Market Reports

Food and Beverage Industry in India

UJA | Market Reports - Food and Beverage Industry India

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Overview: India’s Food and Beverage Industry

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Quick Facts: Food and Beverage Industry of India

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India: Food Processing Sector Outlook

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Classification: Non-Alcoholic Beverage

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Classification: Alcoholic Beverage

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Megatrends: Impacting India’s Food & Beverage Industry

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Prominent Investments in Food & Beverage Industry

Overview: India’s Food and Beverage Industry

Robust Demand

  • Indian consumers are increasingly opting for healthier, more convenient, and more diverse food options, which is driving the demand for organic food with an annual growth rate of 20%.
  • The FDI inflows into the food processing sector reached INR 850 billion between April 2000 and December 2023, indicating strong investor interest

Attractive Opportunities

  • India’s growing middle-class population and urbanization open opportunities for companies to introduce innovative, value-added ready-to-eat products catering to changing consumer preferences
  • Increasing health consciousness presents opportunities for companies to innovate and develop products that cater to these preferences, such as fortified foods, gluten-free products, and beverages with added health benefits.

Policy Support

  • National Food Processing Policy (NFPP) aims to increase the level of food processing from the current 10% to 20% by 2025, thereby enhancing value addition, and creating employment opportunities.
  • Various export promotion schemes, such as Merchandise Exports from India Scheme (MEIS) and Agricultural and Processed Food Products Export Development Authority (APEDA) schemes provide incentives, and promotional support to F&B exporters.

Competitive Advantage

  • India has diverse agro-climatic zones, which support the cultivation of a wide variety of crops and spices. This diversity allows for the production of high-quality ingredients such as basmati rice, spices like cardamom and turmeric, and tropical fruits like mangoes
  • India enjoys relatively lower production costs compared to many developed countries, making it an attractive destination for food processing and manufacturing

Quick Facts: Food and Beverage Industry of India

  •  The Indian food and beverage industry is one of the largest in the world, contributing 3% to the country’s GDP.
  • It is projected to grow at 8.7% CAGR from 2024 to 2030.
  • India is the second-largest producer of food globally.
  • The country ranks first globally in the production of milk, pulses, and spices.
  • The food processing industry in India contributes less than 10% to the total food output.
  • In FY 2023, India exported 111 LMT (lakh metric tons) of non-basmati rice and 52 LMT of basmati rice.
  • India’s food processing industry generated 12.2% of the employment generated in all Registered Factory sector during FY 2023.
  • Horticulture production in 2023 stood at 3,555 LMT, which is an increase of about 2.3% as compared to the previous year.
  • India ranks first globally in milk production.
  • In 2022-2023, total egg production around the country was 138.4 billion.
  • Fish production was recorded as 175.4 LMT between 2022-2023.
  • Total meat production in the country stood at 97.7 LMT for the year 2022–2023.
  • India is among the top five markets for alcoholic beverages globally, with whiskeys and beer being the most consumed alcoholic beverage.
  • The alcohol and beverage industry contributes around 15 lakh jobs in India.
  • 12 joint venture companies with an annual licensed capacity of 33,919 kiloliters produce grain-based alcoholic beverages.
  • Around 56 units are manufacturing beer under license from the Government of India.
  • Maharashtra has emerged as an important state for the manufacture of wines. There are 46 wineries in India, out of which 43 are in Maharashtra.
  • In India, around 80% of the non-alcoholic beverage sector is non-corporate.
  • The non-alcoholic beverage industry saw growth of 30% over 2021.
  • The government’s per capita revenue generated by the non-alcoholic beverages sector, per person was only Rs. 960 in 2022–2023.
  • The per capita consumption of non-alcoholic beverages in India was only 21.4 liters.
  • The country has exported 2.2 LMT of alcoholic products to the world for the worth of Rs. 2,546.4 crore during the year 2022-23 

India: Food Processing Sector Outlook

Food Processing Market Size, 2023

  • According to ICFA (Indian Chamber of Food and Agriculture), India’s Food Processing sector is identified as a sunrise sector with a projected size of INR 45,000 billion by 2025-2026.
  • India’s food ecosystem presents huge opportunities for investments with stimulating growth in the food retail sector, attractive fiscal incentives, and favourable economic policies.
  • The sector, however, needs technologies, investments, and global partnerships to unlock its full potential.
  • Indian food processing industry is one of the largest industries in India, accounting for 32% of the country’s total food market and ranking fifth in terms of production, consumption, and expected growth.
  • India’s food processing sector also holds significant export potential. The country’s diverse agricultural base allows for a wide range of processed food products that can cater to international markets.
  • It contributes around 8.8% and 8.4% of Gross Value Added (GVA) in Manufacturing and agriculture, respectively, 13% of India’s exports and 6% of total industrial investment.

Classification: Non-Alcoholic Beverage

Non-Alcoholic Beverages

India's Non-Alcoholic Beverage Industry

  • The non-alcoholic beverage industry in India is a substantial segment of the food and beverage sector, catering to a diverse consumer base.
  • The industry encompasses various segments such as carbonated soft drinks (CSDs), fruit juices, bottled water, energy drinks, ready-to-drink (RTD) tea and coffee, and functional beverages.
  • Carbonated soft drinks (CSDs) remain a dominant segment within the non-alcoholic beverage industry, led by brands like Coca-Cola, PepsiCo, and local players.
  • Non-alcoholic beverages are distributed through various channels, including supermarkets, convenience stores, online platforms, and vending machines.
  • Companies like PepsiCo, Dabur, Parle Agro, and Coca-Cola are prominent players in the fruit juice category.
  • The non-alcoholic beverage market in India is highly competitive, with both domestic and international players competing for market share.

Classification: Alcoholic Beverage

India's Alcoholic Beverage Industry

  • Contributes over Rs. 3 lakh crore in taxes every year.
  • Supports the livelihood of 50 lakh farmers directly.
  • Employs 20 lakh people in manufacturing and supply chain.
  • Supports hundreds of ancillary industries in glass, tin, plastic, and paper with a turnover of ₹ 6,000–7,000 crores.
  • India is one of the largest consumers of whiskey globally, with a significant preference for whisky brands.
  • Southern states like Karnataka, Kerala, and Tamil Nadu are major consumers of alcohol compared to states in the north-east.
  • Major players included in the beer segment are United Breweries (Kingfisher), Anheuser-Busch InBev (Budweiser), and Carlsberg.
  • Alcohol policies and regulations vary across states, with some implementing prohibition or strict regulations on sales and distribution.
  • The legal drinking age ranges from 18 to 25 years across different states.
  • States like Gujarat and Bihar have implemented prohibition laws, banning the sale and consumption of alcohol altogether.

Megatrends: Impacting India Food & Beverage Industry Industry

Changing Consumer Preferences
  • Increasing consumer awareness about health and wellness.
  • Driving demand for ready-to-eat meals, packaged foods, and on-the-go beverages.
Technology and Digital Transformation
  • The rapid growth of e-commerce platforms has expanded market reach and accessibility for food and beverage products.
  • Targeted advertising and personalized recommendations are influencing consumer choices and brand loyalty.
Urbanization and Demographic Shifts
  • Urbanization is creating a larger market for convenience foods and dining-out experiences.
  • Shifts in demographics, including more young professionals and dual-income families, are influencing product offerings and marketing strategies.
Sustainability and Environmental Concerns
  • Consumers favouring brands that adopt sustainable sourcing, packaging, and waste reduction measures.
  • Increasing regulations and consumer activism are pushing companies towards eco-friendly practices.
Regulatory Changes and Policy Impact
  • Policies promoting food safety, nutritional labelling, and support for agriculture are influencing industry practices.
  • Changes in tax structures and import duties can affect pricing and market competitiveness.

Prominent Investments in Food & Beverage Industry

  • In the Budget 2024–25, the Ministry of Food Processing Industries received a total budget of Rs. 3,290 crore, an increase of around 13% over the revised estimates for the fiscal year 2024.
  • Of the total budget, Pradhan Mantri Kisan Sampada Yojana (PMKSY) and the Production-Linked Incentive Scheme for Food Processing Industry (PLISFPI) received allocations of Rs. 2,173 crore.
  • Hindustan Coca-Cola Beverages (HCCB), the bottling arm of Coca-Cola in India, announced a Rs. 350 crore investment in Madhya Pradesh to establish two manufacturing lines at its Rajgarh plant.
  • In February 2024, Varun Beverages announced an investment of Rs. 3,500 crore to establish a manufacturing factory that would create 1,500 jobs.
  • The purpose of the Mega Food Park (MFP) Scheme is to bring together farmers, processors, and merchants to connect agricultural production with the market. The plan uses a cluster strategy to create contemporary food processing facilities inside clearly defined agri-horticultural zones. Each park includes supply chain infrastructure like collection centers, cold chains, processing units, and developed plots for entrepreneurs. Under the MFP scheme, 41 projects were approved, of which 24 are operational as of December 2023.
  • The food processing industry recorded a cumulative FDI equity inflow of INR 960 billion between April 2000 and September 2023, making up around 1.87% of the overall FDI equity inflow across all sectors. The industry permits 100% FDI using the automatic method.
  • In January 2023, ITC announced plans to acquire 100% of Sproutlife Foods (SFPL), a direct-to-consumer (D2C) startup and parent company of health food brand ‘Yoga Bar’ over three to four years.
  • ITC established a 59-acre food production facility in Telangana in January 2023. There, it would produce atta, chips, cookies, and noodles in stages for sale under its well-known brands, Sunfeast and Aashirvaad.
  • In 2023, BCS Globals, a UAE-based food & beverage company, forays into the Indian energy drink market with the launch of one-of-a-kind brand Wox and plans to introduce a diversified product portfolio.
  • In January 2023, one of India’s leading dairy players, Heritage Foods Ltd., announced the launch of GlucoShakti, a whey-based instant energy drink that revitalizes youth.
  • Dabur India Limited acquired a 51% share in Badshah Masala Private Limited in October 2022 to grow its food business to Rs. 500 crores in three years and enter other related categories

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