India's Processed-Food Market Offers Challenges And Rewards

By:Rina Chandran
Reuters

Wednesday, March 19, 2008

MUMBAI: When Kellogg introduced breakfast cereal to India 14 years ago, it underestimated the tradition of cooked breakfasts.

The few customers for cornflakes ate them with hot milk, because until recently milk was rarely pasteurized in India, and they were disappointed by the soggy results.

Kellogg responded with an extensive advertising campaign and, to adapt to local tastes, introduced products like Basmati rice flakes and mango-flavored cereal. To entice customers, the companies also produced small packs that sold for 10 rupees, or 25 U.S. cents.

"It would be foolhardy for me to say Kellogg has replaced cooked breakfast," said Anupam Dutta, managing director of Kellogg India. "I don't think we can ever hope for that. But we've become a part of the consideration set for breakfast in many Indian homes, and that's a tipping point."

Getting a foothold in India's processed-food market, estimated to be worth $90 billion, requires persistence and a willingness to adapt products to food and cultural preferences, according to analysts.

Rising incomes, more working women, modern stores and greater culinary choices are helping such companies as PepsiCo, Nestlé, Unilever, McDonald's and Yum Brands get a piece of the market.

"Every company that wants a share has to invest heavily, localize extensively and be very patient," Jayanta Roy of the consulting company Frost & Sullivan said. It estimates that only one-third of the processed-food market is controlled by large Indian and multinational companies. The rest is held by regional companies.

Adaptation appears to be essential for success in the sector. PepsiCo, for example, has produced strong sales from ethnic salty snacks and sells aam panna, or green mango nectar, along with its colas.

Nestlé promoted Milkmaid, a condensed milk, as being ideal for traditional Indian sweets. But it had better results with Maggi noodles, a bold step in a country divided between eaters of rice and roti, a flat wheat bread.

Maggi soon became a staple in school lunch boxes, helped by masala, or mixed spices. Nestle recently introduced packaged yogurt, competing with another time-honored tradition, while Danone, along with the Japanese dairy-products maker Yakult Honsha, responded with yogurt probiotic drinks.

A few years ago, Indian and foreign companies struggled to sell packaged foods. But now it is much easier to break into the Indian market because of a younger population, higher incomes, new technologies and a growing middle class, estimated at 50 million households.

Hemant Kalbag of A.T. Kearney, a consulting company, estimates that processed foods will grow at 15 percent annually over the next four years. "We have a young population with higher disposable incomes, living away from the large joint families and seeking greater convenience," Kalbag said.

Dutta, the Kellogg India executive, agreed, saying, "The market's constantly evolving and creating demand for products that you never thought would have had a chance."

Large Indian companies are also seeking a larger share of the market. For example, ITC, India's largest cigarette maker, is broadening its range of instant ethnic foods and pasta, cookies and salty snacks.

"Increasingly, Indian consumption patterns are mirroring global trends such as a preference for protein and for functional foods," Pankaj Gupta of Tata Strategic Management Group said. "So companies can choose to go after the mass market or focus on niche segments which are also viable now."

McDonald's and Domino's Pizza are also adding more vegetarian and ethnic options. McDonald's, which is doubling its outlets in India to nearly 300 this year, does not sell beef products in the country. Half its menu is vegetarian, with popular offerings like the McAloo Tikki Burger, which is essentially a potato patty. It also has more sit-down restaurants for large Indian families and home delivery, a first. Domino's also has an eat-in option in several locations.

Indian companies are imitating these fast-food rivals to attract young customers. For instance, Jumbo King, an Indian fast-food chain, is mass producing vada pav, a spiced potato patty in a bun, using modified cookie-dough machines and temperature-controlled stoves.

"We wanted to give the vada pav a modern look," said Dheeraj Gupta, the head of Jumbo King, which also offers a whole-wheat option. "Our inspiration is clearly McDonald's and Subway."

Despite the opportunity, there are longstanding hurdles. Cumbersome tax rules give an advantage to smaller local companies. And the refrigerated system of transportation and storage is inadequate. Problems in this cold chain result in waste of nearly 40 percent of all fresh produce.

"We need stronger legislation on food safety, more robust supply chains and improvements in the cold chain," Kalbag of A.T. Kearney said.

The government and modern retailers are addressing these issues with new laws on packaging and labeling, as well as greater investment in the supply chain.

Self Heating Technology-My project

Introduction:

The field of food science and technology has a long history of making technologies available form the army to the common people. One such event dates back to 1800 when Napoleon Bonaparte offered a 12,000 franc reward to anyone who could devise a method for the food preservation in order to provide his troops with daily rations in order to keep his armies adequately supplied while on the march [1]. After years of experimentation, Appert submitted his invention and won the prize in 1810. Appert was the first canner history had ever witnessed. In early period the canning industry started with Appert only catering the armies, who would fight at the front lines and could not carry raw food with them due to spoilage hazards. A common man would not use canning in those days as it was expensive and of no use. He would buy vegetables and meat every day to make his food. As time progressed, the civilizations became so involved in work and progress that they could not devote time to cook or buy rations everyday. The canning industry which was limited to catering the army, now opened to civilians also and buying canned food suddenly started making sense. As more and more people bought canned food the competition among canning industry increased and bought the expensive canning technique to fit in the pockets of a common man. We have talked a lot how expensive food preservation and storage technique used by army was eventually used by the common man. The Latest technique used by the army is ‘Self heating soups cans, self heating coffee cans, self heating casseroles (which can have an entire cooked meal in them). [2]

Why People Will Buy Self Heating Technology?

Necessity is the mother of invention. It is this necessity which makes me believes people have more important things in life to do rather than make coffee or heat soup in the microwave. Well everyday we see students buying coffee in coffee baristas standing in line and waiting for their turn to order and then waiting in line to get their coffee. If a person stands in a coffee shop for an average of 10 minutes every day for a cup of coffee he is wasting 61 hours in a year standing and waiting for a cup of coffee. What if the person waiting in line every day would just have bought a self heating 24 pack coffee from the super store. He or she would have saved a lot of time in a year. The customers would just have to twist open the container and the coffee would be heating it self and ready to be consumed as the person drives his car to work.

Other great market would be College students. They live on instant food and frozen meals if they don’t want to go to the dining center or cook meals. When a college student buys food he keeps in mind that the food he buys fits his budget, it should have a good quantity to fill him up and it should not take a lot of effort to cook, at most a microwave heating should cook the meal. The personal preference also breaks the choice whether to buy nutritious food or junk food. I think self heating casseroles; self heating soups can be an excellent choice for college students who don’t cook their meals. Casseroles can hold entire meals.

Self heating meals would be an ultimate answer for adventurers. They can eat meals they can only imagine of eating while on their trek. Self heating meals would be a break through in the way adventures ate food. It is also a good alternate for people who travel abroad and miss food from their country.

Technology involved:

1)The source of the heat for the self heated can is an exothermic reaction that the user initiates by pressing on the bottom of the can. The can is manufactured as three containers. A container for the beverage is mounted on top of a container of calcium oxide (quicklime) that is separated from a container of water by a thin breakable membrane. When the user pushes on the bottom of the can, a rod connected there pierces the membrane, mixing the water and calcium oxide. The resulting chemical reaction releases heat (the heat of hydration of calcium oxide) and thus warms the beverage above it.[3]

2) Another, less effective, way of reaction is copper sulfate and zinc, no gas is produced by this reaction and zinc sulfate and copper is left. Not much heat is produced by this reaction; therefore it is only good if there is a large amount of the reactants and little product. [3]

3) Combination of powdered food grade iron and magnesium, salt, and water. When water is poured on the heater pad (‘HeaterMeals’ food heaters use salt water & MRE heaters use regular water) – the Food Heater releases enough heat to warm-up a pre-cooked meal 100 degrees Fahrenheit in approximately 10 minutes. This technology is used by ‘Innotech’ for their products marketed under the name of heater meals. [4]

4) for flameless heaters used by the army is as follows: When iron metal rusts, it is oxidized by the oxygen present in the air. In the case of the flameless ration heater, the metal used is magnesium. Magnesium is chosen because it is readily oxidized, which is due to its having only two electrons in its valence shell. The magnesium metal is mixed together with a small amount of iron in a pouch. To activate the reaction, a small amount of water is added, and the boiling point of water is quickly reached as the reaction proceeds. The role of iron in the heater is most likely as a catalyst, since it is used in a small amount. In this case, the iron is initially oxidized, and then reduced back to its elemental form as the magnesium is oxidized and sends its two valence electrons to iron.[5]

Discussion Of Problems Faced In Implementing Self Heated Food.

Price- price is one of the factors which restrict the buyers to defense forces and adventurers. This is due to the high manufacturing cost. A 12 pack self heating mocha latte cost $34.99, too expensive for every day consumption by a common man. The retail cost of these self heating containers limit the market to only defense forces. Real potential of this technology can only be realized if the cost is reduced such that it can be bought by a common man from a regular super store and used as an efficient means of preparing meals. The price high because of the heating technique and manufacturing of these containers in United states. [6]

Compatibility - one of the major concerns which might make the make the container easier to carry. Current models available in the market are quiet bulky, the main reason being that the beverage cup not only carries the beverage but also chemical in an outer separate shell. The ‘Ontro’ self heating containers in the market currently come in two sizes 16-oz. (448-g) container that holds 10.5 oz. (294 g) of product. The remaining 5.5 oz. (154 g) is the inner heating cone. A 12-oz. (336-g) version that holds 7 oz. (196 g) of product.[6] The excess weight of the heating chemicals and cone in the container makes them heavier. If this weight can be reduced it will serve the purpose of both civilian and defense.

Discussion Of Proposed Solutions To The Problems Above:

How to reduce the price of these meals? Maybe if we try answer this question in a world which accepts the concept of globalization and automation it is quiet easy. Cost reductions options is to set up the manufacturing plant in a country which has cheap labor and has the resources and infrastructure to support food industries. Countries like China, India, Brazil have the infrastructure, cheap labor and the ability to support modern world food Industries. This is a specialized kind of food product which requires excessive manufacturing inputs and manufacturing a product like this in developing countries will substantially reduce the cost. The other option is to just import the heating component of the container form a above mentioned country where the manufacturing cost is low. The edible content of the container can be filled up in USA for safety concerns. This will greatly reduce the cost of production.

Cheap and Alternate chemicals reactions can be researched which show can achieve a good level of exothermic reaction. The present chemicals used greatly increase the coast of the final product. The cost of materials can also be reduced if we use cheap isolation material which is safe for the consumer to handle and also solves the purpose of heating the container. Materials such as these can be only found if more corporate giants enter the market and more money is invested in researching these kinds of materials.

Future of Self Heating Containers:

In the near future people will be more aware about issues like global warming and this will strongly change the way food will be prepared. May be microwaves will be completely replaced with these self heating technology. Replacement of microwave is quiet possible as it is an appliance which consumes a lot of electricity. With people realizing the value of natural resources, everyone would encouragingly use alternate ways to heat food which causes least amount of harm to the planate.

With more and more innovative designs and more corporate giants like Nestle entering the market. Research for these kinds of self heating products will be taken to the next level. Thermotic Developments (TDL) and Nestle joined the project in 1998 to launch the Thermotic Can. Nestle laboratories provided the all-important input on food technology.[7].

Bibliography:

1. “Appert, Nicholas.” New Standard Encyclopedia 1993 ed.

Can Manufacturers Institute. Dec. 2003.

Nicholas Appert. Brooklyn College. December 2003. .

The History of Can Making. Dec. 2003. http://www.cancentral.com/canc/nontext/history.htm

2. Nosotro, Rit. "GA Foods." Sunmeadow.Net. 2 Apr. 2008 .

3. "Container with Integral Module for Heating or Cooling the Contents." Freepatentsonline. 31 Oct. 1995. 2 Apr. 2008 .

4. "Heating Technology." Heatermeals.Com. 2 Apr. 2008 .

5. Brain, Marshall. "How MREs Work." 15 April 2003. HowStuffWorks.com. 01 April 2008.

6. "Hillside Bevrage Online Store." Ontech. 2 Apr. 2008 .

7. "Self-Heating Can Market Set to Grow." Beveragedaily. 15 May 2002. 2 Apr. 2008 .