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Business of Food
Last updated: 14 July 2008
Ireena Vittal, principal, McKinsey & Co
An authority on the business of food in India, Ireena Vittal, principal, McKinsey & Co feels that the food sector is set for a big time growth, given that food will remain the single largest category of consumption, accounting for 32 per cent of the growth of the Indian consumption between now and 2025.
Forget the excitement of the taste of food for a while, it is the potential of the business of food in India that is the real appetizer for the enterprise street. Speaking at the Food Forum India 2008, Ireena Vittal, principal, McKinsey & co said, the size of the food business opportunity is getting only larger. "From about $ 175 billion, the food business will grow to a size of $ 400 billion by 2025", said Vittal.
However, all is not hunky dory. The supply chain in India, is archaic. "In India, the supply chain is stuck in the stone age and a bold response is needed from all of you who are present in the Food Forum", said Vittal.
Vittal said that the opportunity in the food business is being driven primarily by the rise in the income of the Indian households. However, She pointed out that as incomes rise, the percentage spend on foods will come down but not to worry, as the per capita income on food will double. Food accounted for 56 per cent of the total spend on households in India in 1995, as against 42 per cent at present. It is expected to be 25 per cent by 2025, which will still be a large part of the spend, said Vittal.
Vittal also pointed out the contrast with the other countries, as far as percentage spend of households on foods is concerned. Compared to 42 per cent in India, in US, it is 11 per cent, in UK it is 19 per cent and in China it is 28 per cent. Basically, as the population gets richer, the percentage spend of households on food drops, even as per capita expenditure on food shoots up and this is what is happening in India, at present, pointed out Vittal.
"Food will remain the single largest category of consumption, accounting for 32 per cent of the growth of the Indian consumption between now and 2025", said Vittal.
Vittal also pointed out the way in which the mix of calories, in India is changing, with the increasing shift toward poultry and fruits and vegetables, from grain based calories.
She pointed out that the quality consciousness of Indians for food is the highest among all the BRIC countries (Brazil, Russia, India, China). Freshness is a prime quest of the Indians who shop as many as six times a week for 'food freshness', she said.
Vittal also observed that the Indian consumers are changing and are ready to experiment with cuisines. Moreover, She pointed out that the increasing phenomenon of 'eating out' means a whole world of opportunities for catering services.
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