Packaged food in India has come a long way, but what next?

The Federation of Indian Chambers of Commerce and Industry (FICCI) on 24 March 2021 inaugurated the 13th edition of the Foodworld India show virtually for the first time owing to the pandemic situation.

The two-day forum – Foodworld India 2021 Global Convention for Food Business and Industry – transpired into a highly knowledgeable session shedding light on the food processing industry in India. Industry behemoths and government officials examined the future of the food processing industry and analysed how brands are driving consumption. The conference also drew roughly 1,500 visitors.

The food processing market in India was valued at Rs 25,691.30 billion in FY 2018 and is expected to reach Rs 53,435.52 billion by FY 2024, expanding at a CAGR of 12.09% during the FY 2020-FY 2024 period. The industry has largely remained unaffected by the pandemic and the organised players have seen growth, whereas a lot of conversion from unbranded to branded food products was seed during this duration.

Industry experts believe that the MSME could have suffered, but no data is available. The food processing industry also saw several new product launches – 3,500, to be precise, as per a Nielsen report – over the past 12 months.

The deployment of new safety standards such as package information and colour coding and EPR goals took a backseat, only discussions are taking place and further discussion is still to happen.

During the course of discussions, it came to light that the GOI delegates want to push the industry towards health and nutrition and they spoke about scaling the category so that prices of nutritional alternatives become affordable. Right now, processed food is more expensive than fresh produce and this business model has to change if the industry has to grow.

The food processing market in India was valued at Rs 25,691.30 billion in FY 2018

Digital commerce has doubled during the pandemic. And so, today it has become a must-have rather than a good-to-have. The digital access in "vernacular" will further accelerate this.

Digital penetration was witnessed in operations, back-end supply chain and manufacturing for remote management and automation. Further, Capex could be expected in this area in the coming times, signifying good prospects for packaging.

Another growing trend was related to health, wellness and immunity, which brought about a renewed interest in traditional Indian cuisines. Furthermore, convenience has become an important tool in enabling consumption. Indian consumers are eager to spend less time in the kitchen but don't want to substitute it entirely. They are looking for DIY.

Additionally, the industry has been facing significant challenges in exports such as trade barriers, consistency in quality, hygiene and safety, high production costs, fragmentation and more.

It must also be mentioned that India can't compete on a commodity level due to high unit costs, so it has to identify niches and focus its efforts in selling branded products in those areas. For example, mozzarella cheese (0% in the global market), niche variety of wheat used in certain preparations, to name a few.

Indian food exports mainly cater to the Indian diaspora population around the world and customising offerings to cater to the local ethnic groups is required in order to grow in international markets.

Partner farming is the only way to get quality consistency in a fragmented system like India and it can offer several intangible benefits such as provenance, traceability, and give unique stories to products.

This and much more was discussed during the two-day FICCI Foodworld virtual show.

Here, is how the event unfolded…

Inaugural session
Hemant Malik, chair, FICCI Food Processing Committee and CEO-food division, ITC kick-started the discussions on a positive note by highlighting the findings in the latest Nielsen report, which mentions that the food processing industry is back to normal.

However, not everything is rosy. There are challenges. Some of the commodity prices have shot up. Prices of edible oils, which are one of the major commodities in the food processing industry, have shot up by almost 70% since the beginning of the pandemic.

Meanwhile, packaging material, which is a big cost component, has seen a price increase of 40-50% in both laminates as well as carton brown boxes. The way pricing works, the inflation would be carried forward into the price and we would have to see how it impacts volume growth.

“We see a paradigm shift in consumer trends due to a global demand for food safety and increasing food security, increased demand for sustainability and reliability of supply chain particularly post Covid-19,” says Malik.

Malik also highlighted the shift in consumption patterns. “We see an increase in hygiene and immunity-based products,” he says. “The increased awareness about health and wellness and lifestyle changes is going to transform the packaged food industry.”

Malik is of the view that a lot of unpackaged food will move to packaged food. “The second transformation will take place in how our marketing communication and product value proposition are worked out,” he adds.

He says the work-from-home culture has brought about a rapid shift in consumer culture and eating habits. This has impacted the on-the-go consumption, which is down by about 25-30%. Snacking in between meals is increasing or so are healthier alternatives and precooked ready-to-eat meals. Concern around preservatives and health is positively impacting organic foods.

The changing trends, however, bring new opportunities. The Nielsen data shows that during the Covid period alone, more than 3,500 new products were launched in the food space out of which half were around health and hygiene trends.

“India faces challenges of obesity, diabetes along with a large population, which is malnourished. If we look at the NFS 2020 report and compare it to the 2015 report, there hasn't been much change. This is an important area that food manufacturers can work on,” Malik observed.

Edible oil prices have shot up by almost 70% since the beginning of the pandemic

New trends in sustainability, health and wellness, and convenience are some pillars that will drive formulation, packaging and marketing in the food and beverage industry.

Malik explains: “The role of FSSAI has been very important during these times. They have come up with very clear regulation during the Covid times so that the entire packaged food industry can be part of essential commodities.

“More importantly, FSSAI is bringing in global benchmarks to make sure that Indian food standards are similar to global benchmarks. A lot of work has happened in creating a digital ecosystem, which is helping in licensing and ease of doing business.

“There have also been discussions around colour-coding of products to indicate high-fat high sugar content. If we follow the WHO CRO guidelines, a lot of our everyday products will get coded red. Hence, more discussion and working together are necessary.”

Siraj Hussain, former secretary, Ministry of Agriculture and Food Processing Industries, GoI says, “We are going through very difficult times, and it is really laudable that the food processing industry is not finding itself in much stress. My sense is that the unorganised industry, which is not very well represented in such conferences, must be going through real stress.”

The last NSSO data of 2011-12 found that 12% of total calories are coming from processed food in urban areas and for rural areas, this number stands at 9%. In the highest per-capita income bracket the calories from processed food are at 30%, whereas the same category in rural areas consumed 13% of their calories from processed food.

“The colour coding discussion, which is on the cards from FSSAI, should be taken up with adequate consultation with the industry so that there are no sudden moves. But at the same time consumers have a right to know what they are eating,” says Hussain.

He adds that urban areas are already taking a high-calorie intake of processed food and this number is only going to go up as we recover from the Covid situation. “What is needed is we focus on healthier processed food options and processed food that is geared towards working women as their participation in the economy increases,” Hussain suggests.

(Clockwise): Hemant Malik, Siraj Hussain, Mohit Anand and Manoj Joshi

Meanwhile, Manoj Joshi, additional secretary, MoFPI, GoI says that the cheapest foods are the unhealthiest and the healthier alternatives are expensive.

“The second issue is about credibility over what is healthy food. We need to be careful that we don't lose credibility. Right now, consumers are not assured. So changing pricing structures, demand structures, and gaining credibility can be a big growth trend for the industry,” Joshi says.

“Another area is establishing a direct link between farmers and consumers,” he adds. “Focus on perishable products could increase farmer's incomes.” He further says that one of the foremost challenges is that prices of perishables are higher than international prices.

“When you compare processed food in a perishable segment with fresh produce, we find the price of processed food is high. We won't buy tomato puree when fresh tomatoes are cheaper. The difference is more than five times. So, reaching a higher consumer base is a challenge and requires both industry and consumers to work together,” suggests Joshi.

Small micro food producers are one of the largest components of the SME industry. They have issues with productivity, quality and packaging. Joshi explains that it is difficult for micro or small producers to sell their produce in this country.

“Consumers prefer branded products and if they buy unbranded, they would pay a much lower price, while the cost of manufacturing is probably the same and cost of procurement is higher compared to large producers,” he says. “It is a challenge, but if we see the benefit to society in terms of income and employment, it is far bigger than what we see with large producers. A lot of innovations and traditional foods come from these segments, which large producers often don't want to produce.”

Joshi also explains why India has a very small presence in the international market. “We never focused on it, as the domestic market is large enough,” he notes. “Apart from some small brands and brands that cater to Indian diaspora worldwide, we don't have any brands that are truly global.”

For this, he suggests the government and industry work together in identifying a few segments and focus on international brand-building in these segments, for which industry participation and suggestions would be required.

Speaking about FSSAI, Joshi says the task of colour coding packaged foods is very challenging. “Many of the Indian foods cannot be called healthy foods. Every mithai and fried namkeen would get classified into an unhealthy category,” he remarks.

Future of the food processing industry - How food brands are driving the consumption trends into opportunities

Opening remarks
Rachit Mathur (RM): USD 600 billion is the incremental growth of food consumption projected in India over the next decade. A significant portion of this (USD 130-220 billion) is going to come from the branded packaged food industry. This is twice the size of the current size of the industry.

How is the situation now?
Hemant Malik (HM): There was a 20% drop in the quarter after lockdown mostly in the out of home and restaurant space. In the latest quarter, we are back to where we were. But certain other headwinds are coming in terms of inflation and pricing of commodities and packaging materials.

Piyush Patnaik (PP): Household consumption is back, but out-of-home is still 60-70% down from pre-Covid levels. Inflation is a real danger. We have never seen baseline prices for edible oil go up by 60-70% in a year.

Mohit Anand (MA): At a consumer level, what really matters is nutrition, taste, convenience and value. Health and wellness trend is only going to heighten and Covid has further enhanced it. Even though people's income has gone down, due to them staying at home, discretionary spending has gone down and saving has gone up. This has led to spending on in-home and health and weaning products. The out-of-home has shifted to in-home. We are not eating less. We are eating at home. Convenience and DIY are increasing. As people can't go to restaurants, they are experimenting with what they can do at home.

(Clockwise): Rachit Mathur, Hemant Malik, Mohit Anand, Sanjay Sharma, Piyush Patnaik and Richa Arora 

Richa Arora (RA): In the past, people just talked about health rather than doing something about it. Covid has nudged them to act on it. The rate of conversion from unbranded to branded in staples has accelerated to almost three-fold. Even though the category as a whole has remained flat, the branded players have grown. For example, we see a 4-5% conversion in spices from unbranded to branded in a year. Similarly, we have taken up poha, which is largely unbranded (95%). This acceleration offers an opportunity. Digital access in vernacular has accelerated how we consume media, eCommerce and digital payments. Our eCommerce sales share doubled (2.5% to 5%) in the past 12 months. In search of nutrition and building immunity, people are also showing renewed interest in traditional Indian foods.

Sanjay Sharma (SS): We were able to leverage the convenience factors greatly and had an excellent year both in terms of topline and bottom-line. By staying at home, more meals were prepared at home and it put pressure on the homemaker. Convenience has many dimensions; one being ensuring less time is spent in the kitchen, and next is variety, as we don't want to make the same meals over and over. There is also a knowledge gap with many millennials who don't know how to cook. Another dimension is indulgence. With Covid, we no longer want to buy from the corner shop. While a lot of focus is on health and wellness, indulgence on the other hand, has also exploded.

What is the thinking around repositioning products and marketing messages?
HM: People are questioning what you are putting in your packs when you look at eCommerce. Customers need information. But in terms of product positioning and messaging, we will have to take it by brand. We recently launched liquid milk in Kolkata where we provided a daily milk report card over WhatsApp and there were a good number of hits. On the juice segments, we decided to source fruits only from India and positioned the brand that way.

MA: Since immunity is a trend, every brand should pivot its messages around it. Some brands, for example, tea, have done that and people believe in it, but you can't do it everywhere or you stand to lose credibility. Brands cannot change much of their core, but they can play with insights. If they find something in the consumer's environment, which the brand can resolve, they can try to address it. Most marketers should stick to the core and understand what can be done around it. Else, it can lead to a dangerous path.

How is the situation at the back-end now?
PP: We’re not seeing any major risks on the supply side. The resurgence of Covid is a worry though. Inflationary trends on globally connected commodities are going to continue.

RA: Some lessons we learned were salt, which has a more distributed supply chain, were better off as we could move material at a cost even if some other places had restrictions. Whereas spices, which is restricted to Kerala – which has central distribution – has problems where we practically ran out of supplies. The second is automation. When Covid put stress on the availability of labour, we had to rely on automation. I would say more and more automation is the way to go and one could expect Capex spent here. Related to that is managing manufacturing digitally and remotely. Lastly, partnerships! Having strong partnerships where there was an intent and desire to continue was important.

How can the food industry help benefit farmers?
HM: What is greatly harming farmers is the information and infrastructure asymmetry and economics is such that the people in the middle and not the grower are benefiting. The information and infrastructure symmetry can make a real difference.

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Building trust in food processing ecosystem: synergising government and corporate initiatives

Opening remarks
Hemant Malik (HM): We are seeing a transformational shift of the food processing industry over the years – from products to services to experiences to insights. Today, consumers are becoming more and more conscious about food safety and quality. They evaluate this through criteria such as healthiness quotient, nutritional value, sustainable sourcing and procurement practices and packaging among others.

To make consumers more aware of these quality and safety aspects of food, the corporates and the government are undertaking significant initiatives with the objective to build consumer credibility. With the changing times, food companies are themselves undertaking efforts to build brand credibility, educate consumers about the safety and quality of processed food and provide transparent information about their products. They are also addressing the concerns around food counterfeiting in the domestic market.

What is the secret behind the consumer trust your brands enjoy?
Rajesh Ramakrishnan (RR): As there has been so much uncertainty in the last 12 months, we have observed the natural gravitation of consumers towards the brands they trust, especially in the confectionery category. Now, what are the reasons for this continued trust? Quality, performance and transparency – I would encapsulate these three aspects in terms of brand authenticity. This ensures a higher-order purpose for brands rather than creating just a transactional product.

This aspect of transparency and clear communication is a must to ensure brand loyalty and trust. Consumers should know everything about the production and sourcing of products. This has helped many big brands to rebuild trust.

Gautam Sharma (GS): Globally, 100-bn packages of instant noodles are sold every year. This segment went into an existential crisis a few years back due to a lack of consumer trust. Building trust takes decades, but it only takes one moment to lose it. Thus, the noodle industry came together to rebuild consumer trust by providing absolutely clear information on how the food product is manufactured and packaged. Fortunately, the government was supportive in the efforts to enable this transparent communication. Hence, it is essential that an ecosystem where the government and the industry play a key part to cater to the consumers, who are the value drivers, is built on the basis of a strong institutional framework and trust.

Mohit Anand (MA): One of the things that consumers look for is shared value. Brands built that trust over a period of time due to this shared value. As mentioned by one of the esteemed panellists, authenticity is key. For instance, if a certain food product has gluten or sugar or salt, they can simply be transparent about it. And the brand has to be consistent in regards to all these aspects – this an invaluable criterion to ensure brand authenticity.

(Clockwise): Hemant Malik, Rajesh Ramakrishnan, Rohit Markan, Gautam Sharma and Tarun Arora

Is trust necessary only for indulgence products or also for the range of products Zydus offers?
Tarun Arora (TA): Sometimes you have to go the extra mile to build consumer trust for each of our product. We took this extra mile in our sugar substitute space to convince the consumers as there are a whole lot of things that go around in public platforms which are not backed by the right data; thus, it has become a conscious task for us to educate our consumers about the right data. Authenticity is key for especially a nutritional brand and hence we have always provided clinical evidence to build the trust around it.

Is the way how a consumer perceives a product is changing?
Rohit Markan (RM): The discussions around a sustainable ecosystem are on the rise. Our major raw materials in our five plants in India is maize, which we are sourcing from different states in India. The brands have now set a requirement in which they want information on the sourcing and manufacturing practices of the maize. Earlier, only a few products required such details. We also share our environment-friendly practices with our brands, which they further convey to the consumers.

What are the consumer expectations of the information available on labels?
MA: Fundamentally, there are three questions that consumers ask – What do you have? How is it made? And what value does it offer me? For instance, some ask for a healthiness quotient, some ask for sustainable sourcing and so on. Sourcing has been a marketing tool for products such as coffee, which highlights what the consumers seek.

RR: The market we operate in is important in terms of a practical approach. For instance, the Indian market and the Scandinavian markets have to be operated differently. Now, our confectionery products which come in small mono packs can only display a certain set of information, and what sort of information has to be highlighted depends on the market.

Processed food is more expensive than fresh produce and this has to change if the industry has to grow

GS: The brands should tap the next generations which are set to drive the trends. The environment and carbon footprint are important consideration for today’s consumer. Also, we will have to source each raw material naturally; as consumers expect it. Fully recyclable packages are becoming a trend, too. All these trends will drive the industry.

How should consumers approach the extended producer responsibility model?
TA: Consumers will look at the brands' contribution to sustainability. Planet, purpose, people trend will gain more momentum. We have to believe the sustainability and economics are not contrary to each other. So, the brands should find out solutions to integrate sustainable offerings. They should also be bold enough to take medium-to-long terms calls on such offerings and display them in their packaging. The new generations are conscious of these actions; thus, we should communicate this eco-friendly aspect of our products.”

How does social media impact brand trust?
RR: It’s great because it offers gamification and curated content creation which offers consumer engagement not only about the product but also on what the product stands for. However, on the flipside, misinformation and misinterpretation about a brand on social media can dent a brand image. So, your cohort of consumers should back you here on such platforms as it is virtually impossible to counter each one of them.

RM: Social media has helped us educate our consumers. For instance, we have used social media platforms to highlight how dietary fibres can be incorporated into formulations and how they ensure good gut health to keep away from diabetes and cardiovascular disease.

Are plant-based products becoming a trend in India as well?
RM: Yes. We have been manufacturing P-protein in France and we have also set up a new unit in Canada to produce the same. Such products are in demand in Europe and the USA, but we see this trend growing in Asia as well.

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Untapped export potential - Key for sustained growth of India’s processed food industry

Opening remarks
Sushma Vasudeva (SV): Despite being one of the largest food producers in the world, our share of the global processed food market stands at less than 5%. Agricultural exports, as a percentage of GDP, is fairly low (2%), compared to Brazil (4%), Argentina (7%) and Thailand (9%).

However, there have been some segments, which have been growing – green milk products, processed fish and meat, and ready-to-eat and frozen foods. MoFPI has approved 100% EOU to encourage investments. Food processing is also one of the sectors identified under the PLI scheme.

Food processing offers one of the highest job opportunities with significant scope to boost farmer incomes. However, lower-cost competitiveness and higher unit production cost are challenges. On average, we are about 20-100% more expensive.

For example, the cost of tomato production is 1.75 times that of China despite low cost per hectare – the reason being lower productivity. Our export rejection rates are one of the highest. There is little awareness among farmers about what are the winning crops and varieties. Then there is the challenge of branding and presence with a limited number of GI and umbrella brands.

How is Amul planning to address the global market and what radical changes need to happen to address the challenges in the supply chain?
RS Sodhi (RS): India is one of the largest food producers, but if we add dairy into it, we are at USD 550 billion, out of which dairy is USD 110 billion and it will reach USD 200 billion in the next 10 years. Today we are 21% of the world's milk production and in 2030 we will be producing one-third of the world's milk and that too, by 100 million farmers. There is tremendous potential in dairy because most of the regions around India are milk deficient. Also, dairy provides sustainable rural employment.

Our per-unit cost of production is higher in comparison and the reason is simple – our model is low input, low output. Our farmers have three animals per unit compared to hundreds of animals and free green pastures in other countries.

Export of branded milk products is growing, but we are currently not competitive in exports of milk as a commodity. Most of the dairy surplus countries in Europe and USA, except New Zealand and Australia, highly subsidise milk exports. So we need to identify niche dairy products and work on it.

In the GoI PLI scheme, mozzarella cheese has been included, which is a buffalo cheese. Around 58% of India's milk production is buffalo milk. But we have to work from zero, as right now in the world market Indian mozzarella cheese is non-existent.

For the milk supply chain, one thing that is required is the separation of cow and buffalo milk. Right now, most of the milk is mixed. We cannot compete in cow milk, but buffalo milk is our USP. So, we need to have separate collection and processing lines for cow and buffalo milk.

Most of our neighbouring countries are milk deficient and we need to see how we can reach these countries. This is where the role of policymakers is important. Right now, the world's top 10 dairy importing countries don't allow imports from India. We need to negotiate free trade, tariff and non-tariff barriers with these counties. Countries such as Indonesia are able to negotiate lower duties when they export their oil to India, but we are not asking them to reduce the duty on our processed food exports.

What are your views on attractive geographies and Africa as export destinations for Indian processed foods?
Sanjay Sharma (SS): Indians have been successful migrants and wherever they have gone, they have formed part of high earners. Currently, 43% of the Indian food export market is in the US. The UK is another big market. The market is pretty much spread according to the Indian diaspora population around the world.

Indian ready-to-eat is a fairly underdeveloped market and faces similar challenges of the higher unit cost of production and tariff and non-tariff barriers. We also need to work on ease of doing business as we need to go through various departments for testing and approvals. Exporting is not an easy proposition.

Speaking of Africa, everyone thinks it is the future market. Most of the Indians in Africa are fourth or fifth generation. They have adapted to their local environment, so we can't just go and sell Indian food to them. It needs to be presented in their local context to make these products relevant to them.

(Clockwise): Sushma Vasudeva, Sanjay Sharma, Yogesh Bellani, Neel Kingston Jasper, Vivek Chandra and RS Sodhi 

What is the future scope in rice exports and value addition and what are the learnings on the newer export categories?
Vivek Chandra (VC): Basmati exports, currently valued at Rs 33,000 crores, are a very big part of Indian agricultural exports. On the other hand, basmati is consumed by a very discerning consumer. Out of 500 million MT of rice that is consumed, only 10 million MT is basmati rice.

We work on three operating guidelines. Firstly, sustainable, profitable and growing businesses are created when we sell our own brands. There is a temptation in commodities such as rice to trade and supply unbranded because that is immediate gain. Whereas building a brand needs handwork over a long period of time, but can pay huge dividends. Globally, there are about 15 basmati brands. You can either be a supplier to them or be one of them.

Secondly, brands allow us to capture a lot of upstream value in the value chain. We work on creating a global market while creating our brand and positions in those markets. We sell Dawat to about 80 countries. Initially, we started by following the South Asian diaspora, but we are now expanding to the local ethnic groups. This requires traditional marketing along with experiential marketing as you try to pioneer new categories.

The third one is government support, which is important, but it can't be just for one or two years. As the brand building takes time, the scheme and policies should be around for 5-10 years. The key is to understand consumer palate, but more importantly price-value dynamics of each market and then create suitable offerings.

Another key is identifying where the opportunity is. The Middle East is the largest market for basmati, but it is now saturated. Far-East nations eat sticky rice. Africa is very price-sensitive, so we are left with the EU and the US. Traditionally, we used to think that they don't eat basmati. But they consume around 9 million MT, out of which basmati is about 6,00,000 MT. Developing these markets is key. To build these, we acquired two brands – Royal in the US and Eight Months Seven in Canada. With these brands and Dawat, we have about 50% market share of North America. We are trying to expand the market to other ethnic groups.

Value addition goes a long way in building uniqueness and resilient consumer demand. We need to have products in line with how consumers interact with the category and how it can enable more consumption.

For example, a big trend that came about during pandemic was convenience. Convenience in America meant ready-to-eat rice. So, we launched heat-and-eat products and it took off well. But, in India, people don't want to substitute the entire cooking process. So, we launched ready-to-cook offerings such as Dawat rice saute sauces and kappa rice. Value addition should not just be a process or a technology initiative, but something that the consumers in those markets need to interact with that category.

How can we capitalise on the trend towards healthy foods and organic alternatives?
VC: During the pandemic, consumers altered in four ways – what they are consuming, where they are consuming, where they are buying it from, and how they are consuming information. Any company operating in this space will have to address all of these.

Concerning the first point, eating hygienic, healthy food becomes very high. Our organic foods company Nature Bio Food, which supplies processed food ingredients, have seen a big increase in demand. We launched our own brand called Ecolive and acquired share in a Dutch brand to reach the consumers.

The key in organic is how you get the back-end supply chain right. It takes four years to make a farm organic depending on soil condition. The new farm laws that allow contract farming can be a big game-changer in creating a reliable organic supply chain. There is a demand, but we need to bring value-added products. If we trade only in commodities, it is going to be vulnerable.

Looking at health and immunity, we launched an iron and vitamin-fortified variant called Dawat Sehat and it is gaining significant market share. Interestingly, this sort of product will also do well in many areas of the world where malnutrition is a concern. This can be a big driver for the shift from commodity rice to value-added rice exports from India. Such offerings can also be built in other categories such as fortified atta, fortified dairy, staples and more.

FSSAI is ensuring Indian food standards meet global benchmarks

We are seeing more and more private and white label entering the market. What are your views on the role of the brand from an export perspective?
Yogesh Bellani (YB): Private labels are not a new thing. It has been around for decades. Whenever there is very little differentiation left to make among products, retailers will use a private label strategy to gain market share.

It can be seen as instant gratification, but brand building takes a very long time. Even getting private labels approved in a market is not an easy thing to do. With a private label, you are playing one level up in the value chain, which is better than playing at the commodity level. From there, you can build further points of differentiation.

Of the many challenges that were discussed, one is the unit cost of production and to address this, we need scale. Private labels can offer this initial scale upon which we can build. There are a lot of value additions in the back-end, which can differentiate such as traceability, or taking out from the recipe what's not needed or making them more natural.

What is ITC's view on creating efficiencies in the value chain and how have you used technology to do that?
Neel Kingston Jasper (NJ): ITC also started as an exporter of commodities, but over time we started to look at what value adds we can make. We have a programme that helps us source chillies from integrated pest managed farms. The sourcing advantage in residue-free or organic can be a big differentiator even in simple commodities such as cumin or chilli. Wheat and wheat products is a big market, but we are nowhere in the international market. We need to identify varieties that can fill a certain niche and target it.

How do we get closer to farmers and partner farming and other partnerships?
SS: We started it for Byadagi chilli, as its acreage was going down and it was seeing an inflationary trend. Chilli plays two roles – one is to give flavour and the other is to give rich colour. The partner programme secures supplies for domestic operations but also fuels our exports. There are no standards in agriculture, but there are a lot of standards in processed food exports. Pesticide residue is a big concern and there is no way we can remove pesticide. The only way is to partner with farmers and work closely with them. Even a child will know about Alpino peppers, but we don't know much about Indian peppers or chilli even when we are making the best of varieties. This is because we have never made an effort into marketing them. Once we will be able to build these brands abroad, we will also be able to remunerate farmers well.

YB: Partner farming creates an ecosystem of farmers, which gives you multiple advantages over a period of time. The advantages are that they give you quality products consistently. More importantly, it helps in creating intangible differentiation – a lot of evolved consumers want to know where the product is coming from, what is the story and the purpose behind it. Some of the large coffee brands are built just by talking about their origins and how they are helping farmers. Partner farming helps in solving the assurance part of the supply chain. To increase farm incomes, we need the right procedures and practice and we can't complain that these are small farm holding. We need to work with it as partner farming provides the right way. But to develop this takes a lot of perseverance.

What are some of the bets that you think will win?
NJ: Indian cuisine is something that has big potential. We have taken our software and movies in the world, now it's time to take our food.

Wheat is something that is consumed globally in various forms. Dairy – even if there are challenges and even if it means redoing our supply chain bottom up. Protein is an important space, be it sourced from milk or meat or vegetarian sources.