Improved standard of living drives demand for processed food
The recent years’ economic growth has resulted in an improvement in the standard of living in the world’s developing countries, an increase in consumption scope and lifestyle changes. Demand for processed food and beverages is increasing in pace with the rise in the number of people with improved standard of living. Growth in the food industry in developing countries has only begun. Alfa Laval’s focus on food applications has existed since the company’s inception in 1883.
Alfa Laval has been in India since 1937. This means that the first office opened ten years prior to India’s independence from Great Britain. Since the start, focus has been on food, whose potential has increased in pace with the economic growth in recent years. Since 2000, Alfa Laval’s orders received in India have increased by 347 percent and in 2008 the increase in orders received from the food industry was 20 percent.
Demand in the underlying market is also expected to continue to increase in coming years, in pace with the continued economic growth contributing to more individuals having better economy. A larger consumption scope is followed by increasing demand for processed food and beverages. Of India’s population of 1.1 billion, processed food is currently being consumed by approximately 300 million people. An additional 200 million is expected to be included in this group by 2010. In total, it is anticipated that 500 million people in India* – as many as the population of the entire EU – will consume processed food within two years.
In spite of the anticipated demand increase, the fact is that India, which is admittedly the world’s second largest food producer, only processes a small portion of its cultivated crops. To cope with demands, investments and a significant expansion in capacity in the food industry will be required.
Consequently, the CCEA (Cabinet Committee on Economic Affairs) has approved a plan implying that grants will be provided for the expansion of the infrastructure of the food industry. During the first phase, ten mega food parks will be established. The plan is that these centers will include modern infrastructures for the production of processed food, laboratories, refrigeration and packaging units.
The private sector is also investing – both local companies and international groups – to meet the country’s major demand potential. The food industry in India is expected to be able to achieve an annual growth of more than 10 percent.*
Food processing includes everything from heating and cooling to packaging and refrigerated storage, which will reduce waste problems. For many years, Alfa Laval has been a key supplier to the food industry in India. The company’s products and solutions for separation, heating, cooling and fluid handling are used in the production of dairy products and fruit-based products as well as vegetable oils and beer.
Beer
Beer is a beverage that has increased in popularity in the country in recent years. This is due to the increase in the standard of living, but also changes in the social structure. Beer is increasingly being regarded as a socially acceptable drink. Additional factors that propels demand is the younger generation, which, to a larger extent, prefers beer, and the changes in the tax structure and distribution channels. Today, an average of one liter of beer per person and year is consumed in India. This consumption is expected to increase to about five liters per person by 2015, which will give the market an estimated value of approximately EUR* 3 billion.
More national breweries are springing up, while large, international beer producers are planning new investments. The installed capacity is currently growing by between 20 and 25 percent annually. Alfa Laval’s share of the market is 20 percent and relates to separators, plate heat exchangers, pumps and valves.
Vegetable oils
Vegetable oil is an important ingredient in food preparation. In a country that consumes about 12.5 million tons of oil in a year, while the domestic production accounts for slightly less than 7 million tons, there is a clear demand surplus. Consequently, India is the world’s second largest importer, following China. To cope with demand, which is anticipated to rise further, a significant increase in production is expected in coming years and in 2010 the Indian market for vegetable oil is expected to double, compared with 2004.
Vegetable oil is used in nearly all Indian households, nevertheless, consumption per capita amounts to only 11 kilograms. This can be compared with the average global consumption of 25 kilograms. Due to the economic growth in the country, people can afford to pay more money for good oil and in 2015 the domestic consumption is anticipated to increase to 18 kilograms per person and year and the value of the market is estimated to amount to EUR* 16 billion.
Alfa Laval, which has a market share of 45 percent, supplies the Indian vegetable oils market with plate heat exchangers, high-speed separators and decanters.
Fruit
The fruit-processing industry is another sector in which demand has increased significantly in recent years. The industry comprises beverages that are ready to serve, frozen juices and frozen food. India is the world’s second largest producer of fruit and vegetables but less than 2 percent is processed. This figure is expected to increase to 16 percent by 2015, which will require investments.
Alfa Laval, which has a market share of approximately 50 percent, supplies the Indian market with equipment and process lines to be used in the manufacture of fruit juices and soft drinks. The products include heat exchangers, high-speed separators and pumps.
India – one of many
India is one example of an emerging country, where an improved standard of living has contributed to raising demand for a number of different products. Alfa Laval has been on location since 1937 and currently has a broad presence to satisfy demands in the Indian market for products and services.
However, what is happening in India is not unique, the same is happening in several other developing coun- tries where the economic growth has basically only started.
*Rabobank
  • The Federation of Indian Chambers of Commerce and Industry (FICCI).