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Rise in cold chain facilities and adequate freezer space at consumer end will increase the penetration of frozen food products in India: Bonafide Research

100% FDI, viability gap funding, subsidy on cold chain project cost, establishment of 'National Centre for Cold Chain Development' and construction of food parks by Indian government are the measures that are leading to better cold chain facilities in India. Sufficient freezer space at the consumer end is also adding to the demand of frozen food products as domestic customers can now store frozen packets in their refrigerators.

India is one of the largest producers of agricultural products. Nevertheless, it has a poor cold chain which results in supply chain losses of food and other resources. Cold chain involves the transportation of temperature sensitive products like processed food along a supply chain through thermal and refrigerated packaging methods to protect the integrity of these products. The cold chain in India compromises of comparatively small private companies with a regional or local footprint. This segment is largely dominated by fly-by-night suppliers and small businesses with poor networks. As the services of these suppliers are not integrated, it leads to wastage and damage of food due to frequent handling and transfer. Hence, India is a challenging market to operate in, considering that each operator must have a separate cold room and 24-hour uninterrupted supply of electricity.

According to recently published report of Bonafide Research "India Frozen Food Market Outlook, 2021", the frozen food market is segregated into six segments like frozen vegetables, frozen snacks, frozen seafood, frozen poultry, frozen red meat and others. Frozen snacks and vegetables constitute for more than 75% of the total frozen food market. Freezing ensures that these frozen products are modestly processed with better retention of nutritive value and hence has a potential to become a substitute to home cooked or restaurant food. Distribution of these frozen products requires massive cold chain infrastructure and lack of such facilities in India is limiting the market penetration. As a result, the market share of frozen food has remained more or less constant in the consumption basket. In the packaged food category also, frozen food has lagged behind many high volume generating categories such as snack food, instant noodles and breakfast cereals.

All these challenges of frozen food market are now changing with many private players entering into the cold chain segment. Organized players have only 8-10% market share in the cold chain industry; however the segment is not shifting towards more organized players. The government of India is one of the driving forces in developing the cold chain industry and is supporting private participation through various subsidy schemes and grants. The Indian government has recognized cold chain industry as a sub-sector of infrastructure and created additional budget to build new cold chain facilities in the country. Subsidy on cold chain projects and creation of food parks are the various other actions which are expected to lead the penetration of frozen food in India.

Apart from this, for the full development of cold chain, the domestic consumer should also have adequate freezer space at home. The domestic household penetration of refrigerators is very low in India and majority of the average Indian households have refrigerators of size 200 to 250 liters. This freezer space is just sufficient to keep the daily requirements of dairy products which results in no freezer space for the frozen products. Even if domestic consumer has refrigerator of more than 400 liters, not more than one kilogram of packaged frozen products can be stored. However, with the increasing penetration of refrigerators and microwave oven, the frozen food market will be on a healthier growing path in near future.

Major companies operating in the frozen food market of India are Al Kabeer Exports Private Limited, McCain Foods (India) Pvt. Ltd., Mother Dairy Fruit & Vegetable Pvt. Ltd., Venky's (India) Limited, Innovative Foods Limited, Godrej Tyson Foods Ltd., Darshan Foods Pvt. Ltd., Vadilal Industries Ltd. and Gadre Marine Export Pvt. Ltd.


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