The Indian F&B industry, and the frozen food sector, are critical to each other’s growth; Chetna Chakravarthy sneaks a look at how practical it all is really.
The debate on frozen food is one of perception over function. Ironically, although the food processing industry is one of the country’s largest in terms of production, consumption, export, and growth prospects, our productivity is much below the world average.
The teething problems of this sunshine industry are immense, indeed, it wouldn’t be amiss to say it’s a classic Catch-22 situation. Demand stutters because the supply side has not got its act together, and supply efficiency stumbles because low demand is holding back efficiencies of scale. Choosing functionality over all else is the Quick Service Restaurant (QSR) segment, for whom an efficient cold-chain is a boon.
Says Ivan Rodrigues, vice president, format and marketing, Sodexo Radhakrishna Foodland: “The mushrooming of QSR’s, along with gourmet stores and a modernising retail segment, has attracted an increasing number of international food brands, and change”.
Restaurateurs are showing their impatience in waiting for the cold chain system to improve. The upmarket restaurant Moshe’s, in Mumbai’s trendy Colaba area, is a barometer of the industry frustration with frozen food.
Owner of the self-named restaurant, Moshe Shek says: “Why would I use frozen produce when I can get fresh produce locally? Besides, I prefer chilled meats and seafood over frozen, as procuring the latter in an undamaged condition is quite rare.”
Shek’s ire stems from the damaged finished product he receives. Nine out of ten times, the smoked salmon is bruised or the rich cream is thawed, making it thinner than the required quality.
There is a sense of being cheated when the thawed produce has freezer burns, something not visible at the frozen stage. Chef Gresham Fernandes of Mumbai’s Salt Water Café, is yet to get a good explanation why manufacturers and suppliers do not invest in the cold chain.
“Nonrefrigerated vans and silicon ice boxes reduce the shelf life, as refreezing the meat or seafood that has thawed in transit often results in loss of water, and a change in texture. It makes it a very expensive inferior item.”
The Indian cold chain industry is pegged at Rs8,800 crore, with a growth rate of 20%. Technopak and FICCI says another Rs13,200 crore of investment is expected by 2012, according to their report ‘Land of Opportunities – The Food Industry in India’. Yet, going by Shek’s and Fernandes’ problems, many issues are still to be addressed.
“Some companies offer refrigerated vans”, says Rustom Dalal of Fortune Gourmet Specialities. “However, very few have the dual temperature facility”.
The key hurdle for frozen food is storage at -18° Celsius and below; chilled food can be stored at a relatively warmer 3-4° Celsius. Suppliers fight their case with the supply-and-demand argument; the demand in India is not big enough yet to justify new investment and full truckloads every time.
Chefs will have to wait their turn in longer delivery cycles as suppliers try to hold their cost down by combining multiple deliveries on a route. The other challenge for a supplier is to maintain a stock, and keep the supply chain moving.
For Dalal, it is a hurdle he crosses pretty much on a regular basis. To make up for any shortages, he always offers a choice of products that can be substituted in place of the regular meat or seafood.
But how do restaurants work their menus around this? “We create ‘chef specials’ to counter this”, says Fernandes. An integrated supply chain that includes on-farm pre-processing, and cold chain logistics such as storage facilities, refrigerated transportation, cold storages for multi-product usage, and modern refrigerated storage at the retail level, is the need of the hour.
Says Rodrigues: “This sector is largely dominated by local players. Except for a few customers, most cold chain customers look solely at the price without paying much heed to complete cold chain integrity.” According to him, the requirements are transportation, storage, handling, food safety, and security.
Jaydeep Mukherjee, chef at the Indigo Delicatessen, reiterates this sentiment, but with hope for peers such as Ivan Rodrigues and organisations like his: “There are many fly-by-night suppliers that approach us regularly.
I prefer dealing with those with in-depth knowledge about the product they are supplying, straight from the butcher’s shop.” Having classified this sector as high priority, the Indian government says it is developing concrete plans to attract heavy investments from domestic as well as international players.
In fact, according to the same FICCI-Technopak report, refrigerated warehouses for perishable cargo will be set up near the international airports at Kochi, Mumbai, Delhi, Bengaluru, and Hyderabad.
Currently, these airports do have cold storage facilities, but are not large enough or product friendly. Furthermore, the country’s largest logistics network, the Indian Railways, is inviting private parties to run refrigerated container trains.
If these facilities do see the light of day, then importers and suppliers such as Fortune Gourmet Specialities and Sodexho Radhakrishna Foodland should be able to walk the talk.
The immense opportunity of the QSR format is compelling the frozen food and the cold chain segments to invest in their infrastructure. Franchise is the lead driver of the QSR explosion.
Another FICCI report, along with CIFTI, and Franchise India Holdings, picks out F&B franchising for its expected growth rate of 48% over 24 months, while Euromonitor International, in its report on consumer foodservice in India, pegs the volume of the middle class, our strong economy, and the sheer convenience and cost benefit of the QSR, as key growth drivers.
The report also gives a reason to cheer for restaurants in medium towns of India, which have generally been off the cold chain map.
On the principle of the cold chain network being demand driven, the increasing presence of MNC F&B brands such as McDonald’s, Dominos Pizza, and Baskin-Robbins – concepts which rely heavily on frozen food – will accrue benefits for smaller hotels and restaurants.
“Players will expand into newer markets in middle-tier and smaller cities across India, and offer high-value products at affordable pricing. Having established a presence in the top-tier cities, chains are now turning their attention to … Chandigarh, Kanpur, Lucknow and Nashik to sustain volume sales growth,” the report stated.
Hotels upwards of four-star, at the top end of the food service ecosystem, are also heavily dependent on frozen food and face almost the same challenges as restaurants.
These operations have graduated from the basic French fries and meats to more exotic variations, driven by consumer demand and by the need to outdo their peers. Clyde Fernandes, materials manager corporate purchase, IHCL (Taj) says : “Salmon is now common.
The new demand is for racks of lamb and seafood; some restaurants even keep 25 different cheese varieties.” Pranali Mehta of Fortune Gourmet Specialties, adds: “The demand for Italian meats, Chilean sea bass, smoked bass, and French cheese, have increased.
The opening up of the domestic market has given us the opportunity to introduce new products such as a fish called basha, the black cod, and veal tenderloin, and brands such as Lemnos and Keells.” A feature on organic food by chef Michael Fernandes, had many arguing for its health virtues.
Then, there are also some like Santosh Jori, executive chef at the Le Royal Meridien in Mumbai, who participated in the special report on cost management in an earlier issue of Catering Insight.
“For me, frozen fruits and vegetables are often more nutritious than fresh food, as they are processed and frozen within hours of being picked. Fresh produce may sit in storage for days, weeks, or even months, before being sold.
Their nutrient value depletes with time, which is not the case with frozen food,” he said. Le Meridien has recently introduced its new brand standards, in which cuisine is one of the three main pillars.
Their hotels are now compelled to use certain international products and absorb higher costs to meet these standards. Perhaps Jori has a frozen ace up his sleeve after all.
Stats and facts
A Rs374,000 crore industry directly employing 20-lakh workers, the Indian food processing industry accounts for 43% of the Rs880,000 crore of our overall food industry, and is slated to capture 50% by 2015.
At 43% in value terms, the Indian food processing level is much lower than most other countries. For instance, the total market size of fruits and vegetables is estimated to grow to Rs328,516 crore by 2015.
This segment contributes 23% to the overall Indian food industry. However, the food processing sector contributes a mere four per cent, despite India being the world’s second largest producer of fruits and vegetables.
The marine industry, accounting for 13% of the total processed sector, is expected to grow to Rs52,279 crore by 2015.
Poultry produce is another prime segment expected to grow to Rs49,860 crore by 2015, and offers good opportunity for exports as well as domestic consumption.
India produces 450-million broilers and 30-billion eggs annually, with an estimated growth rate of 16% and 20% respectively. Currently, most of this produce is exported to the Maldives and Oman.
Despite being the world’s largest producer of food, India accounts for only 1.6% of the international food trade. The government plans to take this figure up to three per cent in the next few years.
