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Here's $20m, just don't make me
cook
By Indrajit
Basu
KOLKATA - It took a while to catch on, but
as the country's 15-year-old globalization process
brings about rapid changes in the lifestyles
of urban Indians, ready-to-eat food is fast
becoming a compelling proposition. Over the past
two years, the ready-to-eat packed food market
has grown from an almost insignificant number
to become a US$20-million-revenue industry in 2004.
Industry players say that, considering the
current 35% growth rate, revenues in this sector
can easily touch $50 million in the next three
years.
Take the instance of
Mumbai-based Ruma Banerjee, a 40-year-old market
research professional, who gets her ready-to-eat
curry pastes or cooked packed meals from a grocery
shop at the mall next to her office. "It's not that
I do not like to cook, but with a 70-hour work
week, an equally busy husband and a 10-year-old child
at home, we have little time for regular
cooking," she says. For Shruti Rajam, 23, an
insurance-industry professional living alone in Chennai on
her first job, time is not really a problem.
Cooking is. Shruti never had to enter the kitchen
in her life when she was with her parents. But now
that she is on her own, stuffing her kitchen
cabinet with ready-made food seems to be the
obvious option. "It's cool," she says, "I have
become an expert at this. Even my friends think I
am a great cook."
Ruma and Shruti are part
of a rapidly growing tribe of urban Indians who
are increasingly shunning the painstaking job of
chopping, slicing, dicing and mixing the right
ingredients, to simply picking up a pair of
scissors and snipping open a pack of a two-minute
everyday Indian meal. Indeed, ready-made India
curries that were unheard of even a few years back
occupy the pride of place in Indian kitchens now.
Brands such asITC Aashirwad, Kitchens of India, MTR
Food, Tasty Bites and Currie Classic are not only
gaining acceptance in double-income nuclear
families all over India, but are also spreading
rapidly globally.
"Indian lifestyle
is undergoing a massive socio-economic change,
which is also being reflected in food habits," says
Ravi Naware, divisional chief executive of ITC Foods,
a wing of ITC Ltd, one of India's
largest fast-moving consumer-goods company. "In urban
India, where time is more important than money,
it's tough to return from office and put the hours
into cooking that a typical Indian meal demands.
Also, young Indians have not picked up the cooking
skills from their parents, mostly because they are
simply not interested."
J Suresh, chief
executive officer (CEO) and executive director of
MTR Foods that claims to be the largest player in
the segment with over 65% market share, adds that
ready-made food is not considered extravagant
expense anymore. "Many Indian households with
little time and inclination to spend in the
kitchen are adopting this as a necessity.
Moreover, with disposable income going up as
families become more double-income and salaries
going up, people don't mind spending on something
that will save them the sweat in kitchen," he
says.
The quick-fix food concept is not
really new in India, it has only picked up of
late. It was launched over a decade ago in
different forms but failed to take off primarily
because of a general preference for freshly cooked
food. And also, as Naware says, "because retail
outlets in India lacked the adequate refrigeration
facilities". With the availability of a new
technology called Retort - that packs cooked food
in a four-layer package, which is then heated to
120 degrees Celsius to kill all living organisms,
thereby ensuring freshness through its much longer
shelf-life - the ready-to-eat food concept has
become far more acceptable." Besides, says Suresh
of MTR Foods, all ready-made food makers have
adopted Hazard Analysis Control Point
Certification from the British Standard
Laboratory, which signifies that factories making
such products follow strict food and safety norms.
Nevertheless, all ready-made food makers
say the primary driving force behind the growth of
this sector is the changing Indian mindset toward
food. Convenience is the new buzzword. "There was
a time when eating out was a luxury," says Amit
Jatia, managing director of McDonalds India. "Not
any more. Likewise, an urban Indian no longer
hesitates to pick up a phone and order meal from a
neighborhood restaurant or pick up a ready-to-eat
meal from the next-door store." According to AC
Neilsen ORG MARG, a top market research outfit, it
is not just ready-to-eat food that is growing at a
scorching pace, but "eating habits are changing
rapidly and fast-food consumption is now a part of
everyday life...Almost a third of urban Indians
now claim to opt for fast food, even for
breakfast. Dinner, however, remains the
most-preferred occasion for eating fast food,"
says Sarang Panchal, executive director of AC
Neilsen.
According to the findings of the
latest online survey from AC Nielsen, urban
Indians are among the top 10 most-frequent
consumers of fast food across the globe. The
survey finds that a huge 71% of urban Indians
consume food from take-away restaurants once a
month. Some 37% of the adult Indian population
does so at least once a week. This makes India one
of the top 10 countries among the 28 surveyed in
terms of frequency of fast-food consumption.
"The incidence of fast food consumption in
urban India is accelerating much faster than most
people anticipated," says Panchal. "Contrary to
the belief that a reliance on traditional and
home-made preparation may hinder the growth of
fast food, changing lifestyle has altered the view
toward out-of-home meals. A willingness to spend
and, most importantly, the urban Indian acquiring
a more global palate has catalyzed consumption."
Among the international fast food chains
and local operators, McDonald's is the most
popular of all take-away options. Nonetheless,
selling fast food and ready-made food is not
exactly easy, say the players, especially for
foreign players, as Domino's Pizza India CEO
Arvind Nair discovered. Which is why, he says,
"Imported fast food chains were quick to adapt to
Indian tastes and even the regional variations.
There are extensive vegetarian menus, for example,
and emphasis on the kind of meats that Indians
have no objection to," says Nair.
Indians'
discerning taste buds is a big reason why industry
experts like Naware and Suresh feel that foreign
players would find little opportunity in this new
fad "unless it is ready to tie up with a local
player". However, for foreign players, India could
be a good sourcing point for the overseas markets.
"The growth of ready-made food and curry pastes
has also been scorching in overseas markets," says
Naware. "The potential for exports are very good.
We are experiencing explosive demand for
ready-made Indian food from overseas markets like
the US, the UK, Canada and Europe. This demand is
not only generated by the non-resident Indian
community but also by the local populations that
are increasingly getting exposed to Indian cuisine
through Indians living there, and also through
their travels. I came across a projection recently
that says by 2020, no American will cook starting
from basic ingredients all the way. They will
either use ready-to-cook or ready-to-eat food".
India exported about $7 million worth ready-made
Indian food in 2004, which is growing at around
20% a year.
According to industry
insiders, the opportunity for foreign players in
the country's fast food segment is huge. Nair of
Domino's Pizza says although Indians' penchant for
spicy food has resulted in an Indian-Chinese
cuisine that is quite unknown in Sichuan province
or Guanzhou, the snowballing retail revolution
aimed at India's 300-million-strong middle class
has created a natural habitat for imported fast
food. "Down the road, I can see not only pizzas
and burgers and fizzy drink but also branded
sushi, Vietnamese soup, Lebanese kebabs and Thai
food-in-bowls to join our Mughlai and dosa," says
Nair.
And according to Naware, yet another
untapped segment that could be utilized by foreign
players through their marketing prowess are the
smaller towns and suburbs of India. Despite its
scorching growth, the concept of ready-to-eat and
fast food are still restricted to the six larger
Indian cities and a few smaller ones while a huge
section of the country's billion-plus population
is still not exposed to it. "That has happened
because marketing ready-made and fast foods in the
rest of India requires huge wherewithal that
Indian companies do not have. This is where
foreign players can excel," says Naware.
Indrajit Basu is a Kolkata-based
equity-analyst-turned-journalist with more than 12
years of experience in business/finance and
technology journalism. Besides writing for Asia
Times Online, he also writes for US-based
publications, as well as IT companies.
(Copyright 2005 Asia Times Online Ltd.
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