As nuclear families
proliferate in urban India, the ready-to-eat market is set to grow, says Soumik Sen
It’s a food revolution that’s been a long time
coming. As double-income nuclear families become the norm in urban India, everyone who is
anyone in the food business has been eyeing the ready-to-eat food sector with considerable
hunger.
The result: new menus that include everything from Punjabi kadhi
pakora in a can to pure vegetarian navratan kormas in hi-tech retort pouches.
But it has been tougher to cook up a storm in the Indian
market than anyone expected. Indians proved remarkably attached to freshly cooked meals.
Nevertheless, times may be changing. Top food companies say
the market is currently worth around Rs 50 crore but they confidently predict it will grow
to around Rs 200 crore in the next one or two years.
Take a look at ITC Foods, which started turning out dishes
for the top end of the market with its pricey Kitchens of India range.
ITC won praise for its offerings and showed they could get
the flavours right. But at Rs 150 for a 450 gm tin of dal bukhara (which feeds
about three people) it was strictly a limited clientele.
Now ITC is taking a shot at the middle market and trying to
reach shop shelves around the country. It has put together a range of five vegetarian
flavours including aloo matar, rajma masala and navratan korma, packed in retort
pouches and with a shelf life of 12 months.
The 285 gm pouches — called the Aashirvaad range
— sell for between Rs 35 and Rs 40, putting them within reach of middle-class buyers.
Says Ravi Naware, CEO, ITC Foods, "Aashirvaad will now be the ready-to-eat solution
for the time-pressed family."
ITC is hoping to serve itself big helpings with its new
business. The Aashirvaad ready-cooked dishes have already been launched in five cities
— Mumbai, Pune, Hyderabad, Chennai and Kolkata.
In the next two months, the products will also be available
on shop shelves in Delhi and Bangalore. Naware believes his two brands have already
captured between 15 per cent and 20 per cent of the ready-to-eat market.
What’s more, ITC isn’t stopping here. By the end
of this financial year, another five flavours will be added to the Aashirvaad bouquet.
ITC already has two plants churning out products in
Bangalore and Delhi and Naware is scouting for locations to put up a third one.
But ITC doesn’t have the kitchen to itself — not
by a long shot. MTR foods, arguably the pioneer in the segment, is in no mood to
relinquish the leadership position to the FMCG behemoth.
S Suresh, COO, MTR points out that it has a huge menu card
with 15 curries and seven south Indian specialities. It’s also launching nine
rice-based items like lemon rice and rajma chawal.
MTR believes it is the largest in the field with over 70
per cent market share and it isn’t cowed by ITC’s distribution muscle.
Says Suresh: "We are already present across 60 cities
in India, and by 2005 hope to control around 35 per cent of the Rs 200 crore market."
But MTR also has greater ambitions and hopes to make it to
dining tables around the world. It has sales and distributions teams in North America,
Australia, West Asia and South East Asia.
At another end of the country there’s Satnam Overseas,
one of India’s largest exporters of basmati rice under the flagship Kohinoor brand
which is also hoping to make a big meal from the ready-to-eat business.
It has introduced heat-and-eat curries and lentils with a
distinctly north Indian flavour, including Peshawari dal, Kashmiri rajma,
and Amritsari chole. Also coming from the kitchen are other northern specialities
like sarson ka saag and aloo palak. Research is underway to develop
ready-to-eat paneer curries and pav bhaji very soon.
"Each of these preparations follows traditional
recipes," says general manager, Rajesh Trikha.
"Customers just need to heat for two-to-three minutes
in a microwave or boiling water and eat." A single pack priced at Rs 46, is meant to
serve upto three persons.
Satnam’s USP is its regional appeal. "Punjabi
cuisine like Punjabi music is a rage in the rest of the country as well as overseas,"
says Trikha, "and we want to serve the flavour of North India, as authentically as
possible, from our plant at Murthal in Haryana."
How big is the ready-to-eat market and is it poised for a
quantum leap? Trikha believes the market is poised for an explosive jump and that it will
triple in the next one year.
Says Trikha: "According to our internal estimates, the
domestic market for ready-to-eats is Rs 50 crore plus and is expected to grow three times
by the end of 2004."
What’s more, Trikha is firmly convinced that around Rs
25 crore worth of ready-to-eat-curries are already selling. That’s likely to touch
around Rs 100 crore by 2004 according to him.
Naware is also counting on giant-sized growth. His
expectations aren’t very different from Trikha’s. He believes the market will
touch Rs 200 crore by around 2005 and he’s hoping to garner as much as 50 percent
marketshare by spreading himself across 50 cities.
Naware is putting together a big-budget print and
television campaign to promote his dishes which is being handled by Grey Worldwide. The
company is also organising sampling sessions to gauge customer feedback.
There are smaller companies too that are hoping to grab a
chunk of the action.
Pune based Tasty Bites Eatables Limited [TBEL] has been
exporting for years and is now making an ambitious thrust into the Indian market.
Tasty Bites started operations back in 1987 but it
didn’t make much headway and the products were withdrawn a year later.
"People were sceptical back then and consequently our
products were non-starters," says Ravi Nigam, president, Tasty Bites.
Tasty Bites was taken over and restructured by US
multinational Preferred in 1998. It registered a profit two years later.
The Rs 20 crore export-driven company, (80 per cent of its
earnings come from exports) has successfully tapped markets in Ahmedabad, Baroda, Surat,
Mumbai, Pune, Bangalore, Chennai and Hyderabad.
The company now plans to expand by entering the northern
markets aggressively. Tasty Bites offers nine curries and six south Indian ready-to-eat
dishes like avil and pongal.
Also, it recently launched a range of ready-to-cook (RTC)
curry pastes. Tasty Bites also has another range of ready-to-eat meals that it makes for
the Indian Army which come along with plastic plates.
Inevitably, Indian flavours dominate the ready-to-eat
market. But one of the earliest players was Indo-Nissin foods, a subsidiary of
Japan’s Nissin Foods which has been selling instant cup noodles since 1991. The 80
gram cup, in chicken, vegetable and masala flavours, is priced at Rs 20.
Despite the presence of high-profile brands,
Indo-Nissin’s General Manager R V K James says the company sells around 6.5 lakh cups
every year, giving him a billing of Rs 1.3 crore annually.
"We have been consistently growing at 22 per cent
annually," he says. But I’m sure with the market ready to explode, that number
will only go north."
Armed with a Rs 5.5 crore budget, cup-o-noodle
advertisements are currently being aired on television channels.
Indo-Nissin has also actively targeted school children by
sponsoring quiz sessions and conducting sampling sessions at various schools.
The company is also about to launch a sub-brand in the
ready-to-eat cup-noodle segment targeted specifically at kids.
But will the year-on-year 100 per cent growth that all
players are so optimistic about actually happen?" Most analysts believe the food
companies aren’t being overly optimistic.
Says B Narayanaswamy, executive director, Indica Research:
"The increased penetration of microwave ovens will need ‘software’ to drive
the ‘hardware’. Ready-to-eats will find the perfect match in the upwardly mobile
Indian kitchen."
"Convenience is a prime factor, but other factors like
increased spending on food by city couples are also important, says Hemendra Mathur,
senior manager, food and agri-business, Rabo India.
Abroad, the convenience foods industry has grown to
gigantic proportions. And Indians too could be developing a healthy appetite for meals
from a can or a pouch.