Penetration of frozen food products set to increase with rise in cold chain facilities and sufficient freezer space at consumer end: Bonafide Research

Organized players have only 8-10% market share in the cold chain industry; however the segment is now 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 frozen food market is segregated into six segments like frozen vegetables, frozen snacks, frozen seafood, frozen poultry, frozen red meat and others. 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 such 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. According to recently published report of Bonafide Research "India Frozen Food Market Overview, 2016-2022", the frozen food market of the country is anticipated to grow with more than 22% CAGR in the next five years. Measures like 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 leading to better cold chain facilities 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 ovens, the frozen food market is on a healthier growing path now. Hence, sufficient freezer space at the consumer end is also adding to the demand of frozen food products. 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. India is one of the largest producers of agricultural products. Nevertheless, it's poor cold chain results in supply chain losses of food and other resources. 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. All these challenges of frozen food market are now changing with many private players entering into the cold chain segment. 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. Major companies operating in the frozen food market of India are Al Kabeer Exports Private Limited, Mother Dairy Fruit & Vegetable Pvt. Ltd., Venky's (India) Limited, Innovative Foods Limited and Godrej Tyson Foods Ltd.

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