For further details or any customized research requirement, you may visit us at: www.researchonindia.com

1. Pasta Import ‐
Pasta Import India
December 2008

2. Executive Summary
 Estimated worth USD 8.5 mn in 2008
 Unorganized sector has a monopoly over domestic production
Market  Largest exporter is Nepal
 Barilla and San Remo are the most popular brands
Barilla and San Remo are the most popular brands
 Drivers: Consumers developing tastes for international cuisines, strong growth in organized retail,
Drivers & and government policy towards boosting the industry
Challenges  Challenges: Lack of widespread consumer awareness duty and tax structure inconsistent
Challenges: Lack of widespread consumer awareness, duty and tax structure, inconsistent
supplies, and competition from unorganized sector
 Two possible approaches
– Importing though agents
Importing though agents
Entry Route – Setting up local operations
 Importing through agents is the preferred route for foreign brands
 Developing manufacturing unit locally is economically unjustified
 Pasta imports attract specific import duties and local taxes
Rules and  Food safety norms set by the government need to be followed
g
Regulations  The law requires specific information to be displayed on the packaged good
The law requires specific information to be displayed on the packaged good
PASTA IMPORT – INDIA.PPT 2

3. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Entry Route
•Rules and Regulations
•Rules and Regulations
PASTA IMPORT – INDIA.PPT 3

4. Italian is a popular cuisine in India and is driving growth in pasta
imports
Overview Size and Growth
•Food imports are increasing by 15% p.a. USD mn ‘000 kg
Volume
•Italian food and especially pasta is one of the
p yp 10
Value
V l +17%
1,200
most popular foreign cuisines, predominantly 8 1,000
in urban areas 6
800
•Domestic production exists with unorganized 600
4
sector accounting for 97% of the market
sector accounting for 97% of the market 400
2 200
•However, there is a healthy demand for
0 0
imported pasta, which has grown: 2004 2005 2006 2007 2008
 17% p.a. by value
 21%
21% p.a. by volume
b l Largest Exporting Countries (2003‐2008)
Largest Exporting Countries (2003 2008)
 Uncooked pasta accounts for the bulk of imports Others
although other types (except uncooked or stuffed)
category is growing extremely fast 10%
•Barilla and San Remo are two popular
•Barilla and San Remo are two popular Italy
19%
imported brands
71%
Nepal
PASTA IMPORT – INDIA.PPT 4

5. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Entry Route
•Rules and Regulations
•Rules and Regulations
PASTA IMPORT – INDIA.PPT 5

6. Drivers & Challenges
Challenges
Creating Awareness
Government rules and regulations
Government rules and regulations
Inconsistent supplies
Drivers
Demand generated due to changing Competition from unorganized sector
tastes and attitude
Growth in organized retail industry
Government Initiatives
PASTA IMPORT – INDIA.PPT 6

7. The strong demand that has been generated via changing
preferences is the major driver
Demand generated due to changing tastes and attitude Impact
• In urban areas, frequent travel and greater global awareness is a major influence in broadening
the Indian consumers’ taste for foreign cuisine
• Italian food is gaining universal popularity has become one of the most popular foreign cuisines
in India
• Further, pasta as an ingredient is very adaptable thereby making it a popular choice for
vegetarians, which exist in large numbers in India since 30‐40% of Hindus are vegetarians
•HHowever, it is largely restricted to the urban elite and upper middle class sections of society,
it i l l t i t d t th b lit d iddl l ti f i t
which yet account for a large numbers as well as high levels of disposable income
Per household Total No. of Household Aggregate Annual Disposable
annual income (INR) Core target (millions) Income (INR trillion)
consumer 281 90
groups 3%
Globals >1000 244
12%
Strivers 500‐1000 2% 1% 24%
207
Seekers 200‐500 23%
5% 1% 1% 34%
Aspirers 90‐200 23%
Deprived <200 44% 44
43% 15%
9%
33% 34%
24 9% 34%
49% 13% 7%
30% 49% 33% 15%
18%
23% 9% 3%
2005 2015 2025 2005 2015 2025
PASTA IMPORT – INDIA.PPT 7

8. The growth in the retail sector and minor government initiatives
is expected to create further demand
Growth in organized retail industry Impact
• Imported foods receive maximum mileage through organized retail outlets since they provide
higher visibility and promote the “touch and feel” concept
• Retail market is expected to grow at 13% p.a. over the next five years with organized retail
expected to account for a larger share of around 40% compared to less than 5% currently
• Growth in organized retail, which is the best channel to target the core consumer group of
affluent urban individuals, will act as a growth driver for imported foods including pasta
Government Initiatives
• Realizing the growth of imported pasta, the government has been proactive towards making it
more affordable
 2006‐2007 budget exempted all such products from central excise duty
• Introduction of an integrated food law which is expected to:
 Create a superior market mechanism
 Growth in supply chain infrastructure
PASTA IMPORT – INDIA.PPT 8

9. The major challenge is in increasing awareness in the target consumer
demographic and inconsistent supplies in the market
Create more awareness Impact
• Manufacturers or importers need to create further awareness in order to grow the market
• Within the target demographic too, consumption is largely at restaurants and not cooking pasta
at home. Increasing awareness through marketing could help consumers get accustomed to
cooking pasta at home and grow the retail channel.
Government rules and regulations
• Prices are artificially inflated due to taxes and import duties which if reduced further can
Prices are artificially inflated due to taxes and import duties, which if reduced further can
increase consumption
• Tax and import duty revisions could be explored to determine if it benefits the market
Inconsistent supplies
• Many importers move quickly from product to product, which leads to inconsistent supplies
• Small importers are unwilling to develop a market by investing time and effort unlike larger
importers such as specialist retailer Godrej Agrovet or importer R.R. Oomerbhoy
Competition from domestic manufacturers
Competition from domestic manufacturers
• Apart from a few domestic major manufacturers, there is a large unorganized sector producing
pasta products
• These are often priced far lower than foreign products due to import duties and lower quality
PASTA IMPORT – INDIA.PPT 9

10. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Entry Route
•Rules and Regulations
•Rules and Regulations
PASTA IMPORT – INDIA.PPT 10

11. Entry options include importing through agents or setting up
local operations
• Option 1: Importer agents and distributors supply to retailers and food services
Preferred route 1
of entry for
f t f
Importer Distributor/
foreign brands
Agent Wholesaler
Foreign Retail Outlets/
Consumer
manufacturer/exporter Food Services
Market size does
Market size does
Local manufacturing & distribution operations not justify
2 required
investment
• Option 2: Set up own manufacturing unit and distribution operations to cater to the local market
p p g p
Import agents and local distributors are the preferred route for most foreign brands
Import agents and local distributors are the preferred route for most foreign brands
PASTA IMPORT – INDIA.PPT 11

12. •Market Overview
•Drivers & Challenges
Drivers & Challenges
•Entry Route
•Rules and Regulations
•Rules and Regulations
PASTA IMPORT – INDIA.PPT 12

13. Import of pasta is subject to duties and taxes, food safety rules
and mandatory packaging information
Rules and regulations Duties, taxes and estimated margins
•Duties and taxes: Import Duty
 Basic import duty, additional duty, education cess, Basic Import Duty
Basic Import Duty 30%
Octroi, central sales tax, and VAT
Additional Duty 0%
•Various food safety rules also need to be Spl. Additional Duty 4%
adhered to such as Prevention Of Food Excise cess 0%
Adulteration Act Custom cess
Custom cess 3%
•Packaging must display the following: Education cess 2% of total duty
 Name of company and address of manufacturer
Domestic Taxes
 Green or red sticker indicating vegetarian or non‐
VAT (state level) 4%
vegetarian product
vegetarian product
Central Sales Tax (inter‐state sales) 4%
 Name and contact details of importer
Octroi (variable; municipality/district level) 6% (Mumbai)
 MRP, Month of import, Shelf life
 Ingredients used as per PFA Estimated Margins
Importer (% of landed cost)
p ( ) 18%
Distributor (% of Distributor Cost Price) 10%
Retailer (% of retailer cost) 25%
Notes:
Landed cost = CIF + Import Duty + Clearance Charges + Domestic Freight
Distributor Cost Price = Landed Cost + Octroi + Importer Margin + CST
p g
Retailer Cost Price = Distributor Cost Price + VAT + Distributor Margin
PASTA IMPORT – INDIA.PPT 13

14. Thank you for your time
For an updated report or any customized research requirements, please contact:
Gaurav Kumar
E‐Mail: gaurav.kumar@netscribes.com; sales@netscribes.com
Phone: +91 33 4064 6214; +91 983 030 9715
Netscribes’ Services:
RESEARCH & ANALYTICS
RESEARCH & ANALYTICS MARKET INTELLIGENCE
MARKET INTELLIGENCE CONTENT SOLUTIONS
CONTENT SOLUTIONS
Investment Research Market Monitoring & Competitive Social Media Marketing
Enterprise Market Research Intelligence Marcom Support Services
Patent Research Sales & Prospect Intelligence Content Management Services
Syndicated Market Research
S di t d M k t R h Listening & Media Monitoring
Li t i & M di M it i Book Packaging Services
B kP k i S i
Brand Surveillance
For further details, visit us at: www.netscribes.com
About Netscribes
Netscribes supports the organic and inorganic growth objectives of global corporations through a combination of Enterprise Market,
Investment & Patent Research, Market & Sales Intelligence, Social Media Monitoring & Management and Custom Publishing solution.
Disclaimer: This report is published for general information only. High standards have been used for preparing this market research report;
Disclaimer: This report is published for general information only High standards have been used for preparing this market research report;
however, Netscribes, Inc. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole
property of Netscribes and prior permission is required for guidelines on reproduction.
PASTA IMPORT – INDIA.PPT 14