PACKAGED FOODS

EDIBLE OILS BECOMES LARGEST CATEGORY

The Indian packaged food market registered double-digit constant value

growth in 2016, in line with its performance over 2011-2016 as a whole.
Edible oils overtook dairy to become the largest category in the market in
2016, as hygiene concerns and the growing interest in products offering
health and wellness benefits drove the rapid shift from unpackaged to
packaged oils. Rice, pasta and noodles was the only category to register
faster constant value growth during the year, as it recovered from the impact
of the controversy surrounding the discovery of MSG and lead in Nestls
market-leading noodles brand, Maggi in 2015.

RISING HEALTH-AWARENESS HAS WIDE-RANGING IMPACT

Rising consumer health-consciousness proved to be a key influence on the

development of packaged food in India in 2016. Concerns about the hygiene
status of unpackaged food were a significant factor in encouraging the
uptake of packaged products, playing an important role in the dynamism of
categories such as yoghurt. At the same time, increasingly sophisticated
consumer awareness of health and nutrition issues helped to drive the
premiumisation of demand in urban environments and shape manufacturers
marketing and product innovation activity. In edible oils, market leader,
Ruchi Soya Industries launched the Kill lethargy with Sunrich Sunflower
Oil campaign in July 2016, claiming its Sunrich brand is superior to other
brands because it is enriched with vitamins A and D, as well as offering
15% lower absorption.

DOMESTIC PLAYERS DOMINATE

Domestic manufacturers continued to dominate Indian packaged food sales

in 2016, supported by their long-established roles as providers of staples and
extensive distribution networks that reach beyond major urban centres.
Indeed, the growing role of lower-tier cities and rural areas in driving
packaged food value growth in the market contributed to a growing share of
sales for smaller domestic players during the year. In addition, domestic
companies, such as Maiyas Beverages and Foods, benefited from their
familiarity with the particularities of local taste and capacity to produce
products tailored to local preferences.

INTERNET RETAILING STARTING TO MAKE AN IMPACT

Independent small grocers remained Indias largest packaged food

distribution channel in 2016 and, indeed, saw its share grow partly as a
result of the increasing importance of rural areas, which tend to be less well
served by modern grocery retailers. Meanwhile, although internet retailing
has had nothing like the impact it has had in China and continues to be a
negligible presence in overall packaged food in India, the channel made
notable advances in some categories, including rice, pasta and noodles, and
savoury snacks. Internet retailing, which is benefiting from the rise in
internet access underpinned by the proliferation of smartphones, is attracting
interest from a growing number of manufacturers. In edible oils, Adani
Wilmar joined forces with the leading e-commerce player, Paytm, to launch
the Make Your Fortune campaign for its Fortune sunflower oil in 2016.

INCREASING PRODUCT AVAILABILITY SET TO DRIVE FURTHER

GROWTH

The Indian packaged food market is forecast to see strong growth over
2016-2021 driven by increasing product availability as a result of
manufacturers new product developments and greater penetration of
smaller cities and rural areas. The increased presence of refrigeration
facilities will also bolster product availability in several categories, with ice
cream and frozen desserts notably set to be amongst the most dynamic
performers over the forecast period. Furthermore, value will be enhanced by
an upmarket shift in urban demand underpinned by rising consumer health-
consciousness and an increasing emphasis on convenience.