A MATTER OF TASTE

A combination of Indian preference for freshly prepared meals, lower percentage of working women in the country and
pricing are restricting the growth of the ready-to-eat (RTE) market here, according to a study by Tata Strategic Management
Group, a management consulting firm. The RTE market in India is expected to reach the Rs2,900 crore mark by 2015 from the
current level of Rs128 crore. But to touch that mark, the industry will have to offer customers varied options, competitive pricing
and dispel consumer fears regarding hygiene to ensure its products find favour with Indians. Indias share of the global RTE
market, worth $47 billion (about Rs1.8 trillion), is minimal. But according to the study, factors such as a growing number of
nuclear families, rising household incomes and a significant rise in the number of working women professionals is expected to
accelerate growth.
The study reveals that acceptance of RTE food is low primarily because it competes with home-cooked food, a much cheaper
and fresher option. To increase consumption, RTE players will have to significantly improve their price competitiveness with
respect to home-cooked food. A reduction of prices by 25-30% could lead to a demand explosion due to higher affordability, said
Pankaj Gupta, practice head, consumer & retail, at Tata Strategic Management Group.
Sagar Malviya
sagar.m@livemint.com

estic RTE market ($ m

n)
Dom
700
600
500

Triggers

400

Improvement in:
Technology
Taste
Product
innovations

41

300

A
%C

Scenarios

GR

Improved
acceptability

200
100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Price compression
through:
Potential high growth market for Indian and
Excise duty exemption
international players in both Indian
Supply chain
and global markets
disintermediation
Streamlining of
indirect taxation
Changing
consumer
Need for
preferences:
convenience,
Higher urbanization
increasing awareness
& improved
Increasing incomes
availability
Working women

COMPETITIVE LANDSCAPE

RTE: MAJOR GLOBAL PLAYERS

The global RTE market is fragmented with the top three
players constituting only about 14% of the market.

Ready meal players in India operate with thin margins due

to low capacity utilization arising from inadequate demand
Players

Net sales
Net ROCE#
($ mn) margin
(%)

Capacity
utilization

Estimated
revenues ($ mn)

MTR**

29.0

4.5% 15.6%

44%

12

ITC

2789

22%

40%

N.A

1.5

6.4

3.8%

8.0%

~47%

~4.5

Kohinoor 133.6

3.7%

9.4

~40%

2.5

9% 22.9%

52.6%

~2

Brands: MTR

Brands: Aashirwad, Kitchens Of India

Tasty Bites

Brands: Tasty Bites

Brands: Kohinoor

ADF Foods 17.0

Brands: Ashoka, Classic Ashoka

**Data corresponds to FY 2006

#Return on capital employed

Improved
affordability

Domestic

Revenue 2006 ($ bn)

Market share (%)

Frozen market cuisine

break up: 2001*

Unilever

2.3

ConAgra

2.3

Heinz

2.0

Nichirei

0.5

Katokichi

0.5

Ajinomoto

0.4
0.9%

Exports

4.9%
4.9%
4.2%

Traditional 41%
Other 5%
Mexican 10%
Italian 29%

1.1%

Indian 2%

1.1%

Chinese 13%
*US market taken as indicative

SEGMENT-WISE GROWTH
Packaged foods market in India has grown at about 7% per annum between 2000 and 2005,
within which RTE is the fastest growing segment at 73%.
SALES VALUE (for 2005, in $ mn)
Dairy products
Bakery products
Oils & fats
Confectionery
Dried processed foods
Sauces & dressings
Snacks
Noodles
Ice cream
Meal replacements
Baby foods
Canned/preserved food
Spreads
Frozen processed foods
RTE
Soup

SALES CAGR 2000-06

3,328

1,930
1,799
703
485
434
326
205
201
101
84
63
53
31
25
13

6.8%
5.8%
5.6%
8.3%
13.7%
11.1%
12.6%
18.4%
14.2%
6.8%
5.9%
16.4%
5.4%
11.7%
73%
11.4%

SHARE OF PKGD. FOOD

0.3%
2.2%
0.7%
2.1%
5.1%
3.4%
0.3%
0.1%
4.5%
7.4%
1.1%
34.9%
0.9%
20.2%
18.9%
0.6%

Source: Tata Strategic Management Group