Top Ramen gets New Partner
Mitsubishi, the Japanese conglomerate has picked up a stake in Indo Nissin Foods. Indo Nissin makes Top Ramen instant noodles in India. The 34% stake that Mitsubishi has includes voting interest in Nissan Foods Holdings and will look into local noodles in India, Singapore, Thailand and Vietnam. Maggie Noodles is their biggest competition in India and they will be taking them on beginning with a good advertising campaign.
India is the world’s 5th biggest market for instant noodles. The competition among brands is likely to increase the consumption of instant noodles. Entering this market will enable Mitsubishi Corp. to establish food processing as a core business overseas. In India its presence is mainly in the automobile and trading sector. In Japan, Mitsubishi operates in sectors like processed foods, frozen and chilled foods, confectionery and pet food.
Food and Beverages Colour Market to Rise
The food colour market is expected to increase at a fast rate in India during 2014 to 2019 as the food product market is on the rise. India, China, New Zealand and Australia are going to drive the food colour market in Asia Pacific. FMC Corporation of the USA and Chr. Hansen of Denmark are the two major players in the food colourant market. FMC Corporation has a huge presence in specialty chemicals, industrial chemicals and agricultural products.
In India synthetic colours are not very popular as they are considered to be harmful. However, since the demand for food products is on the rise and since natural colours are expensive the market for synthetic colours will also increase. Presently unpermitted colours are being used or permitted colours are being misused in the food processing industry. The biggest use of food colours is going to come from the frozen meat products segment.
Rasna to Enter Domestic Food Business
By July or August we will see a new breakfast food product from the concentrated drink maker Rasna. Though Rasna sells food products overseas in India they have a presence only in the beverage segment. Rasna has selected breakfast foods as eating habits in that segment are changing. The product will target office going women and school going children who require a healthy breakfast.
The company currently sells products like pickle, paste, chutney and jam in about 40 countries abroad. Other food products include instant powder drink, shake up, litro pack, nectar, syrup and fruit cordial. The company is also planning to increase their present nine facilities to eleven. Though there are no details the company would probably be setting up the facilities in locations where they can easily source fruit.
Cremica Food Industries Keen on Expansion
Cremica Food Industries makes food products like biscuits, mayonnaise, ketchups and Opera potato crisps and have a current turnover of Rs. 200crore. In the next five years the company is planning to expand to a whopping Rs.1000crores. Since they plan to revamp their distribution system, talks are underway with a private equity player to raise funds. There idea is to penetrate the retail space and enhance sales to hotels, cafes and restaurants which has grown by 30 % in the last year. Presently they have a retail presence of 20,000 outlets but would like to see it grow to 200,000 outlets in the next few years.
The company feels that innovations have made them gainers and they would continue to drive profits with innovation and that is why they are going to experiment with smaller trial packs of mayonnaise. The company would make investments worth Rs.150crore to expand their capacity and would also invest in a Food Park coming up in Himachal Pradesh with the aim of strengthening back-end supply chain of high-quality tomato paste.
Jubilant FoodWorks Expecting Growth
Jubilant FoodWorks are hopeful to see some growth in the same store sales. They feel that demand has bottomed out and double digit figures in the second half of FY2016 are expected. The other good news which has rallied its stock is the tie up with Indian Railways to supply pizzas to passengers travelling in trains. The company has made its road map for the coming years and in FY 15 they plan to add 150 new Domino’s stores. They already have a total store count of 838.
According to Morgan Stanley, the reason why same store sales have seen a slum is because there has been no innovation which is not really good for competition. There have been no successful marketing campaigns and the emphasis has all been on the entry level menus. However, the prediction for same store sales is a growth rate of 8% in FY 2016.
Government to Offload Wheat Surplus in Domestic Market
Though private traders have been permitted to export wheat under the open general licence (OGL) the government will not export its stock of wheat even though a bumper crop of wheat is expected. Instead the government will offload their stocks in the domestic market. As of 1st January government has 25 million tonnes of wheat in its stocks which is much higher than the required 13.8 million tonnes. After the ban was lifted in 2011 government had exported 6 million tonnes of wheat by 2014 but nothing has been exported this year.
To meet requirements of ration shops the government intends to procure 30 million tonnes of wheat. The government has already begun putting surplus wheat in the market. Food Corporation of India (FCI) which is the nodal agency for procurement and distribution of foodgrains has already sold 3.5 million tonnes of wheat as of now and in April new stocks will be arriving.
Budget Gains for Food Industry
The best news for the corporate sector in the new budget is of course the reduction of corporate tax from 305 to 25 % in a period of 4 years. Other good news is the policy reform on movement of agricultural produce for domestic trade and the interstate movement of goods will have far reaching consequences. The agriculture market will develop and there would be better realization for farmers. There is also likely to be price stability. Service tax exemption on pre-cold storage infrastructure is expected to generate value addition for fruits and vegetable value chain. There is also likely to be less wastage.
Aerated drinks are likely to get expensive and eating out is going to be costlier for the consumer with an increase of service tax from around 12.30% to 14% on some services. The excise duty on the food processing and packaging industry was already been reduced from 10% to 6% in the last budget which was presented by Mr. Arun Jaitley in July 2014 and now with the exemption of service tax on frozen foods, those in such food related industries could gain.