PremiumWith mobility restrictions in place during the pandemic, consumers switched to ready-to-eat and ready-to-cook food, which accelerate the adoption of packaged food
Packaged food launches are picking up as large consumer goods companies try to capitalize on the rising demand for ready-to-cook meals, snacks, edible oils, pulses and juices amid a shift in consumer preference from unbranded to branded products since the outbreak of the pandemic.
With mobility restrictions in place during the pandemic, consumers switched to ready-to-eat and ready-to-cook food, which accelerate the adoption of packaged food. In general, cooking also took precedence as dining out remained suspended. The convenience of packaged food, and increasing household income prompted the consumer to move up the value chain, opting for better brands. and experimenting with flavours and food items.
Aa s result, the likes of Marico, Tata Consumer Products, Reliance, PepsiCo and Britannia Industries stepped up new launches while others invested in ramping up capacity or buying regional brands to gain a bigger share of India’s ₹3.6 trillion packaged food market.
“During lockdown, we saw in-home consumption growing with home becoming the new social hub. Convenient food products that are high on trust and hygiene along with easy accessibility were key factors for consumers that have contributed to the uptick in demand for packaged snacks," Anshul Khanna, senior director and category head, foods, PepsiCo India, said.
Khanna said in a post-covid era the trend of in-home consumption persists even amid a resurgence in on-the-go and out-of-home consumption of snacks. The food and beverage firm has stepped up launches including its foray into the premium snacking range with Lay’s Gourmet, Quaker Oats Multigrain and Quaker Oats Muesli. It also added more variants of Kurkure.
On Tuesday, Havmor Ice Cream, a subsidiary of South Korean firm Lotte Confectionary, announced investments of ₹450 crore over five years with plans to ramp up local capacity. This includes investments in a greenfield plant in Pune as well as a capacity expansion at an existing plant in Faridabad.
Per-capita consumption of packaged food, beverages, and ice-creams in India is still low, especially compared to other Asian markets. This presents a huge opportunity to grow consumption, said Komal Anand, managing director of Havmor Ice Cream. “In terms of packaged food, 2020 has triggered behavioural change, accelerating the per-capita consumption adoption in India." The investments will help establish its foothold in south and west.
The industry has also seen a surge in M&A activity such as the acquisition of the Nirapara brand by Wipro Consumer Care and Lighting in December or Dabur India picking up a 51% stake in Badshah Masala.
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More recently, Reliance Consumer Products, the fast-moving consumer goods arm of Reliance Retail Ventures, launched FMCG brand Independence, in Gujarat. Independence will sell sunflower and groundnut oil, apart from a wide range of other products including staples, processed foods and other daily essentials such. Meanwhile, Britannia Industries Ltd. and French cheese maker Bel announced a joint venture to sell packaged cheese in India.
The move points to large incumbent players diversifying their portfolio and entering profitable and high-use categories, said others.
“Some of these moves are more about diversification which are very interesting from an overall profitability perspective. Spices as a category is very difficult to build organically because there are local nuances; every market has a regional leader," said Angshuman Bhattacharya, National Leader – Consumer Product and Retail Sector, EY India. Bhattacharya, however warned that the entry of more players in the branded foods market is set to create greater price competition and put pressure on profitability.
Bengaluru-based FMCG company Tata Consumer Products Ltd., has ramped up capabilities at its research and development centre in Bengaluru—a move that has helped the company reduce the time taken to develop and launch new products in the market. “We have repurposed and restructured the entire R&D workforce so that we are building ourselves for the future," Vikas Gupta, Head, Global R&D, at Tata Consumer Products said in an earlier interview.
The company has invested in research capabilities within the organization—this includes building a team of food scientists that leverages science to unlock any consumer opportunities and also identifying opportunities based on broad themes of convenience as well as health and wellness.
Announcing the acquisition of Nirapara in December, Anil Chugh, president, food business, Wipro Consumer Care and Lighting explained that consumers are quickly moving from unbranded to branded foods. “Foods is a very large space—around ₹5 lakh crore in terms of size. It is growing at the back of very strong shift from unorganized to organized. In most of the personal care categories the shift has happened in the last 15-20 years, we are now seeing this phenomenon in food in a big way. Consumers are also experimenting a lot more with their taste palette," Chugh said.