2012-09-09 03:50:04 - New Food market report from Business Monitor International: "India Food & Drink Report Q3 2012"

The domestic demand outlook for India remains uncertain and we see downside risks to our near-term outlook. The reappearance of inflationary pressures suggests caution in our near-term private consumption outlook. While we continue to expect decelerating money and credit growth and falling global commodity prices to take the sting out of domestic price pressures eventually, the central bank's inability to act aggressively in terms of monetary easing means that private consumption activity is unlikely to make a forceful recovery in FY2012/13 (April-March). Despite India's structural challenges such as poor distribution infrastructure, restrictive regulatory climate and excessive bureaucracy, we are continuing to witness an increasing flurry of expansions across the market, clearly bearing out the country's long-term consumer potential.


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Headline Industry Forecasts (local currency)

* 2012 food consumption growth = +5.4%; compound annual growth rate (CAGR) 2012-2016 = +5.4%
* 2012 alcoholic drink value sales growth = +12.4%; CAGR to 2016 = +10.4%
* 2012 soft drink value sales growth = +16.3%; CAGR to 2016 = +13.1%
* 2012 mass grocery retail sales = +18.4%; CAGR to 2016 = +12.0%

Key Company Trends

Food Producers Pursuing Product Launches - India-based dairy firm Mother Dairy has introduced its entire range of milk products in Jaipur. The new range comprises dairy products such as cheese, butter, butter milk, mishti doi and yoghurt. Meanwhile, new Indian food firm Tierra Food India will launch a range of snacks based on traditional banana chips and tapioca chips made in Kerala. Managing Director Alex Thomas said young people were drawn to the packaging and range of flavours offered by potato chips, and that Tierra hoped to lure them back to local snacks. Also, Belgium-based sweetener manufacturer Sweetwell has made a foray into the Indian market through the establishment of local subsidiary Sweetwell India. Sweetwell intends to launch its products in the country by April-May 2012 and expand nationwide by end-2012.

Drinks Sector Witnessing A Wave Of Expansionary Investments - India-based drinks corporation Tata Global Beverages has agreed a multi-year global distribution deal with US-based Green Mountain Coffee Roasters. As a result of the deal, Green Mountain will sell Tata's Eight O'Clock, Tetlet and Good Earth tea brands in its Keurig K-Cup and Vue single-cup packs. Meanwhile, India-based conglomerate Reliance Industries' diversified and biotechnology initiative Reliance Life Sciences (RILS) is collaborating with domestic food and beverage firm Warna Agro to introduce a mango-based drink.

With their sights set firmly on the opportunities provided by a growing health awareness trend in India, US soft drinks giant PepsiCo and domestic drinks producer Tata Global Beverages plan to ramp up their product portfolio of functional beverages through their local joint venture NourishCo. According to Tata Global Beverages vice-chairman RK Krishna Kumar, NourishCo will be introducing a new range of functional drinks over the next 18-24 months and it aims to generate overall revenues of INR7bn (US$141.8mn).

Risks To Outlook

We highlight a key ongoing risk to Indian consumer wealth: the stability of the Indian rupee. The currency has been selling off recently, down approximately 6.0% from its February 6 peak to current levels. Although we remain broadly neutral towards the unit at these levels, we are not expecting a major bull run either anytime soon. Indeed, the risks, from our perspective, remain highly weighted to the downside, given the still-precarious position of the country's overall balance of payments picture.

Partial Table of Contents:

SWOT Analysis
- India Food Industry SWOT
- India Drink Industry SWOT
- India Mass Grocery Retail Industry SWOT
Business Environment
- BMI's Core Global Industry Views
- Table: BI's Core Views
- Asia Pacific Risk/Reward Ratings
- Table: Asia Pacific Food & Drink Risk/Reward Ratings Q312
- India's Food And Drink Business Environment Ratings
- Macroeconomic Outlook
- Table: India - Economic Activity
Industry Forecast Scenario
- Consumer Outlook
- Food
- Food Consumption
- Table: Food Consumption Indicators - Historical Data & Forecasts
- Confectionery
- Table: Confectionery Value/Volume Sales - Historical Data & Forecasts
- Trade
- Table: India Food & Drink Trade Indicators - Historical Data & Forecasts
- Drink
- Hot Drinks
- Table: India Beverage Sub-Sectors - Value/Volume Sales Historical & Forecasts
- Alcoholic Drinks
- Table: India Beverage Sub-Sectors - Value/Volume Sales Historical & Forecasts
- Soft Drinks
- Table: India Beverage Sub-Sectors - Value/Volume Sales Historical & Forecasts
- Mass Grocery Retail
- Table: India MGR Sales by Format - Historical Data & Forecasts
- Table: Average Outlet Sales by Format - 2011
Food
- Key Industry Trends And Developments
- Food Producers Pursuing Product Launches
- Increase In Rice Supplies And Fish Import Demand
- Expanding Domestic Footprint
- Market Overview
- Food Processing
- Food Consumption
- Confectionery
- Canned Food
- Trade
- Agriculture
- Rice
- Dairy
Drink
- Key Industry Trends And Developments
- Dynamism Heating Up In Hot Drinks Sector
- Drinks Sector Witnessing A Wave Of Expansionary Investments
- Financial Woes At UB Group Prompting Divestment Talks
- Market Overview
- Soft Drinks
- Hot Drinks
- Alcoholic Drinks
- Spirits
- Beer
- Wine
Mass Grocery Retail
- Key Industry Trends And Developments
- ABRL Slows Expansion Amid Flurry Of Sector Investments
- Linking Up With Local Retailers To Circumvent Expansion Hurdles
- Market Overview
- Leading MGR Players
- Table: Structure of India's Mass Grocery Retail Market by Estimated Number of Outlets
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Full Table of Contents is available at:
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