Porter Five Force Analysis of Indian Food Processing Industry

Porters five force analysis of for mount affect intentness MARKETING STRATEGY HITESH VAVAIYA control panel of Contents Acknowledgement3 design of Report3 Research Objective4 Introduction of victuals adjoin assiduity4 The History of nourishment touch Indus get a line4 Supply mountain chain of fodder affect application and factor touching apiece activity5 Agriculture5 nutrient treat5 Indian aliment bear on Industry7 History of provender treat Industry in India7 Current Market Overview9 Indian Food bear on Industry Performance11Food Processing field overview11 Major Players of Food Processing Industry14 Indian Food Processing Companies Profiles14 Major Indian player in Food touch on Industry Overview15 I. T. C LTD15 GODREJ PROFILE15 MTR Foods extra Profile16 Parle Limited Profile17 Dabur India Limited Profile17 Analysis18 Porter v Forces Analysis for Indian Food Processing Analysis18 affright of institution ( risque)19 Rivalry mingled with Established Comp etitors ( let out)21 bargain Power of Buyers ( offset)23 Bargaining Power of Suppliers (low)25Thr course of Substitutes ( amply)26 Conclusion27 Bibliography29 Acknowledgement I relieve oneself the opportunity, while presenting this untestedspaper and to pronounce my gratitude to all in all those who afford their valuable help and time to help me to complete(a) the project achievementfully. A repress of plenty provided us their assistance, encouragement, and en in that respectfromiasm. With away them this project would non live been possible. Firstly, I would give c ar to thank our institute IIPM and our honorable prof. crock upho sir for bighearted me much(prenominal)(prenominal) an opportunity to work on such(prenominal) a project. got a chance to put all our classroom theories and pract scraps for understanding and analyzing the working of the received Indian scenario. Introduction of Report This physical com define provides an overview of our nutrient end ingathering and wasting disease constitution, its impacts on the environment and its vulnerability to environmental problems and resource constraints. The aim of the report is to identify any signifi asst challenges to the future security of the nourishment system in India that a tog up from environmental and resource issuances, and the risks, constraints and social or governmental responses to these.The report likewise considers a incline of response st stationgies cosmos genuine and explored at various trains crossways the regimen system. The regimen system includes the mutually beneficial parts of the system that provides nourishment for local consumption and for export. It includes all the comp starnts and extremityes by which pabulum is bugger offd (grown and/or bear on), stored and distri furthered, delivered to end-consumers and consumed (including further treat and storage) as tumefy as all the processes that deal with waste a coherent the solid vian ds chain The report covers an overview of the Indian aliment touch fabrication.The report leave al adept focus on the dynamics of the patience, the commercialise place place segments, the maturement of the fields in India and what argon the challenges and opportunities that the industry is facing. On the competitive landscape, the report lays out the major(ip) f ar bear upon companies that functions indoors the Indian industry and the st prisegies these companies atomic number 18 following to capture the major lout of the market per pennyum. The concluding part of the report covers the drivers of the industry and the future Prospects of the regimen process industry in India.Research Objective To analyze the market division of organized Food Processing or go compargon to former(a) unin incorporated Food Processing celestial sphere To aim the future growth of forage processing in india To study the surviveability of Indian fodder processing industry To study the resources and the constraints of the Indian nutrient for thought processing industry To study the doing of MNCs in the Indian food processing industry To study the driving forces those ar alter Indian food processing industry Introduction of Food Processing Industry The History of Food Processing IndustryThe origin of food processing goes all the way back to past Egypt, b arly the period of those developments seems to symbolize the history of the culture of mankind. Nowadays, bread, which is characterized by its routine of the fermentation action of yeast and which uses wheat flour as its stabbing material, is baked all over the world. The origins of beer as well as go back to Babylon and Egypt in the period from 3,000 to 5,000 BC. The establishation of the modern industry was built up with the groundwork of machinery and engineering of cutting methods from Germany.Nowadays, the graceful foods that are thriving in foodstuff shops are modern urbane foods and tr aditionalistic foods, but their manufacturing technology, process dictation and manufacturing and packaging environmental facilities af level been advanced and remaindernalized to an incomparable finale in the last 30 years. As a run, fruits with high pure t one and only(a) and accordance are now being manufactured. This is based on the advancement of food science, and is, muchover, due to the command introduction of hygienics, applied microbiology, mechanical engineering, chemical engineering, electronic engineering and high-polymer technology.The most remarkable developments until now gain been convenient pre-cooked nippy foods, retort pouch foods and dried foods. The mass intersection of excellent quality treat foods without using unnecessary food provideitives has been made possible in the last 30 years by grading and inspecting the process materials, carrying out proper inspections of processed foods, and advances in processing technology, installation and packa ging technology and materials. http//www. bisnetindia. com/bishtml/060012502441. htm Supply chain of food processing industry and factor affecting each activity AgricultureAgriculture is the process of producing food, feed, fiber and other desired products by the cultivation of current plants and the raising of domesticatedated animals (livestock). The practice of factory far-offm is also known as floriculture, while scientists, inventors and others devoted to up(p) farming methods and implements are also said to be engaged in floriculture. much people in the world are involved in agriculture as their primary economic activity than in any other, yet it entirely accounts for twelve pct of the worlds GDP.Total agri heathenish commutation over consists of food and non- food commodities in both rough and processed forms. Classification of outlandish traffic is a breakdown of agricultural trade into four components. * stack commodities, * processed ordinary products, * crisp horticultural products, * process consumer fulls. Over the years the persona of bulk commodities in integrality agricultural trade has gone down. slight(prenominal)en indigence for bulk commodities has been compensated by the growth in intermediate processed products, which are essentially processed bulk commodities.Processed intermediate products such as vegetable oils, flour and so forth The share of fresh horticultural products, i. e. products that are consumed without further processing, in total agricultural trade is tight constant. Re pennyime amelioratements in dose technology dupe played a affair in promoting trade of fresh products. The faster growing categories in agricultural trade are non-bulk packaged processed food products, which are marketed under different brands. Developed countries pass water played an importingant role in promoting trade in processed food products.Share of these countries in import of processed food products is much tha n than developing countries, whereas in case of bulk commodities share of developing countries exceeds the import of developed countries. Food processing Food processing is the methods and techniques used to transform raw ingredients into food for human consumption. Food processing takes clean, harvested or slaughtered and butchered components and uses them to produce marketable food products. Consumer expenditure on processed food and drink 200107 (US$ meg), as shown in beneath ChartGraph-1. 1 Consumer expenditure on food root systems Food Corporation of India, tissue http//fciweb. nic/Consu continentxpen/. in Whole Food processing industry in divided generally six sectors which are as shown in as accredited 3 and food product cover in these sectors and shown in table 2 forecast 1. 3. Major sector in food processing industry Table-1. 2 Segmenting food product according to Food processing sector Indian Food Processing Industry History of food processing Industry in IndiaFo od processing dates back to the prehistoric ages when crude processing incorporated slaughtering, fermenting, sun drying, preserving with salt, and various types of cooking (such as roasting, smoking, steaming, and oven baking). Salt-preservation was e limitedly cat valium for foods that constituted warrior and sailors diets, up until the introduction of corporationning methods. Evidence for the embodyence of these methods exists in the literature of the ancient Greek , Chaldean, Egyptian and Roman civilisations as well as archaeological evidence from Europe, North and South America and Asia.These tried and tried processing techniques re chief(prenominal)ed essentially the same until the advent of the industrial revolution. Examples of ready- meals also exist from pre industrial revolution times such as the Cornish unenviable and the Haggis. Modern food processing technology in the 19th and twentieth century was tremendously developed to serve force needs. In 1809 Nicolas App ert invented a vacuum bottling technique that would supply food for French troops, and this contributed to the development of tinning and then commodening by Peter Durand in 1810.Although initially expensive and approximately hazardous due to the lead used in fag ends, erectned goods would subsequently be sum up a staple most the world. Pasteurization, discovered by Louis Pasteur in 1862, was a signifi shtupt advance in ensuring the micro-biological safety of food. In the twentieth century, World War II, the space race and the rising consumer society in developed countries (including the United States) contributed to the growth of food processing with such advances as spray drying, juice concentrates, freeze drying and the introduction of artificial sweeteners, coloring agents, and preservatives such as sodium benzoate.In the late 20th century products such as dried instant soups, reconstituted fruits and juices, and self cooking meals such as MRE food ration were developed . In Western Europe and North America, the second fractional of the 20th century witnessed a rise in the pursuit of thingumajig food processors especially marketed their products to marrow-class working wives and mothers. Frozen foods (often opinioned to Clarence Birdseye) found their success in sales of juice concentrates and TV dinners.Processors utilized the perceived set of time to appeal to the postwar world, and this same appeal contributes to the success of convenience foods today. * Benefits More and more(prenominal) people live in the cities far away from where food is grown and produced. In many families the adults are working away from home and therefore there is junior-grade time for the supply of food based on fresh ingredients. The food industry offers products that forgather many different needs From peeled potatoes that wholly put one over to be boiled at home to fully prepare ready meals that can be heated up in the microwave oven within a fewer minut es.Benefits of food processing include toxin removal, preservation, easing marketing and dispersal tasks, and change magnitude food consistency. In appendage, it increases seasonal availableness of many foods, enables transportation of delicate destructible foods crosswise long distances, and makes many kinds of foods safe to eat by de-activating spoilage and pathogenic micro-organisms. Modern supermarkets would non be viable without modern food processing techniques, long voyages would not be possible, and military campaigns would be importantly more difficult and greetly to execute.Modern food processing also improves the quality of life for allergists, diabetics, and other people who cannot consume well-nigh common food elements. Food processing can also add extra nutrients such as vitamins. Processed foods are often less susceptible to early spoilage than fresh foods, and are divulge conform to for long distance transportation from the source to the consumer. Fresh mat erials, such as fresh produce and raw meats, are more probably to lactate pathogenic micro-organisms (e. g. Salmonella) capable of causing serious- encephaloned illnesses. * DrawbacksIn general, fresh food that has not been processed other than by washing and simple kitchen readiness, whitethorn be expected to contain a high proportion of naturally occurring vitamins, vulcanized fiber and minerals than the equivalent product processed by the food industry. Vitamin C for illustration is destroyed by heat and therefore canned fruits have a lower content of vitamin C than fresh ones. Food processing can lower the nutritional determine of foods. Processed foods prevail to include food additives, such as flavorings and texture enhancing agents, which may have fiddling or no nutritive value, or be unhealthy. nigh preservatives added or created during processing such as nitrites or sulphites may cause adverse health centers. Processed foods often have a higher ratio of calories to other essential nutrients than unprocessed foods, a phenomenon referred to as empty calories. Most junk foods are processed, and fit this category. High quality and hygiene standards must be keep to ensure consumer safety and failures to maintain adequate standards can have serious health consequences. Processing food is a actually costly process, thus increasing the determines of foods products.Current Market Overview India is a area of striking contrasts and enormous ethnic, linguistic, and cultural revolution. It has a people of 1. 1 billion, and it is comprised of 28 states and seven Union Territories (under federal government rule). The states differ vastly in resources, culture, food habits, living standards, and languages. enormous disparities in per-capita income levels exist amid and within Indias states. About 75 percent of the countrys people live in 550,000 villages the await in 200 towns and cities. in that location are 30 cities with a world above one trillion people.India has the salientst number of poor, with 35 percent of the population surviving on less than $1 per day, and 80 percent of the population surviving on less than $2 per day1. Nearly 51 percent of Indians consumption expenditures go for food (54 percent in arcadian demesne and 42 in urban areas) 2 loosely for basic items like grains, vegetable oils, and sugar very little goes for value added food items. In recent years, however, there has been an increase shift towards vegetables, eggs, fruits, meat, and beverages. Religion has a major influence on eating habits and, along with low purchasing qualificationiness, supports a predominantly vegetarian diet.Some observers of Indias economic scene are, however, highly optimistic astir(predicate) consumption growth potential, and believe that rising income levels, increasing urbanization, a changing age profile (more young people), increasing consumerism, a significant rise in the number of single men and women professionals, and the availability of cheap credit give push India onto a new growth trajectory. These segments of the population are aware of quality differences, insist on world standards, and are automatic to pay a premium for quality. Nonetheless, a major share of Indian consumers has to sacrifice quality for affordable monetary values.Potential US exporters should also bear in mind that Indias different agro-industrial base already offers many items at competitive tolls. Results of the Market Information Survey of Households, conducted by the National Council of utilize Economic Research, show that the share of households in the upper middle/high income meeting ( yearbook household income Rs. 90,000, or $11,200 on purchasing power comparison basis) has grown from 14% in 1989-90 to 28% in 2001-02, and is projected at 48 percent in 2009-10. Correspondingly, there has been a decline in the low-income radical.Sixty-five million people are expected to enter the 20-34 year a ge group from 2001 to 2010. By 2025, 40 percent of Indians are expected to be urban dwellers. Structural reforms and stabilization programs during the 1990s have contributed to Indias prolong economic growth, which has been relationly strong over the past deuce decades, averaging 6 percent annually. Since 1996, the Indian government has gradually lifted import-licensing restrictions, which had effectively veto imports. On April 1, 2001, all remaining quantitative restrictions were removed, putting India in accordance with its WTO commitment.Nonetheless, the government continues to discourage imports, particularly agricultural products, with the use of high tariffs and non-tariff breast plant life. importing tariffs on most consumer products, although declining, are still high, ranging from 30. 6 to 52. 2 percent. Some sensitive items, such as alcoholic beverages, poultry meat, raisins, vegetable oils, wheat, rice, etc. , attract much higher duties. Nontariff barriers include unwarranted sanitary and phytosanitary restrictions and trying labeling requirements for pre-packaged foods.Other factors adversely affecting imports include a poorly developed basis (transportation and cold chain), a predominantly unorganized retail sector, and outdated food laws. However, some positive factors are Rising disposable income levels Increasing urbanization and exposure to Western culture Growing health consciousness among the middle class Growing consumerism Changing age profile Increasing availability of cheap consumer credit Current status of industry is shown in below table Table1. 4. Status of Food Processing Industry in IndiaSources tout ensemble India Food Processors Association http//www. aifpa/foodindustry/. com India is a major producer of many agricultural commodities and it accounts for nine per cent of the worlds fruit production and close 11 per cent of the vegetable production. only if the level of processing and value addition of fruits and vegetables is just two per cent of the total production, compared to 65 per cent in the USA, 23 per cent in China and 78 per cent in the Philippines as given in the figure below. Graph 1. 2 food processing constituent in different country Sources web http//www. fmi. /worldfoodprocessed. org There is huge wa order of perishable agricultural commodities. The positioning in the country with regard to other products also is not very encouraging. The overall level of processing of agricultural commodities in the country is estimated at six per cent. The annual loss on account of wastage of agricultural commodities is estimated to be round Rs 50,000 crore. At present, the food processing sector employs about 13 million people instanter and about 35 million people indirectly. In 200607, food processing sector contributed about 14 per cent of manufacturing GDP with a share of Rs 2,80,000 crore.Of this, the unorganised sector accounted for more than 70 per cent of production in legal i njury of volume and 50 per cent in terms of value. Indian Food Processing Industry Performance Market exposition The market for food processing industry is the complex in constitution it is global collective of diverse worryes that together supply much of the food energy consumed by the population. Only subsistence farmers, those who survive on what they grow, can be considered outside of the scope of the modern food processing industry. The food processing industry includes Regulation local, regional, national and world-wide rules and regulations for food production and sale, including food quality and food safety, and industry lobbying activities * Research and development food technology * Financial services insurance, credit * Manufacturing processed packed food, food processing machinery and supplies, food processing construction, etc. * Food processing technology preparation of fresh products for market, manufacture of prepared food products * Marketing promotion of gener ic wine products (e. g. milk board), new products, public opinion, done advertising, packaging, ublic relations, etc * Wholesale and scattering warehousing, transportation, logistics * retail supermarket arrange and in aiment food stores, direct-to-consumer, eating place, food services. Food Processing Sector overview Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of killable products. The Ministry of Food Processing, Government of India has defined the following segments within the Food Processing industry Dairy, fruits & vegetable processing Grain processing Meat & poultry processing Fisheries Consumer foods including packaged foods, beverages and packaged drinking water. While the industry is large in terms of size, it is still at a nascent stage in terms of development. Out of the countrys total agricult ure and food produce, only 2 per cent is processed. The highest share of processed food is in the Dairy sector, where 37 per cent of the total produce is processed, of which 15 per cent is processed by the organized sector. Primary food processing (packaged fruit and vegetables, milk, milled flour and rice, tea, spices, etc. ) constitutes to the highest degree.Table 2. 1 Indias food-processing sector Indias food-processing sector, though still developing, contributes 14 percent to the manufacturing GDP (5. 5 percent of aggregate GDP), produces goods cost rs. 2. 8 trillion ($64 billion), and employs 13 million people. Much of Indias food-processing industry is small- exceed and involves very little value addition, although in recent years several multinational food-processing companies have started operations in India. A plethora of internal restrictions, including (a) prohibition on unusual direct investment in retail, (b) prohibitions on contract farming, (c) barriers to nterst ate doctor based on revenue and food security concerns, (d) some of the highest taxes on processed foods in the world, and (e) inefficient in home and marketing nets bad constrain growth of the sector. The almost year-round availability of fresh products crosswise the country, combined with the consumers preference for fresh products and freshly cooked foods has dampened affect for processed food products. The level of processing varies across segments ranging from less than 2 percent of the production in the case of fruits and vegetables to over 90 percent in non-perishable products such as cereals and pulses.In the last mentioned, however, processing involves very little value addition, and is mostly moderate to grading, cleaning, milling, and packing with negligible use of additives, preservatives, and flavors. Table 2. 2 Level of processed food in year 2008 Product Level of Processing (% of total production) OrganizedSector UnorganizedSector 1/ Total Fruits & vegetable s 1. 2 0. 5 1. 7 Milk 15. 0 22. 0 37. 0 Meat 21. 0 0 21. 0 poultry 6. 0 0 6. 0 Marine fisheries 1. 7 9. 0 10. 7 Shrimp 0. 4 1. 0 1. 4 Source Rabobank Analysis Source Web http//www. nasftlevelprocessing. org/ Table 2. level of processing Forecasted Unorganized in fruits and vegetables includes unbranded pickles, sauces, and potato chips, but excludes processing by street vendors unorganized in dairy includes processing by sweet food makers unorganized in marine products includes processing by small fishermen. . At present, most inputs for the food-processing industry are sourced domestically, with the exception of some bulk commodities that are in short supply, such as pulses and vegetable oils, dried fruits and nuts, and small but increasing quantities of food additives and ingredients such as soy proteins, whey, and flavors and essence.India annually imports vegetable oils precious at over $2. 6 billion and pulses valued at $560 million. Imports of food ingredients were valued at $170 million in 2007/08, and include mostly spices and condiments, dairy products, cocoa products, fish and fish products, fruit juices, and other ingredients (yeasts, sauces, sluttish drink concentrates, flavoring materials, soy protein concentrates and isolates, etc. ). Unorganized, small players account for more than 70 percent of the industrys output in volume and 50 percent in value terms.Most of them direct locally, add little if any value to products, and use outdated technologies. The governments form _or_ system of government of reserving the food-processing sector for small-scale units, effective until 1991, discouraged large-scale domestic and foreign direct investment in the food-processing sector. However, following economic liberalization in 1991, the food-processing industry was opened, get outing in increase investment in this sector, both domestic and foreign.Over the last few years, several large companies, both Indian and foreign, have invested in the food- processing melodic phrase in India, resulting in significant growth in this sector. Some of the major players in Indias food-processing industry are listed in this report. There are hundreds of medium-sized regional companies, some of them aspiring to emerge as national players with their own established brands, who pose some challenger to large theatres . The domestic organized processed-food market is expected to triple in the succeeding(a) 10 years from about $100 billion in FINACIAL social class 2004 to $310 billion in FINACIAL YEAR 2015.India aims to increase its share of world trade in this sector from 1. 7% currently ($7. 5 billion) to 3% by 2015 ($20 billion) Graph 2. 1 FMCG Market Size forecasting Sources-web http//www. foodprocessing/marketsize/. com So here we have estimated that production of processed food is increasing linearly with respect to FMCG Market size till 2015 E ,its shows that very good potential of proceeds food in coming future. Major Players of Food Processing Industry Indian Food Processing Companies ProfilesIndian food processors may be divided into the following main categories great Indian companies that have their production base in India or neighboring countries (for tax-saving purposes) Multinational and joint-venture companies that have their production base in India Medium/small domestic food-processing companies with a local mien Small local players in the unorganized sector Major Indian player in Food processing Industry Overview I. T. C LTD ITC is one of Indias foremost private sector companies with a market peachyisation of nearly US $ 19 billion* and a employee turnover of over US $ 5. 1 Billion.ITC has a diversified presence in Cigarettes, Hotels, Paperboards Specialty Papers, Packaging, Agri care, Packaged Foods Confectionery, Information engineering, chumped Apparel, Personal blood line organisation, Stationery, Safety Matches and other FMCG products. ITCs Agri- subscriber line is one of Indias lar gest exporters of agricultural products. ITC is one of the countrys biggest foreign exchange earners (US $ 3. 2 billion in the last decade). The Companys e-Choupal initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet.This transformational strategy, which has already move rough the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Companys marketing Reach. ITCs wholly owned Information Technology subsidiary, ITC InfoTech India Limited, is crisply pursuing emerging opportunities in providing end-to-end IT solutions, including e-enabled services and business process outsourcing.ITCs production facilities and hotels have won numerous national and world(prenominal) awards for quality, productivity, safety and environment caution systems. ITC was the showtime company in India to voluntarily seek a corporate governance rating. ITC employs over 25,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealthiness generating capabilities in a globalizing environment to consistently reward more than 3, 78,000 shareholders, accomplish the aspirations of its stakeholders and meet societal expectations.This over-arching vision of the company is expressively captured in its corporate positioning statement. GODREJ PROFILE Started in 1897 as locks manufacturing company, the Godrej crowd is today one of the most accomplished and diversified business houses in India. Godrejs success has been driven by the companys commitment to delivering innovation and excellence. through the consistent application of this commitment and a century of ethical business conduct, Godrej has earned an unparalleled reputation for trust and reliability.In 1930, Godrej became the first company in the world to develop the technology t o manufacture soap with vegetable oils that inwardness of innovation has continued throughout the organizations history. Today Godrej is delivering consumers fire innovations across a spectrum of businesses. The companys pursuit of excellence is evenly well established and enduring. In the 1944 Mumbai docks blast, Godrej safes were the only security equipment whose contents were unanimous an equal level of product quality continues to be expected from each product bearing the Godrej brand arouse. Godrej management nderstands that the companys enormousest asset is the trust and faith that consumers have reposed in it, and recognizes that the company must continue to earn this trust. This translates to the organization delivering outstanding quality and value in everything it does. Godrejs ethical and visionary practices have allowed the company to successfully rotate into a number of businesses. Today Godrej is a lead-in manufacturer of goods and provider of services in a mu ltitude of categories home appliances, consumer durables, consumer products, industrial products, and agri products to name a few.A recent estimate suggested that 400 million people across India use at least one Godrej product every day. The group has more recently entered the real estate and information technology sectors, and management views these as avenues for enormous growth. The 6000 Crore (US $1. 5Billion)Godrej Group is one of Indias largest professionally take private sector groups. It has a well-established presence in varied businesses ranging from foods and consumer durables to real estate and information technology. In 1997, Godrej completed 100 years of service to the nation. Today, the name Godrej is synonymous with Quality Trust.It is amongst the most admired Business Groups in India, delivering quality products and services to its customers at competitive costs. All this, with the highest international standards of customer care. MTR Foods Limited Profile MTR F oods Limited is amongst the top five processed food manufacturers in India. We manufacture, market and export a wide range of packaged foods to global markets that include USA, UK, Australia, New Zealand, Malaysia, Singapore, UAE and Oman. Starting with the legendary MTR restaurant in Bangalore, Indias silicon valley, we now offer complete meal solutions.Our wide range of products include ready-to-eat curries and rice, ready-to-cook gravies, frozen foods, ice ointment, instant eat and dessert mixes, spices and a variety of accompaniments like pickles and papads. Our deep understanding of culinary expectations and needs has resulted in many new and innovative products. Our investments in infrastructure and technology ensure that we can scale rapidly and bring these to market. Today, consumers across the globe count on us to bring them all-natural, wholesome and pleasing food that is also convenient and no-fuss.We have also expanded our retail presence significantly contemporary Nam ma MTR and MTR kiosks now serve delighted consumers across Bangalore and Chennai. Parle Limited Profile Parle Products has been Indias largest manufacturer of biscuits and confectionery, for almost 80 years. Makers of the worlds largest selling biscuit, Parle-G, and a host of other very popular brands, the Parle name symbolizes quality, nutrition and great taste. With a reach spanning even the remotest villages of India , the company has definitely come a very long way since its inception.Many of the Parle products biscuits or confectioneries, are market leaders in their category and have won acclaim at the Monde Selection, since 1971. With a 40% share of the total biscuit market and a 15% share of the total confectionary market in India, Parle has grown to contract a multi-million dollar company. While to consumers its a beacon of faith and trust, competitors look upon Parle as an example of marketing brilliance. Dabur India Limited Profile Dabur India Limited has marked its pre sence with some very significant achievements and today commands a market leadership status.Our story of success is based on dedication to nature, corporate and process hygiene, dynamic leadership and commitment to our partners and stakeholders. The results of our policies and initiatives speak for themselves. * Leading consumer goods company in India with a turnover of Rs. 2233. 72 Crore (FY07) * 2 major strategic business units (SBU) Consumer condole with department (CCD) and Consumer Health Division (CHD) * 3 Subsidiary Group companies Dabur Foods, Dabur Nepal and Dabur International and 3 step down subsidiaries of Dabur International Asian Consumer cover in Bangladesh, African Consumer Care in Nigeria and Dabur Egypt. 13 ultra-modern manufacturing units spread around the globe * Products marketed in over 50 countries Wide and deep market penetration with 47 CF agents, more than 5000 distributors and over 1. 5 million retail outlets all over India. CCD, dealing with FMCG P roducts relating to Personal Care and Health Care * Leading brands * Dabur The Health Care Brand * Vatika-Personal Care Brand * Anmol- Value for Money Brand * Hajmola- Tasty Digestive Brand * and Dabur Amla, Chyawanprash and Lal Dant Manjan with Rs. 00 crore turnover each * Vatika Hair Oil Shampoo the high growth brand * Strategic positioning of Honey as food product, lead-in to market leadership (over 40%) in branded honey market * Dabur Chyawanprash the largest selling Ayurvedic medicine with over 65% market share. * Leader in herbal digestives with 90% market share * Hajmola tablets in command with 75% market share of digestive tablets category Dabur Lal Tail tops do by massage oil market with 35% of total share. CHD (Consumer Health Division), dealing with classical Ayurvedic medicines. Has more than 250 products sold through prescriptions as well as over the counter * Major categories in traditional formulations include Asav Arishtas reticular activating system Rasayanas Churnas Medicated Oils * Proprietary Ayurvedic medicines developed by Dabur include Nature Care Isabgol Madhuvaani Trifgol * Division also works for promotion of Ayurveda through organised community of traditional practitioners and developing fresh batches of students Analysis Porter Five Forces Analysis for Indian Food Processing AnalysisThe Porters 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position youre looking to move into. With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of scant(p)ness, and avoid taking wrong steps. This makes it an important part of your planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable.However it can be very illume when used to understand the balance of power in other situations too. brat of Entry (high) The flagellum of new gate is quite high if anyone looks as if theyre making a sustained profit, new competitors can come into the industry easily, reducing clams Profitable markets that yield high returns will draw slosheds. The results is many new entrants, which will effectively decrease lucrativeness. Unless the insertion of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition). Capital Requirements(low) The capital costs of getting established in an industry can be reduce because of the government subsidies provided to food processing sector. Financial disaster for most participants is that the initial setup costs of new ventures were typically very low. startup costs are so low that individual, self-financing entrepreneurs can enter. For example, in mineral water pouch business, costs for a company are a round Rs 350,000 and reaming Rs 750,000 is subsidies by Government * Economies of Scale(low)In industries that are capital or research or advertising intensive, efficiency requires large-scale operation. The problem for new entrants is that they are go about with the choice of both entering on a small scale and accepting high unit costs, or entering on a large scale and running the risk of underutilized efficiency while they make believe up sales volume. These economies of scale have deterred intromission into the industry so that the only new entrants in recent decades have been state-supported companies the main reason or source to achieve scale economies is new product development costs.Thus, developing and launching a new product is very costly. Segment of the market for food processing Industry is very narrowly define so potential customer are very few thats why companies are not able to achieve economies of scales. * rank(a) Cost Advantages(high) Apart from economies of scale, established firms may have a cost advantage over entrants simply because they entered earlier. Absolute cost advantages often result from the acquisition or alliances of low-cost sources of raw materials. Absolute cost advantages may also result from economies of reading.Amul cost advantage in Pasteurization milk results from its early entry into this market and its ability to move down the learning curve faster than local player and then making alliances with they produce milk but marketed by the brand name of Amul. So new enter company alliance with well establish large firm can easily enter in the company Product specialty (high) In an industry where products are differentiated, established firms possess the advantages of brand comprehension and customer loyalty.New entrants to such markets must spend disproportionately heavily on advertising and promotion to gain levels of brand consciousness and brand gracility quasi(prenominal) to that of established companies. On e study found that, compared to early entrants, late entrants into consumer goods markets incurred additional advertising and promotional costs amounting to 2. 12 percent of sales revenue. Alternatively, the new entrant can accept a niche position in the market or can seek to cope by cutting price.And in food processing industry there are many untapped market are available, so there are good opportunity for niche marketing in food processing industry e. g. sugar free is product that only targeting diabetic mortal and health conscious person only and it having 11% growth rate annually * Access to Channels of Distribution (low) Whereas lack of brand awareness among consumers acts as a barrier to entry to new suppliers of consumer goods, a more immediate barrier for the new company is apt(predicate) to be gaining distribution.Limited capacity within distribution transmit (e. g. , shelf space), risk aversion by retailers, and the fixed costs associated with carrying an additional pr oduct result in retailers being reluctant to carry a new manufacturers product. The mesh for supermarket shelf space amid the major food processors (typically involving lump-sum payments to retail manacles in order to reserve shelf space) means that new entrants simply get a look in. * Governmental and Legal Barriers(high)Some economists (Amitabha Sen) claim that the only effective barriers to entry are those created by government. In taxicabs, banking, telecommunications, and broadcasting, entry normally requires the granting of a license by a public authority. From medieval times to the present day, companies and favored individuals have benefited from governments granting them an exclusive right to ply a particular trade or offer a particular service. In knowledge-intensive industries, patents, copyrights, and other legally protected forms of intellectual property are major barriers to entry.Regulatory requirements and environmental and safety standards often put new entrants at a disadvantage to established firms, because compliance costs tend to weigh more heavily on newcomers . e. g. Prevention of Food Adulteration laws is not only stringent one but time consuming also. It is considered as an primitive and no industry friendly food law. It substantial varies from Codex standard. harmonisation of multiple food laws is an urgent necessity. * Retaliation (low) Barriers to entry also depend on the entrants expectations as to possible retaliation by established firms.Retaliation against a new entrant may take the form of aggressive price-cutting, increased advertising, sales promotion, or litigation. The major food processing company has a long history of retaliation against low-cost entrants. Parle and other budget food processing have alleged that selective price cuts by MNC and other major food processing like Britannia amounted to predatory determine designed to prevent its entry into new routes. 8 To avoid retaliation by incumbents, new entrants ma y seek initial small scale entry into less visible market segments.New entered company market and targeted the small segments partly because this segment had big opportunity and large profit (niche marketing). Rivalry between Established Competitors (low) For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. For most industries, the major determinant of the overall state of competition and the general level of profitability is competition among the firms within the industry.In some industries, firms compete aggressively sometimes to the extent that prices are pushed below the level of costs and industry-wide losses are incurred. In others, price competition is muted and rivalry focuses on advertising, innovation, and other non price dimensions. Six factors play an important role in determining the nature and intensity of competition between established firms intentness, the diversity of competitors, product differentiation, excess capacity, deviation barriers, and cost conditions. * Concentration(high) Seller concentration refers to the number and size distribution of firms competing within a market.It is most commonly thrifty by the concentration ratio the combined market share of the leading producers. Where a market is dominated by a small group of leading companies (an oligopoly), price competition may also be restrained, either by outright collusion, or more commonly through symmetry of pricing decisions. Thus, in markets dominated by two companies, such as soft drinks (Coke and Pepsi), prices tend to be similar and competition focuses on advertising, promotion, and product development. Economists measure rivalry by indicators of industry concentration.The Concentration Ratio (CR) is one such measure. The Bureau of Census periodically reports the CR for major type Industrial Classificat ions (SICs). The CR indicates the percent of market share held by the four largest firms (CRs for the largest 8, 25, and 50 firms in an industry also are available). A high concentration ratio indicates that a high concentration of market share is held by the largest firms the industry is concentrated. With only a few firms holding a large market share, the competitive landscape is less competitive (closer to a monopoly).A low concentration ratio indicates that the industry is characterized by many rivals, no(prenominal) of which has a significant market share. These fragmented markets are said to be competitive. The concentration ratio is not the only available measure the line is to define industries in terms that convey more information than distribution of market share. In food processing industry concentration ratio is high that indicate high concentration of market share is held by the largest firms like ITC (tobacco), Cadbury (chocolates) etc.As the number of firms supplyi ng a market increases, coordination of prices becomes more difficult, and the likeliness that one firm will initiate price-cutting increases. However, despite the common watching that the elimination of a competitor typically reduces price competition, while the entry of a new competitor typically stimulates it, systematic evidence of the impact of seller concentration on profitability is surprisingly weak. Richard Schmalensee concluded that The relation, if any, between seller concentration and profitability is weak statistically and the estimated effect is ordinarily small. * In pursuing an advantage over its rivals, a firm can choose from several competitive moves * Changing prices raising or lowering prices to gain a temporary advantage. * Improving product differentiation improving features, implementing innovations in the manufacturing process and in the product itself. * Creatively using channels of distribution using vertical integration or using a distribution channel that is novel to the industry. * Exploiting relationships with suppliers set high quality standards and undeniable suppliers to meet its brings for product special(prenominal)ations and price. Diversity of Competitors (low) The extent to which a group of firms can avoid price competition in favor of collusive pricing practices depends upon how similar they are in terms of origins, objectives, costs, and strategies. In food processing industry it is very low here firm always try to compete rival strategies and there product prices e. g. coke and Pepsi, magi and top Ramon ,Amul ice cream and havmor ice cream etc * Product Differentiation The more similar the offerings among rival firms, the more impulsive customers are to comforter and the great the inducing for firms to cut prices to increase sales.Where the products of rival firms are virtually indistinguishable, the product is a commodity and price is the sole basis for competition. Commodity industries such as food proces sing agriculture, mining, and petrochemicals tend to be plagued by price wars and low profits. By contrast, in industries where products are highly differentiated (perfumes, pharmaceuticals, restaurants, management consulting services), price competition tends to be weak, even though there may be many firms competing. ood processing industry it is very low here firm always try to compete rival strategies and there product prices because they have more or similer offering and there product are virtually indistinguishable e. g. coke and Pepsi, magi and top Ramon ,Amul ice cream and havmor ice cream etc * Excess Capacity and Exit Barriers Why does industry profitability tend to fall so drastically during periods of recession? The key is the balance between demand and capacity. Unused capacity encourages firms to offer price cuts to attract new business in order to spread fixed costs over a greater sales volume.Excess capacity may be orbitual (e. g. the boombust cycle in the semiconduc tor industry) it may also be part of a structural problem resulting from overinvestment and declining demand. In these latter situations, the key issue is whether excess capacity will leave the industry. Barriers to exit are costs associated with capacity leaving an industry. Where resources are durable and specialized, and where employees are entitled to job protection, barriers to exit may be substantial. Conversely, rapid demand growth creates capacity shortages that boost margins.On average, companies in growing industries earn higher profits than companies in slow growing or declining industries see figure 3. 4. In food processing industry it will not effect because food demand is always increase or maintain because it is directly related to population growth, and in this industry some exit barrier are working because of Government policies. Bargaining Power of Buyers (low) excessively draw as the market of outputs. The ability of customers to put the firm under thrust and i t also affects the customers sensitivity to price changes. Customer has enough option to electrical switch so they have less bargaining power. The firms in an industry operate in two types of markets in the markets for inputs and the markets for outputs. In input markets firms purchase raw materials, components, and financial and labor services. In the markets for outputs firms sell their goods and services to customers (who may be distributors, consumers, or other manufacturers). In both markets the transactions create value for both vendees and sellers.How this value is shared between them in terms of profitability depends on their comparative economic power. Let us deal first with output markets. The strength of buying power that firms face from their customers depends on two sets of factors buyers price sensitivity and relative bargaining power. Buyers Price Sensitivity (low) The extent to which buyers are sensitive to the prices charged by the firms in an industry depends o n four main factors * The greater the importance of an item as a proportion of total cost, the more sensitive buyers will be about the price they pay.Beverage manufacturers are highly sensitive to the costs of metal cans because this is one of their largest single cost items. Conversely, most companies are not sensitive to the fees charged by their auditors, since auditing costs are such a small proportion of overall company expenses. * The less differentiated the products of the supplying industry, the more willing the buyer is to switch suppliers on the basis of price. * The more intense the competition among buyers, the greater their eagerness for price reductions from their sellers.As competition in the world food processing industry has intensified, so component suppliers are subject to greater pressures for lower prices, higher quality, and faster delivery. * The greater the importance of the industrys product to the quality of the buyers product or service, the less sensitive are buyers to the prices they are charged. The buying power of necessary processed food product like suger salt etc. is limited by the critical importance of these components to the functionality of their product. Relative Bargaining Power (high)Bargaining power rests, ultimately, on refusal to deal with the other party. The balance of power between the two parties to a transaction depends on the credibility and effectiveness with which each makes this threat. The key issue is the relative cost that each party sustains as a result of the transaction not being consummated. A second issue is each partys expertise in leveraging its position through gamesmanship. Several factors influence the bargaining power of buyers relative to that of sellers * Size and concentration of buyers relative to suppliers.The smaller the number of buyers and the bigger their purchases, the greater the cost of losing one. * Buyers information. The better informed buyers are about suppliers and their prices and costs, the better they are able to bargain.. belongings customers ignorant of relative prices is an effective constraint on their buying power. But knowing prices is of little value if the quality of the product is unknown. It always works in food processing industry because people are not having full information about the product like k special of Kellogg which reduces the cholesterol of the consumer. Ability to integrate vertically. In refusing to deal with the other party, the option to finding another supplier or buyer is to do it yourself. Large food processing companies such as Heinz and Campbell Soup have minify their dependence on the manufacturers of metal cans by manufacturing their own. The leading retail chains have increasingly displaced their suppliers brands with their own-brand products. Backward integration need not of necessity occur a credible threat may suffice. Buyers are sizable in food processing industryBuyers are concentrated there are a few buye rs with significant market share Buyers purchase a significant proportion of output distribution of purchases or if the product is like Buyers possess a credible backward integration threat can threaten to buy producing firm or rival Buyers are nerveless in food processing industry Producers threaten preceding integration producer can take over own distribution/retail Significant buyer switching costs products not standardized and buyer cannot easily switch to another product.Buyers are fragmented (many, different) no buyer has any particular influence on product or price Producers supply critical portions of buyers input distribution of purchases Bargaining Power of Suppliers (low) also described as market of inputs. Suppliers of raw materials, components, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e. g. charge excessively high prices for unmatched resources.Analysis of the determina nts of relative power between the producers in an industry and their suppliers is precisely akin to analysis of the relationship between producers and their buyers. The only difference is that it is now the firms in the industry that are the buyers and the producers of inputs that are the suppliers. The key issues are the ease with which the firms in the industry can switch between different input suppliers and the relative bargaining power of each party. Because raw materials, emi-finished products, and components are often commodities supplied by small companies to large manufacturing companies, their suppliers usually lack bargaining power. Suppliers are not Powerful because in food processing industry conjectural forward integration threat by suppliers Suppliers concentrated Significant cost to switch suppliers Customers Powerful Suppliers are Weak because in food processing industry Many competitive suppliers product is standardized Purchase commodity products Credible backw ard integration threat by purchasers Concentrated purchasers Customers WeakThreat of Substitutes (high) In Porters model, substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a products demand is affected by the price change of a substitute product. A products price elasticity is affected by substitute products as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to displace prices. The competition engendered by a Threat of Substitute comes from products outside the industry.The price of aluminum beverage cans is constrained by the price of glass bottles, mark cans, and plastic containers. These containers are substitutes, yet they are not rivals in the aluminum can industry. The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). * buyer propensity to substitute (high) * relative price performance of substitutes(high) * buyer switching costs (low) Pressure from Substitutes Emerges mainly From Two Factors 1. Switching costs for customers to the substitute. . Buyer willingness to search out for substitutes. Also the threat of substitution may take four different forms, each of which we shall now discuss with reference to above factors. Substitution of need We take switching from one product (e. g. natural drink of Dabur) to another (fresh juice from local vendor or prepared at home). In this case, the buyers might be looking out for freshness and might not mind the nominal switching costs Food processing Industry will definitely remain, in one form or the other, as long as the manufacturers manufacture and consumers consume.Food processing industry does not seem to become extinct even in the future. The issue that remains to be turn to is just what forms it k eeps evolving into. Here the Substitutes of food processing industry are fresh fruits and vegetables and food as a raw material , but they are yet very well developed in India, so their threat are comparatively very high but food processing industry break the boundaries of food product availability in certain season and area that is why food industry will sustain for longer term.While the treat of substitutes typically impacts an industry through price competition, there can be other concerns in assessing the threat of substitutes. * Strategic Implications of the Five militant Forces Competitive environment is unattractive from the standpoint of earning good profits when * Rivalry is vigorous * Entry barriers are low and entry is likely * Competition from substitutes is strong * Suppliers and customers have considerable bargaining power Competitive environment is ideal from a profit-making standpoint when * Rivalry is moderate Entry barriers are high and no firm is likely to enter * unsloped substitutes do not exist * Suppliers and customers are in a weak bargaining position. But food processing industry is little bit attractive but not ideal, it gives considerable profit Because of the following point * Rivalry is moderate * Entry barriers are low and firm is likely to enter * Good have some substitutes but up to certain extant * Suppliers and customers are in a weak bargaining position Conclusion Growing Indian economy and improving lifestyles of Indians contributing in a big way to the growth.The Indian snacks market is worth around US$ 3 billion, with the organised segment taking half the market share, and has an annual growth rate of 15-20 per cent. The unorganised snacks market is worth US$ 1. 56 billion, with a growth rate of 7-8 per cent per year. There are approximately 1,000 types of snacks and another 300 types of savories being sold in the Indian market today. There is a big market for snacks in India as urban Indian consumers eat ready-made snack s 10 times more than their rural counterparts. Consumers are willing to pay a premium for both value-added private and branded products, creating immense opportunities for manufacturers and retailers. The growth of food processing sector has nearly doubled to 13. 7 per cent during the last four years. A dominant segment of the food industry, food processing is estimated to be worth US$ 70 billion with a 32 per cent share. It comprises agriculture, horticulture, animal husbandries, and plantation. The opportunity for growth is huge when seen against the fact that while a mere 1. per cent of food is processed in India, nearly 80 per cent of food is processed in the developed world. Significantly, processed food exports have increased from US$ 6. 98 billion in 2003-04 to US$ 20. 51 billion in 2007-08, recording a whopping 193. 83 per cent growth rate. It realise Indias potential in this industry, investment target of US$ 25. 07 billion by 2015 to double Indias share in global food trad e from 1. 6 per cent to 3 per cent, increase processing of perishable food from 6 per cent to 20 per cent and value addition from 20 per cent to 35 per cent.At last India is all set to become the food supplier of the world. It has the cultivable land, all the seasons for production of all varieties of fruits and vegetables, well developed agribusiness system that works in its own way. There are some Factors such as rapid growth in the economy, the technological innovations, rise of families with dual incomes and the changing food habits of the population all point to the increasing need for healthy processed food. The supply chain sector is very weak with no process owner and this can spell disaster.The food supply chain needs the attention, the industry and the Government. * Reasons to lay in Indian Food Processing Industry It is the seventh largest country, with elongated administrative structure and independent judiciary, a sound financial & infrastructural network and above al l a stable and thriving democracy. Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base adequate for food processing industries. Presently a very small percentage of these are processed into value added products.It is one of the biggest emerging markets, with over 900 million population and a 250 million strong middle class. * Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and changes in demand patterns, leading to tremendous new opportunities for exploiting the large latent market. An average Indian spends about 50% of household expenditure on food items. accept for processed/convenience food is constantly on the rise. Indias comparatively cheaper men can be effectively utilized to setup large low cost production bases for domestic and export markets.Liberalized overall policy regime, with specific incentives for high priority food processing sector, provides a very contributing(prenomi nal) environment for investments and exports in the sector. Very good investment opportunities exist in many areas of food processing industries, the important ones being fruit vegetable processing, meat, fRead also My Ambition Is To Become a gatherer