India has emerged as one of the fastest-growing economies in the world. Owing to a huge domestic market and adequate availability of raw materials, the country has become the sourcing hub for various agricultural products. Factors such as the traditional snacking culture, changing consumption patterns, rising urbanization, changes in the gender composition of the workforce, and increasing consumption rates. The younger lot, that makes up for nearly two-thirds of the country’s population, with their growing incomes have created a market for snack products.
Due to the rising demand, there has been an improvement in the manufacturing, processing, distribution and marketing process of snack foods. Diets and tastes have undergone a sea change, especially during the Covid-19 lockdown because people had to switch to working from home and developed the habit of munching while working. This pattern has led to a popularity of packaged snack products by Indian consumers.
Current Market Scenario
In India, most of the people still prefer to opt for unpackaged food. But the ongoing pandemic has raised concerns about health safety and changed this preference. Now there’s a slow and steady move towards packaged snack foods in tier-3 cities as well. the packed food reaches consumers in protected packs that had minimum handling. The packaging also makes identification of the product easy and mitigates the risk of adulteration and wastage due to spillage.
Many of the domestic and multinational companies are expecting profits from the rise of the snacking industry in India. The Food and Beverage (F&B) services industry has been a flourishing business sector with an exponential growth in the past few years. It is poised to grow even more in the times to come. The food automation market is projected to touch $12.50 billion by 2027, rising incredibly at the rate of 7.10 percent.
The Indian snacking industry is undergoing a remarkable growth cycle as multinational companies establish their presence within the Indian market. Foreign investments have been on the rise, thanks to strong policies in place. The period between April 2000 and June 2017 witnessed foreign direct investments amounting to nearly $7.81 billion, making the packaged food industry the 13th largest segment receiving FDI in the country.
The snacking and confectionary industry is all set to expand at a CAGR of 11.5% by the financial year 2023 and is likely to reach a value of Rs. 15,971.9 billion. Growing FDI and collaborations in the industry signal a rise in the snacking items that are being offered by domestic companies and global MNCs. The numbers indicate that the segment possesses a huge growth potential and will add immensely to the development of the Indian economy.
Key Growth Factors & Deterrents
The branded savoury snacks market has come a long way since the decade of 1990s, when the industry was dominated majorly by large players and a handful of regional brands. Innovations are always underway in the Indian snack industry. The Indian snack giants are always surprising and delighting their consumers with unique and amazing taste offerings. The new flavours are inspired by the diversified food culture and the fun spirit inherent in Indians.
In addition, India’s population is rising accompanied with a rise in urbanisation, which in turn has given a huge boost to the food industry. Hectic schedules are making it difficult for people to maintain the right work-life balance. Also, due to Covid, as well as rise in lifestyle diseases like heart ailments and diabetes, many have started making the switch to healthy snacking. Now consumers want to purchase products that are nutritious, tasty, and convenient to procure.
These changing trends and patterns have led to a growth in the demand of responsible and ethical food processing. Packaged products like read-to-eat foods and frozen foods are becoming highly popular. Employees working from home are specially going for confectionary items such as cookies, biscuits, chocolates, namkeens and many other similar products. Namkeen rules the Indian savoury snack sector.
Rising disposable incomes, mall culture and metropolitan lifestyles are boosting higher-customer spending. Also, the practice of farm to table is making the trending list. Bulk foods and Millet cereal’s meal recipes are making their way into imaginative and highly sought-after cuisines. The former is good for health and low on carbs removing gluten, making them very popular.
However, the industry also suffers hindrances in terms of low availability of raw materials for certain seasonal crops, lack of storage infrastructure, and poor connectivity of certain rural areas with food processing units located far. As a result, a lot of wastage happens. There is an urgent need to adopt the latest technologies to keep up the quality of produce and to enable farmers to compete in the global market.
The snacking trend has been brought in from the West, but the Indian touch is constant and quite evident in the available varieties. The producers will need to balance the varied tastes and blend the snacks according to rising demands.-BusinessWorld