SynopsisAs consumers crave a break from home food and are yet skeptical of eating out or ordering in, the packaged ready-to-eat segment is witnessing a major boom.
Haresh Karamchandani knows his potatoes, especially the ones that make great French fries — long, oval ones that have less moisture and more starch. Cut them into strips and dunk them in simmering oil and they will turn into crisp, golden-yellow fries. “The regular table potatoes — the ones you buy from vegetable sellers — do not make great fries. They turn black the moment you put them in a fryer, and are never crisp,” says Karamchandani, CEO of Ahmedabad-based Hyfun Foods.
Until a few months ago, Hyfun was just a supplier of potato-based frozen snacks to quick service restaurants like Pizza Hut, Burger King and KFC. Now, the company has decided to go retail with its own line of ready-to-cook frozen products such as potato fries, burger patties, nuggets and tikkis. “We plan to do non-potato products as well. We will launch our frozen pizza range very soon. We will be in over 100 cities by mid-2022 with a range of products,” says Karamchandani.
Hyfun’s is a carefully planned entry into the retail segment. It wants to cash in on the growing popularity of ready-to-cook frozen foods among Indian consumers — a trend that has gathered pace since the pandemic broke out and people hunkered down in their homes.
According to consulting firm RedSeer, the Rs 2,800 crore, ready-to-eat (RTE) market in India — which comprises ready-to-heat, ready-to-cook and frozen food segments — is logging 35-40% growth in the unlock phase. Large companies like ITC and Godrej Tyson Foods — that have a wide range of frozen foods — are posting segmental growth in triple digits.
“Over the past eight months, there has been a significant shift on the part of the customers into the RTE segment,” says Rohan Agarwal, director at RedSeer Consulting. “Earlier, people relied on it mostly when they travelled abroad where Indian food is not easily available. There was also this perception that ready-to-eat and frozen foods are not very healthy. But this is fast changing,” he adds.
Major players in the segment say the consumers’ inability to eat out is one of the driving factors behind the spurt in the segment. Before sanitisers and social distancing became part of our pandemic-struck lives, Indians on an average ate out seven times a month, according to a survey by the National Restaurant Association of India (NRAI) in 2019. Indian households on an average spent Rs 2,500 a month eating out.
“A few weeks into the lockdown, people were tired of cooking and consuming the same home-cooked food. They craved for food that had different tastes or flavours and was easy to cook,” says Sachid Madan, chief executive (frozen food, fruits & vegetables), ITC. What impact did it have? “People who were averse to eating frozen foods earlier are drawn to it now, given the convenience and taste. We have witnessed an unprecedented surge in demand. The upbeat trend continues even now. Big brands like ours — with 30 different variants of vegetarian and non-vegetarian snacks — are seeing double- to triple-digit growth in sales volumes,” adds Madan.
Among the most sought-after products in the RTE segment are nuggets, tikkis, kebabs, sausages, burger patties, frozen chappatis and paranthas, vada pav, samosas, French fries, potato wedges and fish fingers. Dal and gravies as well as instant rice mixes, biryani and pasta are also popular, say various company officials.
While the growth in the ready-to-eat category is seen across regions, the rise in ready-to-cook frozen segment is restricted to urban centres. “75% growth is coming from the top 10 cities,” says Prashant Vatkar, CEO of Godrej Tyson Foods, which owns Yummiez and Real Good Chicken brands. He points to the problem: “Market expansion is not very easy as there is limited cold chain infrastructure in smaller towns.”
Still, all kinds of frozen products are being launched. Innovative Foods’ brand Sumeru brought out the baked parantha lasagna — layers of shredded parantha, with chicken or vegetarian gravy, topped with cheese — in February. It became a hit during the lockdown. The company is logging 30-35% growth in sales across all categories, which include a range of ready-to-heat paranthas and frozen snacks.
“People have become more aware of the fact that freezing the food is the best form of preservation. A frozen parantha regains its freshness when you thaw it,” says Mithun Appaiah, CEO of Innovative Foods. “The rapid growth we are seeing now may moderate once things turn normal but aided cooking is here to stay, and frozen foods will continue to find shelf space in Indian kitchens,” he adds.
A general preference for easily available fresh food and a belief that partially cooked food that is seal-packaged or frozen is unhealthy had earlier put the brakes on the growth of the readyto-eat category. Their limited range and lack of easy access did not help either. Says Sunil Kajaria, CEO of Banana Division of Keventer Agro, a large frozen food player in eastern markets: “Product availability was a problem in the pre-Covid era. Only big supermarket chains kept RTE products. The kirana stores did not bother to keep them. This reluctance on the part of the retailers has changed now. Many have started keeping these products. But we are still far from the supermarkets in the West that give consumers walls of buying options.”
Players like Keventer are trying to expand to newer markets with a wide range of products. Sumeru claims to have introduced 35 different products in the past three years, while ITC, under its Master Chef brand, has added 13 new snacks in the past eight months.
Frozen food, which accounts for over 50% of the RTE market, is a relatively new category, compared with readyto-cook (gravies, curries and sauces) and ready-to-heat segments. Food companies in India have been selling cooked gravies and curries for several years now. Pouches of dal makhanis, aloo mutter, butter chicken, Mughalai paneer and mango pulp have found shelf space in largeformat stores. This category is also exported, the big markets being the US, UK, Gulf countries and Canada.
“The export market for gravies and curries has gone a bit cold during Covid. While there’s demand from retail buyers, institutional purchases have dropped,” says Chirag Nemani, a director at Vimal Agro Products, an exporter of Indian ready-to-cook range. He is now trying to compensate the fall in exports with a push in domestic markets. “Manufacturers like us are now looking at opportunities in domestic markets. We recently launched a range of sauces and curry pastes for the Indian market,” he says. Like in any business, supply chain is the most critical component here. Manufacturers also need to find retailers who will give them shelf space. It took nearly three years for Nemani to set up distribution network in Gujarat and Delhi. “It’s very difficult to get space in modern trade. You also have to leave enough margin for retailers to give you shelf space,” says Nemani.
The challenges are greater for frozen food manufacturers like Zorabian Chicken, Sumeru, Godrej Tyson and ITC, as they have to ensure that retailers will store their products at minus 15-18 degree Celsius till customers buy them. “The entry barrier is high for this business. It may take years for companies to get their cold-chain logistics right,” says Meghraj Bangera, brand manager, Zorabian Chicken, a Mumbai-based frozen foods manufacturer. “Getting products stored at minus 18 degree Celsius is the only option available to manufacturers who do not want to add a lot of preservatives or binders to their products,” he adds.
Companies also have to get their product combination right to attract higher sales. A company with only meat-based products may not do well in northern and western India, which are large markets for paneer and potato snacks. Likewise, eastern and southern India are strong meat-based snack markets, but there are zones where only vegetarian products sell. “Getting the product right from the point of view of the consumer’s preference is a big challenge,” says Vatkar of Godrej Tyson.
Next, manufacturers have to get the pricing right as it determines the shelf space that retailers would set aside for the product. Many small retailers do not keep highly priced products even on credit. That said, companies that book high sales volume keep 25-30% margin in this business.
This could just be the beginning. “In the frozen ready-to-eat business, we see 10 times more potential, as variety increases and frozen food becomes part of the monthly shopping basket,” says Madan. “A lot of the products will become part of consumers’ daily lives. They may try out 10 different products, but will eventually stick to four or five for a long time.”
Will the growing popularity of RTE and frozen foods end the old concept of cooking from scratch? “If there’s any cooking from scratch happening in India, it is in less than 1% of households. Most people use masala mixes and packed atta these days. Cooking from scratch is long gone,” says Appaiah.
Ready-to-eat food is not an alternative to fresh food: Bhuvaneshwari Shankar, senior consultant dietician at Apollo Hospitals, Chennai
Bhuvaneshwari Shankar, senior consultant dietician at Apollo Hospitals, Chennai, says freshly prepared food is better than ready-to-eat foods. Ready-tocook and ready-to-heat foods should not be consumed for a long period either, she tells Shailesh Menon. Edited excerpts:
Is it safe to consume frozen food?
I’ll definitely advocate freshly prepared food first. If circumstances are such that it can’t be prepared, the next option would be to get food from outside. Frozen foods cannot be compared with fresh foods. If freezing methods are as per food safety standards, then they are safe. But with frequent power cuts and disruptions, whether they will be safe is a big question.
What about ready-to-eat and ready-to-cook foods which are stored in ambient conditions but have slightly more preservatives than frozen foods have?
Ready-to-cook and ready-to-heat foods are the next best options when it is not possible to cook fresh food. But these have to be consumed within the expiry date and their portion size should be within the calorie needs. These foods may have more salt and oil — this needs to be understood before consuming them. The nutritive values of these foods are printed on the packs. Check that.
Bhuvaneshwari Shankar, senior consultant dietician at Apollo Hospitals, Chennai
What problems do you perceive if people consume ready-to-eat food for a long period?
Such foods should not be consumed for a long duration. These can be consumed only for a short while. These should not be seen as an easy alternative to cooking fresh food. All of us — men and women — need to allot enough time for physical activities and healthy cooking.
Why are people consuming more ready-to-eat frozen foods these days?
People are scared of ordering cooked food from outside these days: they are worried about catching the Covid-19 infection. So if they are not ordering freshly prepared food, and if they do not want to cook, their only option is to rely on the ready-to-eat frozen foods segment. This, perhaps, is the reason why the frozen foods segment is growing in India.
Is ordering cooked food from restaurants a good option?
Nobody knows the quality of ingredients used in restaurants. You don’t know if they are reheating food or reusing oil to fry food. You may order homemade tiffins or meals; these options are available in almost all cities now.