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Frozen foods are gaining popularity and acceptance among the working professionals and millennial generation, thanks to their convenience and the greater variety on offer. As a result, companies are recording over 100 per cent volume growth for deep freezers this summer in comparison with the pre-pandemic summer of 2019. This calls for strengthening of the cold storage infrastructure in India.
The Indian frozen foods market was valued at Rs 42.7 billion in 2021, and is expected to reach Rs 93.8 billion by 2025, expanding at a CAGR of around 17 per cent from 2020 to 2025. The frozen foods market, which includes frozen snacks, frozen fruits and vegetables, frozen meat, poultry and seafood, and frozen meals, observed a faster growth rate over the past five years, thanks to a spike in number of millennial consumers among the semi-urban and urban markets opting for convenience food, according to a global consulting firm, Sathguru.
Frozen meat, seafood and vegetables make up more than 85 per cent of the Indian frozen foods market. The consumer preference for frozen potato fries and nuggets drives the frozen snack segment, the largest segment in the market. And now the entry of multiple plant-based frozen snacks is attracting attention. The traditional Indian palette has pushed companies to develop Indian variants within frozen foods such as samosas, cutlets, kebabs, and parathas.
Frozen vegetables are the second largest segment, due to the appeal of year-round availability of seasonal vegetables in frozen format. Urban areas account for 80 per cent of the demand for frozen foods. According to reports, the domestic consumption of frozen meat and seafood is small but is growing at a rate of 10 per cent. North India accounts for a significant share of 40 per cent of the frozen foods market, followed by West (30 per cent) and East India (10 per cent).
Consumer perception about frozen foods has also changed. Since the industry now offers products that not only guarantee taste and convenience but some of them are also, free of added preservatives, colours and trans-fat, frozen foods are also viewed as healthy.
Latest offerings
The frozen foods market is highly consolidated, with a few dominant players. The major companies that account for more than 50 per cent share in the retail segment are Mother Dairy Fruits and Vegetables, Al Kabeer, Venky’s India, Innovative Foods, Darshan Foods and McCain Foods India. But other players are aggressively rolling out new products and strengthening their presence. Not to be left behind, established players are also launching innovative additions to their product ranges.
In the past few months, we saw Gurugram-based Prasuma announcing the addition of new snacks to its frozen foods portfolio such as frozen nuggets, kababs and samosas in both vegetarian and non-vegetarian forms.
Then ITC Master Chef Frozen Snacks entered into a strategic partnership with Havmor Ice Cream owned by the Lotte group, a South Korean conglomerate, to sell frozen snacks in Delhi-NCR region.
“About 50 per cent of the frozen foods market in India is potato-based or chicken nuggets. During COVID-19 times, the search for frozen foods increased over the internet, mostly about their taste, and health benefits. However, post COVID-19 this search shifted towards availability of variety in frozen foods as with increasing acceptability of frozen foods, consumers are demanding variety. In ITC, we are expanding our variety of frozen foods offering in vegetarian, non-vegetarian, and vegan spaces by building infrastructure and expanding the touch points. In terms of variety, only 30 per cent of the ITC portfolio is potato-based, and the remaining portfolio consists of lentil-based, cheese-based, veggies-based, and dairy-based frozen foods”, says Ashu Phakey, Vice President and Business Head – Frozen and Fresh Foods, ITC.
Ahmedabad-based HyFun Foods, a unit of Asandas & Sons, has announced the expansion of its product portfolio with the launch of innovative products like the frozen pizzas which have four variants particularly for the Quick Service Restaurant (QSR). HyFun Foods is in fact the only Indian brand offering frozen pizzas at a pan-India level.
More variety is being added by Mumbai-based SwissBake in the form of frozen cakes and breads. Further, Mother Dairy has introduced frozen Jamun Pulp, under its horticulture brand Safal, for consumers across Delhi NCR.
“The constant availability of frozen foods on online platforms has increased due to the COVID-19 induced lockdown. Therefore, the visibility and penetration of frozen foods have increased in India. Also, the emergence of QSR chains and institutions have boosted the frozen foods industry due to their adherence to brand value and their challenge to provide uniform and standard products to consumers across all locations”, says Archit Goel, Director and Chief Financial Officer, Shri Bajrang Alliance, Raipur which recently launched frozen foods brand, Goeld.
The organised segment of chain restaurants such as McDonald’s, Pizza Hut, KFC, and Domino’s, growing at a rate of 23 per cent year-on-year in India, is emerging as a key driver of the frozen foods industry in the country. Such QSR in India consumes the major volume in the segment. The retail market for frozen foods accounts for around 32 per cent of the total frozen foods market, as per reports.
Emerging technologies
The frozen foods industry has adopted and invested heavily in technological developments and improvements. These foods are frozen quickly with blast, individual quick freezing (IQF) or spiral freezing technologies that not only make sure the foods stay fresh till they reach your doorstep, but also safeguard the quality and freshness of those foods; thus, sometimes even making them fresher than fresh foods as well as giving them a 12-18 months of shelf life.
Isochoric freezing is a new technology with relatively low energy requirements that preserves food products at sub-freezing temperatures without damage due to ice crystal formation inside the product.
Besides these freezing technologies, new variants of cooling technologies for deep freezers are entering the market for sustained growth of the frozen foods segment. For instance, Godrej Appliances, business unit of Godrej & Boyce, the flagship company of the Godrej Group, has recorded over 100 per cent volume growth for deep freezers this summer in comparison to the pre-pandemic summer of 2019. This growth was led by rising temperatures that brought about an incremental demand and consumption of ice creams and other frozen foods across India.
According to Kamal Nandi, Business Head and Executive Vice President, Godrej Appliances, “We witnessed high growth this year for the deep freezer category which accounts for around 5 per cent of our overall business. We are currently at 10 per cent market share for this product category. In the next two years, we plan to invest over Rs 25 crore towards adding new models and expanding production capacity. This will help us to grow our market share to 15 per cent by FY 23-24, and achieve our goal of doubling market share to 20 per cent in the next 5 years in deep freezers.”
Elanpro, a professional appliance company based in Gurugram, has recently invested in New Delhi-based Icold Refrigeration to strengthen its presence in the cold chain storage segment across India. With its dominance in hotel, restaurant, and catering (HORECA) segments, Icold Refrigeration is one of the leading suppliers of cold rooms also known as freezer rooms.
“The industry perspective of cold chain has been revolutionised and diversified and soon it will have a significant impact on hospitality and retail sectors where customers prefer end-to-end refrigeration solutions from one single vendor partner”, says Ranjan Jain, Director, Elanpro.
With technological advancements in the cold chain, there is also a rising demand for real-time temperature monitoring and location tracking. As cold chain technology gets modernised and innovative, many startups such as Celcius, CloudTrack, TagBox, Tessol, and Coldman Logistics are aligning their goals to the new demands.
Supporting the infrastructure
Setting up new and adequate infrastructure for the storage and supply of frozen foods is an entry barrier for new players, since food and safety regulation and compliance are quite strict. It also requires higher capital investments to set up.
Infrastructure and refrigerator facilities at small retail stores is another major challenge in the frozen foods market as most of the owners are unwilling to invest in setting up such a facility. This limits the easy availability of the frozen products. Even if they are ready to maintain some stock, the range of the products is limited.
Thus, the industry requires adequate support from the government to strengthen the cold chain infrastructure in the country. Although there are different schemes being provided by the government as financial assistance to set up cold storage facilities, there is still an inadequacy.
Developing the cold chain in India involves a mix of awareness and technical capacity including investment, information and technology. According to Dr Minakshi Chakraborty, Economist and Consultant, “There is a need to encourage the formation and operation of industry bodies for supply chain actors in the food industry, logistics companies, technicians and engineering firms specialised in cold chain infrastructure. These bodies can serve to enable access to technologies, knowledge, finance and equipment, as well as facilitate the dialogue and coordination necessary for effective cold chain development.”
Enhancement of the cold chain infrastructure can provide India with a great opportunity to adopt the latest technologies that are energy-efficient, environment friendly and also ensure the quality and safety of frozen foods.
Mansi Jamsudkar
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