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Atul ChavanSenior Manager – Ingredients ProcurementKellogg Asia-Pacific & Africa New Delhi, 10th April 2015

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Food Industry Overview - India

CEREALS

• Grits & Cones

FOOD PROCESSING INDUSTRY GROWTH

GROWTH OF INDUSTRY SEGMENTS USING CORN (Average growth rates)

PROCESSED FRUIT & VEGETABLE

• Flour• Germ oil

• Modified starch• Sweeteners

BAKERY• Flour• Grits & cones

• Starch• Sweeteners

SALTY SNACK

• Flour• Whole Kernel Products

• Starch• Grits & Cones

SOUPS

• Whole Kernel Products• Germ Oil

• Starch• Sweeteners

CONFECTIONERY

• Starch • Sweeteners

FOOD PROCESSING INDUSTRY OVERVIEW USAGE OF CORN IN FOOD PROCESSING INDUSTRY SEGMENTS

• Sunrise sector

• Accounts for more than 43 % of total FMCG segment

revenue

Source: MOFPI report, 2013-14

Source: Euromonitor, Technopak Advisor, Nielsen

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Changing Consumer Preferences

RISING INCOME LEVELS

AGE

CONSUMER AWARENESS

NUCLEAR FAMILIES

VALUE FOR MONEY

QUALITY

CONVENIENCE

• India’s average household income is set to triple by 2025

• Increased demand for packaged food

• By 2020, the avg. age of India’s population would be 29 yrs., the lowest in the world

• Desire to experiment new categories

• Increased consumer awareness • Penetration of media (print &

electronic)• Exposure to global foods

• Increased number of nuclear households

• Duel income households

• Increased awareness about personal health and fitness

• Shift towards nourishing & hygienic products

• Indian consumer is demanding yet remains price cautious and look for value for money

• Consumers are quality conscious • Want to know ‘where’ & ‘how’ the

products are made• Look for traceability back to farm

• Time constraints, especially for urban nuclear families, results in a shift towards packaged food

DRIVERS OF CHANGE CHANGING CONSUMER PREFERENCES

HEALTH CONSCIOUSNESS

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The Why – US Consumer Trends

AffordabilityConvenienceTaste + +

The New Purchase Decision Equation

=My Values

Health

Sustainable Practices

Information

Social Good

My Purchasing DecisionConsumer values are a value multiplier for

categories and brands.

Source: Edelman

Relevance

Key challenges

(National Centre for Integrated Pest Management report-2014)

NCDEX(Source: FAOSTAT - 2013)

FARM YIELDS

HANDLING & STORAGE

INFESTATION AFLATOXIN LEVELS

PRICE VOLATILITY

TRACEABILITY

• The total economic loss due to pests is about 13.2 % .

• Both plant & storage pests impact the quality of maize.

• In absence of due care, contamination may pass through to ingredients or potentially to finished goods

• Regulatory limits for Aflatoxin in > 100 nations• Limits in few countries are much stringent (EU,

Japan, Korea) 5 ppb- 15 ppb• Relaxed Aflatoxin norms in India (30ppb) affects

its ability to trade with other countries• Post harvest Aflatoxin levels are observed to be

higher than pre-harvest.

• Improper drying of produce before storage

• In most markets, Maize is packed in old gunny bags leading to increased chances of pest infestation

• Poor storage of grain in warehousing/ silos

• At present , farm produce is aggregated irrespective of

• Variety• Moisture levels

• Ability to trace origin of the grain is limited

Way forward…

• Focus on pest management both on-farm and

storage

• Bulk handling of grains & avoid gunny bags

• Technical training to farmers & stakeholders

EFFECTIVE PEST MGMT

VARIETY IMPROVEMENTS

KNOWLEDGE MANAGEMENT

POST HARVEST INFRASTRUCTURE

MARKET INFORMATION

• Focus on grain drying process

• Proper storage infrastructure to help

control moisture levels

potential Aflatoxin contamination

Pest infestation

• Better yields & pest tolerance

• Development of specific varieties

suitable for food industry

• Special focus on process efficiency

(milling yield & finished product)

• Package of best agricultural practices &

infrastructure requirements to ensure

quality output

• Supporting small holder farmers

through trainings

• Accurate information on crop

size and pricing

• Explore export opportunities

• Improve risk management

framework

Impact of weather Location specific issues

SUSTAINABILITY INITIATIVES

• Enable farmers & millers to implement

more sustainable practices

• Collaboration with value chain partners to

identify issues & help smallholder

farmers

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