Packaged food - Packaged food - Triggers for Triggers for innovationinnovation

Apurb SinhaMita Tanna

Executive PGDM (2010-11)

HistoryHistoryAnything that is ready to be

consumed is called ready to eatIt would be a good thought to

refer to history books to see what people eat during the wars of Ramayana and Mahabharata

RTE food theory is ancient solution for today’s modern world

HistoryHistoryAfter world war II in US. Problem of

not able to carry enough food to feed the soldiers

Introduction of canned goods with whole food.

Canned meats were replaced with lightweight preserved meats to save weight and allow more rations to be carried by soldiers carrying their supplies on foot

In 1963, the Department of Defense began developing the Ready-to-Eat with modern food preparation and packaging technology along with outsourcing it to commercial companies

Post war, many commercial food companies were left with surplus manufacturing facilities

developed new lines of canned and freeze dried foods that were designed for use in the home

TV dinner from aluminum to microwaveable materials usually plastics

Key featuresKey featuresConvenienceTime savingEnergy saving

◦During preparation◦During consumption

Effort saving

NeedNeedIncrease in urbanization and change

in lifestyleShortage of timeIncreasing price of energyLack of cooking skillsImproved ability of cooking gadgetsIncreased demand of new tasteConvenienceFood safety and hygiene conditionTechnology advancesChanging social and economic

parameters

Need continuedNeed continuedSocial Changes

◦Split and nuclear families◦Larger working women class◦Migrants◦Sense of freedom and independence

amongst teenagers and young adults◦Changing priories

Cultural exposure◦Media ◦Oversea travel◦ Increased exposure to west

Need contd.Need contd.Income

◦Improved standard of living◦Increased disposable income◦Education◦Modern thinking

Change in life style◦Concept of breakfast at home is

fading◦Carrying lunch from home

Need contd.Need contd.◦Working couple◦Lack of time in morning hours◦Availability of food next door◦Change in corporate culture. Meeting

and eating are not mutually exclusive activities now

Commonly used phrasesCommonly used phrasesReady-to-eatReady-to-fryReady-to-serveReady-to-cook

Types Types Military MREKid’s MealsSurvival kitsSpecial needsCare packages

Primary stake holdersPrimary stake holders

Primary Stake Holder

Primary Stake Holder

Military

Military

Working

couples

Working

couples

Working Men/Wom

en

Working Men/Wom

en

Students

Students

Bachelors

Bachelors

TouristsTourists

Nomadics/

Mavericks

Nomadics/

Mavericks

Secondary stake holderSecondary stake holderMarket researchersProduct designersProduct manufacturesPackage designerCover designersPolicy makersTransportersWarehouses – cold storages

Secondary stake holdersSecondary stake holdersCold shelf manufacturersStore managersAC manufacturersAC operatorsStock keeperBuyers

ClassificationClassificationReady-to-eat & Ready-to-Serve

◦Idlis, dosas, pav bhaji, meat◦pre-cooked sausages, ham, chicken

products, curries, chapattis, rice,◦vegetables like aloo chole, navratan

kurma, channa masala

ClassificationClassificationReady-to-cook

◦instant mixes like cake mixes, gulab-jamun mix, falooda mix, ice-cream mix, jelly mix, pudding mix etc.,

◦pasta products like noodles, macaroni, vermicelli etc

Factors affecting packagingFactors affecting packaging

Product characteristics◦The type of food and its composition,

moisture, fat, protein, flavour etc◦Form and shape of the product –

smooth, regular, irregular, with sharp edges etc.

◦Nature of the product – crisp, brittle, sticky etc.

◦major ingredients – oil based, fat rich,dry

Packaging contd.Packaging contd.Spoilage

◦Biological spoilage due to micro-organisms

◦Abiotic spoilage due to chemical reactions like oxidation, hydrolysis and enzymatic reactions.

Environmental factors ◦like light, humidity and temperature.

Value parametersValue parametersTime to cookTime to consumeStandalone productUse of energy (heating, cooking

etc)Requirement of cooking skillsVariety in tasteRegional varietyConvenienceFood safety & hygieneCalories consumed

Value parameters contd.Value parameters contd.Shelf life - packagingCostPreservativesTaste and qualityEasy to carryLast touch (mother/wife)

Value parameter mappingValue parameter mapping

Distribution chain for small Distribution chain for small retailerretailer

Consumer

Source :Friend from HUL

Distribution chain for Big Distribution chain for Big retailerretailer

Consumer

Source :Friend from HUL

Markups/PricingMarkups/Pricing

ProcessProcessBuy Plant

Buy Raw material

Manufacture

Supply

Plant manufactur

ers

Wholesalers

Manufacturing- corn curlsManufacturing- corn curls

Equipments requiredEquipments requiredFlour mixer

To mix corn meal with water to prepare the flour for Kurkure

Rotary dry extruder

To cook the corn meal and extrude the Kurkure from the die. The Rotary Die twists and curls the meal before extruding giving a uniform texture

Automatic Frying Machine

To fry the Kurkure in hot cooking oil. The uniform frying introduces the crunchy taste to the Kurkure

Cooling Conveyor To cool the fried Kurkure and reduce the temperature before packing

Automatic Seasoning System

To add required seasoning to the fried and cooled Kurkure to give the different flavors to them

Pouch Packing MachineTo pack the Kurkure into attractive printed pouches with gas flushing

Ref: Labh group of companies

Equipments/Land CostEquipments/Land CostEquipments Description Qty

Unit price cost

Plant combo 500 kgs per 8 hr shift 1120000

0120000

0

Working table 1 5000 5000

weighing MachineTo weigh raw material and finished products 2 10000 20000

Big containersto do any intermediate processing if required 1 2000 2000

Equipment cost122700

0

Facility Rentarea 5000 sq ft(MIDC Turbhe) source: magic bricks 10000

Label & Packing material 750000

Raw materialRaw material

Raw material required Qty Required

Per KG cost

Wheat flour 30Salt 10Seasoning powderEdible oil 50preservatives

Human resourceHuman resource

Human resource requirementmanager 1Production/technical specialist 1machine operators 3labours/helpers 6

Food act - GenerallyFood act - Generally1. if the article sold by a vendor is not of the nature, substance or quality

demanded by the purchaser and is to his prejudice, or is not of the nature, substance or quality which it purports or represented to be;

2. if the article contains any other substance which affects, or if the article is so processed as to affect, injuriously the nature, substance or quality thereof;

3. if any inferior or cheaper substance has been substituted wholly or in part for the article so as to affect injuriously the nature, substance or quality thereof;

4. if any constituent of the article has been wholly or in part abstracted so as to affect injuriously the nature, substance or quality thereof;

5. if the article had been prepared, packed or kept under insanitary conditions whereby it has become contaminated or injurious to health ;

6. if the article consists wholly or in part of any filthy, putrid, rotten, decomposed or diseased animal or vegetable substance or is insect-infested or is otherwise unfit for human Consumption;

International LawsInternational Laws1. India - Prevention of food adulteration act, 1954 of India2. FDA – USA 19383. The Food Standards Act 1999 – UK4. The EU integrated approach to food safety - European Food Safety

Authority (EFSA) 5. Food Safety standards- ANZ

Packaged Food – Laws Packaged Food – Laws IndiaIndiaFood Safety  and Standards  Act , 2006Prevention of Food Adulteration Act

(PFA) 1954 and RulesThe Standards of Weights and

Measures Act, 1976Standards of Weights and

Measures (Packaged Commodities) Rules, 1977

Meat Food Products Order, 1973 (MFPO).

ClearancesClearances

1. Factories Act2. Labour Laws3. NOC from fire angle from Fire Dept.4. Approval of Building plan from industrial centre corporation / local

administration.5. Power Release Certificate6. Consent to Establish under Environment Act

Microsoft Office Excel 97-2003 Worksheet

Recent trendsRecent trendsHealth consciousNo trans-fatNo sugar High grain foodsWellness foodNo preservativesOrganic foodNatural

Govt. PoliciesGovt. PoliciesAutomatic approval of foreign equity

participation up to 51% Income tax rebate of 100% of profit

for five years and 25% of profits for the next years for packaging of foods

The National Policy aims to increase the level of food processing from 2% to 10% in 2010 and to 25% in 2025

Govt. PoliciesGovt. Policies The level of institutional credit to be provided by banks

and financial institutions has been increased from US$ 17.41 billion during 2003-04 to about US$ 23.76 billion in 2005-06

Automatic approvals for foreign investment up to 100%, except in few cases, and also technology transfer

The government has decided to give a boost to research and development in this sector with its decision to set up the National Institute for Food Technology and Management in collaboration with Cornell University of the US.

Zero import duty on capital goods and raw material for 100 per cent export-oriented units. Custom duty on packaging machines reduced. Central excise duty on meat, poultry and fish reduced to 8%

Govt. PoliciesGovt. Policies Income tax rebate allowed (100% of profits for 5

years and 25% of profits for the next 5 years) for new industries in fruits and vegetables besides institutional and credit support.

Government - developing 30 mega food parks which would cover the entire food processing cycle 'from the farm gate to the retail outlet'.

Government would provide a grant of US$ 12.53 million for each one, private investment to the tune of US$ 75.21 million would be encouraged in these parks.

The first five such parks would be set up in Punjab, Maharashtra, Andhra Pradesh, Jharkhand and the North-East region in the first phases.

VALUE

1.Taste2.Quality3.Quantity4.Safe packaging5.Nutrition

CHANNELS

1.Procurement2.Manufacturing3.Distribution4.Retailing

RELATIONSHIPS

1.Supplier2.Vendor3.Retailer4.Distributor5.C & F agent

CLIENTS

REVENUE STREAMS

Retailers

Big

Small

COST CENTRES

Raw Materials procurement, Manufacturing,

(Outsourcing), SG & A, Marketing, Advertising

KEYPARTNER

1.Raw material suppliers

2.Machine supplier

3.Packet printer

4.Dealer

5.Retailer

6.C& F agent

KEYRESOURCES

1.Raw Materials2.Machines3.Labour4.Packaging

KEYACTIVITIES

1.Procurement of raw material2.Mixing of raw material3.Manufacturing4.Packaging5.Weighing6.Checking the standards

Osterwalder Business ModelsCustomer Acquisition

Wholesaler

C&F Agent

Retailer big small

Tasteing joints

Primary SurveyPrimary Survey

Customer Segmentation Customer Segmentation

• Young and busy• New flavors, products, quality, attractive packaging

• Old and choosy• Easy to digest, less spicy, natural flavor

• Price conscious• Value for money, smaller packs

Preference of each Preference of each segmentsegmentTasteHandy packagingLong shelf lifeSafe packagingCost

StrategyStrategyThree product range based on

segmentation

Old & Choosy◦Food based on Atta, vegetable and

cereals◦Decent packaging that highlights

nutrition values◦Promotion near community stalls,

temple

Strategy contd.Strategy contd.Young & busy

◦New flavors like Italian, cheesy..◦Attractive and colorful packaging◦Taste trails at the malls and meeting

joints

Price conscious◦Smaller packs◦Less price as compared to rivals◦Decent quantity

Health consciousHealth consciousParticipation – invite recipesPromotions as healthy foodsUse of natural ingredients like

vegetablePackaging - focus on nutrition

Customer expectationCustomer expectationPrice is no longer a deciding

factor for most of the consumersConsumer delightReady to try more variations