Foreign Firms Seek a Bite of India's $90bln Food Market

March 19, 2008
Getting a foothold in India's processed foods market, estimated to be worth $90 billion, requires persistence and a willingness to adapt products to suit culinary and cultural preferences, experts say.

Rising incomes, more working women, modern stores and greater culinary adaptation are helping food giants such as Pepsico, Nestle, Unilever, McDonald's and Yum Brands get a piece of the market.

"Every company that wants a share has to invest heavily, localise extensively and be very patient,"said Jayanta Roy, at consultancy Frost &Sullivan, which estimates that only a third of the processed foods market is in the hands of large Indian and multinational firms. The rest is controlled by regional firms.

Culinary adaptation appears to be key. Pepsi has had a big hit with ethnic salty snacks and also sells "aam panna", or green mango nectar, along with its colas.
Large Indian firms are also muscling their way to the table. Top cigarette maker ITC Ltd is adding to its range of instant ethnic foods and pasta, cookies and salty snacks.

Foreign fast-food chains McDonald's and Domino's Pizza are addding more vegetarian and ethnic options.

McDonald's, which is doubling its outlets in India to nearly 300 this year, does not sell beef products in keeping with the sensitivity of the dominant Hindu population.

Half its menu is vegetarian, with best-sellers like the McAloo Tikki (potato patty) Burger. It also has more sit-down eateries for large Indian families and home delivery, a first. Domino's also has a dine-in option in several locations.

Nimble Indian firms are imitating these fast food giants to attract youngsters, who make up about half of India's billion-plus population.

Jumbo King, a Mumbai-based eatery is mass producing "vada pav", a spiced potato patty in a bun, using modified cookie dough machines and temperature-controlled stoves, a far cry from the hand-assembled snack sold by street hawkers.

"We wanted to give the vada pav a modern look,"said Dheeraj Gupta, head of Jumbo King, which also has a whole-wheat option.
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