In Food & Beverages, Tier-2 Players Rising Fast: Crisil | SupportBiz


In Food & Beverages, Tier-2 Players Rising Fast: Crisil

Tags: Crisil, FMCG
Small players to control 40% of the fastest growing FMCG segment by 2019

New Delhi: In the last six years, Tier-2 FMCG players have increased their share in the domestic Food & Beverages (F&B) market to 30% from 20%, and grown at nearly twice the pace of Tier-1 players.

CRISIL has analysed about 125 FMCG players in F&B, including over 100 who make up two-thirds of the Tier-2 bucket. Based on this study, they forecast that the bucket will sustain strong growth in the next five years, leading to a further increase in their share to 40%.

This is significant, given that:

· F&B is a vast market. At Rs 1.2 trillion, it is over 50% of the FMCG market

· These smaller, mostly regional, players have outgrown the high & mighty, including Nestle, ITC & Britannia

· This phenomenon has been witnessed only in the F&B segment. In personal care and home care segments, Tier-1 players have fared better by and large

While the report released at CII’s Food and Bev Expo & Summit, which aims to examine the growth potential of the food and beverage industry also highlights that rising food prices have been a constraint for the sector and is expected to impact the demand if not controlled soon.

The report suggests that while some of the Indian players are making use of newer technologies to increase production, meet international quality standards and thereby increase profitability, the adoption has been sporadic since the industry is largely unorganised. While, the market opportunities have been emerging in the recent past, requirement of investments, lack of bank credit facility and long gestation period have been impeding the adoption of newer technologies.

“The growth of food processing sector would need to be a significant component of the second green revolution, considering its possible role in achieving increased agricultural production by ensuring better remuneration for farmers. The food processing sector makes it possible by not only ensuring better market access to farmers but also by reducing high level of wastages. A developed food processing industry will reduce wastages, ensure value addition, generate additional employment opportunities as well as export earnings and thus lead to better socio-economic condition of millions of farm families”, said PiruzKhambatta, Chairman, CII National Committee on Food Processing, CII Food and Bev Expo & Summit & CMD, Rasna.