New Food market report from Business Monitor International: "India Food & Drink Report Q4 2012"
Boston, MA -- (SBWIRE) -- 01/03/2013 -- Sentiment towards India's growth story is at a low ebb. Not long ago, the mainstream view was that 8% growth would be the new norm on the back of the country's demographic dividend, huge infrastructure push and consumer boom potential. Fast forward to today, consensus expectations have capitulated spectacularly and, in our opinion, came down too far. We do not expect a particularly robust rebound and are mindful that major tail risks, ranging from a eurozone breakup to a poor monsoon season, exist. Nor do we expect a return to the 8-10% growth rates seen prior to the 2008-2009 global recession. That said, the structural foundations of the Indian growth story - strong demographics, low leverage and broadening economic liberalisation - remain intact, as do investment opportunities to capture these dynamics. Any marginal improvement in India's business environment could therefore trigger a revival in investment activity.
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Headline Industry Forecasts (local currency)
- 2012 food consumption growth = +5.4%; compound annual growth rate (CAGR) 2011-2016 = +6.8%
- 2012 alcoholic drink value sales growth = +12.8%; CAGR to 2016 = +13.3%
- 2012 soft drink value sales growth = +15.9%; CAGR to 2016 = +16.9%
- 2012 mass grocery retail sales = +17.1%; CAGR to 2016 = +15.9%
Key Company Trends
PepsiCo Expanding In Indian Food: In August 2012, US snack and soft drink producer PepsiCo announced it has partnered with Delhi-based LT Foods to handle the manufacturing, processing and packaging of its rice snack Kurkure in the local market. As part of the deal, Daawat Foods, a majorityowned subsidiary of LT Foods, built a new facility that can produce 796 tonnes of the product per month.
This partnership is the first time LT Foods has manufactured, processed and packaged for a company other than itself, and LT Foods has stated that it hopes other products may be produced with PepsiCo in the future. The Indian snack market has been a strong growth market for PepsiCo, and the use of strategic partnerships is potentially a way for the firm to bolster capacity and distribution for its large portfolio of food brands.
Auchan Enters India: In August 2012, French retailer Auchan confirmed that it has signed a deal with the Landmark Group to enter the Indian hypermarket sector. The move will take the form of a franchising agreement, which will help Auchan circumnavigate India's restrictions on investment in multi-brand retail. Landmark's 13 existing Max Hypermarkets will be rebranded under the Auchan banner in the fourth quarter of 2012, and the two firms have set a goal of rolling out between 12 to 15 new outlets per year.
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