'Indian Ethnic RTE' - A Revolution for the Indian Processed Food Industry

Abstract

India is one of the fastest growing economies in the world where all its sectors are performing very well. The processed food sector in India is heading towards a ready to eat revolution. The changing urban lifestyle of the Indian middle class, increasing prevalence of double income nuclear family structure, rising disposable income, increasingly larger number of globe-trotting Indians with an experimentative palate are all favourable demographic factors spurring the adoption of Ready To Eat (RTE) foods in India. The RTE includes frozen branded and packaged heat and eat ready meals in vegetarian and non vegetarian options. The total processed foods market size this year is Rs1500 crore, out of which RTE foods are around Rs 225 crore industry this year and is expected a annual growth of 25-30% over next 5 years. According to Tata Strategic Management Group, the RTE market is expected to grow to Rs2900 crore by 2015. In the RTE segments, the competitive landscape is largely dominated by 4-5 players, namely MTR, ITC, Bambino, Priya and Kohinoor Foods. Apart from focusing on the domestic market, these companies have also expanded their reach internationally in geographies with a sizeable Indian Diaspora. All the players in this sector used unique marketing strategies and methods to sustain in the market. Indian Government is providing more infrastructures for this sector. Excise duty is now 0% on RTE and 100% tax deduction for the first 10 years for new units. This allows manufacturers to bring down their prices & spreads its flavors to the world. This paper tries to analyse the opportunities available in the Indian market and the major challenges that need to be overcome to remain in the market.