Presentation

on

Indian Food Retail

Trends & Tasks

by

Sanjeev Asthana
President & CE,
Agribusiness & Food Supply Chain
Reliance Retail
 We will talk about…
• Retailing in India
– Indian economic snapshot
– Retailing
– Food retailing
• Trends
– Evolving consumer preferences
– Consumption shift
– Drivers
• Tasks
– Hurdles
– Tasks for suppliers
• Reliance Industries Snapshot

India Food Retail: Trends & Tasks 2

 Happening times !

• Indian GDP growth at 9.4

% for 2006-07 is the
highest in 18 years

• Analysts across the globe

find Indian growth
sustainable

• Economic outlook for India

is positive

Source: Indian Express

• Indian working population
is confident

India Food Retail: Trends & Tasks 3

 India is growing !
Source: Economist

• India will be the third largest economy by 2040

• India will be the 5th largest consumer market by 2025

India Food Retail: Trends & Tasks 4

 Most attractive retail market !

Source:
AT Kearney
Global Retail
Development
Index (GRDI)

India’s retail market has grown by 10% on average for past 5 years
…steadily rising to top position in GRDI
India Food Retail: Trends & Tasks 5
 Organized retail is still in its infancy !

Source:
JM Morgan Stanley

• With just 2 % organized retail …

….India is a big opportunity

India Food Retail: Trends & Tasks 6

Organized Retailing is big opportunity !

With robust economy,

sustained GDP growth and
booming stock exchange,
there are several emerging
sectors in India waiting to be
tapped . . .

…Organized Retail is at the forefront of these opportunities

India Food Retail: Trends & Tasks 7
 Growth in Organized Retail

Source: Ernst & Young

• India is in 2nd phase of retail growth

• Increasing Range, Portfolio and Format options
• Food retailing leads the growth in Indian organized retail
India Food Retail: Trends & Tasks 8
 Food is the largest segment in Retail !

Source: KPMG

Source: Ernst & Young

• At 77 % Food & Grocery is the

largest segment in Retail sales

India Food Retail: Trends & Tasks 9

 Food Retail Sales in India

• Total food sales to cross US$ 250 billion by 2008

India Food Retail: Trends & Tasks 10

 Modern formats in Food Retailing is low !

• Lowest among major retail markets...

…But growing due to evolving consumer preferences

India Food Retail: Trends & Tasks 11

 Evolving consumer preferences !

Indian consumers are evolving…

• From traditional to…

… modernized traditional
• From globalize to…

… Indianise
• From functional to…

… lifestyle
India Food Retail: Trends & Tasks 12
 Evolving consumer preferences !

Indian consumers are evolving…

• From value for money to…

… value for time and convenience

• From cautious to…

… experimentation
• From over-the-counter to…

… touch-and-feel
India Food Retail: Trends & Tasks 13
 Consumption shift !

• Beverages
 Rise in coffee drinkers
 More fruit drinks and bottled water
 Wines and Liquor sales on rise

• Processed food consumption

 Increasing ready to eat food
 Growing premium foods
 Increasing private label
 From “packaged as stale” to “packaged is hygienic and high quality”
 Increased tendency towards disposability
 Shift from price consideration to design and quality

India Food Retail: Trends & Tasks 14

 Consumption shift !

• Lifestyle
 Frequent eating out
 Growing health and dietary supplements
 Growing organic produce
 Greater focus on looking and feeling good

Source: AT Kearney

India Food Retail: Trends & Tasks 15

 Drivers of this shift !

• Demographic advantage : Young population

India Food Retail: Trends & Tasks 16
 Drivers of this shift !

• Increasing discretionary income

India Food Retail: Trends & Tasks 17
 Drivers of this shift !

• Increasing retail space

• Credit availability is also fuelling this shift

India Food Retail: Trends & Tasks 18

Still there are hurdles !

Local and Global players’ concerns

• ‘Unorganized’ sector

• Nascent Supply Chain

• Low Technology Penetration

• Infrastructure

• Bureaucracy

…work with these profitably by

focusing on following tasks…
India Food Retail: Trends & Tasks 19
 Tasks for suppliers !
• India is a not a homogenous market
• 29 States + 6 Union Territories
 Even within each state,
tremendous diversity in customs,
traditions, attitudes
• 22 official languages and 1600 minor
languages and dialects
• 70% Rural population – India lives in
its 600,000 + villages ( < 20,000
population)
 However, accounts for more than
half of sales of many FMCG and
Consumer Durable products
• 35% still illiterate, not accessible by
mainstream media

Most important task

 Understand consumers
India Food Retail: Trends & Tasks 20
 Tasks for suppliers !
 Innovate & invest
• Products
– Not just customize but Indianize
» McDonalds and Pizza Hut
– Processing
» Nestle
• Marketing
– Market research
– Advertising
» Coca Cola and Pepsi
– Encourage experiments
» Kellogg’s
• Distribution
– Packaging
» Sachets & Smaller pack sizes
– Channels / Network
» Frito Lays and Anheuser-Busch
India Food Retail: Trends & Tasks 21
 Tasks for suppliers !

 New agriculture supply chain

is emerging India removing
non-value adding
intermediaries

 Partnership with value

adding intermediaries of the
supply chain

• Technology transfer
• Streamline processes
• Maintain Quality

India Food Retail: Trends & Tasks 22

 Tasks for suppliers !

 Participate in Agri Infrastructure: Logistics

India Food Retail: Trends & Tasks 23
 Tasks for suppliers !

 Participate in agri related activities

India Food Retail: Trends & Tasks 24
 Tasks for suppliers !

 Focus on emerging markets (Tier 3 and 2 cities)

India Food Retail: Trends & Tasks 25
 Tasks for suppliers !
• Rural India consists of 720 Million consumers
across 627,000 villages
– 17% of these villages account for 50% of the
rural population and 60% of the rural wealth
– Extensive reach is required as to cover 50%
market 100,000 villages must be catered
– Immense opportunity amounting to US$ 125
billion

• Rural Retail is growing @ 7% p.a.

• Rural consumption is also shifting from basic
food grains to fruits, vegetables, dairy and
poultry products, as well as beverages
• Demand for better quality food leading to
huge demand for basic foods

 Tap the rural retail market

India Food Retail: Trends & Tasks 26
 Tasks for suppliers !

All these can be done only if you …

 Establish franchisee
 Forge joint ventures
 Licensing agreement
 Strategic partnerships
 Explore other avenues

… Act & Join !

India Food Retail: Trends & Tasks 27

 Reliance: Contribution to Indian Economy
• Revenues US$ 19.9 billion
• Cash Profit US$ 2.9 billion
• Net Profit US$ 2 billion
• Total Assets of US$ 20.8 billion

India and Reliance

• Revenues equivalent to 2.8% of India’s GDP
• 8.2% of India’s total exports
• Contributing 8% India’s indirect taxes
• 4.7% of the total market capitalization
• 11.5% weightage in Bombay Stock Exchange Sensex
• 9.3% weightage in National Stock Exchange Sensex

 US$ 20 billion enterprise created in 30 years

India Food Retail: Trends & Tasks 28
 Reliance: Global Ranks

Global Rank
75
Net Sales 342 11
Net Profit 194
19

Net Worth 226 06

Assets 351
Amongst the fastest 25 growing
companies in Fortune 500

 India’s only private sector company

to list in fortune global 500 list

India Food Retail: Trends & Tasks 29

 Reliance: Recent Major Initiatives

 Exploration & Production

 Refinery – Jamnagar

 Special Economic Zones

 Reliance Retail

India Food Retail: Trends & Tasks 30

 Reliance: Retail Vision

To be the most admired and successful organized retail company in

India that materially enhances the quality of life of every Indian

By
 Providing unprecedented affordability, quality and choice
 Being the partner of choice in creating prosperity for Indian farmers
and other vendor partners
 Unleashing the power of the Indian workforce through the
generation of new & attractive employment opportunities

India Food Retail: Trends & Tasks 31

Thank you !