According to the report by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the industry would grow at a rate of 15 to 20% annually from the current level of US$15bn to 2015.
The industry, which includes snack foods, ready-to-eat food, healthy and functional food, would be fuelled by the arrival of food multinationals, rising popularity of quick-service restaurants, modern retail formats, technological advancement, and changing urban lifestyles, the report says.
It classified the existing packaged food industry as consisting of bakery products, canned or dried processed food, frozen processed food, meal replacement products and condiments.
Packages foods to boom thanks to working urbanites
Emerging categories included processed dairy products, frozen ready-to-eat (RTE) foods, diet snacks, processed meat and probiotic drinks.
ASSOCHAM conducted a survey with 2,000 representative households with or without children, nuclear families and bachelors, which revealed more and more people are consuming packaged foods.
The survey found more than 82% of the workforce prefers packaged food rather eating outside or in roadside eateries in cities like Delhi, Mumbai, Kolkata, Chennai, Bangalore, and Hyderabad.
Time-pressured lifestyles are the key driver, the report said, causing demand to spike for products which can be eaten on the go.
According to ASSOCHAM, urban dwellers are the largest consumers of processed food and are going to be the biggest consumers of processed food because of their ever-increasing per capita income and lifestyle, which is rapidly changing.
Urban Indians consumed 78% of all packaged food in 2011; rural residents the remainder.
Healthy lean boosting market as well
The report highlighted that the growth in the economy, coupled with a strong desire to be healthy and the growing awareness of functional ingredients such as herbs, vitamins, omega-3 fatty acids and probiotics is driving the functional food and beverages market as well.
“The food ingredients market is also increasing with a rapid growth rate, as consumers increasingly demand bigger, bolder tastes, foods that are healthy, and ingredients that are natural or sustainable,” said D S Rawat, secretary general at ASSOCHAM, who added that Indian consumers are becoming more sophisticated and want more upscale flavours and ingredients.
Packaged foods penetration of organised retail is expected to reach 15% by 2016, along with freezer space.