Food Sector – Fruits & Vegetables - macfrut.com

1 food Sector Fruits & Vegetables Sector overview and Industry Structure Trade Statistics Market Size Top companies present in the market Key players Distribution Channels Regulatory Framework Manufacturing & Consumption Clusters Growth drivers SWOT Analysis Future Projections Business Opportunities and Way forward2 TheIndianF&Vmarketvaluedat 66Bn(2015)isgrowingat12%.TheF&Vmarketish ighlyfragmentedandunorganizedupto96%.The domesticproductionofF&Vhasrisento265 MillionMTin2015,growingat5%CAGR. TheIndianimportsofF&Vincreasedto4,791, ,200 MTofF&VfromItalymainlyApplesandKiwiFruit andalsoexportedaround5,000 MTofF&VtoItaly TheF&VexportsfromIndiadroppedto ,Mangoes,Papayas,Onions,Greenpeasmajorly tomiddleeasterncountrieslikeUAE,Saudi,Qa tarandothercountrieslikeUK&USAO verall Fruits & Vegetables (F&V) Market25358660102030405060702012-132013- 142014-15 Total F&V market by Value ( Bn)2012-132013-142014-15 Exports3,53,63,1 Imports4,63,84,8 Domestic243252265 220 230 240 250 260 270 280 Mn MTTotal F&V market by Volume ( Mn MT)Source: Director General of Foreign Trade, Tecnova research & analysis3 F&VimportsfromItalycompriselessthan1%oft hetotalF&VImportsbyIndia.

2 In2014-15,Indiaimported10200 MTofF&VfromItaly, s Fruits & vegetable Trade with Italy34600380048004,13,410,2010002000300 0400050006000201320142015F&V Imports (Thousand MT)All CountriesItalySource: Director General Foreign Trade, Tecnova Analysis3500360031005,66,75,305001000150 020002500300035004000201320142015F&V Exports (Thousand MT)All CountriesItaly IndiaexportsofFruitsandVegetablesacrosst heworld,especiallyUSAandAfricancountries . IndianexportsofFruits&VegetablestoItalyw erelessthan1% IndiaisthesecondlargestproducerofF&Vfoll owedbyChinaandalsooneofthemajorconsumerm arket TheIndianF&VmarketismajorlydominatedbyVe getableswith65%marketsharefollowedbyFrui tsF&V Market Overview & Industry Structure4 Vegetables65%Fruits35%Indian F&V Market size (2015) 66 Bn AlmostalloftheInternationalcompaniessupp lytheF&Vthroughthe200oddimporterspresent inIndiawhothendistributethemtotheretaile rsthroughwholesalers Indiancompanieshaveown/contractfarming,t heyalsosourcefromLocalfarmers,Importexot icfruitsandsellitthroughtheirownretailsh opsIndian F&V MarketInternational PlayersImport DistributionIndian Players (Organized)Own/Contract FarmingImport Exotic fruitsSourcing from Local FarmersIndian F&V Industry StructureSource.

3 Industry Publications, Industry Experts, Tecnova research & analysis5 ,Mango,Papayaintheworld Importsaccountfor1%oftotalFruitsmarketin termsofvolumeandintermsofpricingtheimpor tedfruitsaregenerallythreetimesexpensive thandomesticproducedFruits Market517,719,722,4829094020406080100201 2-132013-142014-15 Fruits market in IndiaValue ( Bn)Volume ('Mn MT)Domestic Production99%Imports1% Fruits market volume (Mn MT) 201594 Mn MTSource: Director General of Foreign Trade, Tecnova research & analysisBanana33%Mango21%Citrus13%papaya 6%Guava4%Others23% Fruits segmentation Type6 PotatoholdsthemajorshareinVegetablesmark etfollowedbyOnions,TomatoandBrinjal Thesevegetablesareconsumedonadailybasisa sapartofmealsinIndiaandhencecreatingahug edemand Importsaccountfor2%ofthemarketasvegetabl esareimportedbyneighboringcountrieslikeS rilanka,Pakistan, Market63437,342,416416617505010015020020 12-132013-142014-15 Vegetables market in IndiaValue ( Bn)Volume ('Mn MT)Domestic Production98%Imports2% Vegetables market volume (Mn MT) 2015269 Mn MTSource.

4 Director General of Foreign Trade, Tecnova research & analysisPotato26%Onion12%Tomato11%Brinja l8%Cabbage6%Cauliflower5%Tapioca5%Others 27% Vegetables segmentation Type7 Major Companies present in the StoresParentCompanyNatureof BusinessMode of presenceSourcing Details1 RelianceFreshReliance GroupRetailerOwn SubsidiaryContract farming2 SafalMotherDairyRetailerOwn SubsidiarySourcedfrom Mandis/Farmers3 MoreAditya Birla GroupRetailerOwn SubsidiarySourced from Mandis/Farmers/Importsexotic fruits4 Heritage Fresh-RetailerOwnSubsidiarySourced from Farmers/Contract Farming5 Big BazaarFuture GroupRetailerOwn SubsidiarySourced from Farmers6 Nature s BasketGodrej GroupRetailerOwn SubsidiarySourced fromFarmers/Imports exotic fruits7 SaboroMahindra GroupProducer/ExporterOwn SubsidiaryOwnFarming8 FieldFresh Foods-ExporterJV between Del Monte & BhartiSourced fromFarmersSource: Industry Experts, Retail visit, Tecnova research & analysis8 Major Companies present in the BusinessMode of presenceSourcing Details9 DesaiF&V-ExporterOwnSubsidiaryContractFa rming10 Champion Agro Fresh-Importer/RetailerOwn SubsidiaryContract Farming11 Namdhari s Fresh-RetailerOwn SubsidiarySourced from Mandis/Farmers12 GokulFreshImporter/RetailerOwnSubsidiary Own Farming13 Farm2 KitchenSahyadriFarmers Producer Company LtdProducer/RetailerOwn SubsidiaryOwn/ContractFarming14 Spencers-RetailerOwn SubsidiarySourced from Farmers15 KovaiPalamudhirNilayam-RetailerOwn SubsidiarySourced from FarmersSource.

5 Industry Experts, Retail visit, Tecnova research & analysis9 Key Players and of presenceHQ/ MfgYear of EntryRevenue (2015)Numberof Stores1 RelianceFreshIndian Company Contract FarmingMumbai1999 760 Mn*700+2 SafalIndian Company Sourcing from FarmersDelhi2000 80Mn350+3 Nature s BasketIndian Company Imports and Sourcing from FarmersMumbai2005 27 Mn364 Heritage FreshIndian Company Sourcing from farmersand Contract FarmingHyderabad1992 65 Mn905 Big BazaarIndian Company Sourcing fromfarmersMumbai2001 48 Mn185 RelianceFreshistheoneofthelargestorganiz edretailersinIndiafollowedbySafalandBigB azaarwithconsiderablemarketshareintheOrg anizedF&VmarketinIndia Nature sBasketisanotherleadingplayerwhichsellsp remiumF&Vwhicharemostlyimported Mostofthefruitswhichareimportedthroughim porters/ownchannelsinIndiaareApples(Wash ington/Fuji),DragonFruit(Thailand),Kiwis (Italy),Berries, Thesecompanieshavealsoinitiatedonlinegro ceryshoppingthroughownportalsorthroughth irdpartyportalslikeBigBasketSource: Industry Publication, Ministry of Corporate Affairs, Tecnova research & analysis10 Distribution Structure10 International PlayersOrganized PlayersIndia ImporterParent Company Sub DistributorsModern Trade Chains / StoresRetailersWholesalersIndian CompanyContract Farming ( Reliance Fresh) Own Retail ShopsThe exotic Fruits /imported Fruits are directly imported or bought through ImportersSource: Industry Experts, Tecnova research and analysisSourcing from Aggregators/Farmers( Safal)Agents/AggregatorsFarmersCollectio n Hubs/MandisVegetable cart vendorsRetailersWholesalersUn-Organized PlayersIndia Importer11 Key Production & Consumption clusters11 Top MetrosDelhi NCRM umbaiAhmedabadPuneBangaloreChennaiHydera badKolkataSource.

6 Industry Publications, Tecnova research and analysisFruit/VegetableMajor Producing StatesIDApplesJammu & Kashmir, HimachalPradeshCitrus FruitsPunjab, Maharashtra, Andhra PradeshMangoUttar Pradesh, AndhraPradeshBananaGujarat, Maharashtra,Karnataka, Tamil Nadu, BiharPotatoUttar Pradesh, Bihar, West BengalOnionGujarat, Maharashtra, KarnatakaTomatoKarnataka, OrissaConsumption Cluster: The major consumption centers of F&V are Metro cities where the population is high with much organized retail channels The Tier-1/2 cities are also emerging as consumption clusters due to rapid urbanization12 Key Growth drivers12 GrowthinIndianorganizedretail IncreasingnumberofModerntradeformatsandt heentryofe-commercechannelsthroughoutthe country. Indiaissaidtobecomethemostpopulouscountr yintheworldsurpassingChinabytheyear2022a ndalsotheyoungestcountryintheworld Therapidurbanizationandyoungpopulationwi thmoredisposableincomeisakeygrowthdriver forF&VdemandinIndiaChangingconsumerprefe rences Indianconsumersarewillingtotrynewexotic/ importedF&Vduetoincreasedawarenessduetoe xposuretomediaandglobalization F&VlikeBroccoli,ImportedApples,Kiwisarec onsumedonadailybasisnowadaysbyanaveragec onsumerwhichwasnotthecasebefore10oddyear sSource.

7 Industry Experts, Industry Publications, Tecnova research and analysis13 TheFoodSafetyandStandardsAuthorityofIndi a(FSSAI)hasbeenestablishedunderFoodSafet yandStandardsAct,2006(FSSAct)toregulatet heIndianmanufacture,storage,distribution ,saleandimportoffoodtoensureavailability ofsafeandwholesomefoodforhumanconsumptio n PlayersimportingF&Vhavetakenproprietaryf oodlicense(productapproval) (s)and/oradditive(s)arenotasperprescribe dstandardsinactandregulationKeyParameter sdefinedforDehydrated/Frozen/DryF&V FrozenFruit/VegetablesshouldattainTherma lstabilizationbelow-18oC MoistureNotmorethan5%-7% SulphurDioxidenotmorethan2000ppm TotalashNotmorethan5percentondrybasis AshinsolubleindiluteHCl(ondrybasis). Platescountnotmorethan40,000pergramRegul atory13 Source : Interaction with FSSAI, Industry expert14 Import Duties & Calculation14HS CodeDescriptionBasic Duty(%)CVD(%)ACD (%)Cess(%)Total (%)0701 -0714 Edible -0814 Edible Fruit25 10000-40-325 ,CVDisequivalenttoCentralexcisedutylevie donalikearticlemanufacturedinIndia.

8 Someofthepackagedconsumergoodsarecharged thisdutybasedontheirMRP(MaximumRetailpri ce)EducationCessEducationCessof2%+1%isch argedonthetotalcustomsduty(exceptspecial CVD)ACDT hespecialCVDoradditionalcustomsduty(ACD) isapplicabletoallimports(exceptforfewexe mptions), , fruit (HS Code 081050 00)CIF Value 100 Assessable Customs for Calculating * for calculating Education Cess on Customs & for Margin to Distributor/ to before (Value Added Tax) (Maximum Retail Price) across pricing assumed based in industry standardSource : Interaction with FSSAI, Industry expert15 SWOT Analysis F&V15 SWOTANALYSIS Establishedmarketof 66Bn,growingat12%CAGR. Increasingorganizedretailchains Consumerpreferencetowardsexotic/imported F&V Increaseinyouthpopulationandrapidurbaniz ation Increaseinthedisposableincome IncreasingawarenessofnewF&Vproductsdueto exposurethroughmediaandglobalization HighlyUnorganizedmarketwith96%share LackofColdchaininfrastructuretogetthepro ductstotowns/villages StringentFSSAI regulationsmakeimportersreluctanttointro ducenewF&Vproducts IndiancompaniestryingtogrowforeignF&VinI ndia Increaseinimportdutiesinordertoprotectlo calfarmersSource.

9 Industry Experts, Industry Publications, Tecnova research and analysis16 ThedemandforF&VinIndiaisexpectedtogrowat aCAGRof12%duetoincreaseinthepopulationan dalsoduetodevelopmentintheColdchaininfra structuretopreservetheF&Vwhichincreasest heavailabilityofF&Virrespectiveofseasona lity Theincreaseintheorganizedretailisanother drivertoincreasethedemandforF&Vasmorecon sumersarepreferringtotryexotic/importedF &Vduetoincreasedawarenessanddisposablein comeMarket Forecast16535866748393010203040506070809 01002012-132013-142014-152015-16*2016-17 *2017-18*F&V market India Forecast ( Bn)Source: Industry Experts, Industry Publications, Tecnova research and analysis17 Way forward for Italian Companies17 Established market of 66 Billion, expected to reach 93 Billion by 2018 growing at 12% CAGR Increasing preference towards imported and exotic F&VIncreasing organized retail structureAvailability of Importers and Distributors in IndiaEntryOptionsincludingImporter, ,theIndianF&Vmarketishighlyunorganizedan dscatteredThereisagrowthinorganizedretai lspaceandpreferencetowardsnewimportedand exoticF& :Tecnova research and analysis