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India Food and Drink Report Q1 2009
Business Monitor International, Feb 2009, Pages: 80
India Food Drink Report provides independent forecasts and competitive intelligence on India's food and drink industry.
'The potential opportunities of the Indian food and drink market continue to be recognised by a number of foreign players. The past quarter has once again witnessed numerous acquisition and expansion deals in India. In the drinks sector, in November 2008, United Spirits confirmed that it is in talks with UK giant Diageo over a possible partnership in India. At the beginning of December, it was announced that Cobra Beer is now planning to send information to trade and financial buyers, explaining they can purchase the company either in its entirety or submit separate bids for its Indian and UK arms.
In the food sector, in October 2008, Tyson Foods, a US-based producer of meat products, confirmed that the company is to invest US$2.0-4.0mn in its Indian joint venture (JV) Godrej Tyson Foods. The investment will be used for development and promotion of products for the JV, which will supply processed and value-added poultry products. A month earlier, US food company Kraft Foods was linked with the possible acquisition of a stake in a Mumbai-based biscuit company. Kraft, which has been long been linked with organic entry into the Indian market, is reportedly now mulling acquisitions in an attempt to gain immediate scale, rather than taking the slower approach of setting up manufacturing facilities, establishing distribution ties and building new brands.
In the meantime, there have been numerous announcements over the past quarter by existing players pertaining to new investments in the country. In September, US giant PepsiCo confirmed plans to invest US$500mn in its Indian business over the next three years, with a view to trebling its revenues in the country. Tetra Pak International also announced plans to invest INR5bn (US$101.1mn) in the construction of a second processing plant in India. Likewise, Nestlé, as a part of its expansion strategy, revealed plans to invest INR6.0bn (US$69.7mn) in India in 2009, up from INR3.0bn (US$34.8mn) in 2008. The company views India as one of the fastest-growing markets in the world.
BMI is forecasting that food consumption in India in dollar terms will grow by 27.5% between 2008 and 2013 to reach US$229.7bn, while growth in local currency is expected to stand at 44.6% over the same period. Per-capita food consumption is forecast to increase by a healthy 19.0%, albeit from a low base, to reach a still very modest US$182.8 in 2013. These growth forecasts are the result of a growing middleincome consumer base and the continued spread of organised retail in the country. Indeed, BMI predicts that sales through mass grocery retail (MGR) outlets will increase by a staggering 529.7% to reach US$27.2bn in 2013. With the arrival of the first Wal-Mart/Bharti cash-and-carry store in the Punjab early in 2009 and rumours still circulating about the likely entrance of French giant Carrefour onto the Indian retail sector, the pace of change is likely to accelerate still further.
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