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SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF PGP COURSE OF IIM SAMBALPUR

BY

GROUP 1

SECTION - D

UNDER THE GUIDANCE OF

Prof. Rihana Shaik

Food & Beverage Industry

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ACKNOWLEDGEMENT

The successful completion of the project would be incomplete without mention of the people who
made it possible. In spite of our commitment and hard work there are some special people who
guided us towards the completion of project.

Here we avail this opportunity to thank them.

We would like to take the opportunity to thank and express my deep sense of gratitude to our
Professor Prof. Rihana Shei and other faculty members for their valuable guidance at all stages of
the study and continuous encouragement without which it would have not been possible to
complete the project.

We also express our deep sense of gratitude to our batchmates for helping us, which led to the
completion of our project. We owe thanks to everyone for their cooperation and assistance during
the course of our project.

WAC Group- 1

Section D

PGP-1
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1. Industry overview:

The food and beverage business is a major contributor to the global economy, involving a wide
range of operations from distribution, retail, and food service to agricultural production and food
processing. It is one of the largest sectors in the world due to its sheer size and diversity, and it
has grown steadily over time. Factors including population growth, rising disposable incomes,
and changing consumer preferences are driving this increase.

The industry's complex worldwide supply chain passes through a number of industries, including
retail, transportation, food processing, and agriculture. The dynamics of the sector may be
impacted by variables that affect the availability and cost of raw materials, including farming
techniques, climate change, and geopolitical issues.

As producers as well as consumers, developing economies are becoming major participants in

the global food and beverage market. The urbanization and expanding middle class in these areas
are factors in the changing consumption patterns that provide industry stakeholders both
possibilities and problems.
Notwithstanding its strong expansion, the industry is not without difficulties. Food waste,
environmental effect, and packaging materials are just a few of the pressing sustainability
concerns. Furthermore, unanticipated events, like as the current COVID-19 outbreak, trade
disputes, and commodity price volatility can all contribute to instability.
The business has entered a new era marked by a fundamental shift in how consumers obtain food
and beverages due to the rise of e-commerce. Digital technology and online platforms are now
essential components of marketing and distribution plans, signaling a growth.

Industry’s history:

1900–1920: Formative Years

● Industrialization of food production.

● Canning and refrigeration revolutionized food preservation.
● Emergence of prominent brands fueled industry growth.

1930s–1940s: World War II Impact

● War scarcity led to rationing.

● Rise of processed and convenience foods.
● TV dinners and instant meals innovation post-war.
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1950s–1960s: Fast Food Boom

● Post-war economic boom shifted consumer lifestyles.

● Emergence of fast food culture and convenience.
● McDonald's and KFC revolutionized dining experience.

1970s–1980s: Health and Wellbeing Trends

● Increased consumer awareness of nutrition.

● Expansion of natural and organic foods market.
● Focus on food safety and groundwork for healthier eating habits.

1990s–2000s: Globalization and Technology

● Surge in globalization and global supply systems.

● Cultural impacts on food became prominent.
● Internet and technology influenced customer behavior, leading to online food retail.

2010s: Plant-Based Movement and Sustainability

● Emphasis on sustainability and ethical sourcing.

● Growing awareness of environmental impact.
● Rise of plant-based proteins, reshaping distribution through e-commerce.

2020s (through 2022): Challenges and Adjustments

● COVID-19 pandemic led to supply chain disruptions.

● Online platforms and food delivery surged.
● Industry tackled worker safety, food security, and adaptability issues.

Size of the Food and Beverages Industry:

Locations:
● Global Presence: The food and beverages industry spans the globe with thousands of
locations, from agricultural sites and manufacturing plants to retail outlets. McDonald's,
for instance, operates in over 100 countries, showcasing the industry's expansive reach.
● Multinational Operations: Major players like Nestlé and Coca-Cola have a significant
presence in numerous nations. Nestlé's operations, spanning 186 countries, contribute to
the industry's global complexity.
Monetary Scale:
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● Trillions in Sales: The industry's financial impact is colossal, with global sales reaching
trillions of dollars annually. As an example, in 2020, Nestlé's revenue exceeded $80
billion, surpassing the GDP of many countries.
● Varied Financial Performance: While Nestlé boasts substantial revenue, regional players
also contribute. For instance, small-scale craft breweries collectively generate billions in
sales globally.
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Products:

Alcoholic Beverages:
● Soft drinks: Carbonated and non-carbonated beverages, flavored water.
● Juices: Fresh, concentrated, mixes.
● Alcoholic: Beer, wine, spirits, cocktails.
Snack Items:
● Chips and Pretzels: Potato, tortilla, pretzels.
● Confectionery: Chocolates, sweets, gum, mints.
● Nuts and Seeds: Roasted nuts, trail mixes, seed-based snacks.
Dairy Goods:
● Milk Options: Cow's milk, plant-based (soy, almond, oat), dairy-free.
● Cheese: Hard, soft, processed.
● Yogurt: Regular, Greek, yogurt-based beverages.
Baked Goods:
● Bread Products: Loaves, rolls, pastries, cakes.
● Cookies & Biscuits: Sweet and savory baked treats.
● Cereals and Bars: Ready-to-eat cereals, breakfast bars.
Frozen Foods:
● Frozen Dinners: Entrees, microwaveable options.
● Frozen Desserts: Ice cream, frozen yogurt, novelties.
● Frozen Fruits & Veggies: Convenient selections.
Meat and Seafood:
● Meat Products: Beef, chicken, pork, processed meats.
● Seafood: Fresh, frozen fish, shrimp, other items.
Sauces and Seasonings:
● Sauces: Tomato, barbecue, pasta.
● Dressings: Salad dressings, marinades.
● Seasonings: Herbs, spices, seasoning mixes.
Organic and Natural Foods:
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● Organic Choices: Pesticide-free foods.

● Functional Foods: Added health benefits.
● Plant-Based: Meat replacements, vegan alternatives.
Ready-to-Drink Products:
● Beverages: Coffee, tea, energy drinks.
● Quick Meals: Soups, instant noodles.
Specialty and Ethnic Foods:
● Specialty: Gourmet, artisanal products.
● Ethnic: Cuisine-specific items reflecting global tastes.

Geographic Scope and Global View:

With global leaders operating in numerous countries, the industry's reach is genuinely
international. McDonald's tailors menus worldwide to local tastes, and Starbucks successfully
introduces cultural variations in different regions.

Contribution to GDP/Economy:

The food and beverage industry significantly contributes to the global GDP and economy. In
India, it constitutes approximately 17.8% of the GDP, providing employment to millions and
playing a crucial role in the nation's economic landscape.

Life Cycle Stages of the Food and Beverage Industry

Emerging:
● Description: Characterized by innovation, experimentation, and market entry.
● Example: Plant-based protein products entering the mainstream market.
Growing:
● Description: Rapid expansion, increasing consumer demand, and rising
competition.
● Example: Craft breweries experiencing a surge in popularity and market share.
Shaking Out:
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● Description: Intense competition leads to consolidation and the exit of weaker

players.
● Example: Closure of small local restaurants amid fierce competition and changing
consumer preferences.
Maturing:
● Description: Stable market conditions, established players, and slower growth.
● Example: Established soft drink brands maintaining market share with consistent
sales.
Declining:
● Description: Decreasing demand, increased competition from substitutes, and
market saturation.
● Example: Traditional sugary soda sales declining as consumers shift towards
healthier alternatives.

Contribution to the GDP/Economy:

Economic Significance:

● GDP Share: The sector is a vital pillar, contributing approximately 17.8% to

India's GDP in 2020 (Source: Ministry of Statistics and Programme

Implementation).

● Key Industries: Food processing and related sectors play a substantial role in this

economic contribution.

Employment Creation:

● Workforce Impact: The industry is a major employer, accounting for 41% of all

jobs in India's agricultural and related sectors in 2021 (Source: Economic Survey

2020–21).

● Significant Job Generator: Millions find employment, bolstering the nation's

workforce.

Retail and Distribution Networks:

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● GDP Share from Retail: The retail sector, crucial for food and beverage

distribution, contributed 10% to India's GDP in 2020 (Source: Confederation of

Indian Industry).

● Integral Component: Retail networks play a vital role in the industry's economic

impact.

International Trade Contribution:

● Export Value: In FY 2020–21, India exported food and beverages worth $30

billion, including processed foods and spices (Source: Ministry of Commerce and

Industry).

● Global Presence: The industry's international trade significantly contributes to

India's economic standing.

Government Policies and Initiatives:

● Strategic Programs: Initiatives like the Pradhan Mantri Kisan Sampada Yojana

aim to boost food processing and strengthen supply chains.

● Industry Growth: Government-led efforts contribute to the overall expansion of

the food and beverage sector.

Spice Export Highlight:

● Global Impact: In FY 2020–21, Indian spice exports amounted to around $3.5

billion (Source: Agricultural and Processed Food Products Export Development

Authority).

● Diverse Contribution: This underscores India's global position in spices,

showcasing the industry's economic significance beyond domestic borders.

2. Market Analysis:
● The Indian Food and Beverages Market is poised for remarkable expansion, projected to
reach nearly USD 504.92 billion by 2027
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● It makes up around 3% of India’s GDP and nearly 2/3 of the country’s whole retail
market

Key Trends Shaping the Indian Food and Beverage Industry Opportunities In India

● Increasing Gourmet Brands

The gourmet food market in India has been experiencing significant expansion for the last few
years. This has occurred due to the shifting consumption habits of Indian consumers from
traditional food flavors to global food

● Growth in Bakery Segments

The Indian bakery market has emerged as the largest food processing segment. Increasing
consumption of biscuits and cookies which accounts for about 72% of the total sales in the F&B
industry is primarily boosting the growth in this segment. Also, several popular reports state the
cake market will reach a valuation of USD 882.24 million by 2024

● Growing Demand For Packaged Foods

As reported by Nestle India, the demand for packaged food in the Indian market will double in
the coming 5 to 10 years. It is estimated to grow up to USD 100 billion creating lucrative
business opportunities for foreign players. Several factors like growing e-commerce,
demographic dividend, and overall economic growth have promoted the change

Products & Technology:

The industry includes segments such as

1. Food processing
2. Dairy
3. Bakery
4. Confectionery
5. packaged water
6. Soft drinks
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7. Tea, Coffee
8. Alcoholic beverages

Emerging technology Trends in India:

Digital transformation and technology integration in India’s F&B industry is already well on its
way due mainly to the efforts of stakeholders from the private sector and public sector players
like government agencies

Specifically, operators can get insight into consumer preferences and purchasing behavior
through data analysis powered by smart technology like AI. This data will help businesses
optimize their menu items and better manage inventory, increasing efficiency and potential profit
while minimizing costs. Other trends include automation enabled via machine learning (ML),
which can benefit operations like food ordering, preparation, delivery, inventory management,
etc.

A recent study conducted by the strategic consulting and market research firm, BlueWeave
Consulting, revealed that India Vending Machine Market is predicted to grow at a CAGR of
17.2%, by the end of 2028. The India Vending Machine Market is booming because of the
increasing need for on-the-go snacks and beverages, which is driving product sales through
vending machines.

Competition:

Important factors affecting ability to compete successfully include-

● Taste and flavor of products

● Trade and consumer promotions (e.g. CocaCola India’s partnerships and promotions)
● Rapid and effective development
● Marketing of new, unique cutting edge products (Ready to Eat Foods)
● Attractive and different packaging
● Branded product advertising (e.g. Amul’s Adertisement Campaigns)
● Pricing

Top Food Processing Companies In India:

● Hindustan Unilever Ltd.

● Nestle India Limited.
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● Britannia Industries Ltd.

● Parle Agro Pvt. Ltd.
● MTR Foods Private Limited.
● Kohinoor Foods Ltd.
● TATA Consumer Products limited.
● McCain Foods India Private Limited.

Beverages:

● CocaCola India
● Pepsico India
● Gujarat Co-Operative Milk Marketing Federation (Amul)
● AbInBev India
● Coffee Day Beverages
● Tata Consumer Products

1. The PESTEL Analysis:

Political Factors:
● Global supply chains of food and beverage get influenced from international trade.
● Government policies on food safety impact the industry's marketing strategies.

Economic Factors:
● Purchasing and spending habits get affected which influences market demand.
● Currency fluctuations impact pricing as they operate in various currencies.

Social Factors:
● Healthy lifestyle taking a shift towards healthy and organic food options.
● Cultural preferences and dietary habits are influential factors.

Technological Factors:
● Advancements in food production, packaging, and distribution create avenues for the
development of new products.
● Technology sophisticatedly streamline operations and reduce cost.

Legal Factors:
● Adherence to food safety regulations shapes production methods and marketing
strategies.
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● Legal frameworks impact product innovation and market competition.

Environmental Factors:
● Natural disasters can disrupt agricultural production and food availability.
● Eco-friendly packaging and sustainable sourcing practises environmental sustainability.

2. Porter's Five Forces Analysis:

Threat of New Entrants:

● Compliance with food safety standards presents challenges for new entrants.

Bargaining Power of Buyers:

● Intense competition and products having less variety are more price sensitive.

Bargaining Power of Suppliers:

● Major food conglomerates have significant power over small suppliers due to long-term
relationships.

Threat of Substitutes:
● Well-established brands mitigates the immediate risk posed by substitutes.

Industry Rivalry:
● Fierce competition among big market players requires aggressive marketing approaches
and continual innovation

Emerging Stronger: The F&B Landscape Today

The COVID-19 pandemic was a crucible for the food and beverage (F&B) industry. It
wasn't just a temporary disruption; it was a transformative fire, burning away old
structures and forging a new landscape of opportunities and challenges.

1. The PESTEL Analysis:

● Political: Government policies like lockdowns, travel restrictions, and vaccine

mandates continue to shape consumer behavior and business operations. Think
relaxed regulations for outdoor dining, digital vaccine passports, and restrictions
on large gatherings.
● Economic: Inflationary pressures on input costs and labor shortages squeeze
profit margins. Businesses need to adapt with menu price adjustments,
automation, and upskilling initiatives.
● Social: Health and wellness remain paramount, driving demand for plant-based
options, functional foods, and transparency in ingredients. Sustainability also
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gains traction, with consumers seeking locally sourced ingredients and eco-
friendly packaging.
● Technological: Automation, e-commerce platforms, and AI-powered solutions are
revolutionizing the F&B landscape. From robotic chefs to contactless ordering
systems, technology streamlines operations and personalizes customer
experiences.
● Legal: Regulations surrounding food safety, hygiene, and labeling evolve in
response to the pandemic. Expect stricter hygiene protocols, clear allergen and
ingredient labeling, and digital menus becoming the norm.
● Environmental: Concerns about food waste and packaging sustainability are
louder than ever. Businesses are exploring upcycled ingredients, smaller portion
sizes, and compostable packaging solutions.

The F&B industry has emerged from the pandemic transformed, more adaptable and resilient
than ever. Here are some key trends shaping the future:

E-commerce and delivery reign supreme: Online food sales continue to soar, with omnichannel
strategies becoming crucial. Think click-and-collect options, virtual kitchens, and subscription
meal boxes.

Hyper-personalization is the new normal: Consumers crave tailored experiences and demand
frictionless options like pre-orders, AI-powered recommendations, and customized menus.

Health and wellness remain center stage: Plant-based options, superfood-infused menus, and
transparency in ingredients are here to stay. Expect more sustainability initiatives like reducing
food waste, compostable packaging, and partnerships with local farms.

The COVID-19 pandemic may have been a crucible, but the F&B industry has emerged stronger,
embracing technology, adapting to consumer preferences, and prioritizing sustainability. It's a
phoenix rising from the ashes, ready to soar in the post-pandemic skies.
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References:

A., A., & A. (2022, January 3). Indian Food and Beverage Industry: Recent Trends. Tecnova.
https://www.tecnovaglobal.com/blog/indian-food-and-beverage-industry-recent-trends/

Emerging Technology Trends in India’s Food & Beverage Industry. (n.d.).

https://ycpauctus.com/insights/emerging-technology-trends-in-india-s-food-and-beverage-
industry

India Vending Machine Market to Grow at a CAGR of 17.2% during Forecast Period. (n.d.).
BlueWeave Consulting. https://www.blueweaveconsulting.com/press-release/india-vending-
machine-market-to-grow-at-a-cagr-of-17-2-during-forecast-period

C. (2023, August 10). Impact of COVID-19 on the F&B Industry | Food and Beverage
Laboratory Software. CloudLIMS. https://cloudlims.com/impact-of-covid-19-on-the-food-and-
beverage-industry/

Bickham, D. (2022, September 8). How COVID-19 Changed the Food and Beverage Industry
and How it Impacts Your Localized Marketing Efforts - SOCi. SOCi.
https://www.meetsoci.com/resources/blog/localized-marketing/how-covid-19-changed-the-food-
and-beverage-industry-and-how-it-impacts-your-localized-marketing-efforts/