FieldFresh Foods Pvt Ltd, a joint venture between Bharti Enterprises and Del Monte Pacific Ltd, is a big-ticket player in the otherwise petite processed food industry. Yogesh Bellani, business head of Del Monte Foods (a part of FieldFresh), shares with FE?s Avik Das the prospects of the food processing industry in India and the challenges it faces. He also talks about the company?s growth and expansion plans in India. Excerpts:
There is a huge gap between wholesale and retail prices in India. This is compounding to escalation of prices of essential commodities. As a big retailer, how do you hope to bridge this gap?
I don?t believe there is really a huge gap. There is the value chain margin of distribution involved. I think to that extent there is an element of price difference which basically takes care of the cost of distribution.
You took almost a year to enter the eastern markets of India. Was it deliberate or you faced some opposition?
Not really. We planned our expansion in a phased manner. We started our operations from the NCR region in a small way. Slowly, we went to Mumbai, Pune and Bangalore. Then we went to the next seven cities. Based on our geographical expansion plan, we?ll move into the east. It?s been a gradual approach. That?s been a way in which we have carried on our business to move slowly, but steadily. We haven?t faced any agitation. It?s our own preparedness in terms of growing naturally and organically.
Which strata of the society are you targeting for your products?
Large consumption base in India remains the huge and growing middle class. And all our products are targeting consumers from this section of the society.
But a bulk of the Indian population is rural, who hardly has access to packaged foods. So how do you think it is possible to grow minus the participation of this cross section?
Market of packaged foods in India is at its nascent stage. It?ll take its own time. Gradually we are seeing some entries into these markets in the form of soft drinks, ketchup and energy drinks. It is really the function of the taste buds and the consumption habits of consumers. I think at this point of time all the big metros and smaller towns are virtually on the same mark. In rural areas, we believe select products like snacks and ketchup can be a hit. As farm-level income increases, we will see a large part of packaged food consumers from villages.
India is an agri-based economy. So why do you feel packaged food has a bright prospect here?
That?s precisely the point. There are enough raw materials available easily for the packaged industry. So we believe there is great potential. Moreover, it also depends on food habits. Packaged foods, with the facility of longevity, come with various options to consumers. But typically for the lack of infrastructure, consumers have not been catered to the potential. To that extent, we need an element of processing. Imagine the amount of food products, which are being wasted now for the lack of processing facility, reaching to consumers. That would have reduced the food crisis to a great extent. You wouldn?t have seen food prices going up to this level.
India is battling out high food inflation. How has it affected you business and the industry as a whole?
It has definitely had a strong impact as prices of the raw materials have increased steeply. But we haven?t passed on the burden to consumers. Neither did we raise prices of our products, nor do we have such intention for near future. As far as the industry is concerned, the inflation has put the sector on an innovative platform.
Where do you estimate the industry to be in the next couple of years?
Going by estimates of the ministry of food processing and other organisations, I believe the industry to grow over three times. I think that?s a safe estimation given the fact that as a percentage of global processed food, India is one of the smallest players.