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Readymade in India


Manufacturers need to concentrate on broadening the market and increasing penetration among today’s upwardly mobile consumers, who are on the lookout for variety in ready-to-eat foods that are nutritious and offered to them in hygienic and convenient packaging at an affordable price.

Keeping a pace with these psychographic changes processed food manufacturers came out with anytime, anywhere solutions – readyto- eat (RTE) Indian meal kits and main course dishes. Shelves at all supermarkets and modern convenience are now laden with RTE Indian breads, pulaos, mix vegetables, dals, dosas, idlis, fish, chicken and mutton curries et al. Thanks to companies and brands such as Tasty Bite, Haldiram’s, MTR, ITC and Kohinoor, the RTE ethnic food category has become an inevitable component of the convenience food section in every grocery store. 
In the absence of exact statistics, K K Kumar, MD, Shakti Bhog Foods, the company known to be a pioneer in manufacturing, branding and packaging of daily-consumption products such as wheat flour (atta), besan, rice, salt, porridge (dalia)among others, recently announced Shakti Bhog’s plans to launch RTE Indian main course dishes and meals.  “The RTE Indian meals market is very small with scores of regional and small players; it is difficult to calculate the market size, but I would tag an approximate figure of Rs 500 to Rs 600 crore for the RTE Indian meals category,” he says. According to Aayushman Gupta, CEO, Veetee Fine Foods Ltd., producer and marketer of Basmati rice and one of the leading players in the RTE segment, growth in the segment has been about 30 percent, which has been mainly led by rise in the number of local and regional Players.
Commenting on the rate of growth, Akshay Bector, MD, Mrs. Bector’s Food Specialties Ltd, one of the prominent food manufacturing, processing and exporting companies in India, says, “A couple of years ago, the segment was staring at the prospect of more challenges than sales, but RTE Indian meals and main course dishes have since then started moving from shelves to shopping carts. While it is still a small market, manufacturers have firmly established it as a consumption category, and are trying to develop it further. The segment is showing a positive trend, which has encouraged us to renew our product range and re-enter the market.” 
“One of the major reasons for the healthy growth of the category is that across the board product quality has improved compared to what it was a few years ago,” he adds.  One should not forget, however, that without innovation in packaging, advancement in processing alonewouldn’t have made ready meals or main dishes accessible or acceptable.
Most ready-to-eat foods come in a flexible plastic packaging known as retort pouches. The retort pouch is a flexible laminate packaging, which can withstand thermal processing, and combines the advantages of the metal can and the boil-in bag. They are made from multilayer plastic films with or without aluminium foil as one of the layers and are made of heat resistant plastics. This makes the retort pouch withstand the processing of food at temperatures of around 120 degrees Celsius. They also possess toughness and puncture resistance normally required for any flexible packaging. The material is heat sealable and has good barrier properties. What’s more, the retort pouch is a space saving package by virtue of its design.
Typically, retort pouches come in two variants – a microwave-friendly version, a non-microwavable version (contents in the pouch need to be emptied into a container and then heated). The segment overview suggests that most brands currently offer RTE Indian meals in non-microwave friendly retort packs, varying in sizes from 250 gm to 300 gm.
The visible trends in the category suggest that certain RTE Indian meal dishes such as dal makhani, chhole, palak paneer, rajma etc are especially popular across all regions (north, east, south and west), among both vegetarian and non-vegetarian consumers, and are therefore part of most players’ brand portfolio.
Commenting on this, Bector says, “I think north Indian gravy dishes such as chana, dal, paneer, mixed-vegetables etc and rice dishes that are consumed across the country will continue to have pan-India dominance. Regional players, however, can explore opportunities in RTE segment in speciality or local cuisines.”
“Analysing the trends it is evident that south Indians do consume north Indian preparations, but they consume larger quantity of south Indian foods. So, there will only be certain signature Indian dishes that are going to be nationally popular; the rest will rule in their respective territories,” he adds. 
Even though there has been lot of hype and hoopla about RTE, with more and more players jumping onto the bandwagon, some analysts point out that traditional Indian foods remain an under-penetrated area as far as the ready-to-eat segment is concerned. Puneet Mahajan, VP of marketing and advertising at Kohinoor Foods, for instance, says, “The RTE Indian meals segment is underleveraged because the category is still quite nascent and the paradigm shift of consumers to eating packaged food over freshly-cooked meals is moving very slowly.”
Agreeing with Mahajan, Shridhar Paradkar, general manager, sales of Al Kabeer, a leading procurer, manufacturer and distributor of frozen foods, including RTE Indian breads, says, “The RTE Indian meal segment is in a nascent stage of development; we have miles and miles to go in this direction to make any significant progress.”
Veetee Fine Foods’ Gupta comments, “Ambient RTE Indian meals comprise 8-10 percent in the entire convenience food segment, which has other options such as frozen food, instant food and non-Indian ready-to-eat foods etc. There is no doubt that the category is underpenetrated.” There are no two opinions about the omnipresence and increasing popularity of RTE foods in modern trade, but being a relatively new segment, there is plenty of unexplored potential in promoting innovation, marketing and distribution, and above all, in building consumer Awareness.
Agreeing with the under-penetrated status of the segment, Mahajan at Kohinoor Foods says, “The category is still very nascent because manufacturers are still trying to expand the consumer base, even as consumers are still trying to get into the mould of buying convenient packaged foods.” 
Elaborating on the reasons contributing to slow growth in the category, Gupta remarks, “Firstly, whatever growth has been witnessed in the segment is mainly because of the rise in the number of local and regional players who do local assembling andpush inferior products to the customer with promotional schemes. These players do not necessarily follow quality compliances or food safety management regulations.” “At the nutrition front, we follow an ISO 22000, HACCP and BRC issue five safety management system for processing of all our products.” 
“Secondly, consumers in India are acutely conscious of the freshness quotient of the food they eat; they find it difficult to understand 18 months of shelf life for food, as in regular practice they don’t store food for more than 24 hours in the refrigerator. Therefore, they attribute reasons like usage of preservatives etc. to the category, while being clueless about the actual technology used. On the other hand, even the category drivers have not taken fruitful initiatives to generate enough consumer awareness. The category is currently characterised by very little marketing and low focus.”
“Undertaking better marketing exercises with focus on consumer sampling will help in augmenting the category. At Veetee we undertook multiple trials with consumers and an internal sensory panel to arrive at the optimum blend of taste and convenience. Changes were made until we reached a point where the taste was authentic and the best-ever offered in the category,” he adds. 
Gupta further points out that the segment has not invested sufficiently on R&D infrastructure to ensure that the ready-meals are consistent in taste as per consumers’ preferences and free from pungent aromas.
Agreeing with Gupta on this point, Paradkar at Al Kabeer states, “RTE Indian meals’ manufacturers require commissioning of market research projects, which among other things, have to study the constituents or composition, quantity, quality, shelf life and taste of the food in retort packs and compare it with what consumers actually want.”
Adding to the challenges are managing the cold chain complexities of India’s fragmented marketplace, he points out. “Logistics and cold chain management of standardised food products from factory to the customers for a country of diverse food habits like India, taste preferences and demographics only complicate the matter and make it not so easy to arrive at an action plan that could help one to build the category.” Analysts point out that one way to minimise the macro marketplace challenges could be to build volumes by adding more products to the basket. Most RTE brands in the market currently offer a fairly standardised menu, which includes several fixed vegetarian dishes such as dal makhani, paneer gravies, chhole etc that are manufactured in larger volumes, offering them economies of scale.
However, some South Indian preparations such as idli and dosa are also highly popular across most urban Indian regions. Among the national players, only MTR Foods offers certain RTE south Indian dishes such as bisibele bhat, avial etc and frozen rava idli with potato sagu, and dosa with aloo curry as meal combos. ITC also has certain south Indian gravies in its RTE portfolio, while Gits Food offers south Indian cuisines either in ready-to-cook format or as pre-mixes.
In addition, there are very few brands such as Veetee, MTR, Tasty Bite etc that offer meal kits or combo meals. The combo meals’ range currently available is very small and thus presents plenty of room for introducing more value-added meal kits. Another area that could do with more innovation and experimentation is the non-vegetarian meals sub category. There are very few offers in this SKU, including those from ITC Foods, which markets a few south Indian non-vegetarian curries and biryanis, and seafood specialist Forstar Foods, which offers south Indian, Goan and Bengali fish curries. But the RTE market for regionalIndian cuisines, meal kits and nonvegetarian cuisines is relatively underserviced with more concentration on north Indian vegetarian gravies.
Agreeing with the lack of innovation, Gupta points to rice, which he says “is a staple food for most Indians, but its importance has not been correctly understood by the category drivers.”
Citing an example and supporting the need for a diversified RTE menu, Mahajan says, “A restaurant menu offers everything, but there are certain preparations that are bigger revenue-drivers than others. Similarly, in the case of RTE, there will always be certain dishes that generate more demand than the others, but manufacturers nevertheless need to offer a diversified Indian menu. That’s necessary in order to connect with a larger number of consumers with varying taste preferences working and studying outside their regional territories. There is a case for manufacturers not always looking at economies of scale and offering only a few dishes that move faster.”
Kumar at Shakti Bhog Foods says, “Our ready-to-eat range, which will be available in the market by next month (May) this year, will offer healthy meal options such as multi-grain khichdis and soyabased products. After undertaking a thorough research we have not only innovated to offer variety in RTE Indian meals, but a combo of health, taste and convenience to consumers.”
“Since RTE foods are offered by established players who are in a position to assure quality and take responsibility for the products, consumers expect more from them as against food purchased from streetside food stalls.” 
Even at the packaging front, Indian RTE meals are available in non-microwavable packs, which may limit convenience for time-deprived consumers. Supporting the point, Gupta says, “There has been little packaging innovation in the category – while globally RTE foods are packed in microwave-friendly pouches, Indian RTE is still retailed in aluminium foil pouches with an outer carton. These outer cartons not only occupy more shelf space but are also a hindrance in the path to convenience.
Aluminium pouches can only be boiled in boiling water and can’t be put in the microwave. With the microwave penetration rising across India, especially among the consumers wanting convenience, this could be an obstacle. Veetee is the only brand in India to have recently launched Indian RTE meals in microwavable pouches without the outer carton.”
Another observation about the category highlights the fact that more than anything else, the RTE segment will thrive on affordable pricing strategy. Going by the current price points, Veetee offers vegetarian ready meals in a price range of Rs 40 to Rs 49; Shakti Bhog’s RTE range will be available for a price range of Rs 25 to Rs 45 and ITC operates in two segments in the category, which are differentiated on the basis of price points – one is branded as Kitchens of India, which is a premium range of gourmet Indian dishes, sub-categorised into Bukhara, Dum Pukht, Dakshin and Gharana offering speciality dishes such as Dal Bukhara, Mirch Ka Salan, Malabari Chicken Stew and Paneer Malai respectively, besides others (including non-vegetarian preparations). The range also offers rice preparations or rice meals such as Noormahal Biryani, Yakhni Pulao etc. This Kitchens of India range is priced between Rs 80 to Rs 105, while the regular range, branded as Kitchens of India – Aashirvaad, is priced between Rs 35 to Rs 50. This Aashirvaad range offers more ‘everyday’ preparations such as dal tadka, rajma etc.
Typically, non-vegetarian dishes are priced comparatively higher. For instance, ITC Kitchens of India’s Dakshin Chicken Chettinad is priced at Rs 98; Forstar’s Malabar Seer Fish Curry is available for Rs 89 and Forstar’s premium range seafood mix pulao is priced at Rs 99 and so On.
Al Kabeer’s Indian frozen RTE breads are priced at Rs 49 for a pack of five parathas.
On speaking to a few consumers, it is revealed that an average expenditure of Rs 25 to Rs 30 per meal is considered affordable by most, provided there’s variety in the affordable range. But a regular expenditure beyond Rs 30 on RTE foods totals out to be a considerable amount for many individuals from the price-sensitive middle class segment, especially nonearning students. Manufacturers will clearly have to significantly improve price competitiveness, especially for non-vegetarian cuisines, with respect to other options such as a dabba system or a tiffin delivery system, where there is the added advantage of no heating a freshly cooked, hot meal.
Retail Support
Speaking at Food Forum India 09 recently, Kishore Biyani, founder and CEO of Future Group said that modern retail can help in growing significant demand for categories such as RTE, as modern trade helps in building visibility and awareness for such categories. 
So is it right to say that the modern trade channel is a more viable partner if consumption for RTE ethnic meal kits is to grow? In line with Biyani’s opinion, Mahajan says, “There is no question that the growth of RTE is quite dependent on modern trade. Through walk-in shelves, RTE gets an opportunity to come closer to consumers and makes it easier for the packs to get picked up through impulse buying.” Supporting the importance of modern retail for the category, Paradkar adds that other channel options such as exclusive franchise operators servicing institutional customers and residential areas etc. can also be explored. Some manufacturers, however, believe that traditional channels should not be discounted completely. 
“Along with modern trade, traditional grocery stores are important for any FMCG and processed food category to grow,” says Bector. “Having said that, modern trade is able to garner more sales, especially for RTE foods, simply by virtue of shelf visibility and the wider selection they provide along with a comfortable ambience, which a small traditional grocer simply cannot offer since he is handicapped on space.”
Displaying mixed views about the viability of modern trade partnerships, Gupta shares, “Undoubtedly, modern trade gives an opportunity to brands to be able to display their ranges in the best possible manner. However, the focus of modern trade in India is to discount the products and sell them with multiple promotions. They don’t necessarily care if the product has relevant food safety certifications or not. This is a threat to serious players who focus on R&D, quality compliances and aim to give the best product to the consumers. Modern retailers are yet to understand that the category is led by convenience and not price-offs.” 
Way to go
Clearly, there are several routes to building consumption here. Adding the ingredient of innovation to broadbase the offering – and therefore the consumer base – is one. “The category will be witness to ample innovation in the days to come with respect to introducing different Indian cuisines in the RTE format,” Kumar promises. “Another positive development that is expected in the future relates to packaging, At present the film wrap used in packaging RTE Indian meals is being imported from overseas and pouches are made in the country, but as consumption rises, we can expect to see these films being manufactured in the country.”
“In the days to come Indians will be more dependent on conveniencedriven ready meals and if the pace of growth continues, by 2010 the market size of RTE Indian meals is expected to exceed Rs 1,000 crore,” he adds.
Contented with the prevailing trends and the pace of growth, Bector says, “The category is under-penetrated in the sense there are lot of opportunities to be tapped and there is always going to be room to innovate in introducing more and more Indian cuisines, and value addition with respect to flavours and ingredients. All of it will happen as the market evolves. I believe that RTE Indian dishes display the right level of penetration at this point in time, given the current market scenario and macro economic trends. Growth could be slow, but it will be steady. And that’s really what is important; no one really wants a flash-in-thepan segment.”
“Also, at the present moment we are not moving towards speciality Indian cuisines. Since the segment offers ‘comfort food’ as of today, manufacturers should focus on delivering a better quality product in the market. As they are able to do that, the RTE Indian meal segment will start competing with take-ways very successfully. However, it will also depend on how well manufacturers are able to tackle the technical challenges involved,” he concludes.