New Delhi, January 24, 2019: The demands of the accelerated lifestyles of younger urban consumers and their relatively high levels of health and hygiene awareness, are set to be key factors in the growing uptake in packaged food over un packaged alternatives.

Furthermore, younger consumers offer significant opportunities for manufacturers looking to develop a new consumer base and willing to experiment with new products. Younger consumers tend to be less established in their purchasing patterns and consumption habits than their older counterparts, partly as a result of globalisation and urbanisation. They have been quick to let go of traditional lifestyles and adopt technological advancements and change. Relatedly, they are more brand-conscious and more cosmopolitan in their outlook than older consumers.

According to report published in indiaretailing.com  diverse Indian population has various needs of food habits that changes with taste, culture, staple products, geography, season and many other factors. The constant demand for packaged products originates from adapting to newer food trends and imitating other cultures; this has been witnessed in India since the last few years. Such changeover from traditional to modern cultural environment has been rampant and this continued to create vast demands for packaged food products during the year.

Euromonitor International considers the below mentioned categories in our packaged food research:
– Baby Food
– Baked Goods
– Breakfast Cereals
– Confectionery
– Dairy
– Edible Oils
– Ice Cream and Frozen Desserts
– Processed Fruit and Vegetables
– Processed Meat and Seafood
– Ready Meals
– Rice, Pasta and Noodles
– Sauces, Dressings and Condiments
– Savoury Snacks
– Soup

Packaged Food

In packaged food we consider two aspects of food sales:
– Retail sales
– Foodservice

Retail sales is defined as sales through establishments primarily engaged in the sale of fresh, packaged and prepared foods for home preparation and consumption. This excludes hotels, restaurant, cafés, duty free sales and institutional sales (canteens, prisons/jails, hospitals, army, etc). Our retail definition EXCLUDES the purchase of food products from foodservice outlets for consumption off-premises, eg impulse confectionery bought from counters of cafés/ bars. This falls under food service sales. For food service, we capture all sales to food service outlets, regardless of whether the products are eventually consumed on-premise or off-premise. Food service sales is defined as sales to consumer food service outlets that serve the general public in a non-captive environment. Outlets include cafés/ bars, FSR (full-service restaurants), fast food, 100 percent home delivery/ takeaway, self-service cafeterias and street stalls/kiosks. Sales to semi-captive food service outlets are also included. This describes outlets located in leisure, travel and retail environments.

– Retail refers to units located in retail outlets such as department stores, shopping malls, shopping centres, super/hypermarkets etc.
– Leisure refers to units located in leisure establishments such as museums, health clubs, cinemas, theatres, theme parks and sports stadiums.
– Travel refers to units located in based in airports, rail stations, coach stations, motorway service stations offering gas facilities etc.

Key Industry Trends

Packaged foods witnesses a healthy growth during 2017 – Essential commodities like edible oils, dairy products and alternatives followed by other categories continues to contribute significantly to the double digit growth achieved by packaged foods during 2017. Consumers are shifting towards packaged food from unpackaged unbranded products and there is also a rise in premiumization. Furthermore, competition among bigger brands and improved performance of smaller categories drives the growth of packaged foods. Edible oils and dairy are the biggest categories in packaged foods and has attracted many investments from both international and domestic players during 2017. These companies expanded of existing business and established new manufacturing and processing plants to cater to the demand of consumers and more specifically, meeting the demands of uncaptured markets across India.

Convenience and healthy eating continues to drive sales of packaged foods – The perception of packaged foods is changing among consumers, as there is a significant rise in consumers wanting convenience, availability and affordability to purchase such products. Meanwhile, with the onset of information sharing through various sources like social media, print and others, consumers are more informed about the benefits and downsides of packaged foods, leading to a better informed decision while purchasing products. Health benefits and hygiene has also become increasingly important, as many consumers become calorie conscious and track calorie intake while consuming packaged foods. This has in turn supported the growth of ‘organic’, ‘fortified’, ‘functional’ and ‘better for you’ types of packaged food products, however these categories are still at a nascent stage.

Necessity, convenience and availability shall drive future growth – The packaged foods market will continue to achieve a double digit growth during 2017-2022, mainly due to the need and dependence on packaged food, coupled by convenience and availability. Essential commodities like edible oils, dairy, rice, bread and breakfast cereals are an integral part of the daily diet and these will contribute to a constant rising demand. Products like biscuits, savoury snacks, confectionery, spreads, soups, noodles, pasta and ice creams will remain the most dynamic categories to perform well 2017-2022.

Furthermore, improvement in logistics, storage facilities and refrigeration packaged foods will witness higher penetration in to rural regions in India. Meanwhile the rise in healthy living and eating will promote the growth of health and wellness type of products among packaged foods and support the shift to premium products.

Packaged food categories fight for consumers’ share of throat – The demand for staples and dairy leads, more than cooking ingredients and snacks, as these are essential commodities. Within these categories, for example snacks and staples usually compete with each other for consumers’ share of throat, as people constantly keep consuming different products. As a result, it ultimately creates opportunities for packaged food companies to expand, innovate and satisfy the needs of consumers.

In 2017, this was evident as one of the many innovations brought in by manufacturers like , Britannia Industries Ltd,  and many others was in traditional Indian flavouring for products like snacks, spreads and others. Also, many international companies like  amongst others are cashing in on the opportune environment in packaged foods, thereby expanding production units and launching new products.

Modern grocery retailers slowly gaining share from traditional retailers – Independent small grocers continued to be the largest and the most preferred distribution channel for packaged foods during 2017, however there was a minute decline in sales from them in 2016 mainly due to competition from hypermarkets, supermarket and Internet retailing. Time constraints among working class population in urban regions in India encourages consumers to buy food at supermarkets and hypermarkets, since these stores have abundance of products available at one destination.

Certain cities like Delhi, Bangalore, Mumbai and other major metros has been witnessing independent small grocers expanding their current store to resemble a supermarket by expanding the selling space and stocking more products, this is prominent in places like residential neighbourhoods, educational institutions housing students in dormitory and nearby offices. In ‘non-store retailing’, ‘Internet retailing’ has been attracting young crowd to shop for their monthly needs either by shopping through mobile or computer, however ‘Internet retailing’ still contributes less than one percent to overall sales of packaged foods.

Health and wellness becoming increasingly prominent – In 2017, Euromonitor International noted that he rise in consumer health-consciousness is expected to have a significant impact across most [if not all], packaged food categories upto 2021. Health-consciousness will be a primary factor in both driving the initial uptake of packaged food and shaping evolving demand amongst Indian consumers.

‘Edible oils’ is set to display both these elements as it continues to benefit from, the consumers demand for the security provided by packaged products. This category also sees, rising demand for products declaring to have a positive impact on health. The relative affordability of rapeseed oil is expected to encourage hygiene-conscious consumers to adopt packaged products as availability increases. Meanwhile, olive oil is set to see a 17 percent CAGR, as urban consumers perceive it to be a healthier option than rival oils, prompting more players to enter the category and expanding distribution.

Awareness of health benefits provided by pro/ prebiotic products is set to contribute towards the expansion of ‘yoghurt’ as a category. These products are typically, targeted towards the affluent urban consumers who tend to be more focused on health issues and more capable of affording products with added-value health benefits according to indiaretaling.com

As such demand evolves, packaged food manufacturers are set to increase their focus on health factors in their marketing and product innovation. There will be a refinement of the health-orientated offering, to target precise health concerns, such as problems with the heart and digestive system, obesity, bone and joint pain, depression and anxiety, lack of energy and stamina and sleeplessness. Moreover, major manufacturers and their expansion plans are is likely to propel the ‘Health & Wellness’ type of packaged foods and also trigger demand from smaller cities.

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