Trends and Opportunities in The Food Processing Industry

Food Manufacturing Industry Market Size
India’s food processing industry is one of the largest in the world due to the abundant availability of agro produce providing an ideal environment to start a food processing industry. India is the world’s largest producer of Spices, Milk, and Pulses and the second-largest producer of food grains, fruits, and vegetables. The food processing market in India was valued at USD 263 billion in 2020 and is projected to reach USD 470 billion by 2025. Favourable government initiatives such as Mega Food Parks, Agro-Processing Clusters, and the allowance of FDI have further boosted the food processing sector in India. Additionally, the massive demand for Indian food products across the globe has opened a plethora of opportunities for Indian manufacturers resulting in the growth of the food processing industry. India exported Ready to Eat (RTE) and Ready to Cook (RTC) food products worth more than USD 2 billion in 2020.  

Major Trends in Food Processing Industry

Innovative Products Development:

Continuous innovations are happening in the food processing sector as industries are trying to grab the attention of consumers in the competitive market. Additionally, due to the rise in health awareness among consumers, food industries are developing immunity-boosting products and other food products having high proteins but low calories, sugar, and fat. Hence food industries are now investing heavily in R&D and adopting high levels of technology. Manufacturers are analysing market trends and consumer’s purchasing behaviour and launching their products to the market accordingly.

Millet Cookies-Food Manufacturing Industry

Sustainable Packaging:

According to reports, approximately 36% of all plastics produced globally are used for packaging. Due to the adverse effects of plastics on the environment, governments and people are opposing the usage of plastics for packaging. Hence food industries are now using sustainable bioplastics and plant-based extracts such as wheat and bamboo. They are biodegradable, reusable, recyclable, free of harmful chemicals, and has a negligible carbon footprint. Sustainable packages play an important role in reducing the accumulation of plastics in the oceans and landfills. Containers made from rice husk and gelatin films are now trending in the market. They are toxic-free, low cost, reusable, and eco-friendly.

Sustainable Packaging-Food Manufacturing Industry

Adoption of Automation:

The food processing industry underwent a massive transformation during the pandemic. As the industries faced labour shortages and supply chain problems they started adopting automation at a rapid pace. The goal is also to increase productivity and reduce human errors. Automation helps in maintaining the constant appearance and quality of the food products. It also helps in tracking goods and products throughout the supply chain journey. The food industry is labour dependent industry with a labour cost of up to 30% of the cost of the product hence automating the production process is considered a viable option.

Automation of Food Industry- Food Manufacturing Industry

The Rise of Clean Labels:

Food processing industries are now trying to provide a complete list of all the ingredients used in the products claimed as “natural”, “sustainable” and touting benefits of wellness for the sake of consumers trying to find the genuineness of their claims. Consumers are now worried about the harmful chemicals such as glyphosate, plasticizers, and lead used in food products. These chemicals are known to cause cancer, heart diseases, and intestinal problems. The clean label ingredients market is projected to reach USD 52 billion by 2025 globally to meet the rising demand for clean label food. Based on type, clean label ingredients are classified as natural flavour, natural colour, natural preservatives, etc.

Clean Lables-Food Manufacturing Industry

Increase in Exports:

The food processing industry accounts for more than 13% of India’s total exports and has emerged as the high growth and high-profit sector. India’s geographical situation provides easy access to the Middle East, Singapore, Europe, Japan, Malaysia, and Korea. In 2020-21 India exported processed food worth INR 36,800 crores and witnessed a growth of 26.51% compared to 2019-20. There is a surge in demand for processed vegetables, milled products, and alcoholic beverages. Also, there is a rapid increase in demand for meat, poultry, and dairy products in the past 5 years.

Export of Food Products-Fodo Manufacturing Industry

Cold chain for Perishables:

Food processing industries are now investing heavily in the cold chain to maintain the food quality from procurement of agro produce to the distribution of food products to retail shops. The cold chain includes refrigerated transportation and cold storage. This helps maintain the nutritional value, freshness, taste, texture, and appearance of food products until it reaches consumers’ hands. Meat products, milk, ice cream, vegetables, fruits, chocolates, packaged foods, and many other food products require cold chain management. Due to high initial investment, the cold chain industry is still in its nascent stage in India and showing slow growth. Due to urbanization and change in consumption style, a significant part of foods is delivered by cold chain method from production to consumer.

Cold chain Food -Food Manufacturing Industry

Opportunities in The Food Processing Industry

Fortification of Foods:

Food fortification involves adding micronutrients such as vitamins and minerals to increase the nutritional value of food products. Currently, 46% of the vegetable oil produced by big players in the refined packaged oil industry in India is being fortified. Also, more than 36% of packed milk in India is fortified. Vitamin D fortified milk helps in reducing the incidence of rickets. Owing to the increasing consumption of protein and vitamin-enriched food products, the fortified food industry in India is growing at a rapid pace. To fight malnutrition in India, the government has launched several initiatives to boost the fortification of food products. According to the National Family Health Survey 2019-21, more than 67% of children above 6 months but below 5 years of age were found to be anemic. Hence to combat malnutrition, prime minister Narendra Modi has announced that fortified rice will be provided under various government initiatives by 2024.

Fortification of Foods-Food manufacturing Industry

The Rise of Plant-Based Foods:

The plant-based food industry in India is growing at a tremendous pace as consumers are adopting a sustainable lifestyle. Vegetarians, flexitarians, guilty meat consumers, and protein deficient consumers are considered as the target consumer group. Plant-based food sector mainly comprises plant-based meat and milk products. The plant-based meat market generated retail sales of USD 221 million in 2020 and is projected to reach USD 293 million by 2025. Veganism spreading across the country has increased the demand for plant-based milk products such as soy milk, oats milk, almond milk, coconut milk, cashew milk, etc. They are non-dairy milk that is made from plant extracts and rich in nutrients such as calcium, Omega-3 fatty acid, and vitamins like A, D, and B12.

Plant Based Foods-Food Manufacturing Industry

The shift towards Chemical-Free Food Additives:

Due to the rising demand for natural food additives, food processing industries are shifting away from chemical-free additives and replacing them with natural food additives such as stevia, coconut sugar, black pepper oleoresin, gum arabic, carrageenan, etc. There are various segments of food additives such as preservatives, sweeteners, food colorants, antioxidants, emulsifiers, flavour enhancers, thickeners, etc. Natural food colorants are produced from parts of plants, algae, fungi, and mould. Natural sweeteners include thaumatin, glucose-fructose syrup, xylitol, neohesperidin DC, etc. As synthetic food additives are less expensive compared to natural food additives, still many food processing industries are using synthetic food additives.

Chemical Free-Food Manufacturing Industry

The Surge in Demand for Immunity Boosting Food Products:

The immunity-boosting food products market size was valued at USD 22,000 million in 2021 and is expected to touch USD 46,000 million in 2029 globally according to reports. An increase in awareness among consumers about the health benefits of immunity-boosting foods is driving the market. According to product type, immunity-boosting products are broadly classified as foods, beverages, and dietary supplements. Immunity-boosting foods are further classified as instant foods and seeds while beverages are classified as juice, probiotic shots, etc. The outbreak of the COVID-19 pandemic has accelerated the growth of immunity-boosting foods. An increase in adulteration of foods has caused a lack of nutrition among consumers and has resulted in a surge in demand for immunity-boosting foods.

Immunity Boosting Drinks- Food Manufacturing Industry

Advantages of Starting Food Processing Industry in India

Large Market Size:

The total population in India amounting to more than 1.38 billion people provides a huge market for food processing industries. As India has more than 50% of its population below the age of 25, it has increased the consumption of processed foods. The food processing market in India is expected to reach 470 billion by 2025. Rising urbanization, increase in disposable income, and changes in consumption patterns have surged the demand for processed foods. Additionally, the increase in the number of working women has drastically increased the consumption of Ready to eat and cook food products. Food processing industries in India can also export food products to the Middle East, Europe, and Southeast Asian countries as there is a huge demand for Indian food products.

Abundant Availability of Raw Materials:

The availability of agricultural products throughout the year in large quantities has created an ideal environment to start and run the food processing industry. India ranks first in spices production, second in the production of fruits and third in egg production globally. This has opened a plethora of opportunities to produce a wide variety of processed foods with unique flavors and tastes. Food processing industries in India still have a lot to explore as India is currently processing less than 10% of its agricultural produce. India not only has the advantage of a huge domestic market but also with abundant availability of agricultural products, industries have the opportunity to export agricultural products such as basmati rice, spices, marine products, grapes, pomegranate, onions, tomatoes, etc to several countries. The diverse climatic conditions in India allow farmers to grow a wide array of crops.

Favourable Government Policies and Initiatives:

To boost the food processing sector in India, the MOFPI has launched the National Mission on Food Processing (NMFP) to decentralize the implementation of food processing-related schemes for ensuring substantial participation of State Governments. The Pradhan Mantri Kisan Sampada Yojana (PMKSY) aims at promoting entrepreneurs in setting up food processing units by providing a grant in aid of 35% of the eligible project cost in most states and 50% of the project cost in North-east and Himalayan states. Some of the other schemes implemented under PMKSY are the Creation of cold chain, infrastructure for Agro Processing clusters, expansion of food processing and processing capacities, operation greens, and food safety and quality assurance infrastructure. Additionally, to maximize value addition and increase farmers’ income, the government of India is creating Mega Food Parks across India. Under the automatic route, India allows 100% Foreign Direct Investment. All these initiatives and policies are encouraging entrepreneurs to start the food processing industry in India.

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