food and beverage sector in india monthly update january 2013
DESCRIPTION
The changing consumer preferences and innovative ways of marketing and distribution have been instrumental in bringing about rapid expansion in the food and beverages industry in India. The industry comprises several sub-sectors such as milk and milk products, meat and poultry products, packaged foods, alcoholic and non-alcoholic beverages, cereals and food grains. The fact that India is primarily an agriculture-driven economy having abundant livestock and access to mechanized farming processes, has worked in favour of the food and beverages industry. Another sub-sector that is gaining a lot of importance recently is that of health food products, given the growing wave of health consciousness among the population. Other consumer product categories that have attained recent popularity, especially among the urban crowd, include chocolates, confectionery, cocoa products, and mineral water, among others. The industry has witnessed the entry of a large number of multinational companies as well as numerous regional players. Branding, advertising, marketing and packaging have become crucial areas for improvement for the entire industry. A number of food and beverage products are exported as well, thus contributing to the economic development of the country.For further information,E-mail us at: [email protected]: India (Toll Free): 1800 102 1133, International: +91 (33) 4027 6214/5TRANSCRIPT
Food and Beverage Sector in India
Monthly Update
January 2013
Food and Beverage – Monthly Update
Top Story Proposal for export of processed agricultural products approved The proposal placed by the Department of Commerce for getting permission for exporting processed agricultural products even in the event of the restriction or ban on export of basic farm produce, was finally approved by the Cabinet Committee on Economic Affairs (CCEA). The various products include wheat of meslin flour, cereal flours other than wheat or meslin, cereal groats, meal pellets, milk products, including casein & casein products, butter and other fats derivatives from milk, cheese and curd, value‐added products of onion and peanut butter among others. In India, huge wastage of food items occurs every year. So, with the approval of this new policy, reduction in wastage as well as value addition due to processing of foods will take place. News Update
General Coke rolls out new ad campaign in winter Coca Cola has once again come up with an innovative ad campaign to promote its brand. This is its second successive winter campaign in India after the 'Ummeed wali dhoop, sunshine waali aasha' campaign that rolled out in December 2011. It is an extension of the first one and it features real‐life characters for supporting Coke’s slogan ‘It's the Real Thing’. The name of the campaign is ‘Crazy for Happiness'. It showcases people who are in different professions and are committed to doing good deeds. The ad shows a teenage singer from Indore who performs in shows for raising funds for the treatment of sick children. She is followed by a Mumbai boy who spends a part of his salary for feeding 30 dogs everyday. This new concept of featuring real life heroes in the ad will give the brand a distinct personality. Choco Sticks launched by Garuda PolyFlex Garuda PolyFlex Foods Pvt. Ltd. has recently launched ‘Gone Mad Choco Sticks’ in India. For entering the Indian market, Garuda which is the food and beverage subsidiary of the Indonesia‐based Tudung Group had entered into a partnership with the Bangalore based firm PolyFlex in 2011. For manufacturing the choco sticks, the company has already invested an amount of INR 500 mn for setting up the green field production plant in Bangalore.
Food and Beverage – Monthly Update
‘Gone Mad Choco Sticks’ are cylindrical wafers filled with chocolate available at a price of INR 5 per pack. Although, it’s an international product, but, for catering to the taste preferences of the Indian market, proper research work was done. Moreover, before launching the product, a pan‐India market survey and sampling study was also conducted. As of now, the company will be distributing its product in the southern market including states of Tamil Nadu and Andhra Pradesh among others and later on move to the northern market. PepsiCo focuses on improving operational efficiencies PepsiCo, the multinational food and beverage company has merged all its company‐owned bottling plants under two market units. The north and east units have been clubbed together and is now called the himalayan market unit and the west and south divisions have been merged together to be known as the peninsular market unit. The designated unit heads will have the authority to make independent calls depending upon market dynamics and consumer demand. This new hierarchical structure will lead to faster alignment of resources in terms of sales and distribution, quicker decision making, and better geographic alignment of commercial strategies. The company has consolidated the plants in order to eliminate layers in organizational hierarchy and enable quick decision making. This will help to push growth in the current economic environment News Update
Regulatory Customs duty to be imposed on crude edible oil The Cabinet Committee on Economic Affairs (CCEA) has decided to impose a 2.5% duty on imports of crude edible oils. The step has been taken to raise the price payable to the farmers for fresh fruit bunches of oil palm, which is linked to the landed price of crude palm oil (CPO). In addition to this, CCEA has made a plan to defreeze the tariff values of all edible oils, palm oil – crude and refined, and soyabean oil – crude and notify their tariff values on the basis of their prevailing international prices. Earlier, all refined oil imports were taxed at 7.5%, while crude edible oil imports were duty‐free. Moreover, huge imports of cheap quality palm oil was taking place from Malaysia and Indonesia, which were lowering their export duties in order to boost export. This was hampering the domestic oilseed growers. Approval from FSSAI mandatory for food products
Food and Beverage – Monthly Update
Recently, a new and modified FSSAI advisory has been issued to all food companies, that says that any new or existing product which is 'proprietary' i.e., not classified in the food act will need to follow a regulatory 'new product approval' guideline, which has been laid down by the FSSAI. This means products such as cheese and butter will be considered as standard products, but, a low‐fat ice‐cream or dessert will fall under the proprietary category and will be required to get approval before it’s launched. As per this new guideline, these food products will not be allowed to be sold without the approval from the government‐promoted Food Safety & Standards Authority of India (FSSAI), despite their presence in the retail shelves. In order to get the approval, the producers of all the proprietary products will have to submit applications to the central government and can launch the product only after receiving all the necessary approvals. News Update
Expansion Plans HUL and Nestle to enter oats market India’s two largest multinational food companies, HUL and Nestle are on the verge of entering the ready to cook (RTC) healthy cereal market. Both the companies have planned to launch oats under their respective Knorr and Maggi brands. Among the various healthy breakfast cereals, oats is gradually becoming popular due to the health benefits associated with it. The company has planned to represent the new launch as a healthy extension of their existing noodle segment. At present, the major players existing in the oats market are PepsiCo's Quaker, Marico's Saffola and GSK Consumer's Horlicks. Fresh investment by McCain Foods McCain Foods, the Canadian frozen food company has planned to invest INR 3.5 bn in its existing plant at Mehsana in Gujarat for enhancing the present production capacity. Moreover, as an outcome of this investment plan, the total workforce of the plant is expected to rise by 50%. McCain Foods is very popular for its potato smileys and aloo tikki. They are one of the biggest suppliers of french fries to McDonald's India. This decision of investment has been taken in response to the surging demand arising from popular restaurant chains which include McDonald's, Pizza Hut, Kentucky Fried Chicken, Subway and luxury hotels. Vishwaraj Sugar plans for expansion
Food and Beverage – Monthly Update
Karnataka based Vishwaraj Sugar Industries has planned to go for capacity expansion by doubling its output level to 11,000 tonnes per day. For this, the company has planned to hit the capital market with an initial public offer (IPO) to raise up to INR 3740 mn and also take a term loan of INR 700 mn from banks for other upcoming projects. For fulfilling the expansion plan, the company will be using around 1,000 acres of farmland to lay a subsoil drip irrigation network which in turn will help the farmers achieve the required output. The cost of laying the drip irrigation network is around INR 0.05 mn per acre. For this, the farmers will be getting a bank loan worth INR 0.03 mn and the remaining amount will be Karnataka Government subsidy. Moreover, the company has also tied up with an Israeli‐based company Netafim to procure the technologies required for setting up the network. In addition to this, a certain portion of the IPO proceeds would be utilized for expanding the mill’s power co‐generation capacity to 66 MW from its current capacity of 36 MW. Fresh investment plans by ITC ITC Ltd., the well known multi‐business conglomerate which has diversified presence in various sectors ranging from cigarettes‐to‐hotels has decided to invest INR 10 bn in its food and consumer goods sector in the coming two to three years. The company has already procured 39 acres of land at Panchla in Howrah district from West Bengal Industrial Infrastructure Development Corporation. The company has planned to set up the integrated food and consumer goods facility in this land. In addition to this, it has also acquired 18 acres of land at Uluberia in Howrah district where a similar kind integrated facility would also be built. Both the facilities will be set up simultaneously and they will be operational within the next two years. Tata Coffee plans for capacity expansion Tata Coffee has planned to enhance its instant coffee processing capacity to 8400 tonnes per annum by April 2013, which indicates a rise of around 30% from its current processing capacity which is around 6500 tonnes per annum. This decision was taken in response to the rising demand from countries such as Russia and West Africa. At present, the company has two instant coffee manufacturing facilities, one at Toopran near Hyderabad and the other at Theni near Madurai in Tamil Nadu. It produces around 10,000 tonnes of shade grown Arabica and Robusta coffees at its 19 estates in South India. Major chunk of the production is exported to countries such as to Japan, South East Asia, West Africa, Russia and CIS countries among others.
Food and Beverage – Monthly Update
Industry Expert Speak FSSAI approval mandatory for new product launch – Piruz Khambatta, Chairman, Rasna "Such guidelines did not exist in the past... We welcome regulations but they should be conducive to growth instead of delaying both new product development and innovation ‐ which is so important when the market is so competitive." Tata goes for capacity expansion of instant coffee – M Deepak Kumar, Executive Director of Finance, Tata Coffee "The consumption of instant coffee in Russia is rising. The current consumption is about 70,000 tonnes per annum and it is rising. Another important thing is that there is an increased demand for quality coffee." Fresh investments by McCain Foods – Vikas Mittal, MD, McCain Food India "We will be investing in a third line for manufacturing thereby increasing the capacity by more than two times." Transactions (Nov 2012 – Jan 2013)
Date Buyer Target Size
(INR mn) % stake Deal Status Type of
Transaction
25th Jan 2013 Creador
PT Simba Indosnack Makmur
(Stakes of Godrej Consumer
Products Ltd.)
1612 100% Completed M&A
18th Jan 2013
Templeton Strategic
Emerging Markets Fund
Globus Spirits Ltd. 900 N.A. Pending PE
17th Jan 2013
Vishwaraj Sugar Industries N.A. 3740 N.A. Pending
Private Placement
18th Dec 2012
Temasek Godrej Agrovet
Ltd 5720 20% Completed PE
11th Dec 2012
Cargill India Wipro Ltd. (Sunflower
Vanaspati brand) 300‐400 100% Completed M&A
Food and Beverage – Monthly Update
Date Buyer Target Size
(INR mn) % stake Deal Status Type of
Transaction
5th Dec 2012 Premji Invest Heritage Foods N.A. N.A. Completed PE
3rd Dec 2012
Helion Ventures & Footprint Ventures
Spring Leaf Retail Pvt. Ltd. 325 N.A. Completed PE
19th Nov 2012
Jagatjit Industries Ltd.
Scotland's George Sinclair & Sons
Ltd. N.A. N.A. Completed M&A
16th Nov 2012
Diageo PLC India’s United Spirits Ltd.
109.8 53.4% Pending PE
6th Nov 2012
N.A. Paradise Food
Court 500 N.A. Pending PE
2nd Nov 2012 N.A. The Beer Café 274.6 N.A. Pending PE
Annual Financial Results – Revenue (INR mn)
Companies FY ‘09 FY ‘10 FY ‘11 FY ‘12
Anik Industries Ltd. 10,209.80 12,232.80 12,788.30 16,075.70
Balrampur Chini Mills Ltd.* 17,551.00 N.A. 19,843.80 23,095.50
Bannari Amman Sugars Ltd. 6,963.60 8,783.20 8,255.40 11,795.10
Britannia Industries Ltd. 34,212.30 37,748.60 45,931.10 54,635.30
Dabur India Ltd. 28,122.40 33,958.00 41,045.10 53,054.20
Dhampur Sugar Mills Ltd* 9,473.60 15,015.27 17,794.52 15,375.20
Godrej Industries Ltd. 36,121.28 37,080.50 44,989.50 57,100.30
Hatsun Agro Products Ltd. 10,135.69 11,415.58 13,557.32 16,035.37
Heritage Foods (India) Ltd. 7,967.54 9,003.85 10,960.86 13,768.51
Food and Beverage – Monthly Update
Hindustan Unilever Ltd. 166,639.84 180,319.30 200,225.50 234,363.30
IFB Agro Industries Ltd. 2,831.48 2,906.74 4,499.83 5,846.29
ITC Ltd. 165,561.40 191,358.70 225,747.00 265,517.90
Kwality Dairy India Ltd. 5,828.03 10,541.25 16,080.36 23,894.81
Marico Ltd. 23,884.20 26,607.60 31,349.90 40,082.80
Radico Khaitan Ltd. 6,960.29 8,355.51 9,964.58 10,977.69
Ruchi Soya Industries Ltd. 127,423.20 143,926.26 182,311.76 302,464.37
Shree Renuka Sugars Ltd.* 28,159.89 77,002.51 86,623.00 88,876.03
Tata Coffee Ltd. 11,184.31 12,896.27 13,013.61 15,489.97
United Spirits Ltd. N.A. N.A. 73,761.83 91,865.00
Venky's (India) Ltd. 5,692.64 7,054.71 8,520.08 9,522.70
*Change in Financial Year Ending
Annual Financial Results – Income (INR mn)
Companies FY ‘09 FY ‘10 FY ‘11 FY ‘12
Anik Industries Ltd. ‐171.00 ‐70.20 ‐89.80 N.A.
Balrampur Chini Mills Ltd.* ‐45.00 64.60 252.37 N.A.
Bannari Amman Sugars Ltd. ‐279.68 ‐141.03 ‐118.47 ‐16.38
Britannia Industries Ltd. ‐357.20 55.14 11.05 92.00
Dabur India Ltd. 20,036.08 21,566.30 22,960.50 27,906.60
Dhampur Sugar Mills Ltd* 1,887.20 2,316.70 2,864.40 3,171.10
Food and Beverage – Monthly Update
Godrej Industries Ltd. 118.68 27.89 187.46 266.02
Hatsun Agro Products Ltd. 1,653.90 2,130.70 ‐2,943.90 N.A.
Heritage Foods (India) Ltd. ‐260.00 ‐17.80 ‐410.70 N.A.
Hindustan Unilever Ltd. 3,905.00 5,010.80 5,685.70 6,448.90
IFB Agro Industries Ltd. 954.86 1,749.00 2,251.66 1,194.24
ITC Ltd. 169.87 280.02 259.25 365.17
Kwality Dairy India Ltd. 33,245.90 41,681.80 50,179.30 62,581.40
Marico Ltd. 130.53 44.25 178.24 265.47
Radico Khaitan Ltd. 65.36 415.40 728.01 636.60
Ruchi Soya Industries Ltd. 1,514.85 1,031.80 1,343.50 1,995.50
Shree Renuka Sugars Ltd.* 129.31 289.19 399.32 408.92
Tata Coffee Ltd. 93.84 179.47 459.43 911.52
United Spirits Ltd. 250.77 ‐90.60 ‐131.60 ‐336.40
Venky's (India) Ltd. 256.01 459.98 ‐335.70 ‐1.40
*Change in Financial Year Ending
Quarterly Financial Results – Revenue (INR mn)
Companies OctDec 2011
JanMar 2012
AprJun 2012
JulSep 2012
Anik Industries Ltd. 3472.852 6038.9 3174.9 N.A
Balrampur Chini Mills Ltd. 6,637.4 N.A. N.A. N.A
Bannari Amman Sugars Ltd. 3,467.2 3,065.1 3,625.3 2,980.3
Food and Beverage – Monthly Update
Britannia Industries Ltd. 12,491.0 N.A. N.A. N.A
Dabur India Ltd. 14,526.8 13,858.3 14,620.0 15,226.0
Dhampur Sugar Mills Ltd 4,578.3 4,387.8 3,496.8 3,351.4
Godrej Industries Ltd. 14,470.8 15,563.4 17,889.3 19,461.2
Hatsun Agro Products Ltd. N.A. 4,329.9 4,897.1 5,284.0
Heritage Foods (India) Ltd. 3,545.1 3,595.2 4,080.3 3,975.9
Hindustan Unilever Ltd. N.A. N.A. N.A. N.A
IFB Agro Industries Ltd. 1209.68 1503.22 1262.8 1,429.3
ITC Ltd. 62,478.4 N.A. N.A. N.A
Kwality Dairy India Ltd. 6414.1 7797.1 8,152.1 8,893.1
Marico Ltd. 10,578.2 9,273.9 12,672.1 11,558.9
Radico Khaitan Ltd. 3,094.9 2,731.5 3,038.3 2,881.0
Ruchi Soya Industries Ltd. 70,343.1 N.A. N.A. N.A
Shree Renuka Sugars Ltd. 20,458.0 16,610.0 N.A. N.A
Tata Coffee Ltd. 4,128.3 3,943.5 4,077.4 4,705.3
United Spirits Ltd. 23,981.0 22,709.0 24,343.0 28,629.0
Venky's (India) Ltd. 2,502.8 2,674.9 3,147.8 3,348.4
Food and Beverage – Monthly Update
Quarterly Financial Results – Income (INR mn)
Companies OctDec 2011
JanMar 2012
AprJun 2012
JulSep 2012
Anik Industries Ltd. 8.6 88 20.7 N.A.
Balrampur Chini Mills Ltd. ‐640.1 N.A. N.A. N.A.
Bannari Amman Sugars Ltd. 201.6 643.0 282.0 501.7
Britannia Industries Ltd. 540.7 N.A. N.A. N.A.
Dabur India Ltd. 1,728.2 1,705.1 1,494.0 2,023.7
Dhampur Sugar Mills Ltd 22.5 223.2 64.1 108.0
Godrej Industries Ltd. 847.3 427.2 414.5 766.2
Hatsun Agro Products Ltd. N.A. 28.2 139.0 96.6
Heritage Foods (India) Ltd. 42.4 29.4 84.5 144.8
Hindustan Unilever Ltd. N.A. N.A. N.A. N.A.
IFB Agro Industries Ltd. 82.35 2.71 54.4 97.3
ITC Ltd. 17,009.8 N.A. N.A. N.A.
Kwality Dairy India Ltd. 223.2 387.9 290 248.2
Marico Ltd. 841.2 697.0 1,238.4 858.7
Radico Khaitan Ltd. 236.6 44.7 211.2 220.6
Ruchi Soya Industries Ltd. 240.5 N.A. N.A. N.A.
Shree Renuka Sugars Ltd. 3,439.0 ‐719.0 N.A. N.A.
Tata Coffee Ltd. 215.1 288.3 281.8 368.5
United Spirits Ltd. 946.0 26.3 ‐394.0 2,050.0
Food and Beverage – Monthly Update
Venky's (India) Ltd. 29.3 181.6 201.3 23.1
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8th India International Food & Wine Show Date: 14th – 16th Feb 2013 Venue: Epicentre Apparel House, Sector 44, Gurgaon Phone number: 0124 42715000, 011 43663010, 09810756611, 09810059550