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Just what is happening in the Food & Beverages (F&B) business space? An answer from SUJIT DAS MUNSHI, Executive Director, ACNielsen South Asia. Share-of-mouth seems an outdated concept, considering what has happened to the Indian Food & Beverages (F&B) market over the years. A more apt concept would probably be share-of-appetite. Not that the Indian appetite for F&B is insatiable, but it certainly isn't inflexible either. A more illuminating view attacks fundamental preconceptions like 'Indians are unlikely to eat anything other than traditional food on a regular basis'. This heralds the birth of an Indian palette that is infinitely adaptable, adventurous and untiring. Let's look at the facts. The Indian brand F&B market grew by over 5 per cent, according to the findings presented in the latest ACNielsen Global Services report on global trends. This rate of growth outpaces the global average growth rate of 4 per cent for F&B across markets studied by ACNielsen. Supporting this buoyant overall trend, growth rates for individual product categories within the Indian market too reflect aggressive performances. If one looks specifically at the categories present in India that can be compared with what is available across the globe, it is clearly a case of aggregates camouflaging the scorching growth rates experienced by individual product categories. A closer study of what's moving off retail shop shelves in India indicates key trends that are bound to dictate medium- to long-term trends. In line with global trends, the need for convenience and a greater desire of healthier product alternatives is precipitating the growth in categories like convenience foods, impulse foods and non-carbonate soft drinks. An increased preference for healthier alternatives appears to be stemming from a greater health consciousness and is heightened by rapidly evolving work and lifestyle habits. Product categories like non-carbonated soft drinks and breakfast cereals are symptomatic of this alteration. External developments and environmental factors too have a large part to play. For instance, in light of the controversy that affected chocolate sales in India, consumers are likely to have compensated for them with other impulse foods. Likewise, for bottled water sales, a resurgence of concerns regarding pesticides may have hindered sales. The numbers for this category, however, are limited to bottle sales from retail channels and do not reflect home and institutional sales of large packs, which are likely to have grown. Demographically, the 'pester-power' of kids too has spurred sales of impulse foods. Categories like biscuits, snacks and chips have witnessed robust double-digit growth rates. The trend towards out-of-home consumption has arrived in India and is set to explode as lifestyles change, discretionary incomes rise and the retail environment get consumers to redefine their basket of purchases. Even categories like tea and coffee, though appearing to plateau in terms of sales through retail channels, are reaching many more consumers through a focus on the out-of-home market for beverages. The apparent paradox in consumers' motivations for purchasing impulse foods despite a greater desire for 'healthier' alternatives is because in the Indian context, 'cleanliness and hygiene' too tend to denote healthier options. Impulse foods with superior packaging technology satisfy these criteria and can therefore co-exist with a greater desire for healthier consumption options. Innovation is also a driver of consumption in developing markets. As packaged branded snack imitates traditional snacks and eventually replaces them, their growth buttressed by strong distribution will be speedy. Confectionery, another impulse food, appears to be indicating a slowdown. As traditionally large segments like hard-boiled candies make way for more innovative product formulations at similar price points, their sheer size tends to depress aggregate growth, but with. These newer products are growing positively and over time may acquire the critical mass needed to carry the category into positive territory. The dynamics of the confectionery category serve as a good analogy for the entire retail branded F&B market in India. As marketers and retail formats innovate and continuously review their product offering, the inflection point for faster growth will occur once these investments coincide with rapidly changing consumer attitudes and behaviour towards the purchase of branded packaged food and beverage. Now let's look at the global picture. Across 89 F&B categories in 59 countries, the cumulative sales value grew by +4 per cent, which is similar to the growth in the personal care categories reviewed earlier this year (at +3 per cent). But cumulative sales often do not clearly identify the growth 'winners' versus those categories or countries that are showing little to no growth. In fact, a wide diversity was apparent when looking across both categories and regions. Highest growth was seen in the more developing areas of the emerging markets (+10 per cent) and Latin America (+7 per cent). Individual countries ranged in overall growth from +22 per cent in Egypt to -4 per cent in Hong Kong. Three key trends were identified with this latest study:
Finally, it should be remembered that several external factors might influence the growth of F&B categories worldwide. Changes to government regulations, economic growth and environmental conditions were all highlighted in the study as affecting the growth of selected categories in certain markets. The message to both manufacturers and retailers is clear. There is a definitive need to acknowledge and address the consumer's requirement for healthy and convenient products. However, since consumers are willing to purchase both private label and branded products, finding healthy products that are both convenient and provide value is the true global challenge.
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