Market Research Ketchup Industry

MARKETING RESEARCH PROJECT REPORT

OBSERVATION REPORT OF KETCHUP AND SAUCE

GROUP – E2 Prateek Sinha (0271/51) Renganayaki (0/51) Sagar Vatkar (0/51) Jimit Patel (0/51) Puneet Aggarwal (0280/51) Kiran Pottipireddi (0/51) Ranjit Singh (0/51)

November 23, 2014

KETCHUP AND SAUCE OBSERVATION REPORT

2

KETCHUP AND SAUCE OBSERVATION REPORT

November 23, 2014

3

November 23, 2014

KETCHUP AND SAUCE OBSERVATION REPORT

INTRODUCTION Sauces and ketchups are among the high activity categories. With rapid urbanization and change in eating habits, sauces and condiments have occupied a substantial shelf space in the Indian gourmet outlets. The Indian ketchup market is valued at USD 110 million to USD 120 million with volume 56.8 million kg. (in 2003), supported by growth at a CAGR of 9-10%. New flavours like mustard and barbeques are widely accepted across nation and marketers are experimenting with the product sizes and convenience packing to increase penetration. The Indian ketchup & sauces market is dominated by tomato preparations and usage of carrot and pumpkins as adulteration is a common activity across regions. After tomato, mustard sauce occupies a significant share of the remaining market.

Till 1970’s and 80’s Maggie and Kissan were the major 2013 ketchup brands but after liberalization Heinz and other international players entered Indian market. With Kissan 2004 and Maggi fighting neck to neck other smaller but established brands like Dipy's from Herbertsons, Volfruit from Voltas, Noga of Nagpur Orange Federation and SunSip of Wimco gradually disappeared from the market. At a time when Kissan had become generic to tomato sauce, Maggi came in with its sauces range with loud and aggressive national thrust. With an increased range of sauces in order to increase market share and expand the market by offering more usage occasions to bring in consumers with different needs into the Maggi Sauces fold. From a market share of 14% in 1985, it has increase it to 47% (2009). Delmonte has also joined hands with Paoma Industries, the manufacturers of Rasna Brands, to launch Tomato Ketchup in India. While mayonnaise, ketchup and olives are the most popular, others such as chilli, soya, gherkins etc. have also gained wide acceptance. The growing demand for sauces and condiments comes from both individual customers as well as institutions such as hotels, restaurants and clubs. We in our research would be focusing only on the individual or household segment.

4

KETCHUP AND SAUCE OBSERVATION REPORT

November 23, 2014

SECONDARY RESEARCH Indian consumers – certainly the urban consumers – have expanded their sauce fancy to more than the tomato ketchup and chilli sauce, even as ketchup often becomes a convenient replacement for homemade chutneys. Many households have adopted ketchup, using it as an add-on with almost everything. Indian snacks (samosa), or parathas are now eaten with ketchup instead of chutney. However, companies who offer branded ketchups in India have also been launching other sauces which have been growing at anywhere between 10-20% per annum as the Indian palate expands to their consumption. There are also variants being launched, such as snack sauces (that contribute single digit sales shares currently but growing fast), imli chutney, hot and sweet sauces that keep the category fresh from time to time and help in garnering additional consumption. Then there is the cooking sauce segment which is 33% of the category and is fuelling growth. In fact, soy sauce and pasta sauce are growing at much higher pace (over 40%).

2003

2013

8% 1%

10%

17%

15%

40%

43%

17% 31%

18%

If we look at the last 10 years data, Nestle (Maggi) has been able to retain its lead in market share by bringing in many variants. Heinz with its increased emphasis on emerging market has been able to improve its market share from 1% to 10%. Kissan (Unilever) has seen drastic fall in its market share as it stuck to its generic product.

Pasta sauces have seen highest growth in the recent times. This is due to deep penetration of international dishes like pastas and other noodles which have boosted the regular consumption of sauces and ketchups across all ages. Major players like Cremica have managed to grow with an average annual growth rate of 30%.

5

November 23, 2014

KETCHUP AND SAUCE OBSERVATION REPORT

2013 2004

People generally buy from independent retailers and supermarkets and the buying pattern has remained stable for the last 10 years. When we look at demographics, majority (close to 50%) is consumed by children (0-14) and youth (15-24)

Key Highlights Expansion of modern retail channels in India means that consumers now have access to a wide range of cooking sauces which would further fuelling growth. Ketchup is the most popular table sauce in India which has also demonstrated strong value growth of 15% in 2013. The consumption of tomato sauce is gaining popularity day by day owing to the growing change in the food habits and increased consumption of Chinese, continental and other convenient snack foods. With the advent of on-trade brands such as Barbeque Nation and Subway, sauces and dressings have seen a new high has exposed Indian consumers to various sauces which can be used in cooking With the increasing popularity of Western-style fast food products and the growth of the fast food category in India, imported sauces such as barbecue, brown and plum sauce have started to gain momentum. Urban consumers have expanded their sauce fancy to more than the tomato ketchup and chilli sauce, even as ketchup often becomes a convenient replacement for homemade chutneys. Indian consumer is now more open to the newer offerings in sauces and dips. With the increase in disposable income and the increase in the number of working women, people are looking at convenient products such as pasta sauces as they have no time to prepare such products themselves The health and wellness trend is continuing to develop in India, with consumers paying more attention to the ingredients of packaged food products. Companies have also in lieu introduced products with health tag, no trans-fat, no artificial colouring. etc. 6

KETCHUP AND SAUCE OBSERVATION REPORT

November 23, 2014

Private label products have strengthened their presence. Marketers of established brands need to ensure that they differentiate their products enough to prevent them from becoming targets for potential private label competition. Inflation is the greatest threat to this category. Companies are buying agricultural commodities in bulk and much in advance and hoarding them to hedge the risks of increases in agricultural prices, and traders hoarding commodities during crop failures. Contaminants, pesticide residues and toxins remain important issues which could be the potential threats to value growth.

Behavioural Changes Cooking sauces are convenience products and have gained from changing attitudes towards cooking and eating in India. The shift has been towards spending less time on food preparation or opting for more convenient options. The shift away from family households means that these homes are catering for fewer numbers, so they are more likely to minimise food-preparation times. Similarly, in larger households, due to busy schedule shift is towards staggered and lighter eating occasions where meals are eaten in smaller numbers or alone. This too has driven the trend towards convenience products. With cookery no longer a priority and reduction in the trend of a traditional housewife role in the household, many consumers simply do not have the knowledge or skill to prepare meals from scratch.

Key Drivers from the Secondary Research

Age group 0-24 major consumer Contanimation and adulteration big issue Shift towards more convinient preparations Strengthen of Private labels Less food-preparation times Rising health and wellness trend Rising popularity of Fast-food

Increasing opennes to new offerings Majority of buying takes place in supermarkets (~83%)

increasing disposable incomes and number of working women Shift from generic to differentiated product

7

November 23, 2014

KETCHUP AND SAUCE OBSERVATION REPORT

8