The frozen food industry of India, now and later

11 May 2021 | Opinion

India is being looked at as a huge potential market for frozen foods. Image source: Shutterstock Image source: Shutterstock

Up until recently, the Indian frozen food’s standard product offerings were limited to options like smileys, green peas, sausages, nuggets and French fries. In the span of just 5-10 years, however, we have seen a revolution in the frozen food industry. India is being looked at as a huge potential market for frozen foods. 

The consumption of such foods right now is still negligible in comparison to the world due to a lot of reasons. A handful of existing players, the large population, higher-priced foods product, lower awareness among the consumers and infrastructure challenges such as the shortage of cold storage have proven to be barriers to the growth of the frozen food market.

But things are surely changing. From preparing a complete meal to opting for frozen food products, food consumption patterns have come a long way. India’s frozen food market is driven by the conveniences such food products offer. The afore mentioned challenges have posed an opportunity for the prominent global players to explore the market.

The frozen food market

In 2020, the frozen food market was valued at Rs 98.79 billion. It is expected to reach Rs 224.90 billion by 2025, augmenting at a compound annual growth rate (CAGR) of 18.17 per ceny in the next five years. 

The fact that there has been a significant rise in the number of millennial and gen-Z consumers among the semi-urban and urban people opting for improved awareness, convenience and acceptance of frozen food, gives India more opportunities to push the market forward. 

Based on the sales channel, the market is divided into retailers, exporters and foodservice providers. In terms of revenue, the export segment accounted for 44.62 per cent of the overall revenue share in 2020, dominating the frozen food market. 

The retailers’ segment was valued at Rs 25.81 billion in 2020 and is estimated to display a massive growth rate during the forecast period, rising at a CAGR of 20.94 per cent. 

The segment of foodservice providers, on the other hand, was valued at Rs 28.90 billion in 2020. It is estimated to reach Rs 70.66 billion by 2025.

Based on region, the market has been divided into North India, South India and East India, West and Central India. North India accounts for the biggest share in the market among these.

In the scheme of things, the organized segment has been playing a crucial role in catering to increasing demand from both commercial as well as residential sectors of the market. Establishing infrastructures for modern retail stores in every part of the country has led to the increase in the dispensation of frozen food products. 

Also, the traditional stores are being equipped with advanced freezing technologies, allowing them to stock up the frozen food inventory and attract more consumers.

Product offerings 

Food type:

  • Meat and Seafood
  • Dairy Products
  • Fruits and Vegetables
  • Other

Food Form:

  • Raw Material
  • Ready-to-cook
  • Ready Made Food

When it comes to cuisine, India is known for its diversity. In order to satisfy the unique Indian palettes that require a different taste every now and then, companies have come up with more Indian variants within frozen foods with items like cutlets, samosas, parathas and kebabs, among others. 

It has provided a great opportunity for companies to capture the Indian market by offering standard staples that comprise vegetables like peas and corn, fruits like strawberries, dairy and bakery products, along with diet snacks, drinks, ready-to-cook meals, healthy frozen alternatives, and so on.

Ready-to-eat frozen foods are mostly used in dessert applications like frozen yoghurt and ice cream which are further driving the growth. 

Advent of digitization

The advent of digitization in the retail industry has highly profited the frozen food market. Frozen food retailers in the past had been hesitant to shift towards online retailing. Seeing how it lowers the opportunity of covering and reaching consumers, many have started to shake up the frozen food industry with their e-commerce sites in order to attract and convert online shoppers. 

The latest trend pertaining to the frozen food market that is driving demand is the introduction of an application that helps the shoppers and makes it convenient for them to pick products as per their preference.

The lockdown scenario 

The surging cases in this second wave of the coronavirus have made the whole country go into lockdown mode again. With most people working from home, frozen food items have been flying off the shelves these days. These items are available year-round regardless of the season.

COVID-19 greatly impacted the restaurant businesses, giving more momentum to frozen foods. The low-ingredient availability has left everyone shifting towards ready-to-cook meals and frozen food alternatives. Looking at the spike in frozen foods, Indian companies are capitalising on local delicacies that comprise organic ingredients. 

Among the Indian customers, vegetables and frozen snacks have summed up to 65 per cent in terms of sales volume. Urban areas account for 80 per cent of the demand which includes dairy, bakery, frozen, canned, diet snacks, ready-to-eat meals, health products, and drinks among others.

The government’s push 

Capitalising on a trust deficit China has been facing due to the COVID-19 outbreak, along with a surge in demand, India is pushing for increasing shipments of frozen foods. The pandemic has made everyone conscious about their food choices and people have been shifting towards brands that display safe processing properties for manufacturing, clean and pure ingredients, and safe handling of products. 

The Indian government has accelerated the process of setting up cold storage chains, mega food parks and reefer vehicles. This can prove to be a huge step to earn more foreign currency at a difficult time as well as commit to doubling farmers’ income by 2022.

China may have a comparative advantage over India in terms of manufacturing and costs, however, the pandemic is prompting people across the globe to rethink sourcing destinations. Compared to $39.4 billion in 2017-18, India is aiming to boost the value of farm exports to $60 billion by 2022. Surely enough, India is at an advantage during this adversity.

Key Players

The key players of the India Frozen Food market are IFB Agro Industries Limited, McCain Foods (India) Private Limited, Godrej Tyson Foods Limited, Mother Dairy Fruit & Vegetable Private Limited, Tanvi Foods, Venky’s (India) Limited, ITC Limited, Innovative Foods Limited, West Coast Fine Foods Private Limited, Vadilal Industries Limited, Gadre Marine Export Private Limited, Al Kabeer Exports Private Limited and Darshan Foods Private Limited, among others.

Moreover, with the evolution of modern retail outlets like Food Bazaar, DMart, Spencers, and online grocery stores like Big Basket and Grofers, the frozen food industry in India is witnessing positive growth.

Moving Forward

Taking into account the global shift toward India in an atmosphere of anti-Chinese sentiments, the Indian Frozen Food market is looking to witness substantial growth in the coming years. With the realisation of key sectors such as the ready-to-eat segment and a rich source of organic food, India certainly has massive untapped potential. 

 

Ashwin Bhadri, CEO, Equinox Labs, Mumbai

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