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DEPARTMENT OF AGRICULTURAL MARKETING, CO-OPERATION AND BUSINESS MANAGEMENTTOPIC : FOOD PROCESSING INDUSTRYSUBJECT: ABM 502COURSE TEACHER : Dr. G N NAGARAJA

PRESENTED BYASHIS DASMBAL-4004Jr. MBA (ABM)

5/19/2015 12:14 PM1FOOD PROCESSING INDUSTRIES5/19/2015 12:14 PM2

CONTENTSDefination of food ProcessingIntroductionScope and ImportanceFood Processing in IndiaNew concept in FPLocation of food processing industriesConsumptionStatus of food IndustryProcessing, value additionResearch and DevelopmentExportsGovernment initiativesSWOT AnalysisCase StudyConclusion

5/19/2015 12:14 PM3Food processing is the set of methods and techniques used to transform raw ingredients into food or to transform food into other forms for consumption by humans or animals either in the home or by the food processing industry. Food processing typically takes clean, harvested crops or butchered animal products and uses these to produce attractive, marketable and often long shelf-life food products. Similar processes are used to produce animal feed.

45/19/2015 12:14 PMWHAT IS FOOD PROCESSING?IntroductionThe Indian food industry is poised for huge growth, increasing its contribution in world food trade every year. In India, food has become a high-profit industry by reason of the scope it offers for value addition, particularly with the food processing industry getting recognised as a high-priority area in this liberalised era. Accounting for about 32 per cent of the country's total food market, the food processing industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth

5/19/2015 12:14 PM55Continued The total food production in India is likely to double in the next 10 years with the country's domestic food market estimated to reach US$ 258 billion by 2015.5/19/2015 12:14 PM6Scope and ImportanceIndias position as a major food producer Resource advantage of India Increasing employment Curbing Migration The demand potential Future driver of Indian growth

5/19/2015 12:14 PM7The ministry of food processing industries, set up in 1988,is the nodal agency in India responsible for developing the food processing industry. For the government of India ,the food processing industry is a priority sector thus ensuring that policies support investment and attract more F.D.I. 5/19/2015 12:14 PM8FOOD PROCESSING IN INDIANEW CONCEPTMEGA FOOD PARK-17 NEW MEGA FOOD PARK IN INDIA DATED ON 24TH MARCH 2015.5/19/2015 12:14 PM9

Fig no.-01- Mega food Park5/19/2015 12:14 PM10

Fig no.- 02- Supply chain FP IndustriesTable No.01- GDP CONTRIBUTE TO FOOD PROCESSING INDUSTRY5/19/2015 12:14 PM11

SOURCE- NATIONAL ACCOUNTS STATISTICS (2014)5/19/2015 12:14 PM12

Fig No.03- GDP IN FOOD INDUSTRY13The Indian Food Sector : Introduction The food processing industry is one of the sunrise industries in India whose potential has been well reorganized, but not satisfactorily realized . India is one of the major food producers in the world,The food sector contributes to about 28 % of Indias GDPIn terms of world ranking India stands :1st in the production of Cereals, Milk & Livestock population2nd in producing Fruits & Vegetables Ranks amongst the top 5 in producing Rice, Wheat, Groundnuts, Tea, Coffee, Tobacco, Spices, Sugar & OilseedsTotal market for food products -Rs. 2,500 Bn. Of this, processed food -Rs. 1,400 Bn. 5/19/2015 12:14 PM13

Location of food processing industries

India has more than 35000 registered units. Butmajorities of the food processing factories are concentrated in the coastal states (one reason being, accessibility to marine food processing).Major coastal states includes: A.P., Maharashtra, Karnataka, Kerala, Gujarat and WB.Non-coastal states include UP, Punjab etc.

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Source:- http://www.mofpi.nic.inFIG NO.04- EMPLOYMENT IN FPConsumption of Processed foodsIt includes packaged foods, soft drinks, alcoholic beverages etc.This segment consists of bakery foods, chips, meat, fish, namkeens and other processed foods growing at 5.7 per cent annum

5/19/2015 12:14 PM16Ready-to-eat foodsReady-to-eat food are foods you don't need to cook food that has already been cooked. You store these on your pantry shelf, or in the refrigerator or freezer, until you are ready to use them.5/19/2015 12:14 PM17

FIG NO.05- Share of food processing segments in 2014source: www.apeda.in5/19/2015 12:14 PM18Leading Food Processing Companies in IndiaNestleRasna InternationalAnkur Chemfoods Products (GUJ) LtdCadbury IndiaHaldiramsRuchi Soya IndustriesMTR FoodsParle Products LimitedPriya FoodsUnileverPepsico

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LEVEL OF PROCESSING, VALUE ADDITION

Fruits & Vegetables Sector at 2%, Poultry 6%, Milk 35% (only 13% in modern dairies), Marine products 8%, Buffalo meat 21%. Wastage Rs. 58,000 crore

5/19/2015 12:14 PM20VALUE ADDITION BREAD PRODUCTION: Bread is an important ready to eat food product which is becoming increasingly popular amongst the Indian population. It is intermediate moisture food, work as a energy food and used as breakfast food

5/19/2015 12:14 PM21CONVECTIONAL FOODSCHIKKI / NUTRA CHIKKIChikki is a ready to eat traditional sweet snack consumed by all sections of population in India. It provides protein, carbohydrates and fats. Currently, the demand for functional foods is increasing at fast pace.

5/19/2015 12:14 PM22BEVERAGE PRODUCTSLime/lemon flavour blend for soft drink manufactureCola flavour concentrateFruit squashes and syrups

5/19/2015 12:14 PM23FOOD PACKAGING TECHNOLOGYDesign and development of functional and economical unit packaging for marketing of processed food products.Shelf life evaluation of packaged food products under simulated storage conditions.Testing of packaging materials for barrier and strength properties and food products for shelf stability.

5/19/2015 12:14 PM2425Fruits & Vegetables Processing - IntroductionIndia is the worlds 2nd largest producer of fruits & vegetables (next only to China)Total cultivated area of fruits & vegetables is around 12 Mn. Hectare (i.e. 7% of total cultivation area).Main fruits produced in India are Mango, Banana, Citrus, Guava & Apple ; these account for almost 75 80% of total fruit productionThe country produces around 140 Mn. tones of fruits & vegetables p.a. & accounts for about 10 % of the global production in fruits & about 13.7 % of global production in vegetablesIndia produces over 60 % of worlds mangoes & 12 % of worlds bananas .30 % of fruits & vegetables go waste due to lack of proper processing & packaging.Only 2 - 3 % of the produce is processed in India as against Malaysia at - 83%, Thailand - 72 % & Brazil - 70 %No. of fruits & vegetables processing units : 52005/19/2015 12:14 PMTABLE NO.02-Fruits & Vegetables Processing :Processing Pattern - Global Country % Processed*

Malaysia83South Africa80Philippines78Thailand72 Brazil70USA65India2 - 3

* percentage processed out of total production of fruits & vegetables5/19/2015 12:14 PM262627TABLE NO.03-Sea Food Processing Units in India State No. of Units

Kerala 124Gujarat 56Andhra Pradesh 55Tamil Nadu 48Maharashtra 41West Bengal 36Orissa 21

5/19/2015 12:14 PM2728Poultry Meat : Market SizeThe poultry meat processing industry is still in its nascent stage.Around 97 % of poultry meat in India is consumed in the fresh form.Only 3 % or about 23,000 tones is processed at present.Western Hatcheries (part of the Venkateswara Group) were the first to set up a poultry processing unit in India (1986)Top 10 major players contribute for 95 % of total processed poultry meat market.5/19/2015 12:14 PM2829

Britannia is the market leader in value terms; however, Parle has higher share in terms of volume FIG NO.06- MAJOR BISCUITS PLAYERS & MARKET SHARE5/19/2015 12:14 PMResearch and DevelopmentCFTRIThe role of CFTRI has always been on a high pedestal in the areas of human resource development and R&D partnerships cherished through the international linkages with institutions such as the Institute of Food Technologists (USA), UN University (Tokyo), European Economic Commission (Belgium), National Science Foundation (USA) and many more. CFTRI is an ISO 9001:2008 and ISO 14001:2004 organization and NABL accredited for chemical and biological testing of samples.5/19/2015 12:14 PM30Research Departments of CFTRIMeat and marine sciencesFruits and vegetables processingFood packagingFood engineeringFood microbiologyProtein chemistry and technologyFermentation technology etc,

5/19/2015 12:14 PM31TABLE NO.04- Exports of processed foods Sl. NoProductsValue in Rs. CroreIn 2011Value in Rs. CroreIn 2012

1Fruits & Vegetables4436.774748.912Processed F & V3062.123429.383Animal foods12,286.1216,137.714Other Processed foods18,313.7535,475.915Cereals23,637.1941,075.25Source:-www.mofpi.nic.in5/19/2015 12:14 PM32325/19/2015 12:14 PM33

FIG NO.07- EXPORT OF PROCESSED FOOD5/19/2015 12:14 PM34

TABLE NO.05- EXPORTS OF MAJOR PROCESSED FOOD TABLE NO.06- FDI IN FOOD PROCESSING5/19/2015 12:14 PM35

Government InitiativesThe government has allocated Rs 180 crore (US$ 29.24 million) to various States/Union Territories (UTs) during FY15 for the schemes of National Mission on Food Processing (NMFP) including that of scheme of Technology upgradation/Establishment/Modernisation of food processing industries.The General Council for National Food Security Mission (NSFM) has approved Rs 2,100 crore (US$ 341.24 million) for the scheme in FY15, which will focus to improve the production of oilseeds and pulses.The MoFPI is exploring the potential and possibility of developing agro processing clusters in smaller areas of 25-30 acres. A national consultation was organised by the Ministry on 'Development of Agro Processing Clusters' in Delhi on August 8, 2014.

5/19/2015 12:14 PM36Continued Government has proposed to establish two more institutions of excellence in Assam and Jharkhand at par with Indian Council of Agricultural Research (ICAR) Centre at PUSA, New Delhi. For this purpose, an initial sum of Rs 100 crore (US$ 16.24 million) has been provided in the Union Budget 2014-15.

5/19/2015 12:14 PM37The national mission on food processing was approved by the Government of India with an outlay of 1600 crore during the period 2012-17. The share of the central and the state government was 1250 crore and 350 crore respectively. The schemes taken up under the mission included: Scheme for technology up gradation/ establishment/ modernization of food processing industries Scheme for cold chain, value addition and preservation infrastructure for non horticulture products Setting up/ modernization/ expansion of abattoirs Scheme for promotional activities Creating primary processing centres/ collection centres in rural areas Modernization of meat shops Reefer vehicles Old Food parks5/19/2015 12:14 PM38NATIONAL MISSION ON FOOD PROCESSINGSWOT ANALYSISSTRENTH

Abundant availability of raw materialPriority sector status for agro-processing given by the central GovernmentVast network of manufacturing facilities all over the countryVast domestic market

WEAKNESS

Low availability of adequate infrastructural facilitiesLack of adequate quality control & testing methods as per international standardsInefficient supply chain due to a large number of intermediariesHigh requirement of working capital.Seasonality of raw material

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OPPURTUNITIESLarge crop and material base offering a vast potential for agro processing activitiesSetting of SEZ/AEZ and food parks for providing added incentive to develop greenfield projectsRising income levels and changing consumption patternsFavourable demographic profile and changing lifestylesTHRETSAffordability and cultural preferences of fresh foodHigh inventory carrying costHigh taxationHigh packaging cost5/19/2015 12:14 PM40

CASE STUDY

5/19/2015 12:14 PM41About Nestl Nestl isthe world's leading Nutrition, Health and Wellness company. Missionof "Good Food, Good Life"is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverages TheCompanywas founded in1866 by Henri Nestl in Vevey, Switzerland, where headquarters are still located today. Employ around 2,80,000 people

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MISSION AND VISIONMission StatementNestl is the world's leading nutrition, health and wellness company. Our mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night.

5/19/2015 12:14 PM43VISION STATEMENTTo be a leading, competitive, Nutrition, Health and Wellness Company delivering improved shareholder value by being a preferred corporate citizen, preferred employer, preferred supplier selling preferred products.

5/19/2015 12:14 PM44HEAD OFFICE

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5/19/2015 12:14 PM46Nestls Presence In India Nestl India haspresence across India with eight manufacturingfacilities and four branch offices.

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Nestls Presence In IndiaNestl India set up its first manufacturing facility at Moga (Punjab) in 1961 followed by its manufacturing facilities at Choladi(Tamil Nadu), in 1967; Nanjangud (Karnataka), in 1989; Samalkha (Haryana), in 1993; Ponda and Bicholim (Goa), in 1995 and 1997, respectively; and Panthnagar (Uttarakhand),in 2006. In 2012, Nestle India set up its 8th manufacturing facility at Tahliwal (Himachal Pradesh).5/19/2015 12:14 PM48Brands of Nestl

5/19/2015 12:14 PM49Research and DevelopmentResearch and Development (R&D) in India is part of Nestl S.A.s global R&D network and supports all markets worldwide with new product development and manufacturing excellence for Noodles. It is also a Centre of expertise for local Indian cuisine within the Nestl R&D network and offers assistance to Culinary, Confectionery, Nutrition and Dairy products in the South Asia Region (SAR).5/19/2015 12:14 PM50Marketing StrategyAs the function driving brand-building efforts, Marketing is right at the heart of what Nestle do. Indeed, Brand Building the Nestl Way is a distinctive process that sets marketing function apart in the industry from both a commercial and a career point of view.5/19/2015 12:14 PM51Turnover of Nestl Sales ofCHF92.2 billion, +2.7%4.6% organic growth, 3.1% real internal growthTrading operating profit margin up 20 basis points to 15.2%, up 40 basis points in constant currenciesUnderlying earnings per share up 11.0% in constant currenciesStrong operating cash flow atCHF15.0 billionProposed dividend increased toCHF2.15 per share

5/19/2015 12:14 PM52Corporate social ResponsibilityHealth and NutritionEducation and Manpower developmentCommunity developmentEnvironmental protection and PreservationRural development in Philippines

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SWOT ANALYSISStrengthsUnmatched product and brand portfolioR&D capabilitiesDistribution channels and geographic presenceCompetency in mergers and acquisitionsBrand reputation valued at $7 billion

Weaknesses

Inability to provide consistent quality in food productsWeak implementation of CSR5/19/2015 12:14 PM54OpportunitiesIncreasing demand for healthier food productsAcquiring startups specializing in producing well-being productsEstablishing new joint ventures

ThreatsFood contaminationTrend towards healthy eatingGrowth of private labelsRising raw food prices5/19/2015 12:14 PM55CONCLUSIONI recognize that there are a number of constraints both in the forward and backward linkages in the sector. But if we can get our act together, as we must, India can emerge as a leader in the global food processing industry.(Dr. Manmohan Singh, Former Prime Minister)5/19/2015 12:14 PM56REFERENCEwww.ediindia.inwww.apeda.inhttp://www.cifti.orghttp://www.mofpi.nic.inhttp://www.nestle.in

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