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Regional Bias

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For the time-pressed working woman of modern India, it is virtually impossible to cook an entire meal from scratch, though the desire to whip up a traditional meal for the family has not died.

The complexities of urban life have greatly encouraged the emergence of the class of foods called Ready-to-eat (RTE) and Ready-tocook (RTC). From a virtually nonexistent category this segment grew to an approximately Rs 2,500-3,000 crore industry by 2007. The growth is expected to accelerate; the RTE foods market in India is clearly on a growth trajectory going by the 35 percent growth registered.

Foods that fall in the rapidly expanding RTE category include pre-cooked non-vegetarian and vegetarian preparations, microwavable meals, frozen non-vegetarian and vegetarian foods. However, while the development of the segment has made regional favourites, such as Chettinad Chicken and Rogan Josh available to consumers across the country, some companies are also exploiting opportunities in specialisation – in mass producing local meal staples in packaged form.

According to industry sources, urban Indians are now among the top 10 most-frequent-consumers of fast food across the globe. The same sources also indicate that around 70 to 75 percent of urban Indians consume food from take-away restaurants once a month. About 35 to 40 percent of the adult population does so at least once a week. The rising demands for regional flavours in the RTC/RTE category can be gauged from the fact that now there are numerous players that specialise in the regional category. In southern India some of the popular brands that offer a variety of traditional foods in this category include MTR, ID Special, Britte Foods, Orkay and Guru Ganesh, among others.

As per a KSA-Technopak study (KSA Technopak Grocery and Foods Advantage Study, GROFAST), a peculiarity of the RTC segment is that while a national player may not be able to reach a feasible level, even a regional niche player may prove to be viable. Thus, vermicelli, with a national penetration level of less than 20 per cent, continues to be a very viable proposition in the south, where its penetration is much higher.

Southern India, in fact, shows the highest penetration for packaged RTC products such as idlis/ dosas and dessert preprarations. According to the November 2008 report, “Land Of Opportunities: The Food Industry in India” jointly produced by Pvt. Ltd. and (FICCI), the size of the Indian Food Industry is estimated at Rs 8,80,000 crore (USD 200 billion) in 2006-07 and is slated to reach Rs 1,320,000 crore (USD 300 billion) by 2015, with the increasing share of processed food (in value terms) from 43 percent to 50 percent. The Food Processing, being the major sector in the indian food industry, stands at Rs 3,74,000 crore (USD 85 billion) and gives direct employment to about 20 lakhs or two million workers. Organised food retailing and food services are the other fastest emerging opportunities, organised food retail is expected to grow Rs 2,33,200 crore (USD 53 billion) by 2013.

According to ‘Branded Foods in India – Forecasts to 2015’, Maggi’s ‘2-minute noodles’ were the first real success story of packaged instant meals in India. Introduced by Nestle in 1983 and supported by high-impact advertising, it caught the imagination of the targeted population and soon became a favourite meal of Indian children.

The major domestic player in the instant meals section is ITC, which has more than 50 packaged branded food products under the Kitchens of India and Brands, with different varieties of packaged RTE/ RTC.

Ltd., which stresses that its products are 100 percent vegetarian and contain absolutely no preservatives, is amongst the top five processed food manufacturers in India. In order to ensure that their products have the “just-cooked” freshness, the company has adopted technology from the Defense Food Research Laboratory, Mysore. MTR has ISO 22000 and HACCP certification and their use of technology from the Defense Food Research Laboratory for their RTE products has won them a President’s Award.

MTR’s wide range of products include RTE curries and rice, RTC gravies, frozen foods, ice creams, instant snacks and dessert mixes, spices and a variety of accompaniments such as pickles and papads. The RTE range currently comprises 22 Indian curries, gravies and rice. Most MTR RTE products can be stored in ambient temperature and require no refrigeration. Among the south- Indian preparations that it offers are Kharabath, Upma, Sambar Rice, Rasam Rice, Bisibelebath, Kesaribath, Seedai, Khara Bhat, Pongal and Pineapple SS Curry.

In sync with product innovations, the company has also expanded retail presence significantly; contemporary ‘Namma MTR’ (is MTR’s retail chain that allows customers to experience the wide MTR range. Namma MTR is split into three sections. One section showcases the entire range of products. The second section is a novel concept kitchen where customers can interact with specialist chefs to learn about MTR products and watch live demonstrations.

This concept kitchen also works as an ideal platform for feedback (allowing the company to understand and address consumer needs) The third section offers a variety of fastfood — one can either eat here or get a quick take-away from the express counter) and MTR kiosks now serve consumers across Bangalore and Chennai. The company’s South- Indian RTC combo-meals in the frozen range consist of Masala Dosa + Aloo Curry, Rava Idli + Potato Sago, and Vada. Rice Meals is the other popular offering from MTR to let the consumers enjoy ‘home’ food anytime and anywhere. The South- Indian cuisines in this range include Bisibele Bhath (a combination of vegetables, lentils, rice and aromatics spices), Lemon Rice (a subtly flavoured mix of lemon and rice), Sambar Rice (lentil and vegetable curry with rice), Tomato Rice (a combination of rice, tangy tomato and spices) and Tamarind Rice (combination of rice and tamarind). The price range of MTR’s South-Indian RTE / RTC products varies from Rs 22 (for 300 gm of Rasam Rice) to Rs 42 (for 200 gm of Puliogare powder).

When R. Ramanathan, national sales manager, MTR Foods Ltd., was asked about how the south-Indian regional RTC/RTE market fares, as compared to the north and other zones of India, he said, “MTR offers breakfast, lunch/dinner and snacks and sweets in the RTE category.

The products are Kharabath, Upma, Sambar Rice, Rasam Rice, Bisibelebath, Kesaribath, Seedai and Onion Nibbles. The response has been very good, though orthodox consumers are still not very open to the idea.

Trials from new customers and demand from non-south customers are what are driving demand for MTR’s south-Indian specialities.”

“The South-Indian varieties of RTE are a narrow market compared to the North Indian preparations. And that is why I believe that this market will not grow as fast as expected by the industry. There are definite roadblocks in generating volume as there are divergent tastes in the four South-Indian states.” Contradicting the belief that the proliferation of modern trade facilitates the growth of emergent categories, Ramanathan points out that modern retailers are interested only in products that are in demand.

“There is no special help from them (supermarket chains). Each brand has its own shelf space depending on the SKU and demand,” he says when asked what the company was doing at the retail end in terms of shelf space visibility.

M. Vijaya Kumar, sales manager of Britto Exports, which manufactures and markets the Britte ready-to-eat brand, says, “Britte is a 30-year-old company involved in seafood exports. Britte just-eat-seafood is processed and packed by Britto Exports, Chennai. The company launched a range of RTE seafood called ‘Just Eat’ in Retort pouches. The range was developed by the Central Institute of Fish Technology in Cochin.”

Britte has also developed a range of RTE vegetarian varieties for export, which are available in Bangalore, Chennai and Hyderabad.

Future plans of the company include expanding the availability of their RTE range to Mumbai, Delhi and Chandigarh. The South-Indian regional RTE cuisines present under the Britte brand include Vada, Idiyappam, Chappathi, Frozen Porotta (Malabar Style) and Ceylon Porotta. All products are currently being retailed in Bangalore and Chennai. The price band for the South-Indian RTE products ranges from Rs 36 (for a 300 gm pack of frozen Idiyappam) to Rs 48 (for frozen Chapathi). “Market demand is slowly growing and we are witnessing a growth of about five percent every month.

Modern retail has helped us immensely to push our brand among new and old customers. At the retail end, we see to it that we have regular sales promotions and that our supply chain remains robust,” Kumar says. According to him, two of the drawbacks to the acceptance of regional RTC/RTE products are price and ‘frozen-awareness’ of consumers. “There is definitely scope for other players to enter this segment, but compared to other regions in the country, especially Delhi and Mumbai, the market is much smaller here,” he admits.

S. N. Muralidhar owns the popular regional brand Guru Ganesh, which was launched in 2002, and has since become one of the most popular brands in the idli/dosa fresh-batter segment in Bangalore.

“Modern retail has helped us with visibility and has driven sales. Adherence to strict quality control norms has helped us excel in product innovation; I can very confidently state that the flavours contained in our idli/dosa batter cannot be had in any other brand,” he says.

“Our product features the homemade batter flavour, and in order to maintain this quality and taste, I am not going in for mass-production; currently we supply approximately 2,500 packets per day around Bangalore. My wife personally looks into the production aspect every single day.”

Guru Ganesh currently offers only the fresh batter mix, which is available in polypacks of 1 kg with an MRP of Rs 25. Having started small in 2002, the Guru Ganesh brand is now available in most of supermarkets in Bangalore, including in Thom’s and Spencer’s. With respect to future plans and availability of Guru Ganesh products in other southern cities, Muralidhar says, “I plan to shortly launch ‘chutney powder’ in the RTE segment – chutney that will serve as an accompaniment with idlis/ dosas. In the past I have noticed that the response from neighbouring cities such as Mysore has not been as encouraging as in Bangalore, which with its cosmopolitan character is a more promising market for innovative foods. But I am hopeful; idlis and dosas are some of the healthiest snacks, and now with our product people can whip them up in a jiffy.”

In response to the range of regional south-Indian flavours present under their brand, the market demand present, Musthafa P C, managing director, Best Food Enterprises, said, “Best Food Enterprises is a food processing business based in Bangalore promoted and managed by IIM and NIT graduates. Best Foods deals with a thousand-plus retail outlets in Bangalore including , , More, Spencer’s, Nilgiri’s, Foodworld, @Fresh, Total and Spar. We have also made inroads in Mysore, having started our operations in 2008. The price range of the South-Indian RTC/ RTE varies from Rs 18 (ID Special Kerala Parota, small pack; three pieces) to Rs 28 (for ID Special Kerala Parota, large pack; five pieces).

Best Foods’ RTC/RTE range also includes ID Special Idli/dosa batter, ID Special dosa special batter, ID Special kerala parota, ID Special Unniappam (deep fried sweet rice balls), ID Special rose cookies and ID Special diamond chips. “We currently sell 10,000- plus kgs of batter and 5,000-plus parotas daily. Comfort, taste and freshness are the major factors driving their demand. We specialise in daily supply and daily replenishment of these products at retail so that customers get fresh products every day,” Musthafa says.  While the batter market has matured in Chennai, it is growing at the rate of 60-70 percent per annum in Bangalore and Mysore, he adds. “Modern retail has helped us to improve efficiencies to a great extent. We have dedicated shelf space with all modern retailers. They also conduct market surveys and work closely with us to co-develop new products. We are working very closely with CFTRI () in Mysore to enhance product longevity so that we can export our products.”

Regarding consumer awareness and acceptability of regional RTC foods, Musthafa says, “While our products are currently available in Bangalore and Mysore only, about 70 percent of Bangalore customers are not aware of availability of such products in the market! We haven’t really explored the other zones of India. Our understanding of the consumers suggests that older south- Indians prefer home-made traditional foods over ready-to-eat/readyto- cook products, though we have noticed many older north Indians using our products.”

Best Foods is planning to expand to 20 other cities in the next few years. “In batter, we have 90 percent market share in Bangalore. I feel there is scope for other players to enter the market, since the prospects of growth in this segment are very good. Even during this retail slowdown our sales are growing at about 10 percent every month,” Musthafa says. Orkay is a brand of Orkay Instant Foods P Ltd., a privately-held company promoted by R. A. K. Swamy and R. A. Madhusudan and registered in 1985. Orkay Instant Foods has four state-of-the-art manufacturing facilities located at Peenya,

Bommasandra and Mysore totalling to 22,000 square feet of manufacturing Space.  “We attribute our success to the utilisation of opportunities thrown open by the changing social scenario,” says R. A. Madhusudan, director, Orkay Instant Foods P Ltd. “In order to meet the cooking challenges of the modern woman, Orkay started manufacturing Orkay Instant Breakfast Mixes. Over time we have not only expanded our range to Instant Sweet Mixes, but our product range now also comprises pure spices, condiment mixes, beverages and instant mixes of South-Indian regional specialities as well. Our wide range of South-Indian RTC products include Gulab Jamoon Mix, Rava Idli Mix, Instant Idli Mix, Vadai Mix, Dosai Mix, Puliyogare Mix, Bisibelebhat Masala, Rasam Masala, Sambar Masala and Kharabhat/Upma Mix.

The products are designed and developed by Orkay’s in-house R&D team. Depending on the nature of the product, most products have a shelf life range of 9-12 months.” The selection of the type of packaging is also specific to the product that the package contains. The price range of Orkay South-Indian RTCs range from Rs 3 (for a 8 gm Sambar Masala packet and Rasam Masala Packet ) to Rs 42 (for the 500 gm Rava Idly Mix). Demand for Orkay’s RTC products spreads from the urban markets, which account for the major share of consumption, to the district and rural markets, where the consumption are catching up very fast, according to Madhusudan.

“These foods were made traditionally at homes by housewives earlier. The changing lifestyle of the urban consumer has led to paucity of time for preparing traditional foods. There has also been a declining interest and fall in knowledge among these consumers, whose focus is primarily on achieving a better lifestyle.

However, the desire to consume traditional foods has not dimmed. This has led to the high decibel growth and increased visibility of convenience foods on the shelves of the market,” he points out. The availability of technology and the advances in the packaging technology have helped in retaining the “freshness concept” in the south- Indian packaged RTC segment. This has contributed significantly to raise awareness and acceptance of packaged foods. The ease with which the RTC products can be used to prepare traditional foods without the rigmarole and grind of ethnic cooking has largely contributed to consumer will to explore.

“User friendliness is a great driver; for instance, RTC products from Orkay seldom fail to perform, irrespective of the cooking skills of the user. Even a student can prepare delicious traditional south-Indian dishes using our RTC range by following simple steps elucidated in the recipe,” Madhusudan explains.

One challenge for packaged food brands is to remain true to the unique flavours of an ethnic cuisine while simplifying the preparation process. The last things consumer want from a RTC product is that ‘processed’ taste that so often accompanies such Innovations.

“I agree,” says Madhusudan, “The traditional food cooked out of Orkay’s RTC range has a consistent taste and flavour, with virtually no compromise in taste and flavour compared to the traditional method of preparing ethnic foods. This is probably what is triggering our growth in this segment. Food habits are very personal and have a very high degree of diversity among the consumers.

Factors such as taste profiles, flavour profiles, textural profiles, preferences for specific cuisines play a very important role in the acceptance/nonacceptance of food. And the RTC segment is not isolated from this phenomenon.”

Clearly, despite galloping urbanrural migration and globalisation, Indians’ primary food habits haven’t altered dramatically. “The migrant population prefers foods they have grown up and are familiar with. This has resulted in a growing niche market for regional RTC/RTE cuisines.

The ability of food processors to provide varied tastes has contributed positively to the growth of this segment. With globalisation, the boundaries of migration have disappeared. This has resulted in a cosmopolitan population, with every regional segment of the population differing in food consumption habits. This provides a tremendous opportunity for food processors to provide solutions in the form of RTC foods. This segment is bound to grow considering that the boundaries of trade are being lowered progressively,” Madhusudan says. Regarding challenges for such speciality packaged foods, he states, “There are very serious cultural and social roadblocks for RTC foods. One must remember that food is considered as one of the primary essentials along with clothing and shelter. The very fact that the growth rate of the processed foods segment has been very slow compared to the growth rate of textile industry indicates that the processed food segment has not been able to fulfil the aspirations and requirements of the consumers. This is even more pronounced in the regional RTC sub-segment.”

Market analysts highlight the fact that consumers come from varying socio-economic and cultural backgrounds, and food preferences are primarily dependent on this very fact. Preferences for specific flavours and aromas, and prejudices present grave challenges to the food processor in creating a RTC brand to satisfy every palate. Hence the market is highly fragmented, to the extent of being unviable for large scale manufacture, and highly regional. Apart from this, the regional variations in food habits and differences in cuisine also contribute to the roadblocks.

“Apart from cultural constraints, taxation has been one of the major impediments,” Madhusudan adds. “The high taxation structures that existed – and continue to exist in some areas – make processed RTC foods expensive for the consumer. The market for RTC products was non-existent during the late 1950s and early 1960s; the concept of packaged foods was a novelty and acceptability was very low. As a result,the packaging industry has also been slow to evolve.”