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Supply Side Opportunities - Food Service Market

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An insight into the supply side opportunities within the food service market space

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Supply Side Opportunities - Food Service Market

  1. 1. FOOD SERVICE MARKET OPPORTUNITIES IN THE SUPPLY SIDE Food Service Market – Opportunities in the Supply Side 1
  2. 2. THE FOOD SERVICE MARKET According to a Franchise India report, the Indian food services industry is estimated to be nearly worth USD 41.3 billion and is growing at a healthy compound annual growth rate (CAGR) of 11%. The Organized Food Service Industry is worth $13.79 bn (approx. 33% of total Indian Food Service Industry) and growing at 17%. The F&B food service sector in India comprises two distinct market segments: a) Organised – Chain and licensed standalone players across quick service restaurants, full service casual and fine dining restaurants, hotels, bars and lounges, cafes and frozen desert formats b) Unorganised – Dhabas (Roadside restaurants serving as truck stops and serving Indian cuisine), street stalls, halwai (sweet shops), road side vendors, food carts, etc. Food Service Market – Opportunities in the Supply Side 2 Category Current Market Share CAGR Expected Market Share by 2017 Organized 30% 12-14% 45% Unorganized 70% 8-10% 55% Source: India Food Service Report Extracts, HospitalityBiz India
  3. 3. THE FOOD SERVICE MARKET Food Service Market – Opportunities in the Supply Side 3 4,395 6,240 1,320 33,200 1,640 8,415 Café QSR Frozen Dessert/Ice Cream Casual Dine Fine Dine Pub, Bar, Club and Lounge 7,745 10,050 2,330 75,955 2,890 13,550 Café QSR Frozen Dessert/Ice Cream Casual Dine Fine Dine Pub, Bar, Club and Lounge 2013 2018 8% 11% 2% 60% 3% 15% 7% 9% 2% 68% 3% 12% Size of the Licensed Standalone Food Service Market (INR Cr) Size of the Chain Food Service Market (INR Cr) 1,520 5,500 775 3,950 500 540 Café QSR Frozen Dessert/Ice Cream Casual Dine Fine Dine Pub, Bar, Club and Lounge 2013 2018 3,775 16,785 1,560 9,035 1,010 1,085 Café QSR Frozen Dessert/Ice Cream Casual Dine Fine Dine Pub, Bar, Club and Lounge 12% 43% 6% 31% 4% 4% 11% 50% 5% 27% 3% 3% Source: Technopak Report – The Rise Of The Quick Bite
  4. 4. FINE DINING • A Fine Dine restaurant is either a specialty or a multi-cuisine restaurant with a strong focus on quality ingredients, presentation and immaculate service • The chain segment is predominantly limited to “starred” hotels and exclusive standalone entrepreneurial ventures • With over 90% of Fine Dine outlets, Metros and mini metros dominate this market as consumers in these cities have high disposable incomes with increased spending powerThe chain Fine Dine market in India has ~50players with ~150-200 outlets spread across major cities • Food contributes ~66% of total sales followed by beverages at 30% • Dinner hours(7:00 PM – 12 midnight) contribute nearly 70% to sales while lunch hours contribute ~29% to total Fine Dine sales Food Service Market – Opportunities in the Supply Side 4 2013 2015 E 2018 E Major New Entrants Premium Michelin-star restaurants such as Hakkasan and Yauatcha Domestic players such as Italia, Kylin, Olive Bar & Kitchen, Masala Library 500 Cr 1,010 Cr 756 Cr The chain Fine Dine market size
  5. 5. CASUAL DINING • Casual Dining revolves around specific cuisines or themes focusing on elaborate menus, quality of food and increased focus on presentation • Casual Dine market is led by domestic players, which are largely region-specific • A few international players present in the space which have a pan-India presence • Currently, there are~1700-1800 Casual Dine outlets spread across India In the affordable and premium segment • In the Casual Dine segment, food dominates the SKU and sales mix at 77% - 81% followed by beverages and deserts that are mostly side orders • Most of the sales (60%) are through dine-in although delivery services contribute a healthy 30% to sales • The main meal times of lunch (1:00 PM – 4:00 PM) and dinner (7:00 PM – 10:00 PM) contribute to ~85% of the total sales at Casual Dine outlets Food Service Market – Opportunities in the Supply Side 5 2013 2015 E 2018 E Key Players International players like pizza Hut,Papa john’s, pizza express, Flavors of Italy, Café Zone Domestic players Rajdhani, Moti Mahal, Indigo Deli, Smoke House Deli, Amici café 3,950 Cr 9,035 Cr 5,673 Cr
  6. 6. QUICK SERVICE • A fast food restaurant, also known as a quick service restaurant (QSR) within the industry, is a specific type of restaurant characterized both by its fast food cuisine and by minimal table service • Largely present in metros and mini metros due to high consumption, heightened consumer awareness and exposure • Now expanding into smaller cities with smaller formats • The concept of QSR has gained increased prominence in India characterized by entry of Indian and international brands into the space encouraging affordable eating Food Service Market – Opportunities in the Supply Side 6 Foreign Brands $0.39 bn Indian Brands $0.23 bn Domino's $0.08 bn KFC $0.04 bn Pizza Hut $0.03 bnMcDonald 's $0.04 bn Subway $0.05 bn Others $0.16 bn Foreign Brands 63% Indian Brands 37% Domino's 20% KFC 9% Pizza Hut 8% McDonal d's 11% Subway 12% Others 40% Break-up of Market Share for QSRs 2013 2015 E 2018 E 5,000 Cr 16,785 Cr 8,250 Cr The chain QSR market size
  7. 7. KEY QUICK SERVICE RESTAURANTS IN INDIA Food Service Market – Opportunities in the Supply Side 7 44% 23% 15% 10% 6% 2% Cafes Pizzas International Fast Food (Non-Pizzas) Ice-Creams Indian Fast Food (Key players) Confectionaries 2,939 1515 1001 645 419 132 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Cafes Pizza Chains International Fast Foods (Non-Pizzas) Ice-Creams Indian Fast Foods Confectionaries Outlets of Key Players (Nos. )
  8. 8. FOOD INGREDIENTS MARKET IN INDIA Food Service Market – Opportunities in the Supply Side 8
  9. 9. INTRODUCTION In addition to the increasing number of restaurants in India, more and more international brands are foraying into India, As a result, there has been an increasing demand in the Food Service Industry for domestic, international and exotic ingredients The increasing appetite of the Indian consumer has created an urgent need for competent supply partners for satisfying the ingredient needs of the quick service restaurants, casual dining restaurants, Fine dining restaurants, cafes, lounges and many more. However, there are not many such partners, present on the supply side who can offer: 1. Competitive and Uniform Price 2. Uniform Quality 3. Uniform Quantity 4. Back-end Integration 5. Hygiene Standards This has led to a gap in the supply side of ingredients for such restaurants which presents a huge opportunity with great potential Food Service Market – Opportunities in the Supply Side 9
  10. 10. Food Service Market – Opportunities in the Supply Side 10 CATEGORY INGREDIENT ITEMS CEREALS Wheat, Rice, Brown Rice, Barley, Oats, Pulses, Maize, Ragi, Semolina, Couscous, Millet, Gramflour, Riceflour, Wheatflour, Soyaflour, Cornstarch, Quinoa etc DAIRY Milk, UHT Processed Milk, Cheese, Mayonnaise, Cottage Cheese, Milk Powder, Yoghurt, Butter, Ghee (Clarified Butter) BEVERAGE-BASED COMPLEMENTARY TO DAIRY Coffee Beans, Tea, Green Tea, Fruit and Non-fruit syrups and Pulp, Nectars, Honey, Chocolate (Cocoa Beans), Vanilla, NUTS AND DRY FRUITS Walnuts, Figs, Dates, Cashew, Peanuts, Raisins, Chestnut, Pistachio, Hazelnut, Almond, Apricot, Coconut SPICES AND CONDIMENTS Nutmeg, Clove, Salt, Black Pepper, Dry Red Chillies, Rock Salt, Mustard, Turmeric, Cinnamon, Rye, Garlic, Cardamom, Parsley, Asafoetida, Fenugreek seeds, Cumin, Poppy, Kokam, Ginger, Green peppercorn, Fennel, Cassia, Pomegranate, Saffron, Star Anise, Aniseed, Marjoram, Tamarind, Dried mango FRESH HERBS Oregano, Basil, Bay Leaves, Coriander, Parsley, Mint leaves, Rosemary, Celery, Thyme, Lemongrass, Lemon leaves, Cilantro, Curry leaves, Sage, Chives, Marjoram, Wheat grass, Rhubarb, Leek leaves, Makroot VEGETABLES Potatoes, Tomatoes, Chillies, Onions, Sweet corn, Baby corn, Leeks, Jalapenos, Paprika, Olives, Mushroom (Oyster/Button), Lettuce, Capsicum, Bell Pepper, Spinach , Carrots, Beet, Radish, Artichokes, Beans, Cabbage, Brussels, Red Cabbage, Asparagus, Broccoli, Eggplant (Brinjal), Leeks, Zucchini, Peas, FRUITS Pineapple, Apple, Custard apple, Litchi, Melons, family of Berries, Peach, Lemon, Avocado, Dragon Fruit, Passion fruit, Mango, Banana, Citrus family, Guava, Papaya, Makroot, Rambutan, POULTRY AND MEAT AND SEA FOOD Chicken, Turkey, Duck, Goat meat (Mutton), Lamb, Pork, Prawns, Fresh water and Sea fishes, Crabs, Sharks, Squids, Clams, Oyster, Eggs OILS Mustard, Soya bean, Sunflower, Rice Bran, Vegetable, Olive, Coconut, Almond, Groundnut, Corn, Sesame, Chilli, Flaxseed, Wheat Germ, Meat Fat, Cod Liver (Fish) Source: D’essence Analysis
  11. 11. SUPPLY CHAIN OF FEW INGREDIENT CATEGORIES Food Service Market – Opportunities in the Supply Side 11 Dairy • There is significant demand for Mozzarella cheese from pizza chains and for cheese slices in burger chains in India. Demand is growing by 25% for these variants • The need for high quality milk has necessitated dairy players to set up their own milk sourcing infrastructure (e.g. Schreiber Dynamix and Parag Milk are servicing McDonald’s and Domino’s) • Schreiber Dynamix and Parag have set up cheese processing plants to cater to this demand. Both are servicing the QSR chains from their plants in Maharashtra state Cold chain • McDonald’s and RK Foodland worked together to put a cold chain in place to support the QSR operations • RK Foodland handles the delivery from distribution centres to all 271 McDonald’s outlets in India • Other cold chain players , such as Snowman, are also supporting QSR players in India Poultry • Poultry has always been processed for wet markets. Therefore, the requirement for good quality chicken and specific chicken parts for QSRs will impact processing operations • Some key poultry players have invested in poultry processing facilities to supply high quality chicken to QSRs. There has been more focus on integration at the back-end in recent years, to provide quality products to QSRs (e.g. Godrej Tyson and Suguna for KFC and McDonald’s) Frozen foods • McCain Foods began working on French fries in India in the late 1900s, initially importing the product to start operations • Significant research was done in multiple states in India to develop potato seeds for oblong potatoes • McCain Foods is now the largest frozen potato player in India, supplying to major QSRs Source: Rabobank Report
  12. 12. COMMON SUPPLY CHAIN STRUCTURES Food Service Market – Opportunities in the Supply Side 12 Structure Description Direct Sourcing Most common among all channels. The restaurant sources products directly from the processors, vendor etc Commissaries Commissaries directly source food products from suppliers and deliver ready to eat food to the franchised outlet. Buying Agency A Buying Agency is an independent franchise-owned purchasing cooperative. It negotiates with suppliers on behalf of all its franchised outlets and aggregates demand Supply Chain Partners SCPs deals with suppliers for fresh products, such as chicken and vegetables, and delivers ready to eat food products to restaurants Source: Rabobank Report
  13. 13. SOME KEY SUPPLIERS Food Service Market – Opportunities in the Supply Side 13 Cheese Dynamix Parag Amul Flanders Poultry Godrej Tyson Suguna Zorabian Vista Processed Foods Al-Kabeer Frozen Foods McCain Godrej Tyson Bakery Mrs Bector’s Cremica Exotic Vegetables Trikaya Jal Agro Pvt. Ltd. Ketchup Mrs Bector’s Cremica
  14. 14. OPPORTUNITIES IN LOGISTICS INDUSTRY Food Service Market – Opportunities in the Supply Side 14
  15. 15. INDIAN LOGISTICS SECTOR • Market size of Indian logistics sector is estimated to be in between USD 90- 125 Bn • The logistics industry contributes around 13 % to GDP of India • Logistics sector growing at a rate of 15% with sub-sector growing at even 30-40% per annum • The industry employs over 45 million people Food Service Market – Opportunities in the Supply Side 15 Logistics Industry Division Modes Services Infrastructure Coastal Shipping Rail Fright Road Fright 3 PL 4 PL Cold Chains CFS/ICD Ware Housing
  16. 16. OPPORTUNITIES IN LOGISTICS SECTOR Warehousing : • Warehousing expenditure is around 20-25% of the total logistics cost • 80-85% of warehouses are traditional with sizes less than 10,000 square feet • Most of them are not leak proof , equipped with security systems, racking facilities • Majority of operators are small to mid-sized entrepreneurs with limited capacity • Main players are government agencies like central and state warehousing corporations • The existing warehouses are of poor quality and are present in limited numbers Cold Chain Storage : • Estimated that the industry will grow over USD 9 Bn by 2015 • About 40% of fruits and vegetables grown in India gets wasted, so the sector needs to grow at much faster rate to meet the needs • The total number of cold storages in India are around 5400 with capacity of 24 million metric tons of these 60% of facilities are meant for storage of potatoes • With the poor electricity condition in the country the cost of operating such facilities is very high • So it provides an immense opportunity to organized players who can setup the infrastructure and are able to provide the service through out the nation • Some key providers – Snowman, R K Foodland Ltd, Fresh and Healthy Enterprise Ltd Food Service Market – Opportunities in the Supply Side 16
  17. 17. OPPORTUNITIES IN LOGISTICS SECTOR Transportation • In India 61% of the cargo is moved by road, 30% by rail and the rest by airway, pipeline and inland waterways • The challenges associated with transporting cargos by railways are like the important rail networks are oversaturated, rail fright tariffs are high, transit time are long and uncertain, terminal quality is poor, less flexibility in carrying different types of product. • Road transport is preferred over rail but it faces challenges like poor road quality with inadequate network coverage , high level of fragmentation along with majority of unorganized players in trucking industry, multiple check points • The temperature control logistics (TCL) market in India recorded revenue about USD 3.83 Bn in 2013 , which comprises of few organized players with capacity of 400-450 frozen trucks and large number of unorganized service providers • The current strength of frozen trucks is not sufficient to sustain the increasing bandwidth of the Indian food service market thus creating a huge opportunity in the sector • Though it will take time to develop the required infrastructure for transportation, it presents a huge opportunities in the sector as majority of manufacturer seeking the option of outsourcing of their entire logistics instead of handling it in-house as timely retrieval and delivery of material is being considered as a strategic tool for customer retention Food Service Market – Opportunities in the Supply Side 17
  18. 18. OPPORTUNITIES IN PACKAGING INDUSTRY Food Service Market – Opportunities in the Supply Side 18
  19. 19. PACKAGING INDUSTRY OVERVIEW • Indian Packaging Industry is valued at around USD 19 Bn in 2014 and it is expected to grow at a healthy rate of 12% per annum • The food and beverage occupy the largest share of about 85% in packaging industry • The large and growing middle class, increasing working population along with increase in number of working women, high rate of urbanization, increase in penetration of modern retail, rural marketing pushing demands for sachets are some of the growth drivers for organized retailing in the country are fueling growth in the packaging industry along with increasing export which requires superior packaging standards for the international market • Packaging is a necessary factor to preserve the quality and lengthening the shelf life of products ranging from milk and biscuits to processed foods, to create attractiveness and brand image • Packaging is a sectoral activity to boost consumption and economic growth Food Service Market – Opportunities in the Supply Side 19
  20. 20. CLASSIFICATION OF PACKAGING Food Service Market – Opportunities in the Supply Side 20 Other Caps and closure Labels Secondary Packaging Rigid Metal Containers Glass bottles Rigid plastic Paper cartoons Wooden racks Flexible Stand-up pouches Milk pouches and bags Laminated tubes Squeezable bottles Medicine bottles Foam packaging Food containers Products Packed Other Rigid Packaging Flexible Packaging Packaging by Product Consumer Packaging Bulk Packaging Packaging by End-use
  21. 21. OPPORTUNITY IN INDIAN PACKAGING INDUSTRY • Sustainability Green plastic is newly introduced concept in Indian market , reusable and recyclable packaging present a huge opportunity as many food manufacturer introducing such kinds of packaging • Light Weighing The demand of thin walled containers which are lightweight and appropriate for refrigeration is on the rise as processed food such as instant noodle, spreadable cheese, ice-cream are increasingly consumed • Shift in demand from rigid(metal/glass) to flexible(paper/plastic) packaging as consumer preferring smaller consumer pack than bulk purchase with focus on higher level of processing and quality • Only 600-700 packaging machine manufacturer out of which 95% are in small and medium sectors and located all over the country , so there is huge gap in demand and supply of food packaging professionals Food Service Market – Opportunities in the Supply Side 21
  • JohnnyJihongLi

    Mar. 28, 2017
  • jsachi

    Sep. 22, 2016
  • tejvalluru

    Oct. 13, 2015

An insight into the supply side opportunities within the food service market space


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