India’s growing bulge of middle class consumers is pushing the growth of the meat sector. Research shows that there will be around 80 per cent growth in meat demand by 2022 driven by the desire for convenience, which will be at the heart of the adoption of processed meat, fish, and poultry products.
India’s expanding middle class is showing a marked preference for moving toward high-protein food such as meat. This is evident from India’s largest household consumption survey conducted by the National Sample Survey Office (NSSO), with a sample size of over one lakh households.
The survey reveals that 62.3 per cent of Indian households consumed non-vegetarian food in 2011-12 compared to 58.2 per cent in 2004-05. The figure is interesting in the sense that meat consumption is a good marker of economic development.
The economic gap between developed and developing countries is often reflected in their meat consumption. While people in developed countries meet more than half (56 per cent) of their protein needs from animal sources, it is only 18 per cent in the case of people in the developing countries like India.
The annual per capita consumption of retail processed meat and sea food products, though still low at 29.36 gram and 6.65 gram respectively, is growing in the country, according to Mintel Market Sizes. Contrary to the conventional belief, growing economic prosperity alone is not the reason for increased animal protein consumption in India.
Meat consumption in India is also dependent on religious beliefs. Therefore states such as Punjab and Gujarat are predominantly vegetarian in spite of their economic prosperity. At the same time, however, as consumers become more health aware, protein found abundantly in meat is getting well established as a muscle building aid.
Protein foods are linked to attributes like satiety, weight management and energy, all of which enhance the appeal towards its consumption. As a result, the volume of processed meat and fi sh consumption in India is set to grow at an annual rate of 15.9 per cent and 14.3 per cent respectively.
Drivers of Rising Meat Consumption
As per research, there will be about 80 per cent growth in meat demand by 2022. Convenience is at the heart of adoption of processed meat, fish, and poultry products. Time pressed urban consumers are looking for easy to prepare meals, fuelling the demand for processed food products.
According to Mintel Market Sizes, Indian organized retail sector is expected to witness a CAGR of 15.6 per cent during 2016-20.
According to Food and Drink Analyst, Mintel, Yogmaya Chatterjee, “A young demographic, rising disposable income and time pressed urban consumers looking for convenient meal solutions without compromising on health aspects are driving the market for the category.”
Says Buying & Merchandising Head for meat/ fish/ frozen category, HyperCITY Retail, Dnyaneshwar Phadtare, “The category is growing at an excellent rate and has a promising future. The market for this category in India is worth Rs 2,00,000 crore and is expected to triple by 2020.” (quote source: India Food Report 2016).
In India, non-veg consumption is the highest in the State of Telangana followed by West Bengal and Andhra Pradesh. In India, the growth in the meat sector is led by poultry whose market size is expected to grow tenfold by 2050. Poultry’s share in total meat consumption stands at 28 per cent currently, as against 14 per cent ten years ago.
According to Mintel research, chicken consumption has been growing the most with India becoming the fourth-fastest growing market for the product in the world. The proportion of households consuming chicken has shot up from eight per cent in 1993-94 to 38 per cent in 2011-12, while that of fish-eating households increased marginally from 30 per cent to 32 per cent over the same period.
At the same time, the proportion of goat-meat/mutton eaters has fallen significantly — from 30 per cent in 1993-94 to 15 per cent in 2011-12. Th e population of beef and buffalo meat-eaters has remained more or less constant at about six per cent over this period, according to NSSO 2011-12.
The poultry market is expanding faster as there are very few social barriers for poultry meat consumption and also because of its relatively more affordable price. As chicken requires limited feed and the birds are ready for consumption within two months, chicken meat is gaining in popularity over the other kinds.
Over 90 per cent of meat and poultry in India is still sold through wet markets and butchers. The trend remains strong even though many established and new brands in the frozen meat category have come up with innovative launches and products even while trying to reach out to more numbers of consumers.
The well-known brands available nationally in the frozen meat category are:
• Poultry: Venkey’s, Yummiez, Sumeru, Suguna, Keya, Republic of Chicken
• Lamb/Chevon: Al Kabeer, Chevon, Carnivore
• Seafood: Cambay Tiger, Gadre, IFB, Big Sam
The fresh meat category has also attracted some branded players but they are more focused on specific regions and are available within only a limited geography due to the short shelf life of products.
Fresh meat brands available in only certain markets are:
• Poultry: Real Good Chicken, Zorabian, Suguna, Venkeys
• Lamb/Chevon: Al Fahad, Al Kabeer
• Seafood: Cambay Tiger
The reason that Indian consumers prefer to buy fresh meat from open/ wet/ live bird markets is because a perception exists among a majority of meat buyers that fresh meat or a live bird slaughtered in their presence is of better quality. Consumers have more confidence in the quality of fresh meat that is slaughtered by butchers in shops. Even when refrigeration is available, consumers lack the confidence in chilled or frozen meat because of the unreliability of electrical power.
The preference for fresh meat also extends to the belief that it is superior in taste and texture. According to Business Head, CPP and Veg Division Baramati Agro Ltd., Krishna Kumar Maurya (which sells a delicious brand of fresh raw chicken and other value-added products), “Currently, more than 90 per cent of the chicken is sold through the wet market in the raw fresh segment, and that is where the opportunity lies for selling branded products through organised retail channels.”
Due to the still lingering large-scale preference for fresh meat, the market size of processed and frozen meat is very small. The size by volume of retail processed meat products and fish as of 2015 are 38.94 and 8.21 thousand tonnes respectively, according to Mintel Market Sizes. But this is just a fraction of the overall consumption of these products.
Processed fish also is less than 1 per cent of the domestic fish consumption in India. According to Mintel estimates, more than 70 per cent of the retail processed fish market in India comprises of frozen products.
Innovative Foods Limited is the market leader in processed seafood in India with West Coast Group and IFB Agro Industries Limited as other leading players in the category. The average consumption of poultry and beef/ veal in India is about 2.9 million tonnes per year.
The consumption for sheep and goat meat is 0.9 million tonnes. Pig meat consumption is on lower side (0.3 million tons) because of religious limitations.
As for meat consumption patterns elsewhere in the world, trends suggest that the highest consumed meat is of pig and poultry followed by beef and sheep/ goat. But this is set to change as poultry will lead in meat consumption across the world with China gaining a 37 per cent share, Brazil with 28 per cent and USA with a 16 per cent share by 2022.
Meat and Modern Retail
In recent years, the demand for frozen or chilled meat products from hotels, fast food restaurant chains and urban consumers is on an upward spiral in India.
“From an institutional point of view, we’ve seen a good acceptance of our products. More and more hotels and caterers are using our products from a banqueting point of view. From a retail standpoint, we’ve seen an increased willingness of consumers to try frozen products and they have accepted it as a healthy and quick option for a snack. The credit for this goes to the youth of this country,” says Director, BMS Enterprises, Sudhanshu Mathur.
BMS Enterprises manufactures its own ready to eat frozen snacks in eight SKUs – veg spring rolls, chicken spring rolls, cheese cigar, prawn rolls, veg dimsums, chicken dimsums, black pepper chicken shaomai and spinach and corn dimsums. The products are all sold under the brand name ‘King’s Delight’ and caters to HoReCa, Modern Trade and General Trade as well.
Over 65 per cent of the population in India is below the age group of 35 years and a majority of them are now exposed to the global media and malls, which is causing the demand for food hygiene to grow by leaps and bounds.
General Manager, Sales & Marketing, Suguna Foods Ltd. – India’s largest integrated poultry operator known for its chicken products as well as a wide range of meat, eggs, ready to eat offerings – Rafi Baig, believes that there is a huge opportunity for branded players and for the organised retail to grow and expand the market because “in India, people have until now preferred fresh meat and so open and live bird markets have played a major role in meat retailing. But now people are becoming aware of the hygiene and quality of processed meat and this segment is picking up wherein we see a huge demand and there is plenty of scope to expand.”
Suguna focuses on retail and HoReCa as its major consumer segments besides also catering to other segments such as the armed forces and other institutions like KFC, Marry Brown, Vista, Nando’s to name a few.
“Our presence is across India but our major focus is in south India where we have more than 200 Suguna Daily Fresshh outlets to cater to the retail segment,” says Baig.
“With rapid urbanization across the country, wet meat markets will shrink and live bird slaughtering will get restricted,” adds Maurya of Baramati Agro. “We have a range of 29 products in diff erent catagories like fry and serve, grill and serve, heat and serve and cold cuts, and these are some of our most popular products in the youth segment.”
With supermarkets and shopping malls spreading to even Tier II and III towns, it is expected that there will be greater support for the growth in the retailing of chilled/ frozen meat products.
“In recent years, new players have been emerging regularly, which indicates that the market size is expanding. A lot of MT stores have started selling chilled meat as well,” says Baig of Suguna Foods.
“Our key focus is Modern Retail Trade, ‘A Class’ super stores and self-service stores selling non-veg products. We have a pan-India presence with leadership status in a few markets and some Modern Retail Trade accounts,” asserts Maurya.
“Meats have always been a popular category and contribute a good percentage of sales in big stores. The most important factor while dealing in meats has to be the freshness and quality. We as a brand do not deal in frozen raw meats. We make sure the customer gets the freshest catch of fish or seafood and the most tender chicken products. You can never go wrong in this category if your focus is on freshness,” adds Founder, Good To Go, Angad Singh. Good To Go is an NCR-based online home delivery brand for chicken, meat, seafood and ready to eat non-veg food.
Singh points out that the meat category has distinctively marked a space of its own in the grocery world.
“With time we have seen more and more stores adding this category to their product line. Margins in this category are a way more than the traditional branded products and that is one big factor that invites people to add this line to the store. It is a quality controlled category and that is where specialization matters,” he says.
MD, Fortune Gourmet – a leading importer of cheese, processed meat, seafood and other fine foods – Jehangir Lawyer, agrees with Singh. “Retailers often get a decent margin on this category. So most retailers are very keen on increasing their range and allocate more shelf space to the category, which is witnessing an increasing demand from consumers.”
“Today, a majority of Modern Trade food and grocery retailers are inclined toward selling frozen meat as compared to fresh meat,” points out Category Head – Godrej Nature’s Basket, (GNB) Avinash Tripathy, which sells a wide and eclectic range of meat products comprising chicken, turkey, duck, lamb, pork and seafoods.
GNB’s range can be further divided into subcategories such as Fresh Chilled (raw and processed), Frozen & Cold Cuts and Canned Non-Veg, which is mainly driven by imported brands like Zwan, Ayam, John West, among others.
GNB also has a reputation for carrying a very distinctive meat range – lamb meat from Australia and New Zealand, turkey meat from Spain, raw pork from Belgium, German sausages, fresh seafoods (Salmon and Basa), and imported cold cuts from Austria, Spain and Germany.
According to Tripathy, there are very limited chains even in Modern Trade that have an in-depth assortment in the meat category. Th e other Modern Trade players to have a meat section across all their stores are Star Bazar, Foodhall, HyperCITY and SPAR.
“We ensure that we have the best in class assortment of premium, International and gourmet range of meat and seafood products at HyperCITY stores. Meat products include raw chicken, mutton, fish, different cuts of chicken, mutton, marinated chicken/mutton, all major varieties of sea water and fresh water fish, marinated fish, fillets of fi sh, prawns, lobsters, dry fish, all kind of cold cuts of local and international brands, fresh chilled imported salmon, New Zealand lamb, different varieties of eggs – Omega 3 enriched, herbal, brown, free range, duck, quail; season based SKUs like turkey and many more,” says Dnyaneshwar Phadtare of HyperCITY Retail, which boasts of having one of the finest and premium range of meat / seafood / cold cuts. Non-veg products contribute about 6 per cent to the entire business of HyperCITY’s food sales.
“This is the one of the most important drivers of footfalls in our stores,” says Phadtare.
Players like Big Bazar, More, Spencer’s carry a selective range in their stores at some locations as per the catchment. Th en there are some standalone stores like Dorabji and Haiko that also keep a good assortment of meat products. “Our major business in meat products comes from the hyper and super formats. At the same time, frozen and chilled packed meat ranges are also gaining traction in our small stores,” says Sector Head – Spencer’s Retail Ltd, Shashwat Goenka, whose stores offer close to 400 products in fi sh and meat, including fresh chilled, frozen non-veg and delicatessen offerings.
There is a good reason why it is difficult to come across a wide assortment of meat products at traditional grocers. For one, non-veg retailing is not an easy business to be in and not every retailer can manage the inventory.
“Having an end to end strong cold chain, sufficient storage space, merchandising/ display of products, skilled knowledgeable manpower to handle these ultra fresh products are critical factors to launch this category, which are rarely found at traditional grocery stores. Also, it is equally important to get region-wise/ store-wise best vendors who follow all GMP/GHP/Food safety standards while handling these products. Launching meat and fish section at traditional grocery stores is not an easy business and such products can be made available only if traditional grocers have a full-fledged cold storage or a tie-up with a vendor who has such capabilities,” explains Tripathy of GNB.
Apart from off ering a wide and varied assortment, there is also a much higher level of convenience that Modern Trade retailers have to offer vis-a-vis the open/ wet market.
“Convenience of shopping in a hygienic and comfortable environment, availability of a wider range under one roof, assurance of correct weight and quality, right pricing, cutting, cleaning of choice free of charge are the key differences over the wet market, which encourage shoppers to buy meat products from organised retailers,” says Shaswat Goenka, pointing out that of all the meat products available at Spencer’s stores, it is seafood that is clocking the highest growth, primarily due to the stores offering a superior level of convenience over the wet market.
The sentiment is shared by HyperCITY’s Phadtare and GNB’s Tripathi. “Customers are shifting from buying non-veg from unorganized /open market outlets to modern retail stores where products are handled in a much hygienic way – products are stored at the right temperature, staff gives you the right product information, and they come with the experience of buying and prompt customer service. Our customer promise and brand positioning of ‘something fresh every day’ ensures that we bring fresh products to the customers as soon as possible and reduce whatever time we can from sourcing to selling. This way our customers are able to get a wide range – be a normal lamb or New Zealand lamb, Catlafish to smoked salmons – under one roof. Another aspect is that we understand the catchment and make the products available as per the requirements of specific regions. For example, the HyperCITY store in Janakpuri, Delhi, sells more chicken than fish – the reason being that the locality is dominated by Punjabis. On the other hand, our Noida store sells more fish as it has a strong Bengali catchment. Hence assortment must be planned as per the requirement of the customers in the catchments. We study and cater to the needs of our customers in the areas and catchments where we operate our stores,” says Phadtare.
Category Growth and Prospects
The category has some established players who have been there for over two decades and have worked to build this category. McCain Foods, Venky’s, Sumeru, Red Lobster, Godrej Real Good Chicken and Godrej Yummiez are some of the major brands that have been there in this segment for quite sometime now.
But as consumer preferences are changing, only those companies will grow and thrive that will work on product innovations.
“Consumers are experimenting more and more today and they are ready to spend on good and differentiated products, which stand apart in taste and experience,” says Maurya of Baramati Agro, which is banking on its wide product range to corner a greater share of the market.
“On the product front, taste and quality are the most profound factors coupled with the availability and visibility of the product to the consumers, which will drive the category performance,” he adds.
His company is aiming to realize a 20 per cent market share in the value-added chicken segment and Maurya says it will be able to achieve this with the variety, freshness, availability and visibility of its products across all leading stores.
Baramati Agro, under its ‘Delicious’ brand sells a range of 29 non-veg products in different categories like fry and serve, grill and serve, heat and serve and cold cuts.
“In our opinion, this category has a very good potential as we are still way behind the developed and evolved markets. Within the category, the appeal for frozen products is growing as consumers are experimenting more and more today,” states Maurya.
By all accounts, it seems that Frozen Foods is a growing industry. “Over the years a lot of people have come to accept this category. It’s still on a growing stage of the industry life cycle curve. As the industry grows, more and more players will try and enter the market. For us it’s a good thing and will keep us on our toes. When we started off , it was a Herculean task for us to convince our audience to accept the concept of Frozen. The situation is different now. People have options. Some want a better price. Some consider quality as the utmost criteria,” says Sudhanshu Mathur of BMS Enterprises, adding that in the Frozen snacks category the availability of products at all point of sales backed by regular merchandising and promotions will play a quintessential role in the performance of these products.
“In addition, there has to be a continuous improvement and innovation in the products’ bandwidth in order to keep up with the market trends and growing demand. It’s food and everybody wants something different, something new,” he says.
Most manufacturers agree that exciting products and great taste will drive the category, provided the products are showcased well and the consumer is in a position to taste the same before making an informed purchase decision. “Keeping this in view, in-store sampling is one of the key initiatives that brands and retailers can take up and this is an area where we strongly focus,” avers Maurya of Baramati Agro.
“Quality, variety and specifications based on consumer needs will be the growth drivers of the category,” notes Baig of Suguna Foods, who feels that the prospects for chilled meat is equally bright.
“Fresh chilled chicken meat has more movement than frozen meat as consumer prefer chilled. There is growth in this category as the demand is always high for the same because of the huge market size.”
Baig is of the strong view that brand awareness about the product, nutritional balance and health awareness, hygiene and quality will be key parameters in shaping the category’s performance.”Also, people are more inclined toward convenience foods like ready to eat products, and their availability will play a major role in the category’s performance,” he opines.
According to Jehangir Lawyer of Fortune Gourmet, “There is a greater awareness among the people about the category and there is also a willingness to try new food. People are very influenced by the trends in the West and the same practices are seen and being replicated here. People of this generation are travelling and are exposed to different cuisines; also the rising income and spending power of the middle class is playing a great role in creating demand for this category.”
He adds: “The opportunity for growth and expanding the category is enormous. Right now, we are only catering to major metro cities. I foresee a huge market in the upcoming smart cities where certain groups of people will have that curiosity to try new products along with a greater spending capacity.”
Retailers say that the future of the category is promising and it will continue to grow at a healthy rate. “With incomes rising, protein consumption will continue to grow and will intensify even further with the increased use of bigger home refrigerators, which will spur an increase in the ticket sizes,” says Goenka of Spencer’s. He is optimistic of the category’s good performance in the future as well and says that Spencer’s stores expect mid- to -high-teen level of growth in the category.
“We are growing in high double digits among all groups of meat and fish. Chicken and mutton products are growing the highest whereas seafood has grown at a healthy clip. The cold cuts segment has also shown a good growth. We are aiming for a higher growth in FY 2017-18 and we are sure to achieve it with the introduction of new ranges across categories,” states Phadtare.
Retailers have a key role in upgrading the category as they can capitalize on the preference for fresh produce in India. According to Mintel GNPD data, there has been a growth in private label launches by key retailers in meat, fish and poultry products.
As the penetration of organized retail grows along with the cold chain network, some of the key things that retailers can look at include the following:
• As disposable income goes up, young urban consumers will look for convenient cooking options. Therefore, convenience-led innovation in terms of product format, packaging offers potential for growth.
• Highlighting sourcing information, free-from products will enhance appeal among consumers looking for healthy and safe product options. And as alternative sources are also growing, globally building on the safe, healthy and fresh image of meat, fish and poultry products is important to gain traction.
• Targeting specific demographics can also hold appeal. Mintel GNPD data shows that South Africa’s major retailers are at the forefront of new product development, targeting those trying to lose weight by offering products with controlled calories and low-fat attributes.