INDIAFUTURESUCCESSSTORYOFWALNUTS

Table of contents1. India: A diverse country

2. Indian Consumer Dynamics

3. Growth in the Indian Retail and Food Industry

4. The Indian dry fruit market

5. Health awareness and growth of walnut usage in India

6. Scope of Chilean Walnuts in India

7. Walnut World Production data

8. Doing business in India

9. INC Congress, Chennai, India

Raju Bhatia

• Legacy in the dry fruit industry since 130 years

• Partner: California Agri Nuts Corporation (bulk trading)

• Director: DRB Foods Pvt Ltd (modern retail, ecommerce, institutional)

• One of the largest importers of almonds, walnuts, pistachios and other dry fruits into India

• Ambassador (India): International Nuts and Dried Fruit Council

• Large population @ 1.3 billion, area 3.29 million sq km

• Young population, with 41% under the age of 20.

• Economy growth @ 7.5% approx.

• GDP (2016) was $2.25 trillion

• Ecommerce industry is $14.5 billion with sales reaching to niche areas in the country

• Foreign Direct Investment has grown 60% from $48.47 billion to $77.86 billion in previous 2 years

India: A diverse country with a bright future

Nearly 41% of India's population is below the age of 20

Source: www.livepopulation.com; http://www.firstpost.com/india/latest-census-data-shows-youth-surge-nearly-41-of-indias-population-is-below-the-age-of-20-2581730.html

India’s young dynamic population

Indian customer

• Growth of the value-conscious and middle-class customer:– Indian consumers are willing to pay a premium for upgraded offerings– Quality of food is considered of prime importance for the family

• Growing desire for progress and staying ahead in the competitive world makes them spend of value-focused products that boost health

• Indian parents want to give their children a healthy kickstart at a young age– Walnuts have high potential as they are considered as ‘brain boosters’– Dry fruits are deep-rooted in Indian tradition and are considered an

‘essential’ everyday food item

Growth of Retail in India

• From $600billion in 2015 to $1trillion in 2020 (forecasted), there is a steady growth of 12%, out of which $120billion is ecommerce

• India is progressing towards a modern and digital economy• Internet penetration is 34% and is expected to increase to 50% by 2020.

Segmentation of Retail sales

91,5%

9,5%

Unorganized Retail

Organized Retail

63% 3%

9%

3% 5%

6% 3% 2% 6%

IndianRetailMarketBreak-UpFoodandGrocery

HomeCare

Apparel

PersonalAccessories

FoodService

Jewellery

HealthCare

Beauty&PersonalCareConsumerElectronics

33%

11% 11% 8%

7% 6% 4%

20%

OrganizedRetailBreakup

Apparel

FoodandGrocery

Mobile&Telecom

ConsumerElectronics

FoodService

Growth in Indian Food industry

The food industry, which is currently valued at US$ 39.71 billion is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11 per cent to US$65.4 billion by 2018.

Source- http://www.ibef.org/industry/indian-food-industry.aspx

0

10

20

30

40

50

60

70

2016 2018

Growth in food industry

Support from Indian Government

1. Demonetisation• $300bn of Indian rupees injected into the system• Reduced bad debts of bank with sudden flush of funds• Reduced lending rates boosting Indian businesses and increasing FDI• GDP of India expected to grow to 8% in the next 2 years

2. Set up of industrial parks for food processing and cold chains with up to 50% subsidies and grants

3. Introduction of Goods and Service Tax (from July 2017) • Uniform tax structure combining all taxes under one making a level playing field• Removal of indirect taxing layers • Initiatives taken by INC to put dry fruits under the lowest possible chargeable category of

GST

4. Other initiatives by Prime Minister Narendra Modi• Digital India- transforming India into a digital society• Start Up India- encouraging innovation and entrepreneurship in the country• Make in India- 40% increase in FDI, growing international confidence

• Started from the barter system.• Majority of the business is done in the Delhi wholesale market Khari Baoli. • A small market does business worth millions.• Over 200 cold storage facilities for dry fruits, using state-of-art machinery and

technologies for storage of delicate nuts and fresh fruits• Walnut hand-cracking facility of 3-5 containers per week in Delhi

80%ofthe business Khari Baoli,Delhi In anareaoflessthan1sq mile

Delhi: The Hub of Dry Fruit trading in India

Total consumption of dry fruits in India

28%

58%

9% 5%

DryFruitsConsumptioninIndia(2016/17)

Almonds Cashews Walnuts Pistachios

• Almonds – 110,000 MT• Cashewnuts – 225,000 MT• Walnuts – 36,000 MT• Pistachios – 18,000 MT

Dry fruits usage in India

• Eaten raw, soaked and peeled every morning in every Indian household

• Added to other food cooked in the house

• Gifting during festivals, weddings and other auspicious occasions

• Given by mothers to the children

• Integral part of prayer offerings

Where does India get walnuts from

56%

42%

2% ConsumptioninIndia2016/17

Domesticproduce(20000MT)

USA(15000MT)

Chile(575MT)

Forecast for 2017/18 for India walnut consumption

44%

44%

11%

1%

WalnutConsumptioninIndia

Domesticproduce(20000MT)

USA(20000MT)

Chile(5000MT)

Australia/Ukraine(200MT)

The Indian Walnut Crop

• Domestic, unplanned industry in Jammu & Kashmir where all the walnuts are grown

• Areas in Kashmir: North(Baramulla,Kupwara,Handwara),Central(Srinagar)andSouth(Anantnag,Supaya)

• Species:Juglan regia

• Taste: Strong, slightly bitter taste and are high in linolic acid

• Color: Walnuts in the northern area are comparatively lighter in color because of cooler conditions, than others

• Soil conditions: The saline condition of the soil is higher, therefore, stronger taste, as in other similar Persian varieties

• Cracking facilities: Hand-cracking and machine-cracking units in Jammu, Srinagar and Delhi

• Yield per hectare: 1.5 -2.0 tonnes

• Crop this year: 34000 tonnes inshell basis•• Exports from India: 10,000 tonnes inshell basis

The Indian Walnut Crop

Production of walnuts in India

43000

3500033000 34000 35000

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2013/14 2014/15 2015/16 2016/17 2017/18(expected

Production(inMT)

Source: US Department of Agriculture

36000

46000

75000

0

10000

20000

30000

40000

50000

60000

70000

80000

2016/17 2017/18(expected) 2020/21(expected)

Quantity(inMT)

Consumption of walnuts in India

HugegrowthpotentialintheIndianwalnutmarketwithgrowingawarenessofwalnutsAnnualgrowthrateof30%

Walnuts: traditional value in India

• Ayurvedic connect: – One walnut a day is good for growing children as it has ‘medhya properties’- nourishing

for the brain– Walnuts are considered natural ‘stress busters’

• Cracking walnuts: all Indian parents have a memory of cracking walnuts with a cracker and feeding their children

• Deep rooted in Indian tradition to feed children and elders soaked walnuts daily

• During Diwali and other festivals, it is considered auspicious and is a deep-rooted Indian tradition to gift dry fruits

Walnuts health awareness

Consideredas‘brainfood’,boostsbrain

performance

High invitaminsandantioxidants,idealforconsumptionbypregnantwomen

Lowriskofweightgainandobesitybecauseofhealthy

fats

Goodfordiabetesandhypertension

Dailyintakeof30gimproveselasticityofbloodvessels

Highestomega-3fattyacidsamongst

othernuts

Highinfiber,thiamin,vitaminB6,magnesium,iron

Maintainingcholesterollevels

becauseofOmega3fattyacids

Monounsaturatedfatty acids

strengthentheskincellsmakingitglow

Usage of walnuts in India

Eatenraw (soakeddaily)

Healthy snacking(mixeswithother

nuts)

Giftingthroughvalueaddition(honey sesame

walnuts)

Confectionery &Bakery(broken

walnuts)

Innovationthroughwalnutpaste,walnutoil,

walnutmilk

BeautyIndustry(walnutscrubs)

Usage of walnuts in India

Avenues of sales for walnuts in India

Institutions likehotelkitchens, corporatekitchens,bakeries,

coffeeshops

Brands makingmuesli,healthbars,trailmixes,

valueaddednuts

ModernretailstoreslikeReliance,AdityaBirlaRetail,Bharti

Walmart

Online:AmazonPantry,AmazonSubscribe&Save(focusedonhouseholdgrocery

items)

Unorganizedretail:localkirana stores

Giftingsegmentbecauseofitspremium&highperceivedvalue

inIndia

Avenues of sales for walnuts in India

Scope for Chilean walnuts in India

• Kashmir is a slow-moving producer

• Kashmir is not a planned producer of walnuts, more like an unorganised sector

• Kashmir has become a net importer of walnuts, instead of a net exporter

• The timing of arrival of Chilean walnuts is ideal for India’s festival season of July-November when over 50% of dry fruits are consumed. Chandler variety of USA finishes by march.

Kashmir1.5-2

MT/hectare

Chile6

MT/hectare

Average production capacity

Chilean variety walnuts with scope in India

• Variety:ChandlerandSerr

• Color:Lightincolor

• Size:30+

• Timeofshipment:FromApril-December,sincethereisa2monthtransittime

• FollowABCstrategyofmarketing- startfromlowerpriceandraisepricessothateveryonemakesmoney

• Qualityconsciousnessisimperative

World Production of Walnuts

Chile

Consumption

Exports

Imports

Indian market vs Chinese market

2016/17 India China

Population 1.3billion 1.4billion

Production 34,000MT 900,000MT

Consumption 36,000MT 450000MT

ThereismassivepotentialintheIndianmarket.

How to move forward?

“Ifeveryoneismovingforwardtogether,thensuccesstakescareofitself.”

- HenryFord

Doing business in India• Choose the right partner to deal with and the correct channel. Ensure

due diligence on your buyer

• Have a steady growth of exports into the Indian market

• Standardization and grading of productØ Special care in removal of foreign materialØ Provide extra number one grade similar to Californian exporters

• Competition of supplies to India with opening of phyto requirements[USA, Ukraine, Australia, China, ] [Domestic production of 35000 MT]. Prices need to be competitive

• Performance of contracts and timely shipments are essentialØ Special control of freshness, color of kernels, moisture levels, due

to short shelf life and 2 months transit time

Doing business in India

• Transparent and regular exchange of market information between Indian and Chilean partners

• Conforming to Indian phytosanity, food safety, fumigation and labelling requirements

• Regional representative of Walnut Commission in Chile for promotion, increasing health awareness, reinforcing Indian traditional customs with walnuts, advertising through TV, social media etc

• Understanding the Indian consumer requirements: Preference for light color chandler varieties. Indian consumers are very conscious about what they eat and know the varieties well.

Trade agreements under way in India

• Efforts are being made on both sides to enter into a duty free way agreement for agricultural products

• The present duty structure on walnuts is 30%

• Even if we are able to reduce this to 10% or 15%, as in case of other ag imports of dry fruits, this will give a great boost to the India-Chile trade

World Nut and Dried Fruit Congress

Themeetingpointforthenutanddriedfruitindustrytoseekbusinessopportunities,learn

andnetwork.

Theplacetoconductyournutbusiness.

www.nutfruitcongress.org

Over the course of 3 days:

• World-class thought-leadership Conference featuring visionary keynote speakers and panel discussions.

• Industry statistics, crop forecasts, supply and demand outlook, consumption, prospects for trade and market developments.

• Update on nutrition research, food safety, science and law.• Trends, products and technology in the Exhibition area.• INC Awards program: Golden Nut Award, Award for Excellence in

Research, Award for Excellence in Gastronomy and Innovation Award.• Social events program• Pre and post Congress tours• Spouse tours

Average Figures

• Theplacewherethenut&driedfruitindustrycomestodobusiness.• Industry'sbestopportunitytonetworkandgetthelatestmarketnews.• Meetwithbusinessleaders.• Recognizingoutstandingcontributionsandachievementsofthesector.

www.nutfruitcongress.org

100’sof companies

Since

1980

20 round tables, seminars

and meetings

60 speakers

1000participants

60countries

The world’s greatest Nut and Dried Fruit event

Chennai 2017 Sponsors:

Your visit to India: Rich culture, heritage and world-class hospitality

Travelling around IndiaoExperience the diverse cultures with different languages, food, religionsoVisit the Taj Mahal: one of the seven wonders of the worldoExperience the art and culture oPre- and post-conference tours

Your visit to India:Rich culture, heritage and world-class hospitality

• Chennaio Exquisite South Indian food and filter coffeeo Beautiful beaches and templeso Chennai Music festivalo Beautiful mix of religion and architecture: Mahabalipuram- a

UNESCO world heritage sight

Chennai video

“Your reputation is more important than your paycheck, and your integrity is worth more than your career.”

Ryan Freitas

Indo-Chile Collaboration

We look forward to seeing you in India, the land of

opportunities and carrying on a successful collaboration!

Thank you.