EVER EVOLVING INDIAN PALETTE

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Strategy : Alliances : Investments EVER EVOLVING INDIAN PALETTE By Harminder Sahni, Managing Director Pvt. Ltd. www.wazir.in June 2010 Page 1 of 5

Recently there has been lot of debate and discussion about the origin and authenticity of biryani. Some believe that biryani belongs to Mughal Darbar, while others reckon that it was Awadh Durbar that gave old pilaaf (pulao) a twist to create biryani. Fans of Deccan food, don t even want to join the discussion, because for them anything other than Hyderabdai Kachhi biryani is not worth consideration. I am citing this example of mere biryani as a metaphor of complex evolution of some of the most popular Indian dishes and the reason for ambiguity about their origin. The heated and animated discussions about origin and authenticity also show that how strongly Indians feel about their food. My belief is that going forward the assimilation of various cuisines will be more pronounced and much more accelerated. Moreover, it will not be left to evolution but the creative chefs and processed food companies will invest heavily into research to create new out of the amalgamation of old. We have seen a lot of this stuff happening already. For example, MTR coming up with variety of quick service dosas and McDonalds and Pizza Hut, creating special meals for Indian consumers by taking cues from popular Indian street food. In the past, North Indian food was hugely influenced by the cuisines of myriad conquerors that arrived incessantly from West. However, even till early 60s, South Indian food was available only at few places even in big cities like Delhi. By now, South Indian food is all pervasive and in 2009, a leading magazine has ranked Dosa as India s most popular food. The availability of South Indian food really exploded in the last couple of decades. But most of the people in North India still believe that South of India has absolutely same cuisine and that is mainly Masala Dosa. Most will actually be shocked to know that there is something called South Indian Non Veg food! Such is the lack of knowledge and understanding of Indians about foods from other regions. With this background let us look at some of the developments at the macro level that will impact the emergence of Indian food over the next few years. I have culled out 7 most important elements that will possibly shape the food habits of Indians and thus will create trends that will have a major impact on the evolution of the Indian food industry, and these are: 1. Younger Indian Population 2. Increasing family income 3. Accelerating urbanisation 4. Unprecedented interstate migrations 5. Inevitable time poverty 6. Increasing percentage of working couples and decreasing availability of household help 7. Cosmoplitisation of major urban centres June 2010 Page 2 of 5

These 7 elements may lead to major trends in development of new food categories, acceptance of regional foods on Pan India basis and acceptance of processed and packaged food over the next decade. I would like to cite 5 such major trends likely to emerge from these macro level developments: 1. Many more Indian cuisines will become available across India - Food courts and Specialty restaurants have already initiated this phenomenon and it is bound to accelerate going forward. When Indian families eat out whether casually or formally, they are always looking for something different than what they eat at home, and they are at their experimentative best during such family outings. A look at the menu card of a multi-cuisine restaurant even in a Tier 3 town like Jabalpur, gives a clear idea about the range that Indian consumers wishes to have when eating out. The menu on an average will have more than 100 dishes and it could go up to as high as 250 dishes from myriad cuisines, some recognizable and some totally indigenous to the chef and/or restaurant. This is a huge opportunity for chains of multi-cuinsine restaurants or its different avatar that is Food Court. 2. Localisation of Indian cuisines say a Bengali dish modified to match Western Indian palette - a la Indian Chinese food, that has led to establishing local Chinese Food as a regular feature for urban India. While consumers are always keen to try new flavours and dishes, for any cuisine to become part of mainstream, a certain level of localisation is a great catalyst. We see a big role of packaged processed food industry to innovate and develop fusion food products that entice and rope in larger set of people as regular consumers. The increasing competition amongst Indian F&G retailers will encourage them to come up with unique food offers to not only differentiate but also to garner market shares. A Pan Indian retailer will be best placed to take specialties of one region to the other with necessary modifications. If retailers rise to the occasion, processed regional food could be the biggest private label opportunity for them for times to come. 3. Processed food more than ready to eat, ready to cook becoming norm in Indian kitchens. As Indian mothers and house wives juggle work life balance and still wanting to serve their own made food, the ready to cook will offer that in between acceptable path. This will also make the younger generation aware of the cuisines that are beyond their own community and will create wave for acceptance of processes and packaged food, when they leave parents home for work and subsequently to set up their own homes. Brands will play a major role in this, as consumers need to be educated about the processed food and break many a myths about the lack of freshness and usage of preservatives, etc. This transit generation having grown up on ghar ka khana (home made food), made every meal time using fresh ingredients has many questions about processed food but is also very open to try and adapt, if right assurances are provided. 4. Eating out already norm for lunch will extend to cover breakfast too. For most of the working urban Indians, lunch is either in the form of ordered tiffin food or a quick bite at the food court in office complex or a munch at the street food. The percentage of people carrying food from home has dwindled drastically and is close to zero already. We expect this trend to continue and extend to breakfast time also. As more and more people will commute longer hours for work, they will tend to grab a breakfast either on the way to work or at work place itself. Some quick- June 2010 Page 3 of 5

service restaurants (QSRs) are already offering special breakfast menus, and many Cafes will transform to become breakfast joints very soon. Some more food chains will position themselves as places for quick and healthy meals, be it breakfast or lunch or evening snacks. As Coffee chains dominated the scene during last decade, it is very likely that breakfast and quick meal restaurants will rule the market in this decade and probably beyond. 5. Indian consumers are experimenting a lot with International cuisines at mass level, still no international food other than Chinese have become a mass consumption meal item so far. There could be many reasons but Chinese food definitely gained from the fact that it was offered at street level first and exclusive restaurants were a much later arrival. Other international cuisines, be it Italian, Thai or Mexican have lost out in this due to their non-availability outside expensive restaurants. But things seem to be changing really fast and the massification game for Italian cuisine has already started. Recently, Maggi has entered the instant pasta market posing a direct competition to ITC Sun Feast pasta, who was maintaining monopoly in the segment. The consumers are ready not only to experiment but also to adapt International cuisines whole heartedly but it is the marketers who are slow in bringing value for money offers to the consumers. In summary, we anticipate Indian food industry evolve quite rapidly on all fronts, be it type of food or cuisines, points of sales, location of consumption, price points and branding. We also reckon that in the next decade, there will be emergence of at least 2 or 3 billion dollar plus food companies and these could be a retailer or a brand or a restaurant chain or even a food delivery company. It is a huge potential opportunity and its size and scale will only be limited by the vision and execution capabilities of entrepreneur and professionals. I sincerely hope that the current players will keep investing in product innovation and market development, and new Indian players as well as International companies will join the fray to educate the consumers and thus expand the market. June 2010 Page 4 of 5

About is a management consulting firm focussed on consumer products, services and retail sectors covering Fashion, Food, Home, FMCG, Consumer Durables, Media & Entertainment, Health, Auto and Education. is started by Harminder Sahni, an experienced consulting professional with 15 years of experience in assisting clients in various consumer segments. For any information or queries, contact us at: Pvt. Ltd. Plot no. 115, Sector 44, Institutional Area, Gurgaon 122002 Tel: + 91 124 459 0300 Email: info@wazir.in www.wazir.in June 2010 Page 5 of 5