Ready-to-cook food market on high flame

Mukta Magazine in New Delhi

There is a big market stewing for branded ready-to-cook (RTC) foods, just waiting to be tapped. While noodles have so far been the biggest success story in this category, touching an all-India penetration level of 62 per cent, other items like parantha stuffings and ready-to-cook non-vegetarian items like tikkas and kebabs, have a strong chance of achieving similar heights. These are some of the insights drawn from findings of a recent KSA-Technopak study.

‘‘Parantha stuffings, with an estimated business potential of Rs 800 crore is a category just waiting to be exploited,’’ says Mr Arvind Singhal, managing director of KSA Technopak. The KSA Technopak Grocery and Foods Advantage Study, GROFAST, has placed the penetration level of paranthas at 40 per cent in the north and western markets. The estimated Rs 800 crore market size for stuffings in fact could be much larger, given the variable factors that impact this segment like accessibility of ingredients and frequency of use. Amul, recognising the potential of this category, has already finalised plans to step in with packed stuffed paranthas. However, what KSA is talking about is the marketing of a variety of stuffings alone, which would help overcome problems of seasonality of ingredients and the paucity of time.

Another category that is seeing increasing demand is semi-processed non-vegetarian food. Around 250 to 300 outlets have mushroomed across the country, with Delhi itself having 12-18 such outlets. With non-vegetarian households accounting for 60 per cent of socio-economic category (SEC) A & B households, and the clamour for hygienic, convenient, easy-to-use food gaining ground, there is a big business opportunity here for conventional marketers, with minimal investments, says Mr Singhal. Significantly, the study found that most Indian households are least interested in cooking non-veg food from the basic ingredients and 50 per cent of the consumers are willing to order at home or get RTC food.

These items fall in the chilled products category, which need to be preserved in a 0 to 2 degree temperature, as distinct from frozen non-veg products like Venky’s and Al Kabeer.

Given the short lifespan of the products (two-four days) which would demand quick replenishment cycles, the segment would necessarily need to be dominated by regional players. In terms of investments, these would need strengthening of the backend supply chain and setting up a wide retail presence. Currently the products are available at butchers, confectionery outlets and fast food counters.

One of the key findings of the GROFAST study, was that the penetration of RTC food items is currently very low, often even less than 20 per cent in SEC A & B households. Typically the penetration would need to be in excess of 20 per cent in order to be considered a viable business proposition on a national level. Breakfast cereals for example, have a penetration level of only seven per cent, making it an unviable business segment, a fact borne out by the fate of Kellogg’s in the Indian market.

Foods that fall in the RTC category include pre-cooked non-vegetarian, microwave products, frozen non-vegetarian and vegetarian foods. The study observes that ‘‘migration of these categories to a more broad-based appeal is the key to success in this segment.’’ This is the platform on which noodles has become the biggest success story in the category, with penetration levels of 62 per cent and an average purchase of 2.5 packets per occasion, says Mr Parag Rastogi, who was closely involved in the study.

However, a peculiarity of the RTC segment is that while a national player may not be able to reach a viable level, even a regional niche player may prove to be viable. Thus, vermicelli, with a national penetration level of less than 20 per cent, continues to be a very viable proposition in the south, where its penetration is much higher. In fact, the south shows the highest penetration for packaged RTC products, like idlis/dosas and sweet dishes.

The objective of the GROFAST study was to observe emerging trends across product categories and the shift in consumer tastes to identify opportunities and threats in the food business for marketers. It covered 10,000 SEC A & B households across 28 cities, besides representative samples of retailers and other channel members.