YET ANOTHER "REPORT"-EXCITING FIGURES AND ROSY GROWTH PROJECTIONS

From time to time mouth watering reports are made by consultants or organizations for the benefit of entrepreneurs who are interested in starting new industries but many such reports are based on inadequate and unreliable data base, Such report making becomes a money spinner because of the promise it offers to venture hungry entrepreneurs. It is rarely that these reports turn out to be useful in practice. There are a few organizations based in Delhi who "sell" project reports for setting up new industries though their credentials to prepare a realistic project reports are questionable. The latest report generated by the industry association ASSOCHAM may be different because it has no personal Axe to grind in attracting new competitors. Here is a take on the report.

"India will need approximately over US$30 Billion worth of investment to completely re-structure its processing-food industry to substantially lift up the share of processed food trade, which currently stands at 2.2 per cent in case of fruit and vegetables, 26 per cent fisheries, 6 per cent poultry, 20 per cent buffalo meat and 35 per cent milk by 2015, according to a study on 'Emerging Opportunities and Strategic Thrust Areas for Food Processing'.

The study brought out by The Associated Chambers of Commerce and Industry (ASSOCHAM), also suggests that with projected investment, export of processed foods could increase by over 70 per cent in next 5 years to touch the targeted level of over $25 billion from the current level of approximately $15 billion. However, in spite of vast natural resources, import growth of food products in India is also expected to be strong over the forecast period to reach $13 billion. The ASSOCHAM, has projected that US$ 30 billion worth of investment can revolutionize Indian food processing sector and take up processing of food and vegetables to levels close to 10 per cent by 2015. In case of fisheries, it has possibilities to reach 40 per cent levels, close to 15 per cent about poultry and over 40 per cent in case of buffalo meat and nearly 60 per cent as regards to milk. Processing levels of fruit and vegetables in case of USA, Philippines and China currently exists at 65 per cent, 78 per cent and 23 per cent respectively".

This is not the first report by ASSOCHAM and this will not be the last also. But in stead of taking this report as absolute truth, new entrepreneurs must consider it as a macro level projection and do their own investigative work before deciding on the industry they want to start. Industry associations are supposed to advocate the cause of the business they are engaged in to prevent impractical and inappropriate developments harming their interest and be sensitive to the changing needs of the consumers they are supposed to serve.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

ANOTHER "REPORT"- ARE THE FINDINGS BASED ON REAL DATA BASE?

Report making is becoming a big business especially in India as many consultancy and market survey groups are emerging with offer of their services that is supposed to help new entrepreneurs, industry and the government in planning their policies and initiatives. But what competence they have and the extent of resources at their command are questions that must worry those who invest in buying these reports. If the latest report on fast food industry is to be taken at its face value one has to believe that only multinational companies are eligible to receive the tag of fast food players! The report conveniently ignores the existence of thousands of desi fast food out lets that span across the length and breadth of the country covering not only urban areas coming under Tier I, Tier II and Tier III cities but also almost all villages where there is habitation. The projection of 35% annual growth looks impressive but from where the authors got the basic data from which growth rate has been calculated. Here is a take on this report.

"As per our new research report "Indian Fast Food Market Analysis", India is blessed with one of the fastest growing fast food markets in the world. The Indian fast food market is growing at an annual growth rate of 30-35%. Almost all big fast food brands of the world have succeeded in making their presence felt in the country and most of them posting an appreciable growth. Most of the popular fast food chains have chalked out massive plans for expanding their business and presence throughout the country. Moreover, foreign fast food chains are aggressively expanding their presence in the country. For instance, Domino's plan to open 60-65 outlets every year for the next three years (2010-2012), while Yum Brands Inc is also preparing for its massive expansion across the country. It plans to open 1000 fast food outlets by 2015. Although the market has witnessed robust growth in the past couple of years, it remains largely under penetrated and concentrated in the metropolitan cities. However, there is large room for growth in tier-II cities, tier-III cities which are mostly untapped. Therefore, the future of Indian fast food industry lies in masses that live tier-II and tier-III cities".

It is called a research report but lacks clarity on many issues besides short on credibility. It has to be borne in mind that there is no agreed definition on what constitutes a fast food and when world over fast food joints are attracting scathing criticism for peddling unhealthy and nutritionally unbalanced foods. While it is an undeniable fact that these foods cause life style health disorders including CVD, Blood Pressure Diabetes and Obesity, here is an organization that is enticing new entrepreneurs through bloated claims and drawing rosy pictures about future. If the dhabas, Udipi hotels, Darshini type joints, multi cuisine restaurants etc are taken into consideration, growth of this sector cannot be 30-35% unless there is a dramatic jump in the per capita income of the population.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

INDIAN FOOD INDUSTRY-SOME PROJECTIONS!

Report making seems to be a big business for consultants touting high market and management credentials. To imagine that the whole food industry in India as well as the GOI depended heavily on the "famous" McKinsey Report prepared in nineteen nineties may seem ridiculous but it is a fact as GOI never had any reliable data base on the country's food sector. At best the figures were guesstimates churned out in the corridors of various ministries and the Planning Commission by the firmly entrenched, chair bound bureaucrats. How far the reports from the private consultants could be more reliable is a matter of conjecture. In absence of any other alternatives, most projections in the country are based on these "fancy" reports either financed by the government or published as part of a business investment.

"As per our new research report "Indian Food and Drinks Market: Emerging Opportunities", despite the economic turmoil, the Indian food and beverage market is expanding rapidly. As per our estimations, the market is projected to grow at a CAGR of around 9% during 2009-2013. Moreover, the market is witnessing entry of large number of super markets, hyper markets, shopping malls and fast food chains. Though most of the products of Indian food and beverage market are observing positive growth, alcoholic drinks have emerged as the largest and fastest growing product category. As per our findings, the Indian alcoholic market is expected to grow at a CAGR of around 12% during 2010-2013. Apart from this, there has also been a substantial growth in the consumption of fruits and juices".

To project a growth of 9% for the food sector or 12% for alcoholic beverages does not need much expertise as these figures are relatively on the safer side and any major deviations can always be explained away by invoking monsoon or drought! Imprecise language using words like "our estimations", "projected to grow", "large number of supermarkets", "most of the products" , "positive growth", "largest and fastest growing", "expected to grow", "around 12%", "substantial growth" does not instill any confidence on the quality and reliability of such reports. As long as there is no "quality check" on the survey methodology and extent of field coverage, it is difficult to either believe or distrust the figures generated by private agencies. The new breed of consultants, many of them NRIs with practically no experience with food processing, having right "connections" at right "quarters", engage retired food technologists or young management graduates in India paying them a fraction of the fancy fees they charge their clients to produce fancy looking documents. The "Reports" they produce look impressive though contents-wise they may not be worth the paper written on them.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com