A

PROJECT REPORT

ON

“MARKET POTENTIAL OF FROZEN SNACKS

IN UTTRAKHAND”

SUBMITTED IN THE PARTIAL FULFILLMENT OF

“MBA”

(TWO YEAR FULL TIME PROGRAMME)

SUBMITTED BY UNDER THE SUPERVISION OF

RAHUL SINGHAL Mr. PRADEEP JOSHI

MBA 2nd SEM

BATCH – 2014-2016

QUANTUM SCHOOL OF BUSINESS

MANDAWAR, ROORKEE

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1. ABOUT INDUSTRY

The change in the lifestyle of the Indian’s creating an opportunity for market players across

industries. As there is the rise in the number of working women’s, preference for nuclear family,

young professionals living alone; the growing acceptance of western food are often cited reasons

given by firms while launching frozen/ready-to-eat meals (or microwaveable meals), ranging

from mutter paneer to cheese nuggets. In India Frozen foods are still a nascent segment for the

Indian market, but it is fast growing sector.

1.1 HISTORY

Natural food freezing (using winter frosts) had been in use by tribes in cold climates for

centuries. By 1885 a small number of chicken and geese were being shipped from Russia to

London in insulated cases using this technique. By March 1899, the "British Refrigeration and

Allied Interests" reported that a food importing business, "Baerselman Bros", was shipping some

200,000 frozen geese and chickens per week from three Russian depots to New Star Wharf,

Lower Shadwell, London over three or four winter months. This trade in frozen food was

enabled by the introduction of Linde cold air freezing plants in three Russian depots and the

London warehouse. The Shadwell warehouse stored the frozen goods until they were shipped to

markets in London, Birmingham, Liverpool and Manchester. The techniques were later

expanded into the meat packing industry. Other experiments, involving orange juice, ice cream

and vegetables were conducted by the military near the end of World War II.

1.2 CURRENT SCENARIO

In the midst of rising inflation and a recessionary environment, where many companies in India

are struggling to sustain growth rates, the food processing industry has steadily advanced to

emerge as a sector of choice for investors. Rising disposable income, changing lifestyles, and

rapid urbanization have accelerated its progression. Currently, estimated to be worth Rs. 7,500

billion, the Indian food processing industry is expected to expand in value at a compound annual

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growth rate (CAGR) of 17% to reach Rs.12,000 billion by 2015, according to a report issued by

Sathguru Management Consultants.

1.3 INTERESTING FACTS

1) What is more promising is the sector’s transformation from low value processing in a

relatively unorganized segment to delivering high value, technology oriented, branded packaged

products in a fast emerging organized environment. As a result of this transformation, there has

been a boom in the packaged food segment with new product launches, introduction of new

product categories and entry of new domestic and international players.

2) Frozen food is one such category which has caught the attention of both processors and

consumers alike. Unlike shelf-stable products, distribution of frozen items requires massive cold

chain infrastructure, which is limiting its market penetration. However, freezing ensures that

these products are minimally processed with better retention of nutritive value and hence have a

potential to become an alternative to home cooked or restaurant food.

3) The market for frozen foods in India has grown at double-digit growth rate in last few years,

reaching a size of about Rs.19 billion in 2012. Although the growth number looks impressive, it

does not truly reflect the future growth potential of the industry.  More than 45% of the current

market is composed of exports of minimally processed low value marine products, meats, fruits

and vegetables.

4) Domestic per capita consumption of frozen food is close to negligible, and is about 50 times

less than intake in China. Even though the retail market value for frozen food products, doubled

to Rs. 3,650 million between 2008 and 2012, it is still primarily driven by minimally processed

vegetables.

5) A deeper analysis of the industry reveals that the market for frozen food has a potential to

grow three times in next five years. However, there are certain constraints which are limiting

growth. The industry is characterized by low revenue to asset ratio, owing to massive investment

in high precision manufacturing and storage infrastructure required to serve the retail and

foodservice segments. Typical revenue to asset ratio in the frozen food segment will be in range

of 1-2.5, as compared to range of 2-5 in other comparable segments such as ice cream,

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confectionary, etc. This aspect, coupled with low market penetration due to an underdeveloped

cold chain and food retail infrastructure, creates entry barriers for new players and also restricts

the existing companies from investing heavily in branding and R&D for product innovation. This

is leading to low awareness and acceptability of frozen product among consumers.

1.5 NEGATIVE POINTS  

A market survey conducted by Sathguru Management Consultants revealed that consumers

neither find the taste and texture of frozen products at par with so-called “fresh” food, nor is

present packaging appealing enough to prompt them to buy such products. The major deterrents

in consuming frozen food are perceptions among many Indians that it is unhealthy, due to an ill

conceived believe that chemical preservatives are used, and that frozen have less nutritive value.

Hence, consumers prefer to use frozen food only when so-called fresh food is not available and

do not see it as a substitute to home cooked or restaurant food.

Moreover, the product range available in India consists of minimally processed products in

contrast to specialty products such as desserts, pizza, ready meals, etc, that are available in

frozen form in developed countries. Indians consume processed food to get a sensory experience

that is difficult to obtain in home cooked food. Hence, in the foodservice sector, cuisines such as

Chinese, Mexican and Italian are getting increasingly popular. However, frozen variants of these

products are not generally available to Indian consumers.

It is imperative for any player to keep in mind the following critical success factors to launch and

sustain frozen snacks in India:

A problem found with microwaving a frozen product is that the thicker the product, the

greater the disparity in reheating. Hot spots tend to form with products of higher

viscosity.

The consumption diversity of food products in India is different across regions and

therefore the decision to launch any product must be assessed in detail to ascertain the

extent, and potential, of the market that can be targeted for high revenues

Indian consumers tend to prefer products which offer more value for the corresponding

price points. To attract them manufacturers have to walk a tightrope in matching product

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size and product price. As a result, smaller pack sizes, which can be retailed at a lower

cost, will become popular.

It is critical while introducing a product in this market to educate the customer and raise

awareness about the quality, value, and usage of the product.

It is good to start the new business related to food but the main thing is to maintain the quality

and price as per the customer preferences and taste. And it is also important to understand the

demographic environment of the place first.

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2. ABOUT FROZEN SNACKS

Frozen snacks are preserve from the time it is prepared to the time it is eaten. The frozen food

industry is also known as convenience food industry, which started by offering basic frozen

vegetables and fries, today offers a wide range of products, from fruits & vegetables to frozen

meats and ready-to-cook, snacking and full meal options. In terms of product categories, Frozen

Vegetables and Frozen Snacks together make up a more than 65% share of the market and their

collective volume share consumption for 2012 exceeded 85%.

2.1 TYPES OF FROZEN SNACKS

There are various types of frozen snacks are available in market as given below_

1) French Fries are a taste sensation - crispy on the outside, fluffy in the center and

delicious through and through.

2) Smiles (Crispy happy potatoes) are delicious mashed potatoes, seasoned and shaped into happy

faces. Go ahead, take a bite and keep smiling!

3) Extra crunchy potato nuggets light, golden bite sized deliciously seasoned with chilli

and garlic.

4) Potato Cheese Shotz are a flavorsome union of potatoes, cheese and herbs seasoning,

coated in crunchy golden breadcrumbs.

5) Veggie Nuggets are irresistible combination of potatoes, vegetables & bold Tandoori

seasoning, finely coated in crispy golden bread crumbs.

6) Aloo Tikki is a classic combination of mashed potatoes and traditional Indian spices.

7) Crispy parsley coated potatoes are crispy coated potato wedges with a special blend of

seasoning and herbs. Ready in minutes, they are perfect as snacks or as accompaniment

to meals

Various types of other frozen foods are also available but they come under the category of frozen

meals because they used as complete food not as snacks. The list is according to the products

available in the Indian market.

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2.2 MARKET PLAYERS

The large numbers of market players are available in the markets which are dealing in frozen

food and snacks. The market is dominated by various organized players and unorganized players

(local players/ unbranded products).

Name of some “Organized Players” are:

1) McCain India (products are used by leading fast food chains, hotels, restaurants, catering

companies and are popular for in-home consumption)

2) Mother Dairy (stands out with a ~50% market share in the vegetables segment as a result

of the widespread popularity of its Safal brand. )

3) Venky’s (V.H. Group)

4) Al-Kabeer (Al-Kabeer Group)

5) Sumeru (Innovative Foods)

6) Everfresh (Temptations Foods)

7) Meatzza (Darshan Foods)

8) McCain Foods (McCain Foods India)

2.3 PRESERVATIVES

Frozen products do not require any added preservatives because microorganisms do not grow

when the temperature of the food is below −9.5 °C (14.9 °F), which is sufficient on its own in

preventing food spoilage. Long-term preservation of food may call for food storage at even

lower temperatures. Carboxymethylcellulose (CMC), a tasteless and odorless stabilizer, is

typically added to frozen food because it does not adulterate the quality of the product.

The speed of the freezing has a direct impact on the size and the number of ice crystals formed

within a food product's cells and extracellular space. Slow freezing leads to fewer but larger ice

crystals while fast freezing leads to smaller but more numerous ice crystals. Large ice crystals

can puncture the walls of the cells of the food product which will cause a degradation of the

texture of the product as well as the loss of its natural juices during thawing. That is why there

will be a qualitative difference observed between food products frozen by ventilated mechanical

freezing, non-ventilated mechanical freezing or cryogenic freezing with liquid nitrogen.

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2.4 TECHNOLOGY

The freezing technique itself, just like the frozen food market, is developing to become faster, more efficient and more cost-effective.

Mechanical freezers were the first to be used in the food industry and are used in the vast majority of freezing / refrigerating lines. They function by circulating a refrigerant, normally ammonia, around the system, which withdraws heat from the food product. This heat is then transferred to a condenser and dissipated into air or water. The refrigerant itself, now a high pressure, hot liquid, is directed into an evaporator. As it passes through an expansion valve, it is cooled and then vaporizes into a gaseous state. Now a low pressure, low temperature gas again, it can be reintroduced into the system.

Cryogenic or flash freezing of food is a more recent development, but is used by many leading

food manufacturers all over the world. Cryogenic equipment uses very low temperature gases

usually liquid nitrogen or solid carbon dioxide – which are applied directly to the food product.

2.5 PACKAGING

Frozen food packaging must maintain its integrity throughout machine filling, sealing, freezing,

storage, transportation, thawing, and often cooking. As many frozen foods are cooked in a

microwave oven, manufacturers have developed packaging that can go straight from freezer to

the microwave.

In 1974, the first Differential Heating Container (DHC) was sold to the public. A DHC is a

sleeve of metal designed to allow frozen foods to receive the correct amount of heat. Various

sized apertures were positioned around the sleeve. The consumer would put the frozen dinner

into the sleeve according to what needed the most heat. This ensured proper cooking.

Today there are multiple options for packaging frozen foods. Boxes, cartons, bags, pouches,

heat-in-bag pouches, lidded trays and pans, crystallized PET trays, and composite and plastic

cans.

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Scientists are continually researching new aspects of frozen food packaging. Active packaging

offers a host of new technologies that can actively sense and then neutralize the presence of

bacteria or other harmful species. Active packaging can extend shelf-life, maintain product

safety, and help preserve the food over a longer period of time. Several functions of active

packaging are being researched:

Oxygen scavengers

Time Temperature Indicators and digital temperature data loggers

Antimicrobials

Carbon Dioxide controllers

Microwave susceptors

Moisture control: Water activity, Moisture vapor transmission rate, etc.

Flavor enhancers

Odor generators

Oxygen-permeable films

Oxygen generators

Validation of cold chain

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