PROCESSING

AND
PACKAGING
FOOD INDUSTRY

Researched By :-
Aashish Gupta
 METHODOLOGY

Research Media: personal interview focused to generate required

information from the retailers , consumers and related articles
manufacturers issued in the various locally available magazines and
newspapers.
Research Instrument: structured questions were asked and the
available figures were compared to conclude the overall research
work.
Data Collection: The report analyses the data given in various
magazines and on Internet, about the retail business regarding
packaged foods in the daily chores of life. The various magazines
concerned are:
Newspapers ( The Times Of India and Hindustan Times )
Femina,
Brunch and Xplore, etc…
Data Analysis: The research work was not merely to give
inputs on the observations but also to compare the data
collected from various newspapers and magazines, to
bring out the similarities and to figure out the vast
dominance of the Packaged Food in Indian consumer
goods market.

Also, I am very obliged to thank Neeru Mam, lecturer

(Food science and nutrition) and Mr Rakesh Goel (M.D.
VIBGYOR INTERNATIONAL), who provided me the
guidance and required material.
WHY THIS PROJECT ?
To conduct a comprehensive
study on the concept of
Processed and Packaged Food
Industry.
To see how the concept of
packaged food has been
implemented and adopted so
far.
What companies are offering
as packaged food to the
consumers.
? To analyze the success figures
achieved by the top companies of
India.

? To see what could be the future

picture of the packaged food
industry.
 Definitions
 Food Processing
is the set of methods and techniques used to transform raw
ingredients into food for consumption by humans. The food
processing industry utilizes these processes. Food processing
often takes clean, harvested or slaughtered and butchered
components and uses these to produce attractive and marketable
food products.

Or in other words,

The process of treating and handling food in such a way as to stop

or greatly slow down spoilage to prevent food borne illness while
maintaining nutritional value, texture and flavor.
Packaging
the enclosing of a physical object, typically a product
that will be offered for sale. Labelling or labeling
refers to any written or graphic communications on
the packaging or on a separate label.

Packaging materials
Commonly used packaging materials includes jute, paper, plastics.
The type of material chosen depends on: the sensitivity of the product;
the types of damage that are likely; the value of the product; the size of
the product; the weight of the product; the length of time the product will
be packaged.

Packaging types
The above materials are fashioned into different types of packages and
containers such as Boxes, Bags, Bottles, Cans, aseptic packages,
wrappers, etc
 Methods of Food Preservations
Drying Canning and Bottling
Freezing Jellying
Vacuum Irradiation
Packing Modified atmosphere
Curing Clamps
Sugar Biological processes
Pickling
INTRODUCTION

In this fast moving and ever growing world everyday new

things are invented and developed. Invention of
microwaves, dishwashers, super trendy treadmills, home
theatres speak for the world we are living in. As the times
have changed, so are the needs. Today we don not spend
too much time in cooking our favorite food because of the
availability of Packaged Foods Packaged Food is a boon for
everybody. Be it housewives, working women, students or
professionals.
 With Packaged Food survival has not only
become easier but also healthier.

Packaged Food comes in two categories:

 Ready To Serve
 Ready To Cook.
 Ready to serve have a variety of nearly all
food items ranging from Dal Makhni to
Chicken Changezi , from Boiled Rice to
Hyderabadi Biryani. Everything is available
in the market. Reputed brands like MTR,
ITC, Godrej, and many more are into this
business which gives us satisfaction on
quality of production.
 In the Ready to cook category comes
Frozen foods like peas, cauliflower,
chicken, cheese, etc. These are par boiled
and take just a few minutes to cook. With
the availability of different gravies and
ginger-garlic paste in the market the art of
cooking is being adopted by all sections of
society.
Sub sectors
 Fruit & Vegetable Processing,
 Fish-processing,
 Milk Processing,
 Meat & Poultry Processing,
Packaged/Convenience Foods,
 Alcoholic beverages
 Soft drinks etc.
Sectoral Overview : Product Wise

 MEAT

Details in terms of quantity and value of

meat food products manufactured under
MFPO, 1973 is as follows:-
Year Quantity (in Value (Rs.in
MTs) Lakhs)
2000-2001 3041 3946

2001-2002 3221 4173

2002-2003 2865 3812

2003-2004 3016 4247

Details of exports in terms of quantity and value of

meat food products are given as under: -

Year Quantity (in Value (Rs.in

MTs) Lakhs)
2000-2001 195 215
2001-2002 168 189
2002-2003 32 36
2003-2004 79 68
FISH
With its long coast line of over 8000 kms., 50600 sq, kms. of continental shelf area
and 2.2 million sq. km. of Exclusive Economic Zone, India is endowed with rich
fishery resources.
Fish production (both marine and inland) since 1997- 98 are given below:

Year Marine Inland Total

1997-98 2.69 2.09 4.78
1998-99 2.70 2.24 4.94
1999-2000 2.96 2.38 5.34
2000-01 2.95 2.44 5.39
2001-02 2.69 2.56 5.25
2002-03 2.83 2.82 5.65
2003-04 2.81 2.84 5.65
2004-05* - - 5.65

Export of marine products from India at present is about $ 1.3 billion. Indian marine products are
exported to over 64 countries. India is ranked 17th among the marine products exporting
countries.
The export of fisheries products during the next 5 years could be increased US$ 3 to 4 billion
with intensive efforts.
Fruit And Vegetable Processing Sector

The installed capacity of fruit and vegetable processing industry has been
increased from 11.08 lakh tons on 01.01. 1994 to 23.28 lakh tons as on
01.01.05. The utilization of fruits and vegetables for processing in the
organized & unorganized sectors is estimated to be around 2% of the total
production.

As on (1st January) 1994 1 1 1 1 1 2000 2 2002 2003 2

995 996 997 998 999 001 004
Capacity (Lakh tons) 11.0 12.6 14.0 17.6 19.1 20.4 20.8 21.0 21.1 21.9 2
8 0 2 0 0 0 8 3.2
8
Production (Lakh 4.69 5.59 6.76 8.50 9.6 9.1 9.4 9.8 9.9 10.3 1
tons) 0.7
2
Growth in Prod. 30.2 20.0 20.9 25.7 12.9 -5.2 3.3 4.26 1.0 4.04 4
over the previous 8 0 3 4 4 .08
year (%)
Soft Drinks
The soft drinks constitute the 3rd largest packaged foods regularly consumed
after packed tea and packed biscuits. The estimated production of soft drinks
has registered a gradual increase as follows:
Year Bottles (in Million)
1998 - 1999 5670
1999 - 2000 6230
2000 - 2001 6450
2001 - 2002 6600
2002 - 2003 10000
2003 - 2004 11040

The aerated soft drinks industry in India comprises over 100 plants across all
States. It provides direct and indirect industry related employment to over 125,000
employees. It has attracted one of the highest foreign direct investments in the
country amounting to around Rs.4700 crore. It contributes over Rs.1200 crore
annually by way of excise duty, sales tax and related taxes. It has strong forward
and backward linkages with over Rs.1000 crores relating to glass, plastic,
refrigeration, sugar and transportation industry. Total export earnings are over
Rs.700 crore per annum. Presently there are more than 7000,000 outlets in the
country.
Exports

MFPI has been encouraging the new processing capacities for agro-food products
through its various policy initiatives and Plan schemes providing financial incentives
for setting up of new units and modernization of existing units. It is conscious of the
fact that the tremendous potential for manufacturing of processed food products
should be harnessed not only to meet the domestic demand but also to take
advantage of the export potential that is available in the international market. The
export of processed food items for the last five years has been as under:

ITEM 1998-99 1999-00 2000-01 2001-02 2002-03

Processed fruits and vegetables 705.6 993.6 1345.5 1100.57 1206.93
Animal products 851.7 905.0 1637.1 1500.93 1800.53
Other Processed Food (Guar Gum, Ground nut, 1134.5 1494.4 1798.0 1780.07 1720.11
Alcohol, Beverages, milled products etc.
Rice 6279.4 3125.8 2943.3 3174.14 5895.85
Walnuts 68.9 60.5 109.94 117.98 121.23
Marine Products 4626.8 5095.7 6443.89 5957.05 6881.31
Total 13666.9 11675.0 14277.6 13629.57 17625.96
Growth of Packaged Foods in India
Sales of packaged food in India grew in 2002, as demand for better quality products
increased among the affluent urbanites. Although unorganized sales in the form of
unbranded food sold loose still pose strong competition. Demand for packaged food
achieved significant growth as a result of four main factors :-

The increased number of dual-income families ,

Greater willingness to experiment with new food products ,
A rise in ownership of refrigerators , and
Increased demand for convenience.

These trends, which were particularly evident in the latter part of the review period,
provided impetus for growth in convenience foods like instant noodles, savoury
snacks, baby food, pickles, soups, ready to eat meals, ketchup, bread and cereals.
They also spurred sales of previously unknown products like frozen foods, which in
2002 saw volume sales increased by an estimated 12%, albeit from a low sales base.

Total packaging volumes for consumer packaging in India reached a total of 37,906
million units in 2002. The packaging industry in India is still growing and the market is
dominated by flexible packaging formats.
Laws relating to food processing industries

There are a number of food laws being implemented by various

Ministries/Departments. These are primarily meant for two purposes namely (1)
Regulation of Specifications of food and (2) Regulation of Hygienic condition of
Processing/Manufacturing. Some of these food laws are mandatory and some are
voluntary. The details of various food laws in operation in India is as under:-

A FOOD LAWS:
1. Prevention of Food Adulteration Act (Ministry of Health)
The Act lays down specifications for various food products and is mandatory. The
Ministry of Health in 1995 had constituted a Task Force under the chairmanship of
Shri E.S. Venkataramaiah, Chief Justice of India (retired). The Task Force
recommended that there should be emphasis on good manufacturing practices
instead of detection of adulteration and prosecution. It also express concern about
lack of laboratory equipments and quantified persons. In addition it also suggested
that the name of PFA Act be changed to Food Safety Act.
2. Agriculture Produce (Grading & Marking) Act (Ministry of Rural
Development)
This Act is commonly known as AGMARK and is voluntary. The Act lays down
the specifications for various agricultural commodities including some processed
foods.

3. Laws being operated by Bureau of Indian Standards (BIS)

BIS is the largest body for formulating standards for various food items. These
standards are also voluntary.

4. Essential Commodities Act

A number of quality control orders have been issued under Essential
Commodities Act such as FPO, MMPO, Meat Product Order and Vegetable Oils
Control Order. These orders are mandatory and primarily meant for regulating
the hygienic conditions. They need to be clubbed under one order which may
called Food Products Order.
Research process flow:
 Processing industry
Some facts
 India is one of the world’s major food producers
but accounts for less than 1.5 per cent of
international food trade. This indicates vast scope
for both investors and exporters. •
 The Indian food industry’s sales turnover is Rs
140,000 crore (1 crore = 10 million) annually as at
the start of year 2000.
 The industry requires about Rs 39,000 crore in
investment over the next five years to 2010 to
create necessary infrastructure, expand
production facilities and state-of-the-art-
technology to match the international quality and
standards.
 Packaging industry
At a glance
 Overall consumer goods packaging demand experienced
a healthy rise of nearly 14% or 390.3 billion units over
the review period to reach almost 3,200 billion units in
2003. Main contributors to growth were flexible as well
as rigid plastic packaging formats, which saw their usage
increase by more than 140 million units each, thanks to
strengthening demand from the packaged food and
beverages markets respectively.
 Flexible packaging clearly dominated the packmix and
accounted for almost half of all unit sales in 2003.
Responsible for over one third of sales were tobacco
products. Some way behind followed rigid plastic
packaging with a share of 17%, followed by paper-based
containers and metal packaging. All other pack types
accounted for less than 10% of global consumer goods
packaging in 2003.
Surveyed research findings
The Indian Market
Indian Market with 1 Billion People is in
Transition

A growing consumer class

Changing life styles characterised by expanding
urban population, increasing numbers of nuclear
families and dual income families
Changing attitudes & tastes with increasing
modernisation
High level of savings
An Overview

Market size € 26 bn
Importance to economy 6.3% of GDP
Export € 5 bn
Domestic market € 21 bn
Of which packaged foods € 7 bn
Principal home consumption items: cereals,
milk, edible oils, meat, horticulture, spices
Principal exports: cereals, marine products,
tropical fruits & concentrates, spices, tea
and coffee
Consumption Structure in India

Domestic Expenditure on Food € 140 bn

Processed Food Sector € 26.3bn
Per capita consumption/ yr € 140
Packaged foods domestic market € 7 bn
Food accounts for 53% of private consumption
Packaged processed products share less than 5% of
final consumption

India therefore a nascent market for processed

food products waiting to be tapped
From A Recently Concluded High Profile
Study….

Investment Environment in India

A. Dominant majority say
1.“India is the country where you have to be”
2. “Environment difficult but not so different from other
developing countries and requires knowing the rules”
B a. 55% say they are in successful business
b.20% very successful business
Investment Friendly Policy Initiatives

Automatic approvals for foreign investment up to

100%, in major areas. Foreign investment also
allowed in sectors reserved for small scale sector,
subject to certain conditions.
Export earnings exempted from corporate tax likely
to be phased out in next five years.
QRs on all food products removed. Customs duty on
majority of the products at 35%.
All Fruit and Vegetable Products exempt from Central
Excise Duty
Investment Friendly Policy Initiatives
New Exim Policy to set up exclusive Agro Export
Processing Zones with fresh incentives
Ministry of Food Processing Industries promoting
Food Parks an integrated processing concept with
common facilities and marketing
Specific Concessions for EOUs
Full duty exemption on all imports
Tax holiday for any 5 consecutive years
Permissions to have upto 100% foreign equity.
Use of foreign brands freely permitted.
Allowed to sell 50% in domestic area
Problems: Unique as they Come
Huge Post Harvest losses
Requirement in Indian food chain to procure raw
material from open market as opposed to the
practice of complete backward linkage in developed
economies
Leading to Indian food players focus entirely on the
processing end ignoring procurement, quality of raw
material and farming practices.
Much larger number of intermediaries in the system
than one would see in food chains elsewhere.
Problems: Unique as they Come

An overly prescriptive Prevention of Food

Adulteration Act facing problems of equivalence
and harmonisation
Poor rural credit and insurance facilities for
farmers
Lack of sound knowledge base & technical
expertise of Banks and financial institutions
Lack of alternative avenues for financial support
to industry
High Taxes on processed products.
Areas Seeking Solutions…...
A substantial amount of fresh produce estimated at
around Rs 7000 Crores wasted every year. The reasons:
Lack of proper Post harvest Management, storage
& Transportation facilities.
Low demand for processed foods due to high costs
in comparison to the fresh produce
Low level of Processing & Packaging Technology
impeding acceptance of “Made in India”
Weak Marketing Linkages - Lacking Organized
Retailing
Insufficient Financial Support
Industry Trends
Increasing consumption of convenience food/ meals
Expected to continue as society becomes more time
challenged
By 2010, 65% of the food dollar will be spent on
convenience food
Consumers are becoming increasingly health -conscious
Increasing demand for more healthy, home -cooked food
However, packed home cooked meals are cold and
unappetising
by the time they are eaten
Heat containers are heavy and inconvenient to carry
around
Industry Gap

Consumers want nutritious and hot

convenience meals,
But no easy efficient way of heating food
on-the-go
What they want is a portable food
packaging device, allowing them to heat
up food on demand
But no such product is available in the
market as yet
Market Strategies:
Market Analysis
Target market
Main target market: young working
adults and students; these sectors
combined, drive 60% of the demand fo
convenience foods in Singapore
Secondary markets: campers,
commercial players, the military.
Long way to go
ahead…..