The Food Processing Sector

Food processing adds value to the agricultural produce starting at the post harvest level. It includes even primary processing like grading, sorting, cutting, seeding, shelling packaging etc.

The sector comprises of the following major areas:

Fruit & Vegetable The major products processed out of fruits and vegetables include beverages, juices, concentrates, pulps, slices, frozen and dehydrated products, wine potato wafers or chips etc. Apple Apple without skin, cooked, canned apples, dehydrated apples, frozen apples, canned apple juice, apple juice, apple sauce. Banana Banana Powder, Banana Flour, Banana Puree, Banana Chips, Banana Jam and Banana Jelly, Banana vinegar, Sweet coat banana. Grape Jam, Juice, Syrup, Squash, Wine and Raisins. Guava Pectin, Jam, Jelly, Pickle, Powder, Puree, Peru khand, Beverages, Ethanol Production, Wine and Animal Feed preparation. Lychee Lychee crush, juice, squash, pickles, canned and dried fruits. Mango Juice, squash, nectar, jam, pulp, puree, pickles, canned slices, mango leather (papad), starch from mango kernel. Papaya Papain, Jam, Marmalade, Tutti-frutti (candy), Pickle, Wafers (Papad), Chocolate, Canned papaya, Fridge dried papaya. Pineapple Canned Pineapple Juice, Pineapple Squash, Pineapple beverage, Canning Syrup from Pineapple Waste Juice, Preparation of Vinegar from Pineapple Wastes, Cattle Feed Ingredient, Pineapple Bran, Pineapple Silage, Pineapple Tops (Crowns), Waxes, Pineapple Proteases (Bromeliad), Pineapple Fibre.

Pomegranate Pomegranate Juice, Jelly, Syrup, Squash, Nectar, Anar rub, Anar crush, Dried pomegranate (Anar Dana), Powder, Pomegranate wine. Sapot Chikku Juice, Squash, Syrup, Jam, Toffee, Candy, Dried Fruit Scrap and Powder, Milk Shake, Ice cream. Watermelon Juice. Fruits and Vegetables Consumer Products Fruit Toffees Fruit toffee is made from pulp of various fruits along with certain food preservatives and ingredients. Small and cottage scale manufacture of fruit toffee provides self-employment in the area where the fruits widely available. Although fruit toffees are being made in the organised sector still there exists a vast potential for cottage scale production. Fruit Bars Fruit bar is a concentrated fruit product, which has a good shelf life. A variety of pulpy fruits like mango, banana, guava, papaya, apple etc. can be used in preparing fruit bars. Due to their good shelf life, availability in various flavors and texture fruit bars are becoming increasingly popular. Fruit Jams and Jellies Fruit jams and jellies are prepared by boiling the fruit pulp with sufficient quantity preservative like sugar to a moderately thick consistency. The popular varieties of jam include mixed fruit, pineapple, mango, strawberry, grape, apricot and among jellies, guava and apple. The jam is used as a bread spread and could be taken along with paranthan, chapatti and puri. Jams, jellies and marmalades contribute around 17% of the total processed fruit and vegetable products. Improved Murabba Making Murabba comes under indigenous sweet preparations of the country. Murabba could be prepared from amla, mango, bael, myrobalan, carrot, apple also citrus peels are quite popular. The traditional method of preparing murabba requires a long processing time and does not ensure good keeping quality for the product often spoils due to miocrobial fermentation. The method has been improved to obtain murabba in a shorter period with good keeping quality, attractive translucent appearance and desirable texture. Tutty Fruity Fruits like apple, mango, amla, papaya, strawberry, raspberry, pear, cherry, etc are used in preparing preserves or candies. Raw papaya is largely used to make tutti-fruity used in bakery products, sweetmeats, ice creams, salads and pan. The candied fruits and vegetables are quite popular food items and their consumption of is rapidly increasing.

Osmo-air dried Fruits Osmo air-dried fruits are based on a novel approach towards dehydration. Slices of various fruits like ber, pineapple, jackfruit, mango, etc. are processed in two stages. In the first phase most of the water is removed using sugar syrup as an osmotic agent. In the second phase air drying is done where the moisture content is further reduced to about 15%. The osmo-air dehydrated product is near to the fresh fruit in terms of colour, flavour and texture. The osmo-air dehydrated product can be used in ready-to-eat type foods, ice cream, fruit salad, kheer, cakes and bakery products. Such osmo-air dried fruit based units can be set up in areas near fruit orchards to the benefit of people. The process is simple and involves operations like selection of fruits, cleaning, washing, peeling, curing and slicing and dicing. To remove water by osmosis the prepared fruit slices are steeped in sugar solution. The slices are then drained, dried in a hot air drier and finally packed in flexible pouches. Grape Raisins Dried grapes are used in various food preparations and are directly consumed. Grape growing area has the potential of manufacturing raisins. An effective and improved method to prepare raisins has been developed which can easily be adopted. This process consists of washing of grape, alkali treatment, sulphitation, drying in sun or in dehydraters. Any grape variety with high sugar and low acid content can be used yielding a good quality product. No sophisticated equipment is needed and the unit can be installed in orchards generating rural employment. Dry Apricots Apricot is grown in the temperate regions. The dry fruit form of apricot is an important item of confection. The fully ripe fruits are harvested item of confection. The fully ripe fruits are harvested and placed in a wooden sulfuring chamber wherein yellow sulphur is burnt at the rate 4g per kg of fruit. Sulfured fruits are then dried in a solar drier for 5-7 days till the moisture content is about 17%. Finally the dry fruits are packed in polythene bags for storage and marketing. Dehydrated Vegetables Dehydration is one of the methods to preserve seasonal and perishable vegetable and make them available throughout the year in hygienic conditions at reasonable or low cost. Such dehydrated vegetables are easy to transport and cater to the needs of large catering establishments. The advantage of such dehydrated vegetables can be used in various preparations at any season of the year. Traditional sun drying is time consuming, less hygienic and climate dependent. The process for controlled dehydration of vegetables consists of grading and sorting, washing, peeling and trimming, size reduction, blanching, chemical treatment, dehydration and packing in unit can be established. Anardana Anardana is pomegranate seed. The seed when dried yields anardana of commerce. The anardana is manually extracted of arils followed by sundrying. It is unhygienic, labour intensive and slow. The product cannot be stored for long or beyond monsoon season since spoilage occurs due to discolouration, moisture ingress and insect infestation.

The modern processing technique is hygienic and consists of pre-cleaning, mechanised extraction of arils, solar drying and packaging. The mechanised aril extractor works on HP motor and can process 60 kg fruit per hr as compared to productivity of 5 kg per hr in manual operation. Fisheries Under this category, frozen and canned products mainly in fresh form is presented. Meat and Poultry It is frozen and packed mainly in fresh form. Egg is also processed into egg powder in a couple of units. Grain and Cereals Flour, bakeries, biscuits, starch glucose, cornflakes, malted foods, vermicelli, pasta foods, beer and malt extracts, parched rice, flaked rice, rice starch, alcoholic beverages, Bran oil grain-based alcohol are some of the products which is processed food under grain and cereals. Milk and Dairy Whole milk powder, Skimmed milk powder, Condensed milk, Ice cream, Butter and Ghee are some of the processed products under dairy. Processed Milk

Skimmed milk Skimmed milk is prepared by removing the fat, vitamin A and other fat-soluble vitamins from whole milk. The fat is removed by using a cream separator. After the removal of fat the milk is suitable for many therapeutic conditions like, diabetic, obesity, high cholesterol, heart diseases, hypertension etc. Skimmed milk has only 2.5gms of protein, 29kcal of

energy, 120mgs of calcium, 90mgs of phosphorous and most importantly fat be only 0.1gms per 100ml. Toned milk Toning can be defined as the addition of the constituted skim milk to whole buffalo milk so to reduce the fat to 3%. The nutritive value of toned milk is almost similar to that of the fresh cow's milk. Toned milk is useful source of protein for certain conditions such as malnourishment, pregnancy etc. Doubled toned milk Double toned milk is prepared by mixing cow's milk or buffalo milk with fresh skim milk or skim milk reconstituted from skim milk powder so that the fat content is not less than 1.5%. Except for lower fat and vitamin A contents the nutritive value of double toned milk is similar to that of toned milk. Standardized milk Standardised milk is prepared from buffalo milk or a mixture of buffalo and cow's milk by mixing with skim milk so that the fat content of the mixture is reduced to 4.5%. Its nutritive value is almost similar to that of cow's milk. Sweetened condensed milk Sweetened condensed milk contains about 40% sucrose but the concentration of milk solids is nearly the same as in evaporated milk. Because of its high sucrose content it is not suitable for feeding infants. It is used for the preparation of pudding, coffee, and tea. It has to be reconstituted with water before consumption if required. Malted milk or powder Malted milk powder is prepared from whole milk and malt extract. It contains 15% proteins and 7% fat. It can be used as food for invalids and convalescents and as supplement to the diets of children as well as for adults. But it is not suitable for feeding infants. Milk products can be unfermented and fermented products which includes all types of milk, cottage cheese (paneer) whey, curd, skimmed milk powder, cream, malai, khoya, yoghurt, butter milk, butter and cheese. Skimmed milk powder Dried and packed milk could be preserved for longer time it can be dried and packed. To prepare skimmed milk powder a thin layer of milk is run over heated cylinder, which is called as roller or drum process. The dried powder is removed by scraping. The other method to prepare the skimmed milk powder is spray process in which minute droplets of milk are sprayed into a heated chamber and powder falls to the bottom. To reconstitute this powder into milk one part of the powder is added to eight parts of water. This milk is deficient in fat and fat-soluble vitamins but the proteins, water-soluble vitamins, and minerals are preserved. Other Milk Products

Cream The fat, which floats to the surface of milk when allowed to stand for several hours are cream. Commercially it is separated by centrifugation. Nature of milk cream Description Fat % 12 18 23 Energy kcal per 100gms 133 185 227

Half cream Single cream Sterilised cream Whipping cream Double cream Clotted cream

35

329

48 55

439 500

Malai (clotted cream) Allowing the boiled milk to cool for some time a thick layer of fat and coagulated proteins collect at the surface. Most of the fat could be removed by repeating the process. Buffalo milk is considered to be ideal as it is richer in fat, produces better malai. Khoya Khoya is a milk product in which the water content is reduced to between 20 and 25 percent. It is prepared by vigorously boiling and stirring milk continuously. Khoya forms a uniform mass containing fats heat coagulated proteins and lactose. It can be stored for about 3-5 days and with the addition of sugar can be kept longer. It can be eaten as such or used for preparing sweets. Khoya provides 20% protein, 25% fat, and 413kcal of energy per 100 gms. Paneer (cottage cheese) Paneer is prepared by adding citrus or lemon juice to boiling milk. Commercially theprevious residual paneer liquid is used which precipitates casein, lactalbumin, and fat. It is then strained through a cloth and paneer is collected. It is not a fermented product of milk so it cannot be ripened like cheese as boiling destroys all the organisms. Paneer supplies 15% protein, 22%fat, 5% carbohydrate, and 280kcal of energy per100gm. Curd Curd is a sour milk preparation regularly made and highly consumed in Indian homes. Dahi or curd is eaten as such with salt or sugar or added to other preparations. The butterfat is removed from dahi by churning and used to make ghee. The calorific value of curd is same

as cows milk. 40 percent of lactose is converted to lactic acid. It has 3.1 gms of protein, 4gms of fat, 149mgs of calcium, and 93mgs of phosphorous.

Sector specific information

Marine Products

India is the third largest fish producing country in the world and ranks second in inland fish production. The 8 from both inland and marine resources, 3 mn hectares of reservoirs, 1.4 mn hectares of brackish water, continental shelf area and 2.2 mn sq km of exclusive economic zone supplement Indias vast potential for fishes.

Processed fish products for export include conventional block frozen products, individual quick frozen produc fish products like fish sausage, cakes, cutlets, pastes, surimi, texturised products and dry fish etc. Exports of mar been erratic and on a declining trend which can be owed to the adverse market conditions prevailing in the EU The anti-dumping procedure initiated by the US Government has affected Indias shrimp exports to the US. Fish Production & Exports Production (In mn tonnes) Exports Year 2000-01 2001-02 2002-03 2003-04 Marine 2.81 2.83 2.99 2.94 Inland 2.84 3.12 3.21 3.45 3.52 Total 5.65 5.95 6.2 6.39 6.3 Quantity (MT) Value (Rs bn) 440473 424470 467297 412017 461329 64.44 59.57 68.81 60.92 66.47

2004-05 (Prov.) 2.78

Source: Ministry of Food Processing Industries, Annual Report 2005-06 Utilisation of Catches

About 81% of the fish catch in the country is marketed as fresh or chilled and forms staple food for the coast inland landing centres. About 6% of the catch is used for drying and curing. Frozen fish production accounts fo 4.7% is used for reduction to fish meal. In the wake of changinglifestyles, value added fishery products of differe 'convenience food' is also gaining popularity in the markets. The range of value added fishery products process include extruded products, battered and breaded products, surimi and derivatives, pickles and curried prod packing. State of the industry

There are about 1,273 registered exporters in the country and the Indian seafood fish processing industry is quit The post-harvest infrastructure includes around 215 ice plants, 481 shrimp peeling plants, 371 freezing plants, units, 7 canning plants, 16 fishmeal plants, 11 surimi plants, and one agar-agar production unit. Around 95 processing units in the country is concentrated in the 20 major clusters in 12 maritime states where fish catch export oriented processing units are HACCP certified.

The total installed freezing capacity of 7,283 t/day, is fully utilized only during the peak fishing season. Commer mostly directed towards export. India exports fourteen major fishery product groups to over 40 countries. Shr accounts for 65-70% of the export earnings. Market structure and exports

The share of marine product exports has steadily grown over the years; from a mere Rs 3.92 crore in 1961-62 to in 2005-06, accounting for approximately 1.5% of the total exports from India. Japan, USA and the Western E are the principal buyers of Indian frozen shrimp. Japan retained its position as the single largest buyer for Indian till 2001-02 accounting for about 31% in the total export value. During the year 2002-03 and 2003-04 USA eme largest market for our marine products. Maritime States of India

The European Union, in the year 2004-05, collectively became the largest importer of Indian marine products 2004-05, EU's share increased by 10% in quantity, 12.8% in value terms in 2005-06. The share of USA also incre quantity and 3.6% in value terms in 2005-06. The exports to the US, EU, China, and Middle East showed an inc export to Japan recorded a declining trend in the past few years.

Major marine products exported from India includes frozen shrimps, Individually Quick Frozen (IQF) shrimps/prawns, dried shrimps/prawns, lobsters, cuttle fish, squid tubes, fresh fishes, canned fish, dried fish, cr aquarium fishes, dried shark fins, dried cuttle fish bones, dried fish maws, etc.

Frozen shrimp is the largest item exported in terms of value with a share of 59.02% of the total exports and froze item exported in terms of quantity with a share of 35.60% in total exports of marine products (MPEDA, 2005-06)

Prospects for the industry

Only marginal increase in marine fish production is predicted from near shore waters in the country, as it has re level. However, gap in total fishable potential and current production exists in deep sea and off-shore pelagic r aquaculture and Mari-culture hold good potential. While, inland fish production has been growing rapidly at abo and showing further development potential, resource enhancement measures in coastal waters is needed to adequate development of the sector, besides, intensifying coastal aquaculture, sea farming, intensification of better management of coastal fisheries with application of principles of sustainability and stock enhancement mea practiced for maximizing the returns. Considering the large scale processing facilities created and the skilled m import of raw material for processing, value addition and export hold good prospects for India. Market Structure

It was before 1960 the markets of Indian marine products were largely confined to neighbouring countrie Myanmar formerly known as Burma, and Singapore etc. when dried items dominated our exports. This situation development of technology and modernization; dried products gave way to canned and frozen items. The p resulted in market shift. More sophisticated and affluent markets viz. Japan, USA, Europe, Australia, etc. beca buyers. Several seafood processing units with modern machinery for freezing and production of value added pro at all important centers in the country for export processing.

For a long time USA was the principal buyer for our frozen shrimp but after 1977, Japan emerged as the princ product, followed by the West European countries. Japan retained its position till 2001-02 as the single larg marine products accounting for about 31% in the total exports value. During the year 2002-03 and 2003-04 US single largest market for our marine products. During the year 2004-05, the European Union has collectively b importer of Indian marine products and it retained its position during the year 2005-06 also. As compared to 20 increased by 16.22% in quantity, 17.31% in value and 19.39% in US $ realization. USA became the second terms of value, followed b y Japan. Exports to USA, EU, China, Middle East etc showed an increase where as th and South East Asia recorded a declining trend. Export Trends

The share of marine product exports has steadily grown over the years; from a mere Rs.3.92 crore in 1961-62 to in 2005-06 accounting for approximately 2.1% of the total exports from India. Growth in Export of Indian Productions Year Quantity Value in in Rs. Tonnes Crore 3.92 4.20 6.09 Average Average Value Unit value Exchange in US $ Realization Rate US $ Million (Rs. / Kg) 2.49 3.76 3.20 NA NA NA NA NA NA Average Growth rate % Unit Value Quantity Rupee Realization Value US $ / Kg. NA NA NA -21.30 -29.06 70.75 -15.52 7.14 45.00

1961- 15732 62 1962- 11161 63 1963- 19057

64 1964- 21122 65 1965- 15295 66 1966- 21116 67 1967- 21907 68 1968- 26811 69 1969- 31695 70 1970- 35883 71 1971- 35523 72 1972- 38903 73 1973- 52279 74 1974- 45099 75 1975- 54463 76 1976- 66750 77 1977- 56967 78 1978- 86894 79 1979- 86401 80 1980- 75591 81 1981- 70105 82 1982- 78175 7.14 7.06 17.37 19.72 24.70 33.46 35.07 44.55 59.72 89.51 68.41 124.53 189.12 180.12 234.62 248.82 234.84 286.01 361.36 3.38 4.62 8.23 9.00 9.21 10.56 9.77 12.54 15.35 17.12 15.17 22.87 28.33 31.62 27.00 28.80 31.07 40.80 46.22 NA NA NA NA NA NA 7.5578 7.4731 7.6750 7.7925 7.9408 8.6825 8.9775 8.5858 8.2267 8.0975 7.9092 8.9683 9.6660 NA NA NA NA NA NA 46.40 59.61 77.81 114.87 86.15 143.43 210.66 209.79 285.19 307.28 296.92 318.91 373.85 NA NA NA NA NA NA 1.29 1.68 2.00 2.20 1.91 2.63 3.16 3.68 3.28 3.56 3.93 4.55 4.78 10.84 -27.59 38.06 3.75 22.39 18.22 13.21 - 1.00 9.51 34.38 -13.73 20.76 22.56 -14.66 52.53 -0.57 -12.51 -7.26 11.51 17.24 -1.12 146.03 13.53 25.25 35.47 4.81 27.03 34.05 49.88 -23.57 82.03 51.87 -4.76 30.26 6.05 -5.62 21.79 26.35

83 1983- 92187 84 1984- 86187 85 1985- 83651 86 1986- 85843 87 1987- 97179 88 1988- 99777 89 1989- 110843 90 1990- 139419 91 1991- 171820 92 1992- 209025 93 1993- 243960 94 1994- 307337 95 1995- 296277 96 1996- 378199 97 1997- 385818 98 1998- 302934 99 1999- 343031 00 200001 440473 373.02 384.29 398.00 460.67 531.20 597.85 634.99 893.37 40.46 44.59 47.58 53.66 54.66 59.92 57.29 64.08 10.3400 11.8886 12.2349 12.7782 12.9658 14.4817 16.6492 17.9428 24.4737 28.9628 31.3655 31.4000 31.5000 35.7500 36.2500 41.8000 43.0300 45.4975 47.5292 360.75 323.24 325.30 360.51 409.69 412.83 381.39 497.90 562.19 610.63 798.21 3.91 3.75 3.89 4.20 4.22 4.14 3.44 3.57 3.27 2.92 3.27 17.92 -6.51 -2.94 2.62 13.21 2.67 11.09 25.78 23.24 21.65 16.71 25.98 -3.60 27.65 2.01 -21.48 13.24 28.41 -3.63 3.23 3.02 3.57 15.75 15.31 12.55 6.21 40.69 54.01 28.54 41.56 42.80 -2.07 17.72 13.98 -1.50 10.59 25.94 -7.56

1375.89 80.08 1768.56 84.61 2503.62 102.62 3575.27 116.33 3501.11 118.17 4121.36 108.97 4697.48 121.75 4626.87 152.74 5116.67 149.16 6443.89 146.29 5957.05 140.34

1138.62 3.70 1111.46 3.75 1152.83 3.05 1295.86 3.36 1106.91 3.65 1189.09 3.47 1416.32 3.22 1253.35 2.95

2001- 424470

02 2002- 467297 03 2003- 412017 04 2004- 461329 05 2005- 512164 06 6881.31 147.26 6091.95 147.86 6646.69 144.08 7245.30 141.46 48.2933 45.7091 44.6683 43.5000 1424.90 3.05 1330.76 3.23 1478.48 3.20 1644.21 3.21 10.09 -11.83 11.97 11.02 15.52 -11.47 9.11 9.01

Indias seafood resource Maritime States of India Kerla Tamilnadu Pondichery Karnataka Andhra Pradesh Andaman & Nicobar Islands Future Prospects Maharashtra Gujarat West Bengal Orissa Goa Lakshadweep

Marine products have created a sensation in the world market because of their high health attributes. With th seafood has been acclaimed as one of the fastest moving commodity in the world market. The world marke doubled within the last decade reaching US $49.32 billion mark India's share is 2.4%, dependence on shrimp a changing due to the increased attention given on other fishery resource like squid, cuttlefish, fin fish, etc. and markets of Western Europe and South East Asia.
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Ready To Eat Food

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The market for semi-processed/cooked and ready to eat foods was around Rs 82.9 billion in 2004-05 and is rising rapidly with a growth rate of 20 per cent. With the changing life styles of the Indian middle class and the busy schedules of both the husband and wife in the family the demand for semi-processed cooked/ready to eat food will go up steadily as hired domestic help is also becoming costlier. HLL has entered the ready to eat segment through Indus Valley rice meals in seven flavours. MTR Foods has also launched a wide range of rice meals and other curries. Satnam Overseas has also entered this growing market with its Kohinoor brands of rice meals and curries. ITC s more than 50 packaged branded food products under Kitchens of India and Aaashirvaad brands with different varieties of ready to eat, cooked, food is gaining popularity in the market. Pizza Corner has also expanded its outlets rapidly this year. There are currently 37 Pizza Corner outlets of Global Franchise Architects (GFA) across India. The total production of culinary products and snack food was around Rs 1750 crore in 2004-05 and is growing at a moderate rate of 8 per cent. The culinary products including mainly wheat based products comprising of noodles, vermicelli, macaroni and spaghetti is gaining popularity. HLL (Kissan and Knorr range) and Nestle (Maggi) dominate this segment, as both have large product portfolios. Heinz and Top Ramen are also knocking at the door. Indian snack food market has reached a value of Rs 1530 crore. It is one of the largest snack markets in the world. Potato chips are by far the largest product category within snacks, with 85% of the total market share. Snack nuts and savory snacks also add to the market. At present, popcorn has yet to break into the Indian market. Frito Lay's India, Pepsicos Snack Food Division having snack foods plants in Channa (Punjab) and Pune (Maharashtra), and going for another in (Sakrail) West Bengal with investment of Rs 75 Crores as the state of West Bengal has immense opportunities for agro-based industries. The company has carried out backward integration to source potatoes and other crops with farmers across the states. The worlds largest producer of French fries and potato specialties McChain Foods with McChain Smiles and NP Foods have entered in Indias potato snack industry in 2005. Ready-to-eat food

According to the report of Euromonitor International, a market research company, the amount of money Indians spend on meals outside the home has more than doubled in the past decade, to about US$ 5 billion a year and is expected to double again in about half that time. The industry is estimated to grow at 9-12 per cent, on the basis of an estimated GDP growth rate of 6-8 per cent, during the tenth five-year plan period. Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit and vegetable processing, which is currently around 2 per cent of total production is estimated to increase to 10 per cent by 2010 and to 25 per cent by 2025. With the growth of 150 per cent in sales, the popularity of food and agro products is not surprising. With such promise in the sector, a number of foreign companies have joined the competition. While US brands such as McDonald's, Pizza Hut and Kentucky Fried Chicken have become household names, more are on their way. The new wave in the food industry is not only about foreign companies arriving here attracted by the prospective size of the market. It is also about the migration of the made in India tag on food products travelling abroad. Indian food brands and fast moving consumer goods (FMCGs) are now increasingly finding prime shelf-space in the retail chains of the US and Europe. These include Cobra Beer, Bikanervala Foods, MTR Foods' ready-to-eat foodstuff, ITC's Kitchen of India and Satnam Overseas' Basmati rice. Major social, economic and demographic changes over recent years have had great influence on the food we eat, and on where, when and how we do so. As a result the convenience food sector has grown by 70% over the past decade, creating a huge market. Convenience foods are foods which are designed to save consumers time in the kitchen and reduce costs due to spoilage. These foods require minimum preparation, typically just heating, and are packaged for a long shelf life with little loss of flavor and nutrients over time. These products tend to be criticized because:o o o o o o They typically are high in fat and calorie contents The reduced time cost and nutritional content associated with these foods is specifically blamed for obesity Sometimes Genetically Modified Foods are used Sometimes an irradiation process is used If heat processing is used the vitamins are lost Preservatives are always used

These products tend to be used because of: o o o o Cost is not very high Time costs: Convenience foods reduce the time it takes to prepare dinners significantly. Variety: Due to packaging techniques such as canning and freezing, foods are available at all times of the year. Food safety: Packaging and processing techniques, such as canning, freezing, and irradiation, reduce spoilage and the presence of bacteria in the consumed products. Consumer Foods This segment includes packaged foods, aerated soft drinks, packaged drinking water and alcoholic beverages. Packaged / Convenience Foods Consumer food industry mainly consists of ready-to-eat and ready-to-cook products, chips, salted snacks, pasta products, cocoa based products, bakery products, biscuits, soft drinks, etc. There are around 60,000 bakeries, 20,000 traditional food units and several pasta food units. The bakery industry is among the few processed food segments whose production has been increasing steadily in the country in the last couple of years. Bakery products include bread, biscuits, pastries, cakes, buns, rusk etc. This activity is mostly concentrated in the unorganized sector. Bread and biscuits constitute the largest segment of consumer foods with an annual production is around 4.00 mn tonnes. Bread manufacturing is reserved for the small-scale sector. Out of the total production of bread, 40% is produced in the organized sector and the remaining 60% in the unorganized sector. Similarly, in the production of biscuits, share of unorganized sector is about 80%. Cocoa Products There are 20 units engaged in the manufacture of cocoa products like chocolates, drinking chocolate, cocoa butter substitutes, cocoa based malted milk foods with an annual production of approximately 34,000 tonnes. Soft drinks This segment is the 3rd largest in the packaged foods industry, after packed tea and packed

biscuits. The aerated soft drinks industry in India comprises over 100 plants and provides direct and indirect employment to over 125,000 employees. It has attracted one of the highest foreign direct investments in the country. Its position is strengthened by strong forward and backward linkages with glass, plastic, refrigeration, sugar and the transportation industry. Penetration levels of aerated soft drinks in India are quite low compared to other developing and developed markets, which is indicative of the potential the segment holds for further growth. Exports of Consumer Foods Below are the fast food item categorized under quantity and their value (Quantity in MT, Value in Rs Mn)
2001-02 Quantity Groundnuts Guar Gum Jaggery & Confectionery Cocoa Products Cereal Preparation Alcoholic & Non- Alcoholic Beverages Miscellaneous Preparations Milled Products 112813 117883 365893 1293 38087 49672 23189 322347 Value 2509 4031 4365 129 2247 1183 1373 1964 2004-05 Quantity 177115 129648 35549 2274 49487 30045 52514 140123 Value 5030 6643 770 273 2778 1138 2244 1449 CAGR Quantity 16.2 3.2 -54 20.7 9.1 -15.4 31.3 -24.2 Value 26.1 18.1 -43.9 28.5 7.3 -1.3 17.8 -9.6

Drinks and Beverages

Fruit Beverages Soft and Aerated Drinks Wine & Beer

Fruit Beverages

Traditionally, the Indian life style has a predilection for fresh fruits and vegetables or those processed at home. There is a sea change. People, are now increasingly going in for fresh fruit vending from kiosk fountains, which produce instant juices from fresh fruits in the presence of the consumer. It could be due to the non-availability of hygienically produced and wellpreserved products with the use of preservatives. That is why some of the real but branded fruit juices launched in the late 1980s and early 1990s did not succeed. There has been a steady rise in the capacity, production and capacity utilisation in the fruit processing units. The processing capacity had gone up from 0.9 mn tonnes in 1990-91 to 2.1 mn tonnes in 1999-00. The capacity utilisation improved from 31% to 47%, with the production in 1999-00 estimated to have increased to 980,000 tonnes. The official reports do not show any substantial increase in total output although branded drinks do show a healthy improvement. There is no general acceptance of the product forms in the fruit drinks market. The consumer is basically concerned that it is a fruit juice and not a synthetically constituted product. Accordingly, the first segmentation is between real fruit drinks and synthetic drinks. The former are based on natural fruit pulp or juice. The others are synthetic products containing fruit flavours. Among the fruit juice beverages are fruit juices (Pepsi's Tropicana), nectars (Dabur's Real) and fruit drinks (Frooti and Slice). All these are real, reconstituted from fruit pulps or concentrates. The leading fruit juice brands include Real, Onjus, Tropicana, Frooti, Jumpin. The fruit drinks are mainly based on oranges, mangoes, pineapples, grapes, apples, guava and tomato. They only differ in pulp content: the juices have over 85%, nectars (20% to 85%) and fruit drinks (less than 20%). The branded fruit juices market inclusive of nectars is placed at about Rs 10 bn. The pure fruit juices are the preferred drink among the fruit drinks. This segment is growing at around 10% annually. The market for fruit juices is expected to grow to Rs. 7.50 bn by end 2009-10 from nearly Rs. 4.75 bn presently. Consumption per capita of juices in India is very low. It is estimated at a fraction of a litre - 20 ml. China has attained a consumption level of 1500 ml. The consumption in India is basically an urban phenomenon. Nonetheless, it is gaining slow but steady penetration into the rural areas. The early development of juice processing was led by co-operatives and other processors in the fruit-rich states of Himachal Pradesh and Punjab. The canned juice segment covered brands like NAFED, Noga, Midland, Gold Coin and Druk. These were fruit juices or nectars - not drinks. These did not make a mark in the market for whatever reasons: high price, unattractive packaging, and lack of right promotion programme. A bulk of juice consumption came from institutional commercial buyers. There was a sizeable export of mango pulp. It is now getting into the retail marketing basically as a funfood, often as a

substitute for aerated and cola drinks. In the area of packaging, Tetra-Pak India, a part of the $ 10 bn Tetra Laval group, has become the major source of brick cartons amenable to aseptic packaging and imparting long product shelf life to the foods. Tins, nonetheless still continue to be in the market in family size packings. A perceptible change came in 1996 with the introduction of Real juice in aseptic cartons from Dabur Foods. Packaged in tabletop packs from Elopak, Norway, the juices were claimed to have a six-month shelf life. Real fruit juice is the first brand in Asia to use the latest Spin Technology developed by TetraPack. It is available in five flavours - orange, mango, pineapple, mixed fruit and tomato. It also plans to export Real to South East Asia, Bangladesh and Sri Lanka. Enkay Texofood Industries entered the market with what is claimed as 100% natural orange juice in India with Onjus brand. Enkay happens to be the largest Indian exporter of fruit juices, pulp and concentrates to Europe and North America, with clients such as Unilever, Coke, Pepsi and Nestle. The company's plants near Vapi in Gujarat have been producing daily 80,000 packs of 250 ml and 70,000 packs of one litre of Onjus. By the end of 1999, Onjus had captured at a point of time third of the juice market. Until the advent of Tropicana, Real remained a premium product. Dabur Foods marketing strategy paid off until Onjus was sold at almost half the Real's price and claimed to be a 100% natural drink. Tropicana Product, a division of PepsiCo, entered the Indian market. For the Indian markets, Tropicana developed a sweeter blend of orange and white grape. Tropicana was planning to enhance its market share in the fruit juice market and to increase its turnover to Rs 1000 mn by 2002-03. PepsiCo International is planning to make India a regional sourcing hub for fruit juice concentrates and pulp. Pepsi Foods is already exporting nearly 20,000 tonnes of mango pulp and concentrate mainly to West Asia and Europe. It has launched a new mango juice and was to introduce guava and litchi variants. The segment has been witnessing some feverish developments. Pepsi was exploring the launch of a new brand in the segment the first international juice brand in the category launched in India. It had already decided to launch other flavours of Maaza and beverages like iced tea and coffee. It is planning to repack its five-flavour offering for the Indian consumer. The company stopped the production of the 250 ml pack. The new flavour - sweet orange - was being targeted at customers who were not used to the regular orange flavoured juice, which Tropicana sells worldwide. While Tropicana came up with mixed fruits, Pepsi ventured into slice mango juice in Tetrapak along Tropicana. Tropicana also explored the possibility of local production of juices from mango. It planned to source raw processed fruits, such as apples from Himachal Pradesh, grapes from Sholapur and tomatoes from Punjab. Dabur Foods has launched Real Junior, a 125 ml pack of apple and mango drinks for children below 6 years of age. The company has also started test marketing of tomato soup under the

homemade brand. Dabur Foods, a Rs. 860 mn company, is planning to achieve a sales turnover of Rs. 5 bn in the next five years. During the period 2003-04, the company, for the first time since its spinning off into a separate company, logging a net profit of Rs. 150 mn on a turnover of Rs. 850 mn. Coca-Cola and Procter & Gamble were contemplating a stand-alone juices and snacks company. Coke had a setback in its deal with Quaker Oats, owner of sports drinks, Gatorade, being acquired by Pepsi. Coca-Cola was introducing powdered drink concentrate Sunfill Fresh, especially in the rural market place. Pioma Industries, the maker of Rasna brand of soft drink concentrate, was negotiating a joint venture with Del Monte Foods of the USA. Del Monte is the largest producer of canned fruits and vegetables in the US. Rasna has set up its first production unit in Himachal Pradesh, with an installed capacity of 350,000 cases a year. The company has plans for setting up two more units with a combined capacity of 600,000 cases a year. To increase its market share the company is planning to introduce local flavours like shikanjvi, aam panna, and jal jeera. Rasna sachet sales have grown to contribute 30% of its sales in terms of volume. Rasna International is set to face renewed competition from the relaunched Tang brand from Kraft General, which is now a part of the Philip Moris group. The international brand was launched earlier in India by Kothari General Foods. The Prakash Chauhan-controlled Parle Agro was to launch two new fruit beverages, besides widening its product portfolio by getting into jams and ketchups. The poduction units were planned in Maharashtra. The company slashed the prices of Frooti and Appy to gain market share. Merisant India, a subsidiary of Merisant USA and makers of Equal, the low calorie sweetener, has introduced a powdered soft drink under the brand, Fix, in the Indian market. The drink is low in calories and will be sold in different flavours - peach, orange, mango, pineapple and lemon. Fruit Beverages and Squashes and Syrups Fruit Juices and Concentrates Demand: Past & Future Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 Rs bn 0.22 0.3 0.42 0.63 1.03 1.62 1.68

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2014-15 Squashes and Syrups Demand: Past & Future Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

2.20 3.30 2.75 2.48 3.55 3.95 4.35 4.80 5.30 5.80 6.30 6.85 7.40 10.90

MT 12 13 20 21 23 35 40 46 52 58 65 72 80

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2014-15 Market Growth Rates

88 96 105 113 122 130 139 177

FJC 1990-91 - 1996-97 1996-97 - 2001-02 2001-02 - 2006-07 2004-05 - 2009-10 2009-10 - 2014-15 Sensitivity Coefficient Fruit Juices /Pulps /Concentrates Squashes and Syrups Market Structure Product Variation Type RTS beverages Pulp/Concentrate Fruit juices Squashes Lead Players Company Share (%) 47 40 6 7 40.3% 16.1% 10.3% 9.0% 8.0%

SS 22.2% 12.5% 9.4% 7.7% 5.0%

7.6% 6.0%

Share (%)

Foods & Inns Dynamix Dairy Godrej Foods Keventer Agro Bhilai Engg Corp. Frigerio Conserva Allana Vinsari Fruitech Market Segmentation Segment North East West South Share (%) 8 7 20 65

20 10 9 8 6 5 4

Leading Brands Vadilal, Jumpin, Kissan, Real, Onjus, Kool Kokum, Frooti, Appy, Joly Jely, Yo Fruity, Noga, Midland, Goldcoin, Druk, Tropicana.

Soft and Aerated Drinks

The 50-bn-rupee soft drink industry is growing now at 6 to 7% annually. In India, Coke and Pepsi have a combined market share of around 95% directly or through franchisees. Campa Cola has a 1% share, and the rest is divided among local players. Industry watchers say, fake products also account for a good share of the balance. There are about 110 soft drink producing units (60% being owned by Indian bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola and non-cola drinks. The cola segment claims a share of

62%, while the non-cola segment includes soda, clear lime, cloudy lime and drinks with orange and mango flavours.

The per capita consumption of soft drinks in India is around 5 to 6 bottles (same as Nepal's) compared to Pakistan's 17 bottles, Sri Lanka's 21, Thailand's 73, the Philippines 173 and Mexico 605. The industry contributes over Rs 12 bn to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries like glass, refrigeration, transportation, paper and sugar. The Department of Food Processing Industries had stipulated that 'contains-no-fruitjuice' labels be pasted on returnable glass bottles. About 85% of the soft drinks are currently sold in returnable bottles. There was a floating stock of about 1000 mn bottles valued at Rs 6 bn. If the industry were to abide by the new guidelines, it would have to invest in new bottles, resulting in a cost outgo of Rs 5 bn. Neither Coke nor Pepsi is in a position to invest such a large amount.

Around 400,000 tonnes of raw material would be required to replace the existing stock of bottles. Instead, the soft drink industry suggested that a seven-year moratorium be extended to the industry so that it can incorporate the change in a phased manner. There is no such mandatory requirement anywhere in the world to specifically label the glass surface of returnable bottles. The government has decided to extend the date for replacing the bottles to endmarch 2006. In the meantime, the producers have shifted

substantially to the use of PET bottles.

Soft and aerated drinks were considered products for the middle class and the affluent. That segregation is no more valid. Soft and aerated drinks are consumed by all except those who cannot afford to buy any drink. An NCAER study says that 91% soft drink sales are made to the lower, middle and upper middle classes. The soft drink industry has been urging the government to categorise aerated waters (soft drinks) equitably with other consumer products of mass consumption and remove special excise duty. The industry estimates that the beverage market should grow at twice the rate of GDP growth. The Indian market should have, therefore, grown by atleast 12%. However, it has been growing at a rate of about 6%. In contrast, the Chinese market grew by 16% a year, while the Russian market expanded at almost four times the rate of growth of the Indian market.

It may be recalled that Coca-Cola, the world's number one player, was present in India for a long time in collaboration with an Indian producer but was thrown out in the late 1970s. It reappeared in India following the economic liberalization era - but after its rival, world's number two, had already entered in a big way following a long and tough fight against the opposition from the domestic producers. When Coca-Cola re-entered, it installed a new milestone. It

acquired the well flourishing India's top player, Parle. Since then it is basically a fight between the two American giants. Others are playing a peripheral role, as adjuncts to the two MNCs. World's third biggest player, Cadbury Schweppes, had also made an entry but was gobbled up by Coca-Cola. When Coca-Cola acquired Parle brands, it was, in fact, buying the bottling facilities, the marketing network, and the established consumer preference during the market build-up. The brands were a drag on the global brand. Since Coca-Cola was not interested in brands (like Thumps Up), it did not promote them. The result, at least, in the short run was a loss of the market to the competitor. Coca-Cola decided to market more effectively the Parle brands. It had in its armoury Coke, Thumps Up, Limca and Fanta. The latest to enter market was Parles erstwhile Rimzim, alongside Portello, a black currant flavoured drink, very popular in Srilanka.

Coca-Cola operates through 35 plants and 16 franchisees throughout the country, while PepsiCo has 20 plants, but it has 7 more franchisees at 23 to 16 of its rival. Coca-Cola claims a market share of 51%, while Pepsi has a share of 46%. The claims, however, remain disputed. The other smaller players like Pure Drinks Ltd claim the rest of the market. The shares of the two lead players are consolidated figures, which include the respective bottlers. Coca-Cola had approached the government for a five year extension for divesting 49% equity in its bottling subsidiary, Hindustan Coca-Cola Holdings. It had set up the marketing

subsidiary as part of its strategy to integrate all its bottling operations, both company-owned and franchisee bottlers, apparently keeping in line with its global policy. All together, it had bought initially over 38 franchisee bottlers.

Kandhari Beverages, coke bottlers for north have been eyeing to lift a stake in Coca-Cola India. Coca-Cola had filed an application to offload 49% stake of its bottling operations in favour of their Indian operators. Besides Kandhari, three other bottlers, one each from Uttar Pradesh, Gujarat and Jammu, were lined up to invest in Hindustan Coca-Cola Holding. Kandhari has already invested Rs 300 mn in 1999 and 2000 to upgrade its capacity. The total investment by all the four was expected to be Rs 1000 mn. Both Coca-Cola and PepsiCo planned for the launch of lemon-flavored versions of their products. Both have been expanding their noncarbonated drink line-ups, as consumers seem to be shifting away from carbonated soft drinks. PepsiCo is deliberating whether to come out with Pepsi Twist, a cola mixed with lemon. But while both companies have juice sports drinks, bottled water and other such drinks in their line-ups, neither coke nor Pepsi has launched a new national variety of a colaflavoured carbonated soft drink in years.

PepsiCo had achieved Rs 3 bn worth of exports, which include processed foods, basmati rice, guar gum and soft drinks concentrate. PepsiCo completed the second phase of its expansion and with this expansion, PepsiCo was

to explore the possibility of expanding the export of concentrates to more countries in addition to the exports to Russia and other South Asian countries. Pepsi India has entered into a marketing tie up with Hindustan Lever to promote sales of soft drinks through Pepsi-HLL network of vending machines and fountains. The major soft drink brand in the Pepsi stable are Pepsi, 7UP, Mirinda, Tropicana and Acquafina.

As a major strategic departure, both MNCs were expanding their brand range. Consequent to some diversifying moves, at present, the sales ratio of Coca-Cola between soft drinks and other beverages is 95.5. The company intended to change this to 80:20 in the next three years. Its juice brand, Maaza - acquired from Parle a few years ago - is being given a major thrust. It has plans to go in for canned coffee, iced tea and purified categories under expansion schemes. It has already launched its bottled water brand, Kinley, in the Indian market. Besides, it is intending to acquire domestic brands in the non-carbonated beverages segment.

The global deal between Coca-Cola and P&G to form a snacks and beverages joint venture company was reported to have slipped into rough weather. The P&G brand of potato wafer, Pringles, seemed to be faced with distribution problems in India. P&G had globally tied up with Coca-Cola

to form a stand-alone juice and snacks company. The new firm is focused on developing and marketing new juices, juice based beverages and snacks on a global basis. The Sharjah-based Allied Beverages was pushing its Ahlan brand in India, having entered the market in mid-2000. Its target was carbonated drinks market in PET bottles. Its plans were to launch a PET bottle in the popular 300 ml category. Ahlan expected to gain a 12% share of the total PET bottle market in northern India. Of the total market, PET bottle segment is approximately 12%. Presently, Allied Beverages has a manufacturing unit at Dharuhera in Haryana. The product range includes carbonated drinks - cola, orange, lemon and soda in three pack sizes - 500 ml, 1500 ml and 2000 ml. Allied Beverages sells non-carbonated drinks in 200 ml foodgrade cups priced at Rs 7 in its portfolio, available in four different flavours. The company's future plans include pulp-based fruit drinks in flavours, which will be available in 200 ml non-returnable glass bottles.

IFB Agro Industries has handed over the distribution rights of Cadbury Schweppes in favour of Coco-Cola India, following the global takeover of Schweppes beverages by Coke. The company still retains the bottling rights for the beverages.

It was noticed for the first time during the summer of 2004 that soft drink companies were registering a slower growth in the sale of bottled water at 20% compared to 35% in case

of drinks.

Aerated Soft Drinks

Demand: Past & Future Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2014-15 mn cases 105 115 125 135 150 165 180 194 209 225 243 262 279 291 310 330 359 373 388 403 479

Lead Players & Alliances Company Aradhana Varun Beverages Devyani Beverages Kandhari Beverages Ludhiana Beverages Sri Sarvarya Sugars Pearl Drinks Pearl Beverages Share (%) 34 15 9 7 7 6 5 6

Leading Brands Coca Cola, Thums Up, Limca, Fanta, Gold Spot, Rim Zim, Maaza, Pepsi, Mirinda, 7'UP, Mangola, Slice, Duke's, Lemonada, Crush, Canada Dry, Campa.

Market Growth Rates 1990-91 - 1996-97 1996-97 - 2001-02 2001-02 - 2006-07 2004-05 - 2009-10 2009-10 - 2014-15 Sensitivity Coefficient Market Segmentation Segment Share (%) 9.4% 7.8% 6.5% 5.4% 3.5% 5.2%

North East West South Rural Urban

24 18 32 26 30 70

Market Structure

Product Variation Company Cola Drinks: Thums Up Coca Cola Pepsi Non Cola Drinks: Gold Spot Fanta Mirinda Limca Overall Colas Lemon: Cloudy Clear Orange Mango Soda 7 3 17 3 8 2 9 8 9 62 29 25 18 Share (%)

Wine & Beer

Wine
The average per capita consumption of wine is 4.6 ml, a little less than contents of a medicinal syringe per person. Ten years ago, the market for wines did not exist. But by the next two years, it could rise to as much as 7 ml. Domestic cheap wines constitute 150,000 cases per annum, domestic wines of international standard (produced by Sula, Grover) comprise 160,000 cases, wines imported in bulk and bottled here constitute 15,000 cases and imported wines comprise 50,000 cases. Wines have grown at 22% annually. The potential for wine sales in India is considered to be very large. The super premium segment with wines retailing for Rs 550 to 650 accounts for 12,500 cases with premium wines (price Rs 300/450) being a 50,000 case market. With an annual growth of about 30% since 1997, the wine market is showing a healthy upswing. Indage commands 75% of the market, while the balance is shared by Sula Vineyards and Grover Vineyards. Chateau Indage is introducing a white wine, Rhine Pride. About 50,000 bottles of Rhine Pride are expected to be sold in one year. This is the result of a joint venture between Chateau Indage and the German partners, Peter Meters, Bernakastel. It is a two-way joint venture: bulk bottling of the Indian wine produced by Indage will be sold under the brand name Angoori in Germany and Rine Pride will be bottled and sold by Chateau in India.

The UB group is now trying to strongly position McDowell in the wine market. It has a presence in the wine market through its alliance with the Italian wine maker, Bosca. The $100 million Sogrape group, owner of Mateus Rose - the largest branded wine in the world with sales of over one mn cases a year, is holding talks with the United Breweries group for a possible tie-up.

Rampur Distilleries planned to launch imported wines into India. Announcing an exclusive distribution tie-up with Ernest & Gallo the company envisaged importing ten of the foreign company's popular wine brands including Carlo Rossi, Turning Leaf, Wine Cellars and Gallo of Sonoma Country. Moet-Hennessy, the makers of Champagnes and Cognacs, set-up a subsidiary in India in anticipation of the lifting of quantitative restrictions from April 2001. The arm called Moet-Hennessy India is a subsidiary. Its champagnes include the famous Dom Perignon, and others like Moet and Chandon, Mercier and Ruinart. Major Cognac brands include Hennessy. Moet Hennessey's market share is in the region of 30% of the champagnes market. Wine specialist, Astoria of Italy, was planning to enter into India and to introduce seven wine variants, such as Fragound Rosso, Cold Lemon Wine and Blanco, which include table and sparkling wines.

Beer Presently, some 36 units are manufacturing beer in India with an estimated output of 670 mn litres. The market for beer in India was about 65 mn cases of 12 bottles each and was slated to touch 90 mn cases in 2002-03. In consumption, India holds the 29th position with the annual consumption growing by 8% per year. Per capita consumption of beer is as low as half-a-litre as against 128 litres in Germany, 129 litres in New Zealand and 116 litres in Denmark. Even China has a per capita consumption of 20 litres.

The Indian beer industry has shifted towards the strong beer segment. The ratio in mild-strong beer has shifted from 66:34 in 1993-94 to 45:55. In the mild beer, segment, Kingfisher, Golden Eagle and Royal Challenge are the main brands. In the strong beer segments Haywards 5000, Haywards 2000, Knockout, Khajuraho are dominant. In the standard segment of over 55 mn cases, United Breweries has the lion's share.

Major brands of Mysore Breweries include Knockout, Bengal Premium, Pals Premium, and Seven Stars. It has two breweries in Aurangabad and Bangalore, with a total capacity of 450,000 hl. Mysore Breweries was to set up its third brewery in Andhra Pradesh, the fastest growing beer market. Mysore Breweries and Singaporebased subsidiary of Heineken NV, Asia-Pacific Breweries, which manufactures the popular Tiger brand, are exploring the chances of setting up of a joint venture. Dutch-based Heineken NV is the world's second largest international brewing group with production from more than 110 breweries spread over 50 countries. Heineken's three international brands, Heineken, Amstel and Murphy's, are the most popular brands. Its regional brands include, Cruzcampo, "33" Export, Moretti, Zywiec and Tiger, the largest regional brands in Asia. The brand portfolio comprises a total of over 80 brands.

Global majors, Stroh Brewing Co of the US and Henninger Brau AG of Germany, have already launched their products. Others like Fosters Brewing group of Australia, South African Breweries have either set up subsidiaries or have gone in for tie-ups.

Haake Beck, entered India through a technical tie-up between Brauerei Beck of Germany and Indian Him Neel Breweries, through a 0.15 mn hectolitre plant at Himachal Pradesh ( at an investment of Rs 550 mn). Haake Beck is sold in non-returnable, lightweight, takeaway 650 ml and 330 ml glass bottles, an innovation where recycled bottles has been the norm. UBs two beer brands, Kingfisher and Kalyani Black Label, enjoy onethird of the market. Kingfisher alone commands 18% of the market. Shaw Wallace, Mohan Meakin and Mysore Breweries also enjoy a significant market presence.

United Breweries group acquired a 65% stake in the Mumbai-based Associated Breweries & Distilleries (ABD), producers of London Pilsner beer. With this acquisition, UB has protected the western Indian market from South African Breweries (SAB), which has already made its presence felt in north India by taking over Narang Industry's brewery in UP. Its brands, besides London Pilsner, are London Diet, Maharaja Premium and San Miguel. ABD manufactures these beer brands at its brewery in Thane. United Breweries is expanding the capacity of its Nacharam brewery in Andhra Pradesh to 220,000 hl. It has also acquired majority control over beer manufacturing Inertia by raising its stake to more then 51% from 31%. The move was to help UB raise its market share significantly. Besides, UB has further concluded an agreement to acquire 75% of Mangalore Breweries, through its wholly owned subsidiary, United Breweries (Holdings).

United Breweries has already decided to divest 26% stake to a strategic investor who could include Belgian Interbrew, Carlsberg or Heineken. The company owns or contracts 22 out of 57 operating breweries in the country, representing about half the total capacity. Carlsberg Breweries based in Denmark had decided to bring two of its brands, Carlsberg and Tuborg to India. It launched Bengal Premium, a lager beer. Cans, which account for negligible volumes might, however, come sooner than later. Shaw Wallace is launching its Royal Challenge beer in cans. Kingfisher beer from UB is already available in cans.

Australian Beer Company Fosters launching of premium lager beer in India is targeting 15% growth in sales. Recently the company launched Amberro in India. Foster's premium lager mild claims to enjoy good market shares in several states. Foster India has evinced interest in introducing Foster's other international brands

including Crown Lager, Foster's Ice, Subzero, Carlton Cold and Victoria Bitter. Fosters had set up a brewery at Aurangabad. Shaw Wallace has a presence of 40% in the strong beer and premium beer segments with Haywards 5000 and Haywards 2000 being the market leaders in their respective segments. It has plans to launch its beer in the US market under the brand name Kohinoor. SWC had earlier launched its beer, Lal Toofan, in the United Kingdom in 1993. The brand enjoyed a remarkable success and has since been extended to other markets like France. The company has a bagful of beer brands, which include Royal Challenge.

Rainbow Breweries will bottle Shaw Wallace brands - Haywards 5000, Haywrads 2000 and Royal Challenge. Rainbow Breweries has a production capacity of 600,000 cases a year. The company expects to augment its presence in the region from a million to million-and-a-half cases. Shaw Wallace had undertaken a restructuring exercise with the merger of three breweries - Sica Breweries, Skol Breweries and Haryana Breweries. Under the plan, Shaw Wallace was to be split into three separate companies: one holding all the breweries' assets, the second all the distilleries, while the main holding company will own the brands. Shaw Wallace currently has eight breweries. The company with 14 distilleries merged with Shaw Wallace Distilleries. Shaw Wallace entered into a strategic alliance with Singha Brewery of Nepal to further spread the reach of Haywards. Singha Brewery will manufacture Haywards super strong beer and Hi-Five mild beer. SWC had planned to capture 10% of the Nepal market in the first year itself. Shaw Wallace sought permission to set up four greenfield breweries. It also planned expansion of some of its existing breweries like the Charminar Brewery in Andhra Pradesh from the existing 2.56 mn cases to 5.77 mn cases a year.

Interbrew, the world's second largest brewery was planning to enter the country in view of the emerging growth opportunities in the sector. It was scouting for a partner and was in negotiations with various brewery majors like Mysore Breweries, a regional player in Karnataka that owns the Knockout brand of strong beer, for collaboration and marketing alliance. Interbrew's brands include Stella Artois, Jupiler, Labatt Blue and Rolling Rock and its speciality beer are amber-red beers (Vieux-Temps, Ginder Ale), abbey beers (Leffe), white beers (Hoegaarden) and fruit-based beers (Belle-Vue).

The Miller Brewing Company, world's third largest producer of beer, had made plans to invest over $150 mn with Mohan Meakins as a joint venture partner. The plan included five breweries. LowenBrau Buttenheim entered the Indian market with a subsidiary, LowenBrau Buttenheim India, with local promoters. LowenBrau now has tough competition from established players such as UB's Kingfisher, San Miguel, Sandpiper and Australian beer major, Fosters.

Beer Demand: Past & Future

Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 Kls 201 208 224 305 272 362 391 422 456

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2014-15 Market Structure Market Segmentation

493 528 565 632 676 723 770 820 875 930 985 1320

Segment North East West South Standard Beer Strong Beer Premium, Diet Leading Brands

Share (%) 12 2 37 49 45 54 1

Kingfisher, Heywards 2000, Heywards 5000, Kalyani Black Label, Kalyani Strong, Golden Eagle, Black Knight, Pelican, London Diet, Thunderbolt, Kaiser, Pilsner, Haake Beek, Lal Toofan, Castle Beer, Hi-Five.

Market Growth Rates

1990-91 - 1996-97 1996-97 - 2001-02 2001-02 - 2006-07 2004-05 - 2009-10 2009-10 - 2014-15 Lead Players & Alliances

11.70% 7.60% 7.70% 6.40% 6.00%

United Breweries, Carlsberg Denmark, Kingfisher Properties, Skol Brew, Mohan Breweries & Dist, Mohan Meakins, Shaw Wallace, Associated Breweries, Mount Shivalik, Inertia Inds, Winsome Brew, Heminger Brau Ger, Fosters India, Lilasons

Foodgrain Milling
Repeal of Rice Milling Act:

Print

The Rice Milling Industry (Regulation) Act, 1958 (RMI Act) was enacted to facilitate modernization of Rice Mills and to regulate the establishment of new Rice Mill. Considering the fact that most of the paddy produced in the country is processed in modern Rice Mills and most of the commercial rice millers in the country are now aware of the advantages of setting up of modern rice mills. The Government has repealed the Rice Milling Industry (Regulation) Act, with effect from 28th May, 1997. In view of this, no Government permission is now required for setting up of rice mills.

Material in respect of Pulse Milling, Flour Milling and Rice Milling to be replaced in the website of the Ministry. The Ministry of Food Processing Industry has re-opened the Flour Milling, Pulse Milling and Rice sector w.e.f. 01/04/07 which was closed since 31/3/04. Under the Plan Scheme of the Ministry grant will be provided up to 25% in general areas and 33.33% in difficult areas up to a maximum of Rs. 50 lakhs and Rs.75 lakhs respectively on Plant & Machinery and Technical Civil Work for setting up/modernization /expansion of Food Processing Industries. Under the new scheme of decentralization cases are processed by authorised scheduled bank and grant is disbursed by these banks. The units who have not availed any grant from the Central / State Government can approach directly these authorised scheduled bank for term loan and grainin-aid.

Edible Oil
Background

In India, Mustard / rapeseed is produced in states of Rajasthan, Uttar Pradesh, Haryana, Punjab, Gujarat, Madhya Pradesh, Jammu and Kashmir, West Bengal, Punjab, Assam, Bihar, Himachal Pradesh & Orissa Rajasthan and Uttar Pradesh account for majority share, contributing to over 50% of the total Indian produce that stands at an average of 5 million tons. These areas also have maximum area under cultivation for this crop. Indias oilseeds processing sector is made up of the three groups viz Ghanis, solvent extractors and oil refiners engaged separately. Edible oils constitute an important component of Indian households expenditure on food. According to NSS 60th Round (January-June 2004), average monthly per capita consumption expenditure (MPCE) of edible oil in food was 8.2% in rural India, and 8.2% in urban India. The share of edible oil has increased in successive NSSO surveys.

According to the Second Advance Estimates released by the Ministry of Agriculture on February 5, 2007, total oilseeds production during 2006-07 is expected at 23.62 million tonnes (mt), representing a decline of 15.6% over 2005-06. The decline in oilseeds production is due to lower output of rapeseed, groundnut and castorseed.

Oilseeds Sector in India: Size

India is one of the worlds largest edible oil economies with 15,000 oil mills, 689 solvent extraction units, 251 Vanaspati plants and over 1,000 refineries employing more than one million people. The total market size is at Rs. 600,000 Mln. and import export trade is worth Rs.130, 000 Mln. India being deficient in oils has to import 40% of its consumption requirements. With an annual consumption of about 11 mln Tonnes, the per capita consumption is at 11.50 kgs, which is very low compared to world average of 20 kgs. China is currently at 17 kg. India is also a leading producer of oilseeds, contributing 8-10% of world oilseed production. India is estimated to account for around 6% of the worlds production of edible oils. Though it has the largest cultivated area under oilseeds in the world), crop yields tantamount to only 50-60% of the worlds average. India is the fifth largest producer of oilseeds in the world, behind US, China, Brazil, and Argentina. Three oilseeds - Groundnut, Soybean and Rapeseed/ Mustard - together account for over 80 per cent of aggregate cultivated oilseeds output. Mustard seed alone contributes Rs.120, 000 Mln. turnover out of Rs.600, 000 Mln. oilseed based Sector domestic turnover. Cottonseed, Copra and other oil-bearing material too contribute to domestic vegetable oil pool. Currently, India accounts for 7.0% of world oilseeds output; 7.0% of world oil meal production; 6.0% of world oil meal export; 6.0% of world veg. oil production; 14% of world veg. oil import; and 10 % of the world edible oil consumption. With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing steadily. However, oilseeds output and in turn, vegetable oil production have been trailing consumption growth, necessitating imports to meet supply shortfall.

Oilseeds Production (2001-02 to 2005-06) (Qty in million tonnes) 01-02 02-03 03-04 04-05 05-06 Major Oilseeds Groundnut 7 4.1 8.1 6.8 8 Rape/Mustard 5.1 3.9 6.3 7.6 8.1 Soybean 6 4.7 7.8 6.9 8.3 Other Six 2.6 2.1 3 3.1 3.6 Sub-Total 20.7 14.8 25.2 24.4 28 *2nd advance estimate,ministry of Agriculture Structural Characteristics

06-07*

4.4 7.6 8.7 2.9 23.6

Broadly, edible oil/fat products can be categorised into four categories, vegetable refined oil, hydrogenated oil (vanaspati), bakery fats/margarine, and de-oiled cakes. The Indian edible oil industry can be classified into the following segments. Ghanis, small.scale expellers, solvent extractors, oil refiners and vanaspati manufacturers. Oil mills crush oil seeds and extract oil, 70% of which is sold in the open market. The remaining 30% is refined and sold as branded oil. After the extraction of oil, residual seeds are processed further by solvent extractors, to make solvent-extracted oil. Most of the solvent extracted oil is used to make vanaspati'. The Indian edible oil industry is highly fragmented with a large number of small scale producers. The ghanis belong to the SSI segment and usually serve the rural markets. Small scale expellers, much like the ghanis, use metal screws to press or expel oil from seeds. However, they are larger than the ghanis, oil expelling capacity being in the range of 5-10 tonnes per day, compared to around 50-60 kilos a day for ghanis. Solvent extractors belong to the organised segment and are also the second largest after the SSI segment, in the domestic edible oil industry. They use modern technology to process low oil & high meal seeds (eg.soyabean, cottonseed) into edible oil and de-oiled cake. Oil refining also belongs to the organised sector and has recorded rapid growth in recent times. Refiners generally refine both expeller oils and solvent extracted oils. Vanaspati is made by hydrogenation of refined oil to vegetable shortening or spread and is similar to the milk product ghee and absorbs around 10% of the total edible oil supply in India. Due to increased consumer preference for non traditional oils such as soyabean and sunflower oil, the organised sector has emerged as one of the fastest growing sectors in recent times clocking double digit growth. Branded products, though small portion of the total edible oils market, have been one of the main drivers of rapid growth.

Market Potential Edible Oil Demand Projection Total Demand (Mln. Tonnes) Total Area under Oilseeds (Mln. Hectares) Yield (Tonnes/hectare) Production of Oilseeds (Mln. tonnes) Domestic supply of edible oils (Mln. tonnes) Total edible oil imports - (Mln. tonnes) Imports as share of demand Source: Rabo Bank 2004 10.9 23.4 1.07 25.1 7 4.3 39.40% 2010 15.6 28 1.2 33.6 10.1 5.9 38.10% 2015 21.3 32 1.4 44.8 13.4 8.3 39.50%

India will continue dependence on imports to the extent of 40% of its consumption requirements. The improvement in yields and the increase in area under cultivation will ensure that the domestic oilseed production is sufficient to meet 60% of consumption requirements.

Increased support from the Government Minimum support Price Rs. per MT 11,000 12,000 13,000 16,000 17,000 17,250

Year FY2001 FY2002 FY2003 FY2004 FY2005 FY2006

The government is increasing its focus on the edible oil industry, given that it has the second largest import bill after crude petroleum. The supported price of mustard seed, which was Rs 11,000 per MT in 2001, was increased to Rs 17,250 per MT by 2006. Consequently, mustard seed cultivation also increased from 5 MMT to 7.0 MMT in 2006. The main emphasis of the government is on reducing the import bill, and this step has helped to a certain extent. Indian market for Rapeseed/Mustard Oil

India occupies 3rd position in the list of rapeseed / mustard producing countries. India also ranks as the third largest producer of mustard/ rape oil in the world. The entire Mustard oil production is consumed domestically. The demand comes mainly from eastern and northern belts. Two basic types of mustard oil are traded in the market - viz. Kacchi Ghani and Pakki Ghani (Expeller Grade Mustard Oil). Rapeseed/Mustard is traded in all major Indian commodity exchanges viz. National Commodity & Derivatives Exchange Ltd, Multi Commodity Exchange of India Ltd, Multi Commodity Exchange of India ltd and National Board of Trade, Indore

Mustard Oil: Key Market Influencers

Prices and demand-supply pattern of other edible oils in the country and abroad Monsoon in the country Pests, diseases and other environmental factors Speculation and Hoarding Consumption of by-products Production fluctuations

Mustard Oil trade

Almost 90% of the Mustard oil processing sector is unorganized in India with numerous small factories located throughout the mustard growing belt.

With the removal of Excise and introduction of VAT etc, the organised sector now faces the advantage of taking over unorganised, loss-making units.

MAJOR PLAYERS Edible Oils

National Dairy Development Board (Anand) ITC Agro-Tech (Secunderabad) Marico Industries (Mumbai) Ahmed Mills (Mumbai)

Vanaspathi

Hindustan Lever (Mumbai) Wipro (Bangalore) Rasoi (Calcutta) Avi Industries (Mumbai)

FEATURES Characteristics

Oils: primarily a commodity market - price sensitive Effective distribution chain - through a complex network of C&F agents, wholesalers / stockists & retailers (kirana shops, supermarkets). Oil sold in bulk (tin, HDPE containers) to institutions; in retail packs (PET bottles, cans, jars, pouches) to small customers. Seasonal demand for oils & vanaspathi - September to November (peak season). Regulation: Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils cannot be sold loose but can be sold only in `packed form Oil consumption - North is largest market, followed by South, West & East zones Imports and Prices Oils and vanaspathi substitutes can be freely imported under OGL Import duties: 15 % basic + 10 % surcharge (Oil); 40% basic (Oilseeds) Large scale imports of oils and vanaspathi substitutes - primarily to check price rise and meet supply shortages

Usage

Oil and vanaspathi used as cooking media (in households, hotels, restaurants, canteens, institutions) Vanaspathi used as an industrial input - for making bakery products & confectionery

FUTURE: Demand Drivers

Macroeconomic factors: Population growth, per capita income, purchasing power, oilseeds crop Other factors: Prices - domestic/ international, Availability - oil, oilseeds Influence of branded products - `health message Growing preference for convenience foods.

Key Success Factors

Raw material sourcing: focus on improving yields, getting better quality oilseeds, ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (Vanaspathi - Dalda, Oils - Sundrop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based assistance to farmers of eliminate unofficial markets

Business Concerns

Free imports, low import duties and slump in global prices - lead to `dumping Domestic industries of edible oils and vanaspathi affected - low realisation and idle capacities in oil and vanaspathi industries Production slippages have also forced imports Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally hence, farmers have shifted to other cash crops Increasing health awareness - impact of oils and vanaspathi usage on individuals cholesterol levels

Policy

In order to increase the domestic supply of oil seeds, the government has been frequently freezing the MSP for wheat and rice while increasing the MSP for oil seeds, thereby prompting a diversification from wheat-rice to oil seeds. This is intended to improve the

supply of oil seeds. However, despite these measures, the demand-supply gap is likely to continue in the medium term. Again this does not push up prices, due to availability of low priced imports, as edible oil is the common mans utility item. Free imports (since 1994) have further lowered the entry barrier to the industry as crude or refined oil can be imported, packed and distributed doing away with the need of having manufacturing facility in the domestic market. Customs tariff on edible oil continues to be the most important and dynamic area of government intervention. India adopted a modified tariff schedule for agricultural products in March 2000. The tariff bindings, subsequent to revision in 1996 and renegotiations within the WTO in 1999 retain the overall structure notified after the Uruguay Round: 100% for commodities, 150% for processed products, and 300% for edible oils. Departures from this pattern are mainly with respect of tariff lines that were negotiated as special cases. India's bound rates for edible oil are as high as 300% ad valorem, except for 45% on soybean oil, and 75% for rapeseed oil. On all other oils, the GoI can raise the level of customs duty up to 300%. The per capita consumption of oil in India is 11.5 kg/year is way below the world average. Even china is at 17 kg. By 2010 the per capita consumption of oil in India is likely to be 15.6 kg. There is huge potential of growth.

Fruits & Vegetables

The installed capacity of fruits and vegetables processing industry has increased from 1.1 million tonnes in January 1993 to 2.1 million tonnes in 2006. The processing of fruits and vegetables is estimated to be around 2.2% of the total production in the country. The major processed items in the fruit and vegetable segment are fruit pulps and juices, fruit based ready-to-serve beverages, canned fruits and vegetables, jams, squashes, pickles, chutneys and dehydrated vegetables. Some recent products introduced in this segment include vegetable curries in retortable pouches, canned mushroom and mushroom products, dried fruits and vegetables and fruit juice concentrates. The fruits and vegetable processing industry is highly decentralized, and a large number of units are in the cottage, household and small-scale sector, having small capacities of up to 250 tonnes per annum. Since 2000, the food processing industry has seen significant growth in ready-toserve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, pickles, processed mushrooms and curried vegetables, and units engaged in these segments are export oriented. Exporters Of Fruit & Vegetables (Quantity in MT, Value in Rs Mn)
2001-02 Quantity Value 2004-05 Quantity Value CAGR Quantity Value

Dried & Preserved Vegetables Mango Pulp Pickles & Chutney Other Processed Fruits & Vegetables Total

209157.8 76735.18 38758.97 61332.39 385984.3

5371.5 2413.4 1203.4 2017.4 11005.7

351034.3 90988.6 67193.29 80760.5 589976.7

7657.5 3008.6 1205.8 2755.3 14627.2

18.8 5.8 20.1 9.6 15.2

12.5 7.6 0.1 10.9 9.9

Source: Ministry of Food Processing Industries, Annual Report 2005-06 The domestic industry has to change its preference in favour of processed foods. Consumption of value added fruits and vegetables are low compared to the primary processed foods, and fresh fruits and vegetables. The inclination towards processed foods is mostly visible in urban centers due to a high purchasing power. A remarkable push can be given to this sector by strengthening linkages between farmers and food processors. The poor and weak linkage between farmers and markets, as well as, farmers and processing companies has brought about inefficiencies in the supply chain and encouraged the involvement of middlemen leading price rise to the products. The Government of Indias National Agriculture Policy envisages the participation of the private sector through contract farming and land leasing arrangements which not only assures supply of raw material for processing units, but also a market for agriculture produce, accelerate technology transfer and capital inflow into the agriculture sector. Innovative practices like contract farming in wheat practiced in Madhya Pradesh by Hindustan Lever Ltd and by Pepsi Foods Ltd in Punjab for tomatoes, food grains, spices and oilseeds are some successful examples of contract farming in India, which changed the farming landscape and promoted the cultivation of processable variety of farm produce this will certainly power the fruits, vegetables and grain processing industry. Besides such initiatives, fiscal incentives and tax concessions will also give impetus to the sector. The five-year 100% tax exemption announced by the Government in the finance year 2005 was one such incentive for upcoming fruits and vegetable processing units.

Dairy Industry in India

India has the highest livestock population in the world with 50% of the buffaloes and 20% of the worlds cattle population, most of which are milch cows and milch buffaloes. Indias dairy industry is considered as one of the most successful development programmes in the post-Independence period. In the year 2006-07the total milk production in the country was over 94.6 million tonnes with a per capita availability of 229 gms per day. The industry had been recording an annual growth of 4% during the period 1993-2005, which is almost 3 times the average growth rate of the dairy industry in the world. Milk processing in India is around 35%, of which the

organized dairy industry account for 13% of the milk produced, while the rest of the milk is either consumed at farm level, or sold as fresh, non-pasteurized milk through unorganized channels. Dairy Cooperatives account for the major share of processed liquid milk marketed in the India. Milk is processed and marketed by 170 Milk Producers Cooperative Unions, which federate into 15 State Cooperative Milk Marketing Federations. Over the years, several brands have been created by cooperatives like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur). Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu are the milk surplus states in India. The manufacturing of milk products is obviously high in these milk surplus States. Exports of dairy products have been growing at the rate of 25% per annum in the terms of quantity terms and 28% in terms of value since 2001. Significant investment opportunities exist for the manufacturing of valueadded milk products like milk powder, packaged milk, butter, ghee, cheese and ready-todrink milk products. India has emerged as the largest milk producing country in the world with present level of annual milk production estimated as 94.5 million tonnes. We expect a production level of 135 million tonnes by the year 2015. India has a large livestock population base constituting 278 million livestock including 180.5 million cattle, 82.8 million buffaloes, 4 million sheep and 9.2 million goats. The livestock population is projected to increase to 322 million by the year 2015. The large livestock population is raised primarily on crop residues and grazing in the common property including basement. The forest area, which was a major source of grazing, is no longer available to livestock breeders especially landless people. As a consequence, the available feed resources fall short of the nutritional requirement. The shortfall is estimated as 59.9 million tonnes for the green fodder and 19.9 million tonnes for dry fodder. This shortfall is likely to increase by 2015 to 63.5 million tonnes of green fodder and 23.56 million tonnes of dry fodder. The landless people are, therefore, likely to face severe shortage of resources to raise cattle and other species of livestock. There is a real danger that in the absence of resources to maintain their stock, these under-privilege rural people may give up livestock farming. This could be a serious setback to lakhs of rural families who derive income as well as employment opportunities from livestock sector. India prepares to tackle the international market following Japan, where milk consumption today, has more than trebled to 70 kg per capita from a mere 20 kg in the 'sixties - the consumption of dairy products in other Asian 'tiger' nations is also growing. As a consequence - creating excellent export opportunities for India, as these nations are deficient in milk by at least 3 million tonnes per year. India, with some 27 per cent of Asia's population, accounts for more than half of the milk output with enough growth potential to explore foreign markets. In anticipation of the export opportunities and in view of the post GATT scenario, India is gearing up to tackle the demands of the international market. Indian companies are preparing themselves to meet international standards and other nontariff barriers. Planners are taking measures to meet the sanitary and phyto-sanitary

specifications - prescribed by Office International des Epizooties (OIE) under the auspices of the World Trade Organization (WTO) -, which range from the quality assurance of processed dairy products to the health status of livestock. Livestock Population in India by Species (In Million Numbers) Species Cattle Adult Female Cattle Buffalo Adult Female Buffalo Total Bovines Sheep Goat Horses and Ponies Camels Pigs Mules Donkeys Yak Mithun Total Livestoc k Poultry * Dogs 1951 1956 1961 1966 1972 1977 1982 1987 1992 1997 2003 155.3 158.7 175.6 176.2 178.3 180.0 192.5 199.7 204.6 198.9 185.2

54.4 43.4

47.3 44.9

51.0 51.2

51.8 53.0

53.4 57.4

54.6 62.0

59.2 69.8

62.1 76.0

64.4 84.2

64.4 89.9

64.5 97.9

21.0 198. 7 39.1 47.2

21.7 203. 6 39.3 55.4

24.3 226. 8 40.2 60.9

25.4 229. 2 42.4 64.6

28.6 235. 7 40.0 67.5

31.3 242. 0 41.0 75.6

32.5 262. 2 48.8

39.1 275. 7 45.7

43.8 288. 8 50.8

46.8 288. 8 57.5

51.0 283. 1 61.5

95.3 110.2 115.3 122.7 124.4

1.5 0.6 4.4 0.1 1.3 NC NA 292. 9 73.5 NC

1.5 0.8 4.9 0.0 1.1 NC NA 306. 6

1.3 0.9 5.2 0.1 1.1 0.0 NA 336. 5

1.1 1.0 5.0 0.1 1.1 0.0 NA 344. 5

0.9 1.1 6.9 0.1 1.0 0.0 NA 353. 2

0.9 1.1 7.6 0.1 1.0 0.1 NA 369. 4

0.9 1.1 10.1 0.1 1.0 0.1 NA 419. 6

0.8 1.0 10.6 0.2 1.0 0.0 NA 445. 2

0.8 1.0 12.8 0.2 1.0 0.1 0.2 470. 9

0.8 0.9 13.3 0.2 0.9 0.1 0.2 485. 4

0.8 0.6 13.5 0.2 0.7 0.1 0.3 485. 0

94.8 114.2 115.4 138.5 159.2 207.7 275.3 307.1 347.6 489.0 NC NC NC NC NC 18.5 18.0 21.8 25.5 29.0

NC: Not Collected; NA: Not Available birds Source: Livestock Census 2003

* Includes Chicken, ducks, turkey & other

Processed Dairy Products

Cheese The organized cheese market including its variants like processed cheese, mozzarella, cheese spreads, flavored and spiced cheese, is valued at around Rs 4.5 billion. Processed cheese at 60% of the overall market is Rs 2.7 billion. The next most popular variant is cheese spread claiming a share of around 30% of the total processed cheese market. The market is primarily an urban phenomenon and is known to be growing at around 15%. The market for cheese cubes, slices and tins is growing. The flavored cheese segment has been constantly declining. Gujarat Cooperative Milk Marketing Federation (GCMF) with the Amul brand continues to be the main operator in the branded cheese market in India. It pioneered the market for processed, branded cheese. What GCMF did was to develop the technology to make cheese from buffalo milk. World over it is made from cow milk. Britannia Industries joined the fray in the cheese market in mid-1990s through an arrangement with Dynamix Dairy Industries (DDI). It was set up in 1995 by a consortium of five companies - Conwood, Indo Saigon, Hiranandani, ETA and Metro. DDI has capacity to process 500,000 litres of milk per day with an estimated investment of Rs 1500 mn. The plant designed by Valio of Finland is run on technology tie-up with Schreiber Foods of the US. Schreiber is the largest supplier of processed cheese to fast food chains in the US with expertise in sliced cheese. Britannia's cheese is sold in tins in the form of cubes, and in individually wrapped slices in packs of fives and tens. The slices are being promoted more aggressively worldwide, and these account for a bulk of cheese consumption. These are gaining acceptance in India as well. Amul followed Britannia in launching slices. Its cheese spread in the form of paste has been well received in the market. Britannia has been concentrating on metros and large cities. The network covers some 60,000 dairy outlets equipped with cold cabinets, refrigerators and insulated boxes. Amul covers some 500,000 retail outlets. French cheese major, Fromageries Bel, a 10-bn French franc outfit, has entered the Indian market with La Vache Kirit or what is worldwide known as The Laughing Cow. Its target market to start with were the two metros of Delhi and Mumbai with distribution entrusted to Delhi-based

Rai & Sons, distributors for premium food brands, Ferraro Rocher and Ricola. The Bel product will be produced at Bel's facility in Poland exclusively for the Indian market. La Vache Kirit is a guaranteed vegetarian product. Fromageries Bel is expected to widen its product portfolio by launching laughing Kirit (creamy cheese in cube form) and Babybel (semi-hard with a wax coating appropriate for sandwiches). Laughing Cow was expected to be followed by an Austrian cheese brand, Happy Cow (owned by Woerle). Woerle has entered into a licensing arrangement with Veekay Foods & Beverages in Mumbai. Nestle and Kraft have been planning to make foray in the Indian market. Foreign brands in India include: Probolene, Colby, Mozzarella and Parmessan from Italy, Cheddar from Dutch, Gryueve. The new entrants will have to compete with well-established players such as Amul, Britannia's Milkman and Daburs Le Bon, enjoying substantial market shares in the overall Indian cheese market. The US-based Philip Morris, which brought in its Kraft cheese brand earlier, has gained a significant presence in the market. The rest of the market is spread among Verka, Nandini, Vijaya and Vadilal. Dabur had forayed into the dairy products market through its joint venture company, Dabon International, a 50:50 joint venture between Dabur India and French dairy products major, Bongrain. The company claimed a product range of 20 different varieties of cheese under LeBon brand. Dabon has a manufacturing facility at Noida with an installed capacity of 12,000 tonnes per annum. Incidentally, the government had, in a move in late April 2001, barred Dabon from marketing flavoured milk and processed cheese in the country. Dabur was to launch speciality cheese like blue cheese and hard cheese. It had plans to developing cold chains at the distributor and retail levels in the state capitals and major towns in order to increase penetration levels. The demand for cheese is projected to grow from about Rs. 4.50 bn in 2003-04 to Rs. 6.00 bn in 2006-07 and to over Rs 11.00 bn by the terminal year of the projection period, 2014-15. Cheese is becoming a popular item in the menu of all relatively affluent families. Slowly but surely, it will penetrate into the rural markets. Processed Cheese Leading Brands Amul, Vijaya, Verka, Vadilal, Kraft, Britannia.
Market Growth Rates 1990-91 1996-97 18.5%

1996-97 2001-02 2001-02 2006-07 2004-05 2009-10 2009-10 2014-15

20.6% 11.7% 9.4% 7.4%

Lead Players The lead players in processed milk products in the market are as follows: Amul, Britannia, and others include Vijaya, Verka and Vadilal. In the category of cheese Amul, Britannia Dabur (Le Bon) are the leading players including others like Verka, Nandini, Vijaya and Vadilal Dairy Whiteners About 15% of the total milk output in India is estimated to be processed in the organized dairy. The industry has maintained a high growth profile, especially in the wake of the Operation Flood, colloquially also termed as White Revolution, initiated in early 1980s. Today, India produces over 85 mn tonnes of milk annually. The total milk economy is estimated at Rs 1300 billion in terms of value. The market for dairy whiteners (commercially know as beverage milk powders and condensed milk) and creamers is around Rs 3,000 mn. Apart from MNCs like Nestle and companies like Britannia, the Indian enterprises have also made perceptible progress. Names like Amul, Sapan, Vijaya, Mohan, Parag and several others have been seen in the marketplace with their whiteners. These are available mostly in pouches, tetrapacks, and in the near future, may be in miniportion cups. Aseptically packed creamer in miniportions is widely used in the West, but has yet to enter the Indian market in any substantial way. Amul did make a beginning with its whitener pouches and has emerged as a leader with a market share of 45% followed by Nestles 23%. Aseptically packed creamer involves techniques to impart a longer shelf life to the product. It is packed in small cups ready to be poured into a cup of tea or coffee. Creamer is fresh milk with increased fat content (upto 12%) and is aseptically packed after

undergoing Ultra Heat Treatment (UHT) at 1400 C. Its introduction will affect the existing whitener market as a natural milk product with a longer shelf life. Britannia forayed into the dairy business as a diversification move in 1997. Its first offering, Milkman Butter, just managed a 5% share. The dairy business claims a 10% share in Britannia's topline. The company had drawn up plans to atleast capture 5% of the overall fresh milk market estimated by Britannia at Rs 420 bn. Extending the product portfolio beyond cheese, dairy whitener and butter, Britannia entered the fresh milk segment in 2001. In the dairy whitener, the company has managed to capture a significant market share. Nestle India with its Everyday dairy whitener has established its brand well. It has also entered into the market with its Nestle Pure Milk and, of course, a product in its niche area, Nescafe Frappe. Having earlier launched

UHT milk, Nestle is concentrating on expanding its reach. Its plans covered Rs 800 mn investment in its Moga (Punjab) facility. New product segments like butter, yoghurt and flavoured milk were also on the cards. While Sapan characterises it as Dairy Special (instant milk mix for tea and coffee), Vijaya is the only UHT processed milk homogenised brand sold in the market in 200 ml and one litre tetrapack. All the rest, Amulya, Meadow, Mohan, Parag and Shweta dairy whiteners are in the form of powders. Mohan also markets a nondairy whitener alongside its dairy type product. Since India is a major consumer of tea and coffee, it would be a very large market if only the price was not a constraint. In addition to domestic consumption, the whiteners/creamers find a high level of institutional acceptance, especially by railways, hotels and restaurants, airlines, hospitals and nursing homes and corporate offices. The institutional market can be tapped first, in particular, the airlines, railways and hotels. The penetration can then be extended to the household sector. The potential for exports, especially to neighboring countries and the countries in the Middle East, the Gulf and Africa, also exist and could be exploited. Dairy Whiteners / Creamers
Demand: Past & Future Year 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 th MT 80 83 85 86 89 91 99 95 135 183 147 160 175 190 206 224 243

2007-08 2008-09 2009-10 2014-15

263 284 307 450

Lead Players Nestle, Amul, Britannia, Dynamix Diary, Sterling Agro, Haryana Milk Foods, Mohan Food, Modern Dairy, K Dairy
Leading Brands

Amul, Sapan, Vijaya Spray, Meadow, Mohan, Parag, Shweta, Malkana, Gagan, White Magic, Every Day.
Market Growth Rates 1990-91 - 1996-97 1996-97 - 2001-02 2001-02 - 2006-07 2004-05 - 2009-10 2009-10 - 2014-15 3.6% 10.1% 8.7% 8.3% 8.0%

The main thrust of proposals is on the improvement of animal health and adoption of sanitary and phyto-sanitary specifications (SPS) for dairy products. Towards this end, the Technology Mission on Dairy Development (TMDD) has initiated a wide-ranging program.

Table 1: Milk Utilisation Pattern in India, 1943-2004 Year 1943* Milk Production (million tones) 23.5 Mil Utilisation (Percentage) 100 Liquid Milk 28.0% Traditional Products 72.0% Ghee/Makhan (clarified butter) 58.7% Dahi (Yogurt-like) 5.2% Khoya (Partially desiccated Milk 5.0% Chhana and Paneer (unprocessed cottage cheese) 3.1% Western Products: Milk Powder, etc Neg *Includes Pakistan and Bangladesh Source: Handbook on Technology of Indian Milk Products

1956 17.8 100 39.2% 60.8% 46.0% 8.8% 4.4% 1.6% Neg

2004 91 100 46.0% 50.0% 33.0% 7.0% 7.0% 3.0% 4.0%

The upsurge in milk production has thrown up challenges in milk marketing. The country is blessed with an enormous domestic market because of the following factors: Large population and its continuous growth, low level of per capita milk consumption and hence large size of potential, but latent demand, increasing purchasing power, which is already in evidence, will transform the huge latent demand into real demand. The groups of dairy products offering exciting marketing opportunities are liquid milk itself, which accounts for a

sizeable part of the milk consumption products, in which our dairy industry already has demonstrated considerable expertise, like milk powders, butter and ghee. The ability to manufacture the relatively new and sophisticated products like cheese and ice cream alongside the traditional products like paneer, khoya and milk-based sweets are now being manufactured on a large scale.

Utilization pattern
Table 2: Projected demand for major milk products in the organized sector, 1988-2009/ metric tonne Product Ghee Cheese Paneer Shrikhand Rasgolla Gulabjamun Demand 1988 100,000 4,200 1,000 3,000 1,600 3,000 Project demand 2009 200,000 15,000 16,000 5,650 6,000 5,850

As shown in the table, of the total milk produced in the country, nearly 46 per cent is consumed as liquid milk and the balance converted into various dairy products, such as ghee, butter, milk powder, ice cream, cheese, condensed milk and for making various kinds of sweetmeats having distinct regional preferences. Dairy products an estimated 54 per cent of India's milk production is converted into products, both traditional and Western. In this, the share of traditional products is about 50 per cent, accounting in 2001 for a little over 42 million tonne of milk, which yields over 10 million tonne of mithais and other related products per year. The growth projections for their demand in the organized sector are presented in Table above.

Commercial production of traditional products

With the increase in the availability of liquid milk and Western dairy products, refinement in the marketing network and significant improvement in per capita income, there is an increased pressure for the restructuring of the indigenous milk product industry. Now, the organized sector has started showing keen interest in processes and equipment for manufacturing traditional products standardization of products, as well as refinement in packaging and improvement in safety and shelf life. Any innovation which can enable the organized sector to manufacture and market indigenous milk products on an industrial scale can have a far reaching impact on the dairy industry as well as on the economic condition of milk producers. The market for indigenous products far exceeds that for Western dairy products like butter, milk powder and cheese. A great scope exists for further expansion of the market for indigenous milk products, provided quality and safety are ensured and the shelf life is extended to facilitate distribution over larger areas. Major innovations are needed in manufacturing, quality assurance, packaging and process engineering to adapt these products to current marketing and consumer requirements. Some commercial processes have been developed to manufacture ghee, khoya, shrikhand and gulabjamun, but much is required to be done.

Major Players
The dairy industry is dominated by the co-operative sector. About 60% of the installed processing capacity is in the co-operative sector. The National Dairy Development Board (NDDB) is a major player in the market with its major brand, Amul. Leading brands like Amul, Nestle, Mother Dairy and Britannia are in the

race to tap the growing market. SmithKline Beecham Consumer Healthcare, Nestl India and Heinz India are amongst the large MNCs that dominate the high-value milk products market. Other players include Indiana Dairy Specialties, Jagatjit Industries Ltd and various other state cooperatives. Some dairy plants have production of mithais on a commercial scale. Some national brands like Haldiram, Bikanervala, K C Das, Chitales, Ganguram, Brijwasi, Agarwal Sweets etc are getting wide acceptance because of consistent quality Encouraged by the growing market and cashing on brand value select dairy companies are planning major expansion plans in various cities with new brands suited to local taste and preferences and realizing higher prices with higher sales volumes and product safety. The milk and dairy products segment is set for up gradation of cold-storage chains for expansion. Mother Dairy, a wholly owned subsidiary of National Dairy Development Board plans to make strong presence in the market of milk and milk products under the Mother Dairy brand through retail outlets across the country in addition to its own 300 outlets with provision of cold storage and cold chains.

Milk Production in India

Production in India Year 199192 199293 199394 199495 199596 199697 199798 199899 19992000 200001 Production (Million Tonnes) 55.7 58.0 60.6 63.8 66.2 69.1 72.1 75.4 78.3 80.6 Per Capita Availability (gms/day) 178 182 187 194 197 202 207 213 217 220

200102 200203 200304 200405* 200506

84.4 86.2 88.1 90.7

94.6

225 230 231 229

220

Source: State/UT Animal Husbandry Departments, 2004 *Source: Production Estimate of MILK, EGG, MEAT and WOOL of the year 20042005

Milk Production By States

Estimates of Milk Production - State wise (000 tones) State All India Andhra Pradesh Arunachal Pradesh Assam Bihar Goa Gujarat Haryana Himachal Pradesh J&K Karnataka Kerala Madhya 199798 72128 4473 43 719 3420 38 4913 4373 714 1167 3970 2343 5377 199899 75424 4842 45 725 3440 41 5059 4527 724 1232 4231 2420 5442 19992000 78286 5122 46 667 3454 44 5269 4679 742 1286 4471 2532 5519 200001 80607 5521 42 683 2489 45 5312 4850 761 1321 4599 2605 4761 200102 84406 5814 42 682 2664 45 5862 4978 756 1360 4797 2718 5283 200203 86159 6584 46 705 2869 46 6089 5124 773 1389 4539 2419 5343 200304 88082 6959 46 727 3180 48 6421 5221 786 1414 3857 2111 5388 2004-05 * 90715 7252 48 739 2974 57 6745 5222 870 # 1422 3917 2025 5506

Pradesh Maharasht ra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh West Bengal A&N Islands Chandigar h D&N Haveli Daman & Diu Delhi Lakshadwe ep Pondicherr y Chhattisga rh Uttarancha l 5193 62 59 17 46 672 7165 6487 35 4061 57 12934 3415 22 43 4 1 267 1 36 5609 65 61 20 48 733 7394 6923 35 4273 76 13618 3441 22 43 8 1 290 2 36 5707 68 62 18 48 850 7706 7280 35 4586 77 14152 3465 23 42 8 1 290 1 37 5849 66 64 14 51 876 7777 7455 35 4910 77 13857 3471 22 43 8 1 291 2 37 777 1025 6094 68 66 14 57 929 7932 7758 37 4988 90 14648 3515 23 43 8 1 294 2 37 795 1066 6238 69 68 15 58 941 8173 7789 45 4622 79 15288 3600 26 43 8 1 296 2 37 804 1079 6379 71 69 15 63 997 8391 8054 48 4752 84 15943 3686 25 44 8 1 299 1 40 812 1188 6567 75 71 16 69 1283 8554 8310 46 4784 86 16512 3790 24 43 4 1 303 1 41 831 1195

Jharkhand

910

940

952

954

1330

Source: Basic Animal Husbandry Statistics, 2004 * Source: Production Estimate of MILK, EGG, MEAT and WOOL of the year 200405 # Projected by state Source: Indiandairyassociation.com

In addition to the above-mentioned points - there are areas where major thrust is required:
Brand image or major players needs to be projected in leading international dairy trade fairs, particularly of those countries to which exports are being targeted. Another step may be to encourage technical collaboration and marketing tie-ups with leading international dairy companies. With the liberalization and open policies of the Government and the restructuring of the economy the dairy industry is undergoing major developments. This has brought about greater participation of the private sector. This is also consistent with global trends, which can hopefully lead to greater integration of Indian dairying with the world market for milk and milk products. India is witnessing winds of change because of improved milk availability, a changeover to market economy, globalization and the entry of the private sector in the dairy industry. The value addition and variety in the availability of milk products are on everybody's agenda. There is a consistent increasing demand for new products and processes. The major reasons are an increase in disposable incomes, changes in consumer concerns and perceptions on nutritional quality, hygiene and safety, arrival of foreign brands, increasing popularity of satellite or cable media and availability of new technologies and functional ingredients. India is the world's largest milk producer in the present scenario.

Market for liquid milk

Poultry Industry

Indian Poultry And Its Future Prospects It is believed that the indian Poultry Industry is 5,000 years old, since last 4 decades it began to witness remarkable growth from backyard to poultry industry. The organised sector of poultry industry is contributing nearly 70% of the total output and the rest 30% in the unorganized sector. The broiler industry is well dominated in southern states in our country with nearly 60-70% total output coming from these states. The layer industry once again is represented more in southern states especially, Andhra Pradesh, Tamil Nadu and Maharashtra producing nearly 70% of the country's egg production. India's 75% of egg produce is consumed by the 25% population living in urban and semi-urban areas. Presently about 800

hatcheries are operating in the country. Per capita consumption The National Institute of Nutrition has recommended 180 eggs and 11 kg of meat per capita consumption for our country. At present, Per capita availability of meat is 1.6 kg. Per capita availability of egg is 1.8 kg or 42 eggs. Average consumption of eggs in major cities is 170 eggs Average consumption of eggs in smaller cities is 40 eggs Average consumption of developed rural areas is 20 eggs Average consumption of undeveloped rural areas is only 5 eggs. While 20% of Indian population is vegetarian. In spite of this, with the rise of middle class and increased urbanization people prefer to go for non-vegetarian. About 3 million farmers and 15 million agrarian farmers are employed in the poultry industry that grow poultry ingredients for feed and contribute about Rs 26,000 crore to the national income. India is the fifth largest producer of egg and ninth largest producer of poultry meat. India was positioned 17th in the world poultry production. The Indian poultry production is considered to be the cheapest in the world. Leading broiler integrators in India are as follows:

Venkateswara Group, Pune Suguna Poultry Farms Ltd, Coimbatore Pioneer Poultry Group, Coimbatore Godrej Agrovet Ltd, Mumbai Sky Lark group, North India Jafa com feed

These companies account for nearly 40% of broiler industry integrators and contracts. Pioneer Poultry group introduced the concept of contract farming in the year 1980 and the concept of integration was introduced by Suguna farms in 1990. Poultry farming came to be accepted as a viable activity by mid 60s and the real thrust to development came in 1971 with the establishment of Venkateswara Hatcheries Pvt Ltd. The Central Poultry Breeding Farms laid the foundation for the development of poultry industry during 1959. Other agencies such as ICAR (CARI) contributed much in the R&D sector. Commercial Poultry India has emerged as the only country in the developing world a self-reliant, technology driven industry, with capability to produce every essential input for successful poultry farming including indigenous genetic resource and breeding, world class poultry vaccines and medicines, specific pathogen free eggs (SPF), farms and hatchery automation systems, pelleted feed, egg processing, poultry processing, nationwide network of disease diagnostic laboratories and facilities for entrepreneurial development and training in both private and public sectors. Rural Poultry Production

Rural poultry production constitutes important component of agricultural economy in India, small poultry holder are practically capable of more significant contribution to alleviate malnutrition, poverty and unemployment. A spectacular progress has been made from subsistence to sustainable production system. Indian backyard population increase is only by 16% in the last 30 years from 60 to 70 million. China's 76% of total egg comes from rural backyard production. India requires both mass production as well as production by masses. Egg Scenario India produces 3.6% of global egg production, i.e., 61 million tonnes. The annual growth rate of egg is 5 to 8%. India has the lowest cost of egg production in the world at 2.55 US cents per egg. Value added products The introduction of new poultry products and perceptible shift in eating habits are moving people to branded food such as chicken yummiez, cold cuts, breaded and coated snacks, marinated snacks, chicken nuggets, canned chicken curry, freeze dried chicken pulao, meat soup, powder omlette and scrambled egg mixtures, sandwich, pizza, burger and dial-a-chicken and fast food joints, Kentucky Fried Chicken (KFC), McDonald's, Wimpy, Pizza Hut all these are going to change the palatability of the chicken consumer. Medical uses Chicken eggs are used to produce source of molecules to treat snakebite. Duck embryos are used in manufacturing anti-rabies vaccine. Diet eggs or designer eggs are going to boost special eggs for vitamin E substitution, Omega fatty acids and antioxidant requirements. Poultry eggs and meat have got sensorial, curative, nutritive and therapeutic potential. Poultry is labour intensive and has a potential to create 25,000 more jobs on the consumption of one more egg per capita and similarly 25,000 additional jobs on the consumption of 100 gm more chicken meat. By the year 2010 India is expected to produce 260 million layers (77700 million eggs) and 3500 million broilers (5.9 million tonnes). Per capita consumption of meat will be around 3.5 to 4.5 kg and eggs will be around 65 and it is expected to contribute Rs 60,000 crore. No agriculture sector is growing as fast as the Indian poultry, making it the most dynamic rapidly emerging sector of livestock economy. The export of poultry meat at present is worth Rs 150 crore and is expected to reach Rs 1,500 crore by 2010. Indian agriculture contributes 28 per cent to the GDP of which 17% is contributed by poultry. Poultry is the only industry where modern technology co-exists with the traditional poultry keeping because poultry technology is appropriate, adaptable, accessible, available and affordable both for the rich and the poor. Recent positive developments of poultry industry
NABARD has committed to bring about rural prosperity through poultry. Meeting of sub-group of poultry has asked for funds of Rs1095 crore for poultry development during the 11th Plan and Rs 30,000 crore for the entire livestock sector under various schemes of the Government of India. India has resumed egg export. IFC (Washington based International Finance Corporation) picked up stake in Suguna Poultry farms. Suguna Poultry paves the way for North Indian expansion and introduces dial-a-chicken concept to promote value added products. Thousands of broiler farmers will reap the benefit. Venkateswara Hatcheries has decided to use tennis to promote their brand Venky's.

Poultry farmers to get maize on concessional rate to use it as feed in poultry. Kerala livestock development board chalked out plan for poultry tourism in Munnar. Poultry litter to fetch carbon credit in Andhra Pradesh with 3.5 mw power plant. Godrej Agrovet Ltd introduced wide range of processed chicken in the brand name of Godrej Real Good Chicken.

The poultry production and consumption in the domestic market is slated to grow. Indian poultry industry has been a major contributor to the food-processing sector in the country. From backyard activity to major commercial operation the poultry sector has undergone a paradigm shift. Indian poultry industry has been growing at annual varying rates of 8-15% and this growth in the past few decades made India fifth largest producer of eggs and ninth largest producer of poultry broiler. At present the industry is estimated at over Rs 30,000 crore and is expected to grow over Rs 60,000 crore by 2010. India produces 1,400 million chickens a year, which is close to 27 million a week, of which 95% is traded alive. According to a market report the poultry production and consumption in the domestic markets is slated to grow by 66% to approximately 2.3 million tonnes by 2010. Poultry sector is one of the fastest growing industries of the Indian economy than any other sector contributing about $230 million to the Gross National Product. But in statistical terms the industry has reported a loss of over Rs 4,000 crore as an aftermath effect of the bird flu crisis. The contribution of the small rural farmers points out the importance of integration of the poultry farming and the allied sector. Suguna Poultry Farm is the pioneer in poultry integration and contract poultry farming in India, with presence in nine states and membership of about 15,000 contract farmers. Suguna has set an example of integration and contract farming before the industry and has proved to be beneficial for the company. Integration could be the way forward for the entire industry towards expansion and success. Presently 100% Foreign Direct Investment (FDI) is permitted in the food processing sector. Also FDI in food retailing, covering dairy, poultry, marine, vegetables and fruits might help the entire food processing industry grow. Poultry farming in India has transformed from a mere tool of supplementary income and nutritious food for the family to the major commercial activity generating the required revenue. The growth of the industry with steady production of 1,800 million kg of poultry meat, 40 billion egg per year and employment generation of about 3 million people indicates the future prospects for the industry. Changing food habits, rising income of the middle class Indian, presence of private players, rising market demand of the Indian poultry produce in the export market are some of the contributing factors to the growth of the industry.

Meat and Meat Products

Print

India ranks top in animal and cattle population. The meat and meat processing industry is still to come up. Some top players in the meat processing industry like Venkateswara Hatcheries, Godrej Agrovet, Vista Processed Food, Al Kabeer, Allanasons etc., with modern state-of-the-art slaughter and processing plants, have changed the entire scenario, making the industry grow at almost 10%. There is a huge scope for expanding exports, especially in buffalo and poultry meat, eggs and dairy products. There is an urgent need to frame a right strategy for the development of meat and poultry production in the country this will certainly bring prosperity to millions of our rural citizens and create employment in rural India. Having achieved the Green Revolution, the White Revolution and the Blue Revolution, it a question can the Pink Revolution be far behind? Certainly this will require large investment in infrastructure, mainly in cold storages, and modern meat processing plants. Without a strong and dependable cold chain, a vital sector like meat industry, which is based mostly on perishable products, cannot survive and grow. India ranks first in world buffalo population, with 56.5% i.e. 94.1 million of buffalo population and one-sixth of goat population in the world. India also ranks first in milk production with over 100 million tonnes a year. The country is also fifth in egg production with over 1.6 million tonnes, while it is ninth in the number of poultry. Though India tops in meat, milk and eggs production, exports are very low because of quality considerations. The export of sheep and goat meat in terms of quantity is very small. Buffalo meat export is also not much appreciable due to lack of competitive advantage. Export is restricted to countries primarily in the Middle East, with large ethnic Indian population who prefer it. Poultry products export is also not quite good. According to APEDA, the export of buffalo meat was 343817.08 tonnes (value Rs 1536.77crore) in 2003-04, 337777.65 tonnes (value Rs 1774.52 crore) in 200405 and 459937.63 tonnes (Rs 2629.57 crore) in 2005-06,494111.48 tonner(Rs.3211.70 crore) in 2006-07. The export of sheep/goat meat was 16820.53 tonnes (Rs 110.39 crore) in 2003-04, 9024.49 tonnes (Rs 81.27 crore) in 2004-05 and 7177.51 tonnes (Rs 80.37 crore) in 200506,5481.55 tonnes(Rs.63.05 crore) in 2006-07. The processed meat export was 986.13 tonnes (Rs 7.63 crore) in 2003-04, 1359.7 tonnes (Rs 9.45 crore) in 2004-05 and 256.04 tonnes (value Rs 2.43 crore) in 2005-06. The export of poultry products was 415228.17 tonnes (Rs 202.40 crore) in 2003-04, 277744.46 tonnes (Rs 160.79 crore) in 2004-05 and 145889 tonnes (Rs 167.58 crore) in 2005-06. India produces an estimated 1.5 million tonnes of buffalo meat annually, of which 24% is

exported. Even as per the latest census of 2003 there was a growth of 7.5% of buffalo livestock during the previous five years. The buffalo meat export industry has grown well. The potential for rapid growth is high, particularly if a specific time bound plan of action between the various wings of the government and the meat export industry is drawn up. Since the growth of buffalo meat for domestic consumption is low (less than 2%), the potential for export increases substantially. India's poultry product exports are mainly confined to eggs and egg powder, which are growing due to cost competitiveness and logistical advantages. Poultry meat exports are negligible due to high costs, inadequate meat processing facilities and infrastructure bottlenecks. In recent years, some South India-based integrators have been exploring the possibility of exporting poultry meat to the Middle East and South-East Asian markets. There are no restrictions on exports of poultry and poultry products. The government provides some transportation subsidies (Rs 3-15 per kg) for its exports. There are a number of issues that need to be addressed to fructify and ensure the growth for the current markets, industry sources expressed. For the development of meat export from India the industry has demanded some immediate measures like financial assistance for upgradation of export oriented abattoirs/processing plants. Inclusion of buffalo meat under APEDA's Transport Assistance Scheme for new markets in Africa/CIS where freight cost from India for reefer containers is much higher than from competing countries. Restoration of DEPB rates for frozen buffalo meat. Exemption from Service Tax on transportation of meat products processed for exports. This is presently applicable only for fruits, vegetables, eggs or milk even for domestic consumption. Since 1995, production of meat & meat products has been steadily growing at a rate of 4% p.a.. Currently, the processing level of buffalo meat is estimated at 21%, poultry 6% and marine products 8%. Only about 1% of the total meat is converted into value added products like sausages, ham, bacon, kababs, meatballs, etc. Production of meat is governed under local bylaws as slaughtering is a state subject. Processing of meat is licensed under the Meat Food Products Order, 1973. In 2003 India had a livestock population of 470 million that included 205 mn cattle and 90 million buffaloes. The country produces about 450 mn broilers and 30 billion eggs annually. Cattle, buffaloes, sheep and goat, pigs and poultry are the types of animals, which are generally used for production of meat. Slaughter rate for cattle as a whole is 20%, for buffaloes it is 41%, pigs 99%, sheep 30% and 40% for goats. The country has 3,600 slaughterhouses, 9 modern abattoirs and 171 meat-processing units licensed under the meat products order. The poultry industry is among the faster growing sectors rising at a rate of 8% per year. Vertical

integration of poultry production and marketing has lowered costs of production, marketing margins and consumer prices of poultry meat. There are eight integrated poultry processing units in the country, which hold a significant share in the industry. Exports of Meat and Meat Products (Quantity in MT, Value in Rs Mn) 2001-02 Quantity Buffalo meat Sheep/Goat meat Poultry Production Animal Casings Processed Meat Total 243356 3915 19876 464 267 267878 Value 11444 331 1301 96 13 13185 2004-05 Quantity 306971 8885 264608 552 107 581123 Value 16156 794 1541 126 16 18633 CAGR Quantity 8.0 31.4 137.0 6.0 -26.2 29.5 Value 12.2 33.9 5.8 9.3 6.5 12.2

Source: Ministry of Food Processing Industries, Annual Report 2007-08 to be compiled Meat exports have been growing at close to 30% per annum in terms of quantity, which is largely driven by poultry, buffalo, sheep and goat meat. Exports of value added meat products are insignificant. In the domestic market, the growing number of fast food outlets in the country has had a significant impact on the meat processing industry.

RESOURCES

Food Fortification and Nutrition

The world has recently started realising the full extent and impact of micronutrient malnutrition. Deficits in three key micronutrients vitamin A, iron and iodine prevent nearly three billion people from achieving their full potential as students, parents, workers and citizens. Fortunately, a number of interventions have shown that micronutrient malnutrition is as preventable as it is devastating.

Fortifying common foods with vitamin A, iodine and iron has proved one of the most sustainable and cost-effective strategies for delivering key micronutrients to a large population in the industrialized countries. The rapid increase in modern food processing and packaging technologies has now made food fortification a realistic option for developing countries as well. Documented impacts from food fortification programs in Latin America, Asia and Africa have made the case for fortification increasingly compelling.

But introducing fortification into the food supply requires a broad-based effort that cuts across public and private sectors. While every nation must define its own strategy to end micronutrient malnutrition, every successful national experience offers a model from which others can learn. Success stories are needed to clarify technical issues, build trust and rally partnerships.

What is food fortification?

Food fortification is the addition of vitamins and minerals to a staple food or condiment consumed in fairly consistent and huge amounts. Pre-determined quantities of vitamins and minerals beneficial to the health and well-being of the population are added at the processing stage. The decision regarding which additive to use is based on the severity of the vitamin and mineral deficiencies in the consuming population, the added cost of delivering these nutrients and the compatibility of the food vehicle to their acceptance.

How safe is fortified food for consumers?

Experiences in countries that are already fortifying show that fortified food is completely safe for consumers and that the benefits are enormous. The amount of vitamins and minerals added to a specific food is usually set at a proportion of the individuals daily requirement and is usually less than one third of the total RDA. Fortification is always strictly monitored and, by implementing stringent quality control measures companies can ensure that there is no excessive intake of a specific vitamin or mineral.

How does fortification affect the shelf life of a product?

Fortification has negligible impact on the shelf-life of a product. The vitamins and minerals have a shelf life of their own although they do become less active over time. The selection of the form of nutrient added to the food may also depend on the shelf life requirements of the particular food being fortified.

Does fortification change appearance, taste, texture and flavour of the food?

No. When deciding on the appropriate premix for food fortification, only the vitamins and minerals that will not change the appearance, taste, texture and flavour of the food are considered. In some cases encapsulated micronutrients may be used to prevent the interaction of micronutrients with either the

atmosphere or with other micronutrients. The concept is based on the fact that the consumer buying behaviour should not affect by the fortification process.

Are there any international regulations and specifications for fortification?

No. There are no international specifications for food fortification; however the following organisations have issued guidelines:

Codex Alimentarius: This international commission operating jointly under the WHO and FAO, establishes international specifications and standards for a wide range of foods. In terms of fortification, the Codex Alimentarius only goes as far as to note that in countries where a micronutrient deficiency has been identified, vitamins and minerals to overcome this deficiency may be added to foods that are widely consumed. The Codex Alimentarius has further published General Principles for the Addition of Essential Nutrients to Food which can be downloaded at,http://www.codexalimentarius.net/download/standards/299/CXG_009e.pdf

WHO: WHO is expected to release guidelines for fortification of staple foods in 2006. Some countries in Africa apply mandatory fortification to certain basic foodstuffs and in these countries the specifications for this fortification have been laid down by the Department of Health. Other countries in Africa have developed guidelines for adding vitamins and minerals to foods that can be followed in the case of voluntary fortification. Where there are no guidelines, countries consider Codex Alimentarius guidelines as a reference.

Food companies need to operate on a level playing field. Who will put the required fortification regulations in place?

If the programme is made mandatory then fortification of staple foods is effective, i.e. enforced by law and/or regulated, on a national basis. Mandatory fortification takes time and experience has shown that when a leader in the food industry takes the first step by fortifying food on a voluntary basis, it can result in governments making the process mandatory. In many countries forward thinking food companies have started fortification voluntarily while legislation to make it mandatory was being drafted and implemented. Public Private Partnerships of this nature have a good record of success.

What are the cost sharing experiences in other countries where fortification is carried out?

Each country situation is different, based on how the public and private sectors operate. The following

experiences give some of the possibilities:

In countries where food prices are strictly controlled by the government or are subsidised, the government covers the on-going cost of the programme (the main cost is premix) while the industry covers the on-going Quality Control costs. In countries where there is a free market, the industry passes on the cost to the consumer. The incremental cost can be very small considering the fluctuations in the prices of raw materials and commodities. Fortification usually results in a once-off cost increase to the consumer. In some countries the government contribution to the cost of fortification includes: exemption from duties and taxes on the imported components of both equipment and premixes, or adjustments in VAT and other taxes to cover the cost of the programme, or inclusion of premix costs in the national drug budget of the Ministry of Health.

What claims is a company allowed to make to market their fortified foods?

Companies can state that their product is fortified or enriched with vitamins and minerals and they can indicate the levels of added micronutrients. A logo identifying the food as being fortified is now used on the packaging in many countries and provides an effective means to differentiate a fortified product and to assure consumers that they are paying for a premium quality product.

Each country has its own set of regulations relating to the marketing of foods. Some countries do not permit health claims to be made about the benefits of fortified foods. In such cases, claims such as eating fortified flour will prevent heart disease are not allowed. However, claims that eating fortified bread or flour will increase your iron intake may be permitted.

Who will educate the consumer?

The public education or communication sections of the Ministry of Health, or some such regulatory body, will usually be responsible for educating the consumer. This is normally achieved via extensive media campaigns, public health messages at community health centres and primary health care centres, education programmes for health professionals and nutrition education programmes through primary and secondary schools. Private companies also have an important role to play in educating the consumer and should stress the benefits of fortification in their advertising and marketing campaigns.

Where can a company get more information and assistance?

Technical assistance can be provided by the Micronutrient Initiative and other international technical agencies that are active in the country if such support is requested and/or required.

Fortification Micronutrients Commonly added to Foods

The following and vitamins are commonly added to foods:

Minerals

Vitamins

Iodine Iron Zinc Calcium Magnesium Copper Selenium

A (Retinol) B1 (Thiamin) B2 (Riboflavin) B3 (Niacin) B6 (Pyridoxin) B9 (Folic Acid) B12 C (Ascorbic Acid) D E (Tocopherol)

Choice of Food Vehicles

Micronutrients are added to foods at following three levels: STAPLE FOODS such as whole grain & milled cereals, oils & fats, sugar and salt BASIC FOODS such as breads, biscuits, packaged cereals and dairy products VALUE ADDED FOODS such as condiments, beverages convenience foods and sweets and candies Commonly Fortified Foods The most commonly fortified foods and associated nutrients are:
Food Salt Nutrient Iodine, Iron, Fluoride

Wheat and Maize flours Iron, Folic Acid, B Vitamins, Vitamin A, Zinc Cooking Oils and Fats Vitamins A and D Sugar Vitamin A

Condiments (Sauces) Iron Milk Vitamins A and D, Iron

Complementary Foods Iron, Folic Acid, B Vitamins, Vitamin A, Zinc

Fortification of food with micronutrients

GOVERNMENTS, OFTEN ASSISTED by international agencies and non-governmental organizations and industry, have for many decades taken steps to eliminate or reduce micronutrient deficiencies. Building on the impressive results of the reduction in iodine deficiency disorders (IDD) through the fortification of table salt with iodine, vigorous efforts are currently being made to address other micronutrient deficiencies through the fortification of appropriate foods.

The term "food fortification" means the addition of nutrients at levels higher than those found in the original food. Fortification is synonymous with enrichment. Restoration means that nutrients are added to a food to compensate for the loss of nutrients during processing. Generally, food fortification is undertaken at the industrial level, although food fortification can also take place at the household or community levels.

Mass fortification refers to the addition of micronutrients to foods commonly consumed by the general public (such as cereals and condiments), which is instigated, mandated and regulated by the government sector. Universal fortification refers to the fortification of foods consumed by animals as well as humans, with iodization of salt as the main example. Targeted fortification programmes also exist, for example the distribution of biscuits fortified with a certain number of vitamins and minerals in school food programmes. Furthermore, fortification of some foods (e.g. wheat flour) with specific nutrients at specific levels may be either mandatory (legislated through governments) or voluntary.

The technological problems relating to fortification are being overcome even in developing countries. Different foods may be fortified with a single micronutrient, for example sugar with Vitamin A, or with more than one nutrient, such as salt with iodine and iron or wheat flour products fortified with multimicronutrient mixes. The international nutrition community is now looking at ways to apply fortification more prominently in order to reduce or eliminate other existing micronutrient deficiencies.

This paper outlines the role and position of FAO regarding the fortification of foods with micronutrients and presents the ways in which the Organization can provide technical assistance to governments in concert with international agencies, non-governmental organizations, public and private institutions and the food industry, to support planned and ongoing fortification programmes. However, in providing such assistance, it must be acknowledged that fortification programmes have certain limitations, and to ensure their success and sustainability such programmes should be implemented in concert with poverty reduction programmes and agricultural, health, education and social intervention programmes that promote the consumption and utilization of adequate quantities of good-quality, nutritious foods, especially among the nutritionally vulnerable.

What leading companies stand to gain from adopting fortification?

As several company leaders have noted, the short term benefit to companies ready to innovate with fortification is that they would have a differentiated product, and thus have a competitive advantage in positioning their product as the market continues to grow. As discussed in more detail below, fortification presents a clear leadership and growth opportunity for African food companies:

Fortification can be used to consolidate and extend market leadership in staple food processing and marketing: African-owned and operated companies are currently the leaders in the production of

processed staple foods consumed in Africa. Fortification provides one means to remain dominant in a competitive industry that is also attractive to international corporations. By taking the lead in launching fortified products, African food companies will maintain their leadership in the market for processed food, rather than having to catch up when international corporations inevitably start introducing these products into African markets. In addition, starting with fortifying now will enable African companies to meet the more stringent quality require- ments of supermarkets, thus ensuring themselves a foothold in this rapidly growing sector.
Fortification represents a business development opportunity: The introduction and expansion of

capacity to implement food fortification provides companies with an opportunity to upgrade production-processing facilities in their plants, which could lead to overall improvement in productivity. Likewise, when compa- nies embark on upgrading production processes, they could enhance the benefits of the upgrade by adding the capacity to fortify. Thus fortification can be a significant component of a companys business development strategy.
Fortification links a companys core business activities and its corporate social responsibility (CSR) obligations: -Leading companies worldwide are seeking sound CSR opportunities. Companies that

have started marketing fortified food to communities that were largely excluded from the market have shown that poor people can be as discerning about brands and value-added as richer consumers. Taking the lead in marketing fortified food to poor people is considered a good business opportunity and a sign of respect for people whose needs are often over looked. Several African food company leaders have expressed a strong belief that fortification is the right thing to do and in countries where a specific company has a strong presence and market share, fortification is already being done voluntarily (for example, RAB Processors, maize flour in Malawi; Namib Milling, maize and wheat flour in Swaziland; MIDEMA, wheat flour in the DRC; and the Grands Moulins, wheat flour in Guinea).
Fortification can help to ensure more equitable integration into world food markets: -By drawing

attention to the need to harmonize stand- ards across the region, and helping to generate innovative means to strengthen regulatory capacity, the effort to fortify will facilitate participation in the global market for a range of products. Already, development partners have taken steps to address regulatory ca- pacity constraints. Recently, representatives of 49 countries, with the support of FAO and WHO, agreed on a five-year food safety plan, which would include attention to regulations, basic food legislation and consumer information, under the auspices of a panAfrican coordinating body.

Investment in fortification is an investment in the companys future, and in the future of the continents people: -While investing in a socially-beneficial technology, companies are paying attention to

their longer term market development and sustainability. By establishing fortification as normal business practice, and thus contributing directly to the health, vitality and prosperity of their consumer base, companies would be assuring a growing and sustainable market for their products.
FAO's overall policy to improve nutrition

FAO's efforts to improve nutrition worldwide are guided by the recommendations made during international meetings and conferences, including the FAO/WHO International Conference on Nutrition (Rome, 1992) and the World Food Summit (Rome, 1996). In following these recommendations, emphasis is given to addressing the underlying causes of malnutrition and the micronutrient deficiencies that often accompany it, which rest, inter alia, in poverty, the underdevelopment of agriculture and poor livelihoods that lead to food insecurity at the national and household levels. Actions to promote an increase in the supply, access to and consumption of an adequate quantity, quality and variety of foods for all population groups is central to FAO's work. These actions are also the logical outcome of the right to food, which is an internationally agreed right for all human beings. In accordance with these rights, FAO promotes and supports sustainable food-based programmes and strategies to improve nutrition with the aim that all people, through a variety of different foods, can obtain a diet providing all the energy and macro- and micronutrients they need in order to achieve a healthy and productive life.

Fortification of food with micronutrients was identified by the two above-mentioned conferences as a valid technology to adopt as part of a food-based approach if existing food supplies and limited access fail to provide adequate levels of the respective nutrients. In such cases, fortification of food is seen as a valuable addition to reinforce ongoing nutrition improvement programmes. In FAO's view, fortification is not an alternative to the overall goal of improving nutrition through policy and programming responses that encourage the consumption of a nutritionally adequate diet composed of a variety of available foods.

In developing food fortification programmes, attention must be paid to the following:

The population groups most in need of improved nutrition are the poor. They often do not have access to fortified foods because of their low purchasing power and because distribution channels remain undeveloped. The combination of low economic demand and lack of physical access to markets means that the poor often eat food directly from the field without the added value of commercial food processing. The poor are known to suffer from multiple micronutrient deficiencies, all of which cannot realistically be addressed by fortified foods. As most traditional diets are normally able to provide the micronutrients required for normal function and growth, micronutrient deficiencies generally result from inadequate intakes of the overall diet.

The standards for the technology of fortification of different foods have not yet been fully resolved with regard to nutrient levels, stability and physical property characteristics as well as consumer acceptance in terms of cooking properties and taste, among other factors. Insufficient scientific knowledge about nutrient interaction complicates decisions concerning the amount of nutrient to add to a food.

Nevertheless, fortified foods as part of food aid are of unquestionable value in protecting the nutritional status of vulnerable groups and people affected by emergencies. In this context, FAO is pursuing the goals set by governments for overall nutrition improvement through food-based approaches as a priority, and is assisting countries in ensuring that food fortification programmes find their appropriate place as one element of national nutrition improvement policies plans and programmes.