society from unbridled business behave. A major purpose of business legislation and enforcement is to charge businesses with social costs created by their products or production processes. The laws are not always administrated fairly; regulators and enforcers may be lax or overzealous. Although each new law may have a legitimate rationale, it may have the unintended effect of sapping initiative and initiative economic growth. Legislation affecting business has increased steadily over the years.

Forecast and Demand measurement

One major reason for undertaking marketing research is to identify market opportunities. Once the research is complete the company must measure and forecast the size, growth, and profit potential of each market opportunities. Managers need to define what they mean by market demand. Measure of Market Demand Companies can prepare as many as 90 different type of demand estimates (cube form of space level, product level, and time level). Demand can be measured for six different product level (all sales, industry sales, company sales, product line sales, product form sales, product item sales), five different space levels ( world, country, region, territory, customer), and three different time level (short run, medium run, long run). Forecast also depends on which type of market is being considered. The size of market hinges on the number of buyers who might exist for a particular market offer. But there are many productive ways to break down the market. The Potential Market is the set of consumers who prefer a sufficient level of interest in a market offer. However, consumer interest is not enough to define market. Potential consumers must have enough income and must have access to the product offer. The Available Market is the set of consumers who have interest, income, and access to a particular offer. For some market offers, the industry or government may restrict sales to certain group. For example a particular state might ban motorcycle sales to anyone under 21 years of age. The eligible adults constitute the qualified available market- the set of consumers who have interest, income, access, and qualification for the particular market offer. The Target market is the part of the qualified available market the industry decides to pursue. The Penetrated Market is the set of consumers who are buying the companys product.

Expert Opinion
Companies can also obtain forecast from experts, including dealers, distributors, suppliers, marketing consultants, and trade associations. Large appliances companies periodically survey dealers for their forecast of short term demand, as car companies. Dealer estimates are subject to the same strength and weaknesses as sales force estimates. Many companies buy economic and industry forecasts from well-known economic forecasting firms. These specialists are able to prepare better economic forecasts than the company because they have more data available and more forecasting expertise.

ANALYSIS OF DATA COLLECTION

1- Percentage of various Processed Foods Consumed by Customers. Processed Foods (a) Animal based products (b) Baker (c) Beverages (d) Cereals & Pulses (e) Fruits and Vegetables (f) Snacks and Spices (g) Pickles and Sauces (h) Jam & Juices (i) Dairy Products (j) Ice-cream Percentage 1% 12% 10% 7% 9% 14% 8% 7% 18% 14%

14%

1%

12% Animal based products Bakery Beverages Ceareals & Pulses Fruits & Vegetables Snacks & Spices Pickles & Sauces Jam & Juices Dailry Products Ice -Cream

10% 18% 7%

7% 8% 14%

9%

InterpretationAccording to survey it is found that the processed food which is consumed most is dairy products, second most consumed foods are ice-cream and snacks and spices after that bakery and beverages etc. 2- Consumers purchasing decision influenced by different media. Media Percentage

TV Newspaper Friends/Relatives Magazines

40% 26% 20% 14%

(% of consumer behaviour influenced by the media)

45 40 35 30 26% 25 20 15 10 5 0 TV News Paper Friends/Relatives Magazines 20% 14% 40%

InterpretationAccording to survey it is found that consumers purchasing decisions are influenced by different medias, in which Television comprises the highest 40% share, second influenced media is Newspaper 26%, Third is Friends or Relatives 20% and the last and least is Magazines only 14%. 3- Reasons to like for consuming processed food. Reasons To Like Easy to cook and Handle Freshness Percentage 39% 21%

Readily Available Taste

23% 17%

17%

Easy to cook & handle

39% 23%

Freshness Readily available Taste

21%

Interpretation When survey to consumers through interviews it is found that the most preferred reason to like processed foods is its Easiness to cook and handle, nearly 39% responded gave their response in this favor. The second highest reason is its Readily Availability nearly 23%, 21% responses for Freshness and only 17% responses was for Taste.

5- Customers source of purchase for processed foods. SOURCE OF PURCHASE Departmental Store Retail Stores Specialty Stores PERCENTAGE 45% 37% 18%

18% 45%

37%

Departmental stores

Retail stores

Specialty stores

InterpretationThe highest 45% respondents said that they purchased processed foods from Departmental stores, 37% said they purchased from Retail stores and only 18% respondents said that they purchased processed foods from Specialty stores.

6- Processed Food Users Customers segmentation chart based on Income Level. Income Group Lower income group Lower-Middle income group Higher-middle income group Higher income group Percentage 8% 28% 42% 22%

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Lower income Lower-middle income 8% 28%

42%

22%

Higher-middle income

Higher income

InterpretationAccording to survey it is found that Higher-middle income group of the society uses most processed food nearly 42%, lower-middle income group consumes processed foods nearly 28%, Higher income group uses processed food nearly 22%, and least 8% uses by lower income group. 7. Consumers choice for different types of brand while purchasing processed food.

Product Animal Based Bakery Products Cereals & Pulses Fruits & Vegetables Dairy products Snacks Spices Ice-creams Pickles Sauces Jams Juices

Brands Moderate High recall Swiss Naturen Britania, Parle-G Rajdhani, Shakti Bhog Safal Nestle Haldiram MDH Kwality, mother dairy Pachranga Maggie Kissan Tropicana recall Chatta Frontier Hathi Kshap Ever Fresh Amul, Mother dairy Bikaner Everest, Catch Amul, Vadilal Tops Kissan, Tops Druk Real Low recall IFB Sunfeast Lancer Local Brands Local brands Paras Local brands Other brands Baskin Rubins, Nirula Haldiram, Mothers Other brands Tops/Mapro Fizzy

20

High
18 16 14

18%

14% 12%

14%

Moderate

12 10 8 6

9% 8% 7% 7%

Low

4 2 0
Animal based products Bakery products cereals & pulses Fruits and vegetables Dairy products Snacks & spices Ice-creams Pickles & Sauces Jams & Juices

1%

InterpretationAccording to survey it is found that in all processed foods category Dairy Products are consumed most 18%, snacks & spices and Ice-cream are nearly same 14%, Bakery products are 12%, Fruits & Vegetables 9%, Pickles & sauces 8%, cereals 7 pulses and Jam & juices are 7%, Animal Based are only 1%. So, high consumed processed foods are dairy, snacks & spices, ice-cream, and bakery products.

DATA ANALYSIS ON THE BASE OF RETAILERS INTERVIEWS

1- Percentage of highest selling products in the processed foods. PRODUCTS Animal Based Bakery Products Cereals & Pulses Fruits & Vegetables Dairy products Snacks- Spices Beverages Ice-creams Pickles- Sauces Jams- Juices PERCENTAGE 1% 12% 7% 9% 18% 14% 10% 14% 8% 7%

8% 14%

7%

1%

12% 7% 9%

Animal Based Bakery Cereal & Pulses Fruit & Veg. Dairy Products Snacks-Spices Beverages Ice-Cream

10% 14%

18%

Pickles-Sauces Jams- Juices

Interpretation- According to the retailers the selling ratio of processed foods are- animal based products are only 1%, bakery based 12%, cereals & pulses constitutes 7%, fruits & vegetables 9%, Dairy products the highest 18%, snacks and ice-cream second highest 14%, beverages 10%, pickles & sauces 8%, and jams & juices only constitutes 7%. 2- Sought after brands purchased by consumers in different processed foods. (A) Animal Based Products

BRANDS Swiss Naturen Chatta IFB

PERCENTAGE 45% 40% 15%

15% 45%

40%

Swiss Naturen

Chatta

IFB

Interpretation According to survey it is found that in Animal based products Swiss Naturen Brand is most popular and demanded nearly 45%, second sought after brand is Chatta constitutes 40%, and last is IFB 15%.

(B) Bakery Products BRANDS Britannia Parle-G Priyagold Sunfeast Others PERCENTAGE 32% 23% 21% 15% 09%

35% 30% 25% 20% 15% 10% 5% 0%

32% 23% 21% 15% 9%

Britannia

Parle-G

Priyagold

Sunfeast

Others

Interpretation In Bakery products category it is found that Britannia is most demanded brand 32%, Parle-G is standing on second number 23%, Priyagold is third sought after brand 21%, Sunfeast constitutes 15% and others brands 9%.

(C)Cereals & Pulses BRANDS PERCENTAGE

Rajdhani Haathi-kshap Others

60% 30% 10%

10%

30% 60%

Rajdhani

Haathi-kshap

Others

InterpretationIn cereals & pulses category most sought after brand is Rajdhani 60%, second number comes Haathi-Kshap 30%, and others constitutes 10%.

(D) Fruits & Vegetables BRANDS Safal Everfresh Others PERCENTAGE 45% 43% 12%

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

45%

43%

12%

Safal

Everfresh

Others

InterpretationIn fruits & vegetables category, Safal is most demanded brand 45%, Everfresh constitutes 43%, and others brands constitutes only 12%.

(E) Dairy Products BRANDS Amul Mother Dairy Gopal jee Nestle Others PERCENTAGE 41% 20% 17% 9% 13%

13% 9% 41%

17% 20%

Amul

Mother Dairy

Gopal jee

Nestle

Others

InterpretationIn dairy products Amul constitutes the highest 41%, mother dairy is on second number constitutes 20%, gopaljee 17%, Nestle 9%, and others brands like gagan, amrit foods etc only 13%.

(F) Spices BRANDS MDH Everest Catch Others PERCENTAGE 40% 30% 22% 8%

45 40 35 30 25 20 15 8% 10 5 0 MDH Everest Catch Other brands 22% 40%

30%

InterpretationIn spices category, MDH is highest demanded brand 40% share constitutes, Everest constitutes 30%, Catch 22%, and other brands constitutes 8%.so the result shows that in the surveyed market MDH is market leader in spices category.

(G) Snacks BRANDS Haldiram Bikaner Others PERCENTAGE 50% 40% 10%

60 50% 50 40% 40 30 20 10% 10 0 Haldiram Bikaner Others

InterpretationIn snacks category Haldirams demand is the highest, constitutes 50%, Bikaner is the second most sought after brand constitutes 40%, and others brands share only10% in overall snacks demand.

(H) Ice-Creams BRANDS Mother Dairy Kwality walls PERCENTAGE 35% 30%

Amul Vadilal Nirulas Baskin Rubin

40

19% 10% 3% 3%

35%
35

30%
30 25 20 15 10 5 0 M other Dairy Kwality Wall's Amul Vadilal Nirula's Baskin Rubin

19%

10%

3%

3%

InterpretationIn dairy products Mother dairy constitutes 35% the highest demanded brand, kwality walls constitutes 30%, Amul constitutes 19%, Vadilal 10%, Nirulas 3% and Baskin Rubin constitutes 3%.So in ice-cream segment mother dairy is the market leader. 3% Mother's (I) Pickles Haldiram BRANDS Pachranga Tops Haldiram Tops Mothers 7% PERCENTAGE 55% 35% 7% 3%

35%

Pachranga

55%

10

20

30

40

50

60

InterpretationIn Pickles category Pachranga is most demanded brand constitutes 55% of total branded pickles demand. Second is Tops 35%, third is Haldiram 7%, and last and least is Mothers constitutes only 3%.

(J) Sauces BRANDS Maggie Kissan Tops Others PERCENTAGE 40% 35% 15% 10%

45 40% 40 35 30 25 20 15 10 5 0 Maggie Kissan Tops Other brands 15% 10% 35%

InterpretationIn Sauces category Maggie is the most sought after brand constitutes 40%, Kissan is second highest 35%, Tops comes on number three with 15%, and other brands constitutes 10%.

(K) Jams BRANDS Kissan Druk Tops Mapro PERCENTAGE 50% 40% 6% 4%

60 50%

50

40

40%

30

20

10

6%

4% Mapro

0 Kissan Druk Tops

InterpretationIn Jams category Kissan constitutes 50% the highest demanded brand, druk constitutes 40% the second highest demanded brand, Tops constitutes 6% and mapro 0nly 4%. It indicates that Kissan has a strong presence in jams category.

(L) Juices BRANDS Real Tropicana Others PERCENTAGE 60% 30% 10%

10%

30% 60%

Real

Tropicana

Others

InterpretationAccording to survey it is found that Daburs Real is most demanded juice Brand nearly 60% of total juice market demand, Second largest demanded juice brand is Pepsicos Tropicana nearly 30%, and 10% share of the brands are Freshgold, Safal juice and Juc Fit etc. 3- Maximum days of stock maintained of each category by the retail respondents.

PRODUCT Animal Based Bakery Cereals & Pulses Fruits & Veg. Dairy Products Snacks & Spices Ice-Cream Pickles & Sauces Interpretation70

No. Of Days 3 7 45 1 2 30 2 60

60 60

50 (No. of days)

45

40 30 30

20

10 3 0 Anim al based

7 1 Bakery Cereals pulses Fruits & veg. 2 Dairy products Snacks & spices 2 Ice-cream Pickles & Sauces

Pickles & sauces are stocked for maximum 60 days, cereals & pulses maximum 45 days, snacks & spices 30 days, bakery 7 days, dairy and ice-creams hardly 2 days, fruits and vegetables 1 day. 4- When the respondents were asked whether customer recall a brand or do they propose on their own, the results are following-

BRAND RECALL Customers recall Proposed by Retailers

PERCENTAGE 75% 25%

80 70 60 50 40

75%

25% 30 20 10 0
Customer recall a brand Proposed by Retailers

InterpretationWhile conducting the survey, the information about brands recall or awareness among consumers figures that while purchasing processed foods 75% consumers recall the brands and well aware about brands, only 25% consumers are proposed by the retailers.

5- The following table briefs depict the market leaders in each processed food category.

Products
Animal Based Products Bakery Products Cereals & Pulses Fruits & Vegetables Dairy Products Snacks Spices Ice-cream Pickles Sauces Jams Juices

Brand Name
Swiss Naturen Britannia Rajdhani Safal Amul Haldiram MDH Mother Dairy Pachranga Maggie Kissan Real

6- During survey it is found that processed food products can be reserved for number of days and at different temperatures.

Products
Animal-based products Bakery products Cereals & pulses Fruits and Vegetables Dairy products Snacks & spices Ice-cream Pickles & sauces Jams & juices

No. of Days
3 days 7 days 60 days 10 days 5 days 30 days 2 days 80 days 30 days

Temperature
0 Normal Normal 0 1-3 Normal 0 Normal Normal

PROPER UTILIZATION OF WASTE PRODUCTS FROM PROCESSED FOOD INDUSTRY

No. 1 2 3 4 5 Item Apple Banana Carrots Beans Grapes Waste Peel, cores trimming Peel Stalks, Strings Stalks, strings Stems, pounce, seeds skins Utilization Preparations of jams felines etc Used for making fruit cake like product. To feed cattle or ploughed. To feed cattle or ploughed Cattle feed, soap making, preparation of jelly 6 7 8 9 10 Guava Lemon Mango Orange Peach Peel, seeds, core Peels, seeds, pomander Peel, stone, trimmings Peel, Seeds, Pomander Stone, peel, core pit Production of guava cheese Making pickles, Lemon oil Used syrup, wine and vinegar Used in making creams, oil Utilized for productions for the productions of on edible oil. 11 Pear Peelings, core pit Fermented into Perry or vinegar, dried for use of an animal feed. 12 Pineapple Crown, peel, core cye trimmings, pomander 13 Tomato Skin, core, seeds, trimmings Good animal feed, juice patch up Canning pineapple prepare fiber

By products from plantation crops

No. Items Wastes Utilization

Coca

Empty pods, shell, germ, shell nib mixture

Manure as well as fuel

Coconut

Husk, water, shell

Use in coir industry, fuel, soft drink

Coffee

Pulp, husk, heels, caffeine

Coffee feed, oils, dress tennis courts

Spices

Ginger peels, leaves

Used in manure, fuel, cattle feed, jelly, chutney, pickle etc.

Tea

Seeds and waste tea

Production of caffeine oil

By products from dairy industry

No. 1 Item Cheese, whey buttermilk Wastes Nutrients, proteins Utilization Infant food, ice-cream, cake, soups and processed cheese

By products from poultry industry

No. 1 Item Feather Wastes Poultry feather Utilization Pillow stating, toys, shuttles and sofa cloths

Blood

Protein

Source of lysine

By products from meat industry

No. 1 Item Hair Hair Wastes Utilization Produce winter cloths like hot top, hard gloves 2 Skin Peeled skin Manufacture of leather as: shoes, hard bags etc.

CHALLENGES AND OPPORTUNITIES

CHALLENGES The following are the main challenges in process food industry: The Indian psyche-the fresh food is the best food contains to be the biggest challenge to the process food industry. The processed food industry in India is yet to exploit the huge potential in international market. Technology up gradation is another major area of concern. Lack of coordinated marketing efforts to create strong and influential brand. Huge wastage in the production of process food industry. Packaging is the problem in process food industry. Hurdles in the distribution network. A quality processed food is the need of the hour.

The Indian Psyche - The Fresh Food is the best Food continues to be the biggest challenge to the process food industry When it comes to that old debate over fresh versus processed foods, India continues to vote with its money. Belying hopes of marketers, Indians are still firm believers that neither slick advertising nor packaging make them think otherwise. The reason behind this fact fresh food is good for the health having proteins and nutrition in it. This psyche of Indian has become a biggest challenge to the processed food industry.

Now the processed food industry have to find some alternatives to eliminate the Indian psyche by showing the same benefits in processed food and giving them feeling of freshness in it. So that customers can understand the benefits of processed food in healthy manner. The process food industry in India is yet to exploit the huge potential in International market Indian can become one of the largest fruit and vegetable exporter in the world and can equally be a large importer given its demographic diversity. However it needs to argument its food and processing industry at a mega scale. An increasing acceptance of new products with market development efforts has been witnessed lately given the fact that there is a good international demand for certain fresh fruits as well as processed fruits products. The processed food industry in India has a huge potential in international market as processed food is in heavy demand in international market and people there prefer to buy a process food and enjoy eating them. So processed food industry in India having a huge scope in international market as processed food is in heavy demand in international market and people there prefer to buy a process food and enjoy eating them. So processed food industry in Indian has a huge scope in international market and a bright future. Technology up gradation is another major area of concern Indias future is linked to the progress of food processing industry. In other words food processing is Indias sunrise industry. It is a vast country with agriculture as the main occupation. Agriculture products are in abundance but still have to develop the technique and technology for preservation of food.

Fresh foods are in excess supply during the season and shortage during the rest of the year is a phenomenon, which invites attention to the development of technology for food to appropriately processed and packaged. A lot of agricultural waste and decay can be avoided by application of proper food processing technology. A modern well developed food industry will bring positive changes in the food habits of the production enhancement and socio economic upliftment of rural masses. The future awaits such developments. Lack of co-ordination in marketing efforts to create strong and influential brand The processed food industry in India is facing a huge problems in the brand name of the products, processed food cant able to co-ordinate the marketing efforts to create a strong and influential brand among the consumers. This has become a huge hurdle for the processed food industry to face it and due to this problem the processed food industry is not able to make a particular brand name for their products in the market. The processed food industry has to concentrate on the brand name of the products so that the industry can able to make an influential brand name in the market which leaves a positive impression in the mind of consumers. Huge wastage in the production of process food The economic success of any food processing industry depends upon the utilization of waste products that are produced during the various stages of processing during the canning of fruits vegetables and the preparation of juice, squashes, jams, dried products etc. large quantities of waste materials are being left over.

These wastes have to be utilized in order to reduce the cost of production of main products and industry can able to make some profits. The utilization of wastes minimizes pollution also which help industry to gain profit. Packaging is the main problem for Process Food Industry The food industry has to pull its packaging act together if it hopes to exploit the international markets; packaging is at the heart of the marketing strategy in terms of functionality, sheet appeal and convenience. Every market has stringent quality standards for packaging of aimed at ensuring health and hygiene for the consumers. But processed food industry is facing a main problem in packaging processed food. The reason behind this is that the consumer demand a packaging which is healthy for them and able to maintain the freshness of the processed food for that processed food industry has to use the latest and modern technology which is very expensive but able to satisfy the consumers demand. And Omnibus Packaging policy to encourage packaging is in the pipeline. Hurdles in the Distribution Network Every industry requires a channel that can distribute their product to the right customer at the right place, at the right time and at the right cost. While selecting a distribution channel the industry compares the costs, sales volume and profits expected from alternative channels of distribution. In order to select the distribution network, processed food industry is not having a direct selling. They are having distribution channels. This is the traditional channel of distribution, but in this channel the industry loses direct contact with his customers and control over distribution and cant able to find out what customer demand and why customer is unsatisfied.

In this distribution network, industry are not able to earn profit also and loosing their control in the market.

Quality processed foods is the need of the hour Today consumers are more health conscious and prefer real good quality food. Main emphasis is on life style, a lot of emphasis is on food safety. Having attained self-sufficiency in food and the processing sector growing over a period of time, the quality perception of processed foods has still not attained perfection. Lack of institutional coordination shortage of technical skills an equipment, lack of updated standards, awareness among the food handlers, are some of the key issues, which require immediate attention. Quality aspects of processed food products have to be nurtured by the nature of raw material. It is the quality of raw material that defines the real quality of the product. Besides, this requires tremendous amount of network and integrated approach to establish quality fore product.

OPPORTUNITIES
Huge International Markets Government Initiatives Export opportunities

Huge International Markets

Processed food industry in India is having huge opportunities in the international market. the reason behind this fact is that many consumers are accustomed to purchasing meat, fish and

vegetables in processed forms. They are having shortage of time so they prefer frozen processed food. However, processed food industry is undergoing a rapid development that stimulates the frozen processed food market and suggests a strong opportunity for continued growth in the international market. The total processed food exports are expected to be Rs. 14900 crores in 2007-08.

The eating culture in international market is changing slowly. Longer working hours, more working women and western influence on diet and culture have increased consumer demand for processed food. So processed food industry in India is having opportunities in international market, which they can avail and earn profit. Further more, India has huge quantities of forest produce, which, with the help of Ayurveda or traditional medicine, could be brought into the food industry as well.

GOVERNMENT INITIATIVE The government will give a major push to foreign direct investment in the fruit and vegetables and processed foods. The food sector has major potential of fruits and vegetables rot before they reach the markets. The food sector has major potential as about 40% of fruits and vegetables rot before they reach the market. Foreign direct investment in this segment will improve the food processing chain, value addition practices, ware housing and packaging. This will not only bring better income to farmers but will also generate employment, as huge stores will come up. On the other hand, FDI will bring much-needed capital investment in organized retailing that has huge potential to grow. This step of government motivates foreign direct investment in food processing field.

EXPORT OPPORTUNITIS Indian can become one of the largest fruits and vegetable exporters in the world and can equally be a large importer. However, it needs to augment its food and processing industry at a mega scale. Abundant investment opportunities are thee in expanding the export market. An increasing acceptance of new products with market development efforts has been witnessed lately given the fact that there is a good international demand for certain fresh fruit as well as processed fruits products. The domestic industry to gear up for the export market is to produce quality products at affordable prices. There is hoard of fruits and vegetable for export.

CONCLUSION
Presently, the processed food has a share of only 2% volume and 10% in value. With high population growth increasing incomes and changing life styles, the multinationals and domestic corporate see the country as a major growth market. The processed food is mainly a consumer product demand for such product is driven mainly by an increase in per capita income and availability of raw material. Considering the countrys agricultural base, fruit and vegetable products have the highest potential for development. But this requires improvement in

technologies, which allow processing of food products without nutrient losses so as to increase their acceptability. Finally the research gives the finite conclusion for the present study. The present study reveals that in the matte of processed it because it, consumer preferred it because it complements todays fast lifestyle. Also they offer variety to suit everybodys taste and needs. The processed food is mostly preferred by high medium income group as referred by the respondents. Finally it is worth conducting that a processed food is now becoming a necessary one in every household rather then it is a symbol of high status. Contrary to the popular belief that processed food is not fresh and rich in nutritional value it can act as a great supplement to the fast moving lifestyle of today. There is an enormous opportunity for both the manufactures as well as suppliers in the processed food industry. Both in domestic as well as export market there is a lot for the consumer too, the only thing missing in the level of awareness which over a period of time will surely increase and lead to phenomenal growth in the consumption pattern of processed food in India.

FINDING AND SUGGESTION

Based on my observations made during the analysis and discussion with the respondents by way of information following are the recommendations with respect to the marketing strategies. During the survey it was found that organized retailers face a lot of threat from product duplication. There should be stringent laws to prevent duplication. Government as well as corporate should take initiative to break the mental psyche that processed food is not fresh and it contain lots of chemical. This can be achieved by doing massive campaign especially in rural areas, by food roping in celebrities. The customer also needs to be enlightened that processed does not mean over could and less in nutritional value. Processed food generates lots of wastes so proper technology up gradation should be enforced to make a proper utilization of these waste products. Attended in a table indicating how waste production can be utilized. Government should take more steps to encourage foreign direct investment for infrastructure development so that Indian companies can complete globally. Most of the customer respondents did not know the brand names of certain processed food like animal based products etc. therefore the companies selling those brands should aggressively market these products to increase awareness. During the survey it was found that processed food products are preferred mostly by high income group. The companies should offer flexible product range to suit the requirements of all income groups.

ANNXURE
QUESTIONNAIRE FOR CONSUMER
Name: Address: Occupation: Total No. of Family Members: 1. Please mention your age group. 1. Gender Male Female 18-20 26-30 36 above 21-25 31-35

3. Please mention your income group (Per month is Thousand). 5-10 15-30 50 above 10-15 30-50

4. Marital Status Married Unmarried

5. What is your Occupation? Student Officials House Wife Business man

6. What are the features which you look while purchasing a processed food? Price Packaging

Brand Availability

Quality Any other

7. Which of the following processed food products do you consumer? Animal Based Products Beverages Cereals & Pulses Fruits & Vegetables Snacks & Spices Bakery Products Pickles & Sauces Jam & Juices Dairy Products Ice Cream

8. Which are the following do you consume regularly? Animal Based Products Beverages Cereals & Pulses Fruits & Vegetables Snacks & Spices Baker Products Pickles & Sauces Jam & Juices Dairy Products Ice Cream

9. What are the sources of advertising that you recall as an influencing factor to you, Is it: Television Magazines News Paper Friends/Relations

10. Why do you consume process food? Freshness Readily available Any other ______________ Easy to cook & handle Taste

11. From where do you purchase processed foods? Specialty Stores Departmental Stores Retail Stores Any other_________

12. Which brands do you recall while purchasing processed foods? Brand Recall Animal Based Products Bakery Products Beverages Pickles & Sauces Cereals & Pulses Jam & Juices Fruits & Vegetables Dairy Products Snacks & Spices Ice Cream _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________

13. Please mention your valuable suggestions ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________

QUESTIONNAIRE FOR RETAILER

Name: Address: Place: Name of Department/Store1. You are having which type of store? Departmental Stores Specialty Stores Retail Stores Any other_________

2. Which of the following processed food do you sell? Brand Recall Animal Based Products Bakery Products Cereals & Pulses Fruits & Vegetables Dairy Products Snacks & Spices Ice-creams Pickles & Sauces Jams & Juices _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________

3. Which brands are sought after by the consumers? Brand Recall Animal Based Products Bakery Products Cereals & Pulses Fruits & Vegetables Dairy Products Snacks & Spices Ice-creams Pickles Sauces Jams Juices _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________

4. Where do you get the supply from? Direct from company C/F Agents Own Transport Wholesalers Any other _________________________ _________________________ _________________________ _________________________ _________________________

5. Do you face problem stocking processed food? Yes/NO (if yes, then why) _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ (a) Damaged products, what do you do _______________________________________________________________ _______________________________________________________________ _______________________________________________________________

(b) How much they consume, minimum stock for the following-

Animal Based Products Beverages Cereals & Pulses Fruits & Vegetables Snacks & Spices

Baker Products Pickles & Sauces Jam & Juices Dairy Products Ice Cream

(c) How long the following items can be preserved and at what temperature? Animal based products ____________________________________ Fruits and vegetables _____________________________________ Dairy products ___________________________________________ Ice-Cream _______________________________________________ 6. Are you happy with the margin, if not why? ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ 7. Do customers recall a brand or do you propose on your own? 8. Who normally comes for the purchase? Servant Ladies Children Gents

9. Which of the following are in high demand (Give the ranking)? Brand Recall Animal Based Products Bakery Products Cereals & Pulses Fruits & Vegetables Dairy Products Snacks & Spices Spices Ice-creams Pickles Sauces Jams Juices _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________ _________________________

10. The demand for processed food is __________ Increasing Decreasing Neutral

BIBLIOGRAPHY
1- Marketing Management By Kotlar Philip, Printice Hall, New Delhi; 11th Edition 2- Research Methodology By KOTHARI C.R. Vikas Publication House, New Delhi 3- Marketing Research By BERRY G.C. Tata Mc-Graw Hill; 5thEdition 4- Business World Special Issue Who Will Feed India - April 7, 2008 5- Food & Beverage News March 8, 2008 6- Beverages & Food Processing Times March 1, 2008 7- www.mofpi.nic.in 8- www.fnbnews.com 9- www.ibef.com 10-www.economictimes.com