Things around us have changed due to the current unprecedented times and we are finding ourselves looking for ready-to-cook meals that are easy, quick and healthy, to support our hectic lifestyles. The new normal of work from home, lack of domestic help and long working hours are some of the reasons where frozen foods can come to the rescue. Especially now, where we want ourselves and our essentials to come into minimal contact with others, frozen foods are a welcome relief since they are hygienic, made with less human contact, tasty and nutritious.
While Covid-19 has impacted most of the industries across the globe, it has had a great impact on the growth of frozen food markets in India. However, Covid-19 is not the only factor that has affected the market trends, there are other factors like taste and preference of consumers, change in perceptions and demand for more hygiene and wholesome product, growing purchasing power (socio-economic development), technological development, easy and wide availability of food items and infrastructure developments are other factors that have impacted the growth of frozen food in India.
The frozen food market was valued at Rs 98.79 billion in 2020 and is anticipated to reach Rs 224.90 billion by 2025, expanding at a compound annual growth rate (CAGR) of ~18.17 per cent during the 2021 – 2025 period, but this growth rate has surely accelerated multi-fold. They are gradually becoming more and more popular among consumers in India due to the increasing self-awareness among consumers of their easy availability and high quality.
The post-Covid scenario is very positive for the frozen food industry. Consumers are now, increasingly looking for better- packaged food options because of hygiene and safety concerns. Frozen foods are not only fresh and hygienic but also serve as a great alternative to full-course meals that save time, bring convenience and safety to our currently extraordinary and busy lives. Consumer’s demand seeking variety in taste and local flavours have also changed, which the frozen food companies are meeting by expanding their product portfolio.
The general perception of consumers about frozen foods have also changed. Now the industry is offering products that not only guarantee the taste and convenience but also, some of them, are completely free of added preservatives, colours as well as trans-fat. Freezing as a process tends to involve minimal processing, prevents flavour changes and nutrient loss, retaining the nutritional content, texture and flavour.
There have been a lot of technological developments and improvements which the frozen food industry has adopted and invested heavily into. These foods are frozen quickly with Blast, IQF or Spiral Freezing Technologies that not only make sure that 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 it a 12-18 months shelf life.
Due to urbanisation and increase in jobs, the socio-economic scenario of the country has changed. Disposable incomes and the living standards of the people have drastically improved. The easy availability of retail stores equipped with frozen facilities had led to the availability of frozen foods. The large working-class population now prefer ‘convenient’ foods over the home-cooked regular meal to avoid preparation and to save time. Initially, this was the scenario in Metros, but now this trend is easily visible in Tier II cities and B Towns. This is why now; we will be launching our brand very aggressively in more than 30 B Towns within 3 months.
Through its various schemes to promote the farmers, small and medium scale industries to set up food processing industries and cold-store facilities, the government has financially supported the Frozen Food industry. The advancement in cold chain infrastructure has further supported the supply and distribution of frozen food products in Tier I and Tier II cities. This has led to growth in the frozen food industry.
The supply chain management and the logistics arrangement of frozen food have also greatly impacted the supply of frozen foods to market. The refrigeration facilities and the infrastructure available in hypermarkets, supermarkets, departmental stores and other modern trades and retail stores have led to the easy and wide spread availability of the frozen foods in the market. Moreover, 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 also increased in India.
The emergence of Quick Service Restaurant (QSR) chains and institutions have also boosted the frozen food industries due to their adherence to brand value and their challenge to provide uniform and standard products to consumers across all locations.
Last, but not the least, as the consumers are now looking for better food options due to hygiene and safety concerns, they are moving towards vegetarianism. Consumers will become choosy and look for healthier and high-quality options. Vegan is the next trend going to emerge in India. Many of the consumers will now change their brand preference and look for a vegetarian range of products and new offerings. They will move towards those brands which display guaranteed safe, regulated plants and processing properties for manufacturing, clean and pure ingredients and safe handling of products.
As per market reports, Asia Pacific is anticipated to be the fastest-growing region in the next 5-6 years owing to increasing trends of ready-to-cook and ready-to-eat foods in China and India. Although the frozen food market remained largely unaffected in India during the C ovid-19 pandemic, there are a few challenges that the industry is facing in India.
On the one hand, the demand for frozen foods in retail has skyrocketed, on the other hand, the demand from the food service sector has declined. Horeca (hotel, restaurant, café) saw a steep decline in the sales and the people remained at home due to a nationwide lockdown. Horeca is the backbone of the frozen food industry therefore, loss of business from this sector is one of the major challenges for the frozen food market in India.
Setting up a new and adequate infrastructure for the storage and supply of frozen foods is a barrier for a new player due to strict food and safety regulation and compliance. It also requires higher capital investments to set up such a facility. Infrastructure and refrigerator facility at small retail or Kirana stores is another major challenge in the frozen food 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 keep to stock, the range of the products is limited.
Recent hikes in the price of fuel and energy have also added to the woes. Earlier, the price for transportation of a kilogramme of frozen food product to its production facility and to the warehouse, has seen a hike of 33-37 per cent.
Post-Covid, the frozen food brands will get more acceptance from the consumers and the consumer penetration to the category is going to rapidly increase in India. The same trend is now visible in the Indian market and especially across all Asian markets. Earlier, the high cost of processed food items posed a major challenge for the category to grow. However, people in society are becoming self-aware and health-conscious and have entirely transformed the face of the frozen food category.
Archit Goel, Director and Chief Financial Officer, Shri Bajrang Alliance, Raipur