Rabobank: More Indians adopt branded rice as modern retail takes off

By RJ Whitehead

- Last updated on GMT

Rabobank: More Indians adopt branded rice as modern retail takes off

Related tags Rabobank

A report on thebranded Indian rice industry has forecast strong growth in the segment as an increasingly less price-sensitive market continues its move away from preferring commodities to labels. 

According to Shiva Mudgil, an analyst at agribusiness specialist Rabobank, the branded rice market has been growing at an annual rate of 15% in volume over the last four years. 

This growth is expected to continue at a similar rate until at least 2017, when analysts estimate volume will have reached 2.9m tonnes—up from 1.6m tonnes in 2014.

In value terms, the branded rice business will increase by US$1.1bn during this period, reaching the US$3.5bn mark by 2017.

Mudgil said this growth would be driven by increasing consumer acceptance of branded products and the growth of food retail in India. 

Some players have already started to develop value-added, ready-to-eat-and-cook snacks such as savouries and noodles, and formalisation of this segment will drive innovations in products and packaging in the next five years​,” said Mudgil.

Driven by increases in disposable incomes, urbanisation, women’s participation in the workforce, and a younger population, consumer lifestyles have changed over the last decade, the report said. 

With greater propensity to spend and desire for convenience, a shift is seen in consumption patterns toward better-quality and protein-rich products, it found.

Mudgil also noted that growth in India’s modern retail segment has provided an ideal platform for branded rice. This retail segment has been growing at 15-20% annually, and is expected to reach 25% by 2017. 

This means branded rice sales in modern retail should more than double, from 0.3m tonnes in 2014 to around 0.7m tonnes in 2017.

To seize this growing opportunity of branded rice, companies will have to exercise greater control over the value chain, which will lead to integration, supply chain partnerships, and consolidation at the processing level​,” said Mudgil. 

There will also be an increasing focus on developing a brand and distribution network in order to capture the fragmented branded business in India​.”

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