Soda market moving to India? Latest investment on soft drinks in Hyderabad

When we are being bombarded with the Prime Minister's pet theme of "Make in India", day in and day out, there was great hope that products identified for manufacture, both for domestic and export consumption would be highly relevant to the country's needs. Of course the relevance of a product is determined by factors like consumer demand, environmental hazard, health implications, employment generated, water exploitation, farmer linkages etc. By no stretch of imagination manufacture of soft drinks can fit into this bill but if current trend is any indication foreign investors will invest only if they have a market for their products, rightly so.  Is soft drink an item of consumption that must be encouraged in our country when world over these products are being condemned for their empty calories and vulnerability of consumers to a host of diseases including CVD, blood pressure, kidney ailments, obesity, diabetes etc ? Recent report coming from Andhra Pradesh claiming that an MNC is investing in that state on a piece of land measuring 85 acres of government land for setting up a mega bottling plant is indeed disturbing. Should India be rolling red carpet to such investors who have very little regard for the well being of the citizens in this country? It is difficult to justify or rationalize this industry as the highly automated plant is unlikely to provide much employment or earn any foreign exchange! Here is a take on this paradox that is happening in front of our eyes with all and sundry paying obeisance to the dollar lord!   

"For the past 25 years, PepsiCo has been investing in the Indian economy and its people. As we move forward into our next 25 years, that commitment is stronger than ever. This plant is an investment in India's bright future," said Nooyi. Spread across 86 acres, the first line of the plant started manufacturing on Friday. When it becomes fully operational, it would benefit nearly 33,000 farmers thanks to local sourcing of mangoes and other fruits, Nooyi said. Speaking on the occasion, Naidu said local sourcing of mangoes would immensely benefit the region economically. Complimenting the Sri City management for attracting dozens of companies to set up shop there, Naidu said it could become India's largest industrial park in 10 years. The PepsiCo plantwill manufacture fruit juice-based drinks, carbonated soft drinks, and sports drinks, among other beverages. PepsiCo has deployed state-of-the-art technologies with an emphasis on production efficiencies, environment protection and safety. The plant will be PepsiCo's most water-efficient beverage plant in India and the firm aims to procure LEED certification for this facility, company officials said. a LEED, or Leadership in Energy & Environmental Design, is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighborhoods. It is developed by the US Green Building Council. PepsiCo has a large manufacturing facility, with seven production lines in Telangana to cater to the markets of the undivided Andhra Pradesh and parts of Karnataka. The company, which has 22 brands in its product portfolio comprising food and beverages, has annual retail sales of about $1 billion. Sitting on a land bank of 8,000 acres, Sri City currently houses 106 companies employing 25,000 directly The GVK group plans to set up a hospital, medical college and a research centre at Sri City with an initial investment of Rs 100 crore, according to officials."

Andhra Pradesh government which is bending backwards to please the MNC seems to be forgetting what happened in Kerala years ago when the people of Plachimeda, a small hamlet in that state where a similar bottling plant was allowed to be set up led to one of the most virulent opposition campaigns India has ever seen against the corporate investor. Besides over exploiting water resources, the spent water polluted the area heavily causing many problems to the local population and thanks to people's power the bottling plant was forced to be shut down once for all. Interestingly the investors in A.P are using sugar coated words like employment generation, benefiting the farmer, high technology, research and innovation etc to mislead the government. It is difficult to imagine how farmers are going to benefited if the major product made is flavored sugary water, though there is a sprinkling of fruit based but sugar sweetened drinks containing traces of natural fruit solids! Unhealthy products like potato chips, fried and heavily salted extruded snacks etc are going to be the major part of the turn over expected from this factory. There is not even a single healthy product in the portfolio of products churned out by this company justifying conferring so much favors on it. If this is the forerunner of things to come under the "make in India" slogan, where is this country going to end up? God save the country!

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

Salute the leader-The long journey of "Parle G"

Glucose biscuit is a unique product in the Indian market and there cannot be a cheaper "ready to eat" product more affordable than this in any market any where in the world. Whether one analyzes the cost based on energy, protein or any other parameter, glucose biscuit still comes out with flying colors compared to other food products. Who is responsible for making glucose biscuit so enormously popular in this country? Universally the answer is Parle Biscuits of Mumbai! The illustrious Chauhan family of Mumbai will always be remembered by Indians affectionately and respectfully with nostalgia as some of the major products like glucose biscuits, fruiti drink, Thumsup cola, Bisleri water, were all the creation of members of this family which served the country for more than 8 and a half decades. If Indians should be proud of our feats in food sector, which were threatened with extinction by a spate of "muscly" multinational food companies, we have to thank families like Chauhans, Aggarwalls (Haldiram), Bhujiawalas, etc . No wonder that these foreign companies are trying either to buy them out or imitate them to push them out of the market! It speaks enormously of their resilience and survival abilities that even 3rd and 4th generation successors are giving the MNCs a run for their money. Here is a commentary on the evolution of Parle G the most important icon of Indian food industry and its dominance of bakery products sector.      

"There is a spot where the warm aroma of fresh baking catches hold of anyone travelling in a Mumbai local train enroute Andheri and further north. A result of the busy ovens at the first factory of Parle Products baking a batch of the world's largest biscuit brand, Parle G. The company makes 400 million of those a day. Parle Products was established in 1929 to manufacture confectionery such as boiled sweets, after the promoter family, the Chauhans, bought a decrepit factory. Parle G was born as Parle Gluco a decade later, even as the bugle for World War II was sounded. Parle had to manufacture military-grade biscuits for British soldiers right after, but ensured that it could manufacture the nutritional Parle G for the common masses. Parle G, as we know it today, has grown to be bigger than any other biscuit brand in the world by carrying forward the same positioning from the thirties, perfected over the years with a resourceful knack for scale and self-sufficiency. Launched as an affordable source of nourishment (it underlined the calories in a pack at one time) to counter expensive, imported biscuits in the British Raj such as Jacob's (cream cracker of United Biscuits) and those of erstwhile large biscuit maker, Huntly & Palmers. Britannia, then based out of Calcutta (Kolkata now), was strong in the east, while Glaxo glucose biscuit, also imported, ruled over the south. Kamal Kapadia, who worked at Parle for 32 years and left as CEO, Bengaluru project, in 2004, says, "There were many local manufacturers in the early years, mostly cottage industries. Biscuits then would first mean glucose biscuits." Kapadia recalls that in 1960, Britannia launched its first glucose biscuit brand, Glucose D, later endorsed by Amjad Khan's Sholay avatar, Gabbar Singh in the 1970s. It was then that Parle Gluco started feeling the heat, even smaller players would imitate the pack and carry the suffix of 'glucose' in their names. People, especially who were not literate would just ask for glucose biscuits.  Munawar Syed, who worked on the Parle account from the seventies till the nineties, at Everest (now director at Triton), says, "People were confused by similar brand names. Glucose became generic. We did advertise the differences but then, took a call to change the name and ride more on Parle." In 1982, Parle Gluco was repackaged as Parle G. The company had earlier tried to battle knock-offs by imprinting the plump little girl (an illustration by Everest) on its packs, in the mid-seventies. It clicked with Parle G's target audience, kids and their mothers. Kapadia says Parle always believed in branding: "I still remember Parle G's taglines such as 'Often imitated, never equalled'". Parle was among the first advertisers to paint Mumbai's train compartments with Parle Gluco ads when the Indian Railways allowed it. It was the belief in branding that also made Parle G's makers self-reliant, build scale and maintain pricing. Kapadia says, "It wanted to sell biscuits in consumer-friendly packs, rather than leave them loose in jars." Parle resorted to importing and patenting its own packing machinery as early as the fifties. Praveen Kulkarni, general manager, marketing, and with the company since mid-90s, says, "Parle G, till the 1980s commanded over 95 per cent. The glucose market was 60-70 per cent of the overall market." Glucose is now 22 per cent of Rs 24,000 crore and Parle G is around 80 per cent of it, reaching 6 million outlets."

If there is a single product that a poor man in this country can buy it is Glucose biscuit which can be considered a complete food. To day every street corner shop through out the length and breadth of the country sells smaller packs of these biscuits at Rs 2, Rs 3, and Rs 5. Whether it is eaten as a quick bite or as a one time food during the day, glucose biscuit fills the role! Remarkably even MNC companies which are fighting for dominance in the market are just the followers and it will remain as one till the foreseeable future!  Talk about the price front and Parle has fulfilled its role as a counterbalance to the MNCs from escalating the price unreasonably as the latter is known to do when they achieve strangle hold on the market by virtue of their dominance. Glucose biscuit is one food product, which always held its price line in spite of inflationary pressure over the years. Imagine a kilo of glucose biscuit costs less than Rs 80 while the breakfast cereals being marketed by the MNCs cost beyond Rs 400 per kilo! Indian citizen must be grateful to Desi stalwarts like Parle for making this country an affordable one, especially for the poor and lower middle class people!

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

THE GLUTEN-FREE PRODUCTS-A MARKET PROMOTED GIMMICK?

Whoever has not heard of Celiac disease which affectes many people who cannot consume foods containing the protein gluten. It is a tragedy that this small segment of consumer community cannot enjoy the pleasure of eating most of the bakery products which are made from wheat flour. Wheat allergy or insensitivity is manifested by the the autoimmune response in the intestine when gluten is ingested in any form with the white blood cells attacking the intestinal lining mistaking it for an invader not to be tolerated by the body. While Celiac disease is a full blown manifestation of gluten intolerance, gluten sensitivity is relatively a minor version tolerable in many cases. American market to day is being flooded with gluten free food products for catering to people with gluten allergy. While the proportion of such people in that country is hardly 0.5% of the population, according to a recent survey more than 11% of the population buy these foods though they do not need them. How can this happen? The promotional power of American food industry can be gauged from this quixotic situation where consumers not needing specialty foods are brain washed into believing that they are good for them! Here is a take on this as reported below: 

'And consumers are responding with gusto. The portion of households reporting purchases of gluten-free food products to Nielsen hit 11 percent last year, rising from 5 percent in 2010. In dollars and cents, sales of gluten-free products were expected to total $10.5 billion last year, according to Mintel, a market research company, which estimates the category will produce more than $15 billion in annual sales in 2016.Launch media viewerMichelle Marinelli and her son, Joshua, of Staten Island, N.Y., shop at a Wegmans market in Woodbridge, N.J. Matt Rainey for The New York Times "I see this as part of the current American concern with digestive health, which is also responsible for the yogurt boom," said Harry Balzer, vice president at the market research company NPD Group, where he has followed the food industry for some 30 years. "About 30 percent of the public says it would like to cut back on the amount of gluten it's eating, and if you find 30 percent of the public doing anything, you'll find a lot of marketers right there, too." Never mind that a Mayo Clinic survey in 2012 concluded that only 1.8 million Americans have celiac disease, an autoimmune disorder that causes the body to attack the small intestine when gluten is ingested and can lead to other debilitating medical problems if not diagnosed."

Increasing awareness about health and its relation to the quality of food is a welcome development but illogical misconceptions about the foods offered in the market can lead to distorted response which may not be good for a country. Why should the industry promote gluten free foods in such a massive way? The reason is clear. It is the increased profit generated by such specialty foods which drives the industry to invest in product development continuously. It is a good move basically to develop specialty foods like gluten free ones for those who depend on them for their life sustenance but promoting them as universal foods cannot be justified in any way. If industry cannot self control and self discipline itself the regulators must step in to force it to declare on such products that they are intended for those health compromised people though they may be harmless for others too. 

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

SKIM MILK POWDER-A NEGLECTED COMMODITY

Way back in 1950s, 1960s and 1970s, milk was a shortage commodity priced heavily as it was being imported. Skim Milk Powder (SMP) being donated by charity organizations abroad invariably found its way to the market at some what lower prices. In fact many hotels used to depend on such illegal powder supply to stay in business as the then production was grossly insufficient to meet the demand. Under the Operation Flood program, pioneered by late Dr V Kurien was supposed to have overcome the milk shortage and it is another story that India went on to become the top milk producing country in the world. With many dairying units coming up in the cooperative and private sectors, milk availability, 24/7 became a reality. Under such a condition it is not understandable why there should be shortage of milk powder in the country in recent years? The frantic efforts being made by the down stream users of milk powder in stocking this precious commodity, as being reported in the media, provide a sad reading about the working of Indian dairy sector. Here is a take on this issue.  

'Food, beverage, milk and ice cream companies, from NestleBSE -0.60 % to Vadilal, have started purchasing skimmed milk powder (SMP) six months in advance to beat the shortage that usually hits the market in summer. Current prices are 10% to 15% cheaper than the previous year at Rs 140 a kg owing to a huge stock in the country. However, with international prices firming, the domestic players expect to see prices being bullish in the coming days.  "Compared to the previous year the prices are cheaper by 10%. We have started making small purchases," says Rajesh Gandhi, MD, Vadilal IndustriesBSE -4.12 %. The icecream manufacturer whose peak capacity reaches 3.75 lakh litre in summer is set to procure 1,700 tonne SMP in the coming months. The SMP prices have fallen to Rs 140 a kg from Rs 160 a kg in the month of February this year.  As per the industry estimate there is close to 80,000 tonne of SMP lying with both milk co-operatives likeMother Dairy, Gujarat Co-Operative Milk Marketing Federation (GCMMF) and Karnataka Co-operative Milk Producers' Federation and private players like Sterling Agro, VRS Foods, Bhole Baba, HatsunBSE 1.58 %and so on. Apart from milk co-operatives, major SMP purchasers include companies such as GlaxoSmithKline India, Nestle, Cadbury, ITCBSE -0.09 % and Parle. "With prices moderate compared to the previous year, the purchases have begun in advance, though we anticipate a hike in the coming days," says Mayank Shah, group product manager Parle Products. Parle-G is the glucose biscuit brand from the country's largest biscuit manufacturer Parle Product. On Thursday, the Animal Husbandry & Dairy Department while reviewing the stock position in the country, felt that there were ample stock in the country. "Unlike the previous year we don't need to import SMP this year," says Rajni Sekhri Sibal, Joint Secretary in Union Agriculture Ministry's Department of Animal Husbandry and Dairying. Rajni added that with SMP prices gaining by 3.9% on Wednesday at the Fonterra's Global Dairy Trade online auction at $3,449 a tonne, the domestic prices might firm. The Rs 11,668-crore Gujarat Co-Operative Milk Marketing Federation (GCMMF) that markets dairy products under Amul brand is getting orders of over 2,000-3,000 tonne of SMP per month from Pakistan, Afghanistan, Bangladesh and other middle-eastern countries, unlike 2011 when exports were banned said GCMFF, MD, RS Sodhi".

Considering that value added products from milk are limited in range and volume, why there should be panic in the market is not understandable. After all there is no restriction on the price or import of milk powder and those needing it can always get it from any where in the world. It is unfortunate that the powder sold in the market to bulk buyers at Rs 140-150 per kg is offered in the market to retail consumers at double this price. To further fleece the consumer many companies are selling skim milk powder blended with powdered sugar at prices even higher, ostensibly as coffee whiteners. As for the consumer milk powder can be a valuable raw material for making fluid milk as well as other traditional products if available at affordable prices. After all one should not forget that milk powder is made from surplus milk when supply is more than the requirement and most dairy units in the country reconstitute it into fluid milk for sale during summer season when there is supposed to be a production dip. There is no two opinion that skim milk powder must be made more affordable and offered to the consumer at reasonable prices either through the milk distribution net work or in retail shops. It should not be forgotten that for a predominantly vegetarian population milk is the major source of good quality protein and a host of other vital nutrients like calcium. 

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

ORGANIC FOODS-BECOMING MORE RELEVANT THAN EVER!

Compared to main stream food industry the organic food sector is considered puny with its share in the market touching not even 2% but its continued growth, much faster than that achieved by the general food industry conveys a loud message that this sector is here to stay in spite of many impediments before it. It is unfortunate that organic foods are considered to be the prerogative of rich consumers because of the higher price tags they carry though such premium pricing is justified because of the high input costs required to get the necessary certification. That Australia remains the biggest producer of organic foods in the world tells its own story and the rich man's tag is further reinforced because of this factor. Certification process for organically produced foods is very complicated and costly and many developing countries find it non-affordable and non-feasible to get into this business. Here is a take on this emerging market and its dynamics.

"Australia has the largest area of organic farmland in the world at 12 million hectares, with the vast majority of this land comprising large rangelands for organic cattle production. However, the industry is comprised mainly of small operators, which has contributed to difficulties in providing consistency in the quantity and quality of produce. Other dampeners to growth have been intermittent drought conditions over the past five years. Despite this, over the five years through 2011-12, revenue in the industry has remained resilient. The industry will continue to grow strongly over the next five years, favoured by strong demand in domestic and export markets. Over the five years through 2016-17, industry revenue is anticipated to increase an annualised 12.1% to reach $892.3 million in 2016-17. Over this period, there will be increasing participation by supermarket chains in the organic market, downwards pressure on prices from growing economies of scale in production, and benefits from improvements in the certification of organic produce".

A larger question that confronts the world is whether this planet can support a total shift from conventional cultivation to organic version and there is no consensus that this can be achieved. In stead of going too far to produce organic foods every where it may be more realistic to evolve an intermediate mode of production where fertilizers only are allowed while growth hormones, pesticides and other harmful chemicals are avoided. Some times one gets a feeling that organic food certification is too fetish and academic in nature with doubtful impact. Of course most organic food admirers may scoff at this because of their abiding faith in the safety, nutrition and health promoting features. Still it is worth considering whether a new category of foods can be promoted that will be much more safer than conventionally raised foods.

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