RTC –The future of Indian Brands ( www.internsindia.com.

, Only to be used for

academic purpose)

Changing lifestyles and the modified eating habits of India’s growing urban
population have propelled its processed food industry. 30 million upper and middle
class Indians consume packaged food and 200 million more are projected to do so
in the next three years. Frozen and canned foods that can be heated and served
instantly have found a place on the shelf in a regular middle class kitchen. Various
social changes are driving this trend, from the growing number of nuclear families
to increased urbanization and a significant rise in the number of working women as
well as a growing practice of singles living away from home for education or work.
The demand is propelled by the options to consumers apart from Maggie as the only
lesser effort and time consuming appetizer. 30-40%of the housewives from the SEC
A,B and C households regularly shop for packed and convenience food items like
noodles, pasta, soup powder and RTC of brands like MTR and Ashirvaad regardless
whether they are shopping from traditional grocery stores or modern format.
(Source Indian Shopping trend 2008). One school of thought even says how
consumer differentiates and value between RTC mix and blended spices like
Pav Bhaji mix and Pav Bhaji masala.

According to a study, the Indian ‘Ready to Eat’ market is estimated to grow to US$
727.09 million by 2015 from the current $ 32.09 million. ‘Food’, clearly, has become
the appetizer driving India’s retail revolution. According to Retailers Association of
India (RAI), food and beverage sectors’ share in overall retail in India is now at a
staggering 65%; and majority of this 65% share comes under the ambit of
processed foods and vegetables. Further, according to consulting firm McKinsey &
Co., the retail food sector in India is likely to grow from $70 billion now to $150
billion by 2025 (a forecast many analysts say is very conservative) with 60% of this
market belonging to the convenience food category. Even McKinsey stresses that
the Indian FMCG segment’s gen-next growth will be driven by the food segment
only.

The future market will be shuffled by the two factors, firstly by the aggressive
marketing of the India originated brands to acquire a niche and get brand loyalty.
Secondly by the foreign players those are entering into the Indian market either
through JV or through acquiring the Indian originated brands.

Aashirvaad’ and ‘Kitchens of India’ products from ITC’s stable include a wide
assortment of ready to cook foods and dishes ranging from ‘Dal Bukhara’ to ‘Murgh
Methi’ and other exotic cuisines, but also include the more everyday biryanis and
curry pastes. Amul has ventured into the ready-to-eat industry and includes
Processed Cheese, Pure ‘Ghee’, ‘Shrikhand’, Nutramul and ‘Mithaee Gulab Jamuns’
among its offerings. Bikanerwala Food’s Bikano, the traditional Indian Sweet- Maker,
is taking its wares beyond the domestic frontiers to the Western World with offers of

Article by Siddhartha Bhardwaj, Director Sylloge Corporation, his strategic work is

appreciated by the global marketing and sales strategist.
RTC –The future of Indian Brands ( www.internsindia.com. , Only to be used for
academic purpose)

packaged ‘Bhel puri’, ‘Chaats’, ‘Sev Puri’, ‘Chana Masala’, ‘Samosa’, ‘Pakoras’, and
‘Aloo Tikki’.

Even Dabur, has planed 'Hommade' to exploit the RTC segment. Dabur, however, is
keeping the new product portfolio under wraps but the company is likely to launch
products based on traditional knowledge, like paneer, which would also get the
'Hommade' tag.

Capital Foods, which markets the popular instant noodles, ‘Ching’s Secret’, plus
sauces and soups, also eyeing the Indian RTC market with the regional Indian
specialties concept. The convenience foods targeted at Indian consumers could
range from traditional recipes like ‘avial’ from Kerala, ‘dhoka’ from Bengal to lotus
roots from north India. The idea is to give quick and healthy nutritious meal options
to Indians from different regions. The strategy will be to present at all price points
with cheaper range of instant noodles under the brand name of Smith & Jones.

The lucrative future in RTC is further evident by huge influx of foreign players
entering the convenience food industry in a clear attempt to either set up JVs or
simply to acquire companies lock, stock and barrel. The rising incomes will increase
domestic consumption of ready-to-eat (RTE) and ready-to-cook (RTC) food over the
next five years in India. There’s more! Indian RTE and RTC brands are now
increasingly finding prime shelf-space in the retail chains of US and Europe. For
example, the Bentonville giant Walmart, after rolling out its first store with Bharti in
India in May 2009, is now working on a pilot project with the Gujarat Co-operative
Milk Marketing Federation.

One of advantage for foreign players is the consistent increase in agricultural output
of India, combined with India’s second largest in the world arable area, have worked
to a large extent to support easing of raw material sourcing issues for RTE and RTC
products, a big reason for global giants to enter India. A FICCI estimate this year
says that the year 2009 has been a record year for India’s food retailing industry as
at least 20 convenience food brands have entered the Rs.9,900 billion Indian agri-
retail sector. Who all are we talking about here? Starting from global giants like
Walmart, Hershey to Indian players like Capital Foods, Mother’s Recipe and
Kohinoor Foods, the list seems to be growing by the month.

MTR Foods Ltd is a brilliant example of how an Indian convenience food brand was
simply lapped up by a global behemoth for such reasons. The Norwegian branded
food major Orkla SA acquired the Bangalore-based MTR Foods Ltd for $80 million to
get a snapshot entry into the Indian market. At the same time, Orkla is now using
MTR as the sourcing hub for its overseas food business as well.

Indian companies now focused to secure niche and get the consumer loyalty as the
base to sustain the future,consider the Mumbai based Rs.200 crore Al-kaber Group,

Article by Siddhartha Bhardwaj, Director Sylloge Corporation, his strategic work is

appreciated by the global marketing and sales strategist.
RTC –The future of Indian Brands ( www.internsindia.com. , Only to be used for
academic purpose)

which has been into the business for more than a decade, but has only recently
started brand positioning exercises. Similar is the case of Capital Foods Ltd, which
has rolled out brands like Ching’s Secret and Smith & Jones and plans to introduce
three more snacks brands by 2010. Other regional brands like Kohinoor,Priya and
Praveen (with Suhana) brand are strategizing to en-cash on brand equity in RTC
segment.

As the future is of high competition with the biggies,the real challenge for the India
originated brands is to sustain its market share. The wrong selection of the RTC
category will make one to face the giant in future. The product strategy should be
to opt the right RTC product category that’s suits the current brand image and is
secured from the big giants. One thing must be remember here that a consumer is
paying for convenience and novality so pricing quantification wil be one of the
challenge. The uncertanity lies in the market selection of the biggies either mass or
premium. It can be assumed by the foreign acquisitions that the channel strategy
will be to exploit the existing distribution network.

Article by Siddhartha Bhardwaj, Director Sylloge Corporation, his strategic work is

appreciated by the global marketing and sales strategist.