Logistics the biggest headache for India’s food and drink SMEs

By Gary Scattergood contact

- Last updated on GMT

Logistics the biggest headache for India’s food and drink SMEs

Related tags: Cold chain, Nutrition

Logistics infrastructure is the major stumbling block hampering the efforts of India’s food and beverage SMEs as they seek to expand and tap into growing consumer demand, business leaders have warned.

According to Unitas Foods chief executive Puja Mahajan, only MNCs are able to effectively transport their goods across the whole country.

Speaking at the Fi India pre-connect congress in Dehli on Saturday, the frozen snack food manufacturer said: “We cannot send our product from one part of the country to the other because there is no infrastructure in terms of logistics for SMEs, only for the big guys.”

Prabhat Dairy managing director Vivek Nirmal agreed, claiming that cold chain problems were a constant challenge when the firm was first established.

“When we started as an SME and tried to hire companies to work with us, they were only interested in the MNCs,”​ he said.

“It’s very hard because it means the nutrition of a product when it leaves the factory is not always going to be the same as when it is finished by the consumer, and this is largely due to cold chain problems.”

Unorganised retail

All India Food Processors Association (AIFPA) president Sagar Kurade said cold chain issues would inevitably persist in a highly price sensitive and unorganised retail market, with nobody wanting to pick up the tab.

However, he said progress had been made in recent years, arguing advances in chilled storage and transportation now meant the mango season lasted six months instead of two.

Away from cold chain concerns, Mahajan said firms like hers were also restricted by inadequate bank credit facilities and workforce skills shortages, while the industry as a whole was beset by a lack of product innovation, in part because of the long time it took to see a return on investment.

“We are living in a country that is very price sensitive and many consumers don’t realise that quality comes at a premium,” ​she added.

Nevertheless, she said an effective, targeted business strategy could offset these difficulties.

“You don’t always have to create value by reducing price, depending on what section of society you are targeting,”​ she added.

Customise products

As a manufacturer we are better off serving the food service industry than retail, because retail is so unorganized.

“We are now heavily focused on food service and if you are able to customise your products you can charge a premium and people will pay for it – as long as it is well defined.”

Both Mahajan and Nirmal noted a growing trend in India for more healthy and nutritious products, which people may be willing to pay more for.

“Changing demographic trends are leading us provide healthier products, as long as they are married with taste,”​ said Mahajan. “We all now want to know where our food is coming from, how much it is processed and if it has any health element, so we are also focusing on using better ingredients.”

“For us, whey powders and high protein milk powders are growing in demand and we are coming up with ways to build on that,” ​added Nirmal.

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