India fresh food market: Key demand from rural areas

Press Release   •   Jul 18, 2013 14:17 BST

Supply in the India fresh food market remains primarily seasonal, although the growth of modern retail chains has led to most varieties of fruits and vegetables starting to become available throughout the year. Consumers in metropolitan and urban areas have access to these modern retail outlets, with the major players being Reliance Fresh, Food World, Food Bazaar, Star Bazaar, Auchan and Spencer's. These outlets also sell a number of Western varieties of exotic fresh fruits such as strawberries, dark grapes, pears, grapefruit, peaches, plums and imported apples. In addition, these outlets sell a wide variety of vegetables which were not previously available in India, such as Chinese cabbage and mushrooms, capsicums, oriental spinach and broccoli. With growing economic prosperity, along with the urban population enjoying increased disposable incomes, greater availability and access, demand for exotic fruits and fresh vegetables is on the rise.

Over 70% of the population live in rural areas and have negligible access to packaged foods, thus consuming mainly fresh foods. As such, fresh foods are likely to remain unaffected by the growth of packaged food and the growth of restaurants as consumers will continue to consume fresh foods.

Modern retail continued to develop significantly towards the end of the review period. Many big players such as Big Bazaar, Star Bazaar, Reliance Fresh, Food World, Food Bazaar, Spencer's and Auchan are already present across India's major and second-tier cities. After a great deal of debate, the government of India finally made a move to open up the market further to foreign players by permitting 51% foreign direct investment (FDI) in multi-brand retail and 100% FDI in single-brand retail in 2012, thus providing greater opportunities for modern retail to grow. These large modern retail stores, such as supermarkets and hypermarkets, are slowly eating into the share of traditional distribution channels due to the combined effects of ongoing urbanisation, retailer upgrades, lifestyle changes and better household refrigeration facilities.

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