GUNJAN V JAIN VKC NUTS P LTD (INDIA) · Source: TGI data, IMRB ... Almonds Pistachio THE GREAT...

GUNJAN V JAINVKC NUTS P LTD (INDIA)

Presentation Roadmap

• Knowing/Understanding Dynamic Indian Economy

• Changing India

• Key Consumption Trends

• Food Retail

• The “Business” of Walnuts

India – Dynamic EconomyLarge, High Growth Market

Knowing IndiaIndia At a Glance

Population 1.35 Billion

Consuming Class 250 – 300 Million

GDP Growth Rate 7.5 % (2018 Est.)

Polity Democracy

Food Patterns Diversified

Agriculture Core

Regulatory WTO Signatory

Potential Huge

Understanding India• Strong Economy

– Resilient to the Current Crisis• 200 Million Consumers!

– Unified by Aspiration• Young population

– Part of a Global Village• Small Families

– Open to change• High disposable incomes

– Willingness to spend• Media Revolution

– Part of a Global Village• Imported Foods

– Niche to Mainstream

India – A Dynamic Economy• World’s fastest growing Economy, grew at 7.8% in FY 18-

191

• Country of 1.3 bn2 population of which nearly 65% is

younger than 353

• During FY17-18, India’s Foreign direct investment (FDI)

stood at US$61.96 bn;

• 3rd largest startup base in the world with over 4,750

technology startups4

• Urbanization, growing middle class, & increasing

consumer spending are the driving forces of growth

• Government initiatives – such as ‘Make in India’, Smart

Cities, Infrastructure Development

6

7,1% 6,7%

4,8%

2,2% 2,0% 1,7% 1,6%0,9%

0,3%

IndiaChina

Asea…Mexi…

U.K.Euro…

U.S.Japan So

ut…

GDP growth rates (2016)

India year ends March 31, 2017ASEAN-5: Indonesia, Malaysia, Philippines, Thailand and Vietnam. Source: IMF, Fortune

Source: 1World Bank; 2Doing Business in India, 3Future of India, PWC, 4Financial Express, 5India Brand Equity Foundation

35%

65%

Rural Urban

Rural / Urban Consumption

Split

Source: Crisil Outlook, Fiscal 2017

65%

35%

Rural Urban

Rural / Urban Population Split

Source: India’s Growth Paradigm, EY

383

593

2014 2017

Growing Retail Sector• Emerged as one of the most dynamic & fast-paced

industries due to the entry of several new players

• Accounts for 10%+ of the country’s GDP and ~8%

of employment6

• Ranked 1st in the 2017 Global Retail Development

Index (GRDI) rapidly progressing from a 20th

position in 2014

• Benefited from rapid growth in e-commerce

wherein 100% foreign ownership is allowed in B2B

e-commerce businesses & for retailers that sell

food products

Retail Market size (USD bn)

Source: Retail Report, India Brand Equity Foundation

Source: 6India Brand Equity Foundation *Others include: apparels, accessories, footwear, jewellery, time-pieces and time wear, home & furnishing, consumer durables & IT, health and beauty Source: India Food Report 2016

204 238 278 321 368 424518 490 534 600

1300

2000 2002 2004 2006 2008 2010 2012 2013 2014 2015 2020

CAGR 7.5%

CAGR 15%

India’s Food & Grocery retail (USD bn)

Food & Grocery retail

Others*

Source: India’s Food Service Industry: Growth Recipe, KPMG

Retail Industry, 2016

60-65%

30-35%

7

Food Processing Sector• Food processing industry is one of the largest industries

in India contributing to 14% of manufacturing GDP

• Ranks fifth in the world in terms of production,

consumption & exports9. In FY17 exports stood at

USD1.3 bn10

• Major food processing sector are grain milling, sugar,

edible oils, beverages, fruits & vegetables processing &

dairy products, with rice mills accounting for the largest

share of processing units

• 100% FDI is permitted under the automatic route in

food processing industries - between April 2000 &

December 2016, FDI in food processing industry was

USD7.5 bn11

8

Source: 9, 11 Food processing, IBEF, 10Food Processing, Make in India

Source: Food processing, IBEF

India’s food processing industry (USD bn)

258

482

2015 2020

CAGR 13%

Source: Food processing sector, IBEF

Organised sector has largest share (FY2016)

Organised 58%

Unorganised Sector & Small Scale Industries

42%

Food Industry in a Glance

• India’s Total Food Market: US$ 120 Billion– Projected Size: US$ 900 Billion by 2020

• Processed Food Products: US$ 60 Billion– Projected Size: US$ 300 Billion by 2020

• Average growth rate: 14%• World Ranking: 6th-Largest food consumer

– Projected Ranking: 5th-largest consumer food market by 2025

Indian Economy Expected To Touch Almost US$ 2.2 Trillion In The Next 3 Years In Real

TermsGDP $

1990 2000 2010 2015 2018Trillion

US 6.4 10.8 15.7 16.8 20.5China 0.4 1.3 5.6 8.6 13

Japan 3.3 5.2 5.5 5.9 4.9

Germany 1.9 2.1 3.6 3.9 3.9

France 1.3 1.5 2.9 3.1 2.7

UK 1.1 1.6 2.4 2.6 2.8

Italy 1.2 1.2 2.3 2.4 2

Brazil 0.5 0.7 1.9 2.4 2.1

India 0.4 0.5 1.4 2.2 2.8Russia 0.5 0.3 1.7 2.1 2.5

India has been

Ranked 11th

in the Global FDI Confidence Index 2018, making it the

2nd highest Rankedemerging market for FDI.

Highest population In The Key Consuming Age Group Of 15-59 Years

• Unlike any other top-10 economy (including China), India will have the lowest median age and the trend will be even more pronounced by 2020 as most of the populations age even more rapidly

• This population is more aspirational and aware and with higher spending power and will consume more number of categories than their parents

Median Age : 26 Median Age : 29

364 369492 528

229 25787 96

2010 2020

0-14 years 15-39 years 40-59 years 60 years +

The Indian Market

“THE” most exciting, challenging and complex market in the global food business

• Food mostly eaten at home and eating out considered an excursion

• Availability of ‘Ready to Cook’ (RTC) and ‘Ready to Eat’ (RTE)

• Ready to Cook food still an occasional phenomenon

• ‘Mummy ka magic’ retained as this would define her position and importance at home

2012 2019

• Manifold increase in eating out frequency

• RTE/RTC but with “health”

• More experimental foods

• Fresh consumption increasing

• An emerging generation of Indian women that will have neither the necessary knowledge nor the time to prepare traditional meals on a regular basis

Changes in Consumption Mindset

Rich Dad

Poor Dad

India and It’s Rich Dads• A growing middle

class of 250-300 million

• Spread across the country

• Dual Household with high disposable incomes

Retail Policy

• 100% FDI allowed in Cash & Carry• 51% FDI allowed in Single Brand Retail• 0% FDI in Multi Brand Retail

Changing Consumption Priorities… Yet Food & Grocery To Be By Far The Biggest For Decades To Come

Savings & investment9%

Clothing, footwear and accessories

5%

Consumer durable/appliances

7%

Vacation3%

Eating out6%

Movies and entertainment3%

Books and Music4%

Food and grocery57%

Home textiles1%

Personal care items5%

z

Source: NCAER

Indian Consumers

Health & Wellness – a major trend, here to stay

Statement 2018/ 2008

I think fast food is all junk

I often worry whether my family is getting enough nutrition

I consider my diet to be very healthy

Source: TGI data, IMRB

“of late awareness

actually has increased”

“don’t look muscular, look a

little bit thin and be healthy”

“if you have healthy body you will have a

healthy mind”

“We should be health conscious at this age, less sugar

consumption, parents are diabetic”

“nutritious, hygienic, ready to eat”

Changes in Indian Retail

• Retail revolution even without the direct entry of global retailing giants.

• Several new hypermarkets, supermarkets springing up across the country funded by domestic investment

• Likely investment in retail and supply chain to the tune of $22 billion in the next five years. Over 600 retail malls are being planned across the country.

Changing Supply ChainD

omes

tic

Farmer Consolidator Trader Distributor

Sub-DistributorRetailerConsumer

Impo

rted

Importer

Distributor Retailer Consumer

Changing Retail

India & Walnuts

Walnuts holds an enviable place in consumer beliefs – on the sweet spot of polarities

Nutritious

Fresh

Natural

Traditional

Popular

Ingredient/Complement

Light

Familiar

Tasty

Packaged/Hygienic

Convenient/Long shelf life

Contemporary

Premium, Aspirational

Complete, Stand-Alone

Satiating

Special

India & Walnuts

• Crop- Harvesting in September-October• No Variety-Mix• 100% Grown on Hills• Generally in wild, no specific orchids

Walnut Production-India

97,5

1 1 0,5

Jammu & Kashmir Himachal PardeshUttrakhand Arunachal Pardesh

The Kashmir Walnut Crop• Domestic, unplanned industry in

Jammu & Kashmir where all the walnuts are grown

• Areas in Kashmir: North (Baramulla, Ganderbal, Kupwara, Handwara), Central (Srinagar) & South(Anantnag, Shopian, Kulgam, Pulwama)

• No new area under cultivitation

• Species: Juglan regia

• Taste: Strong, slightly bitter taste and are high in linolic acid

Walnuts in Kashmir Region• Color: Walnuts in the northern area are comparatively lighter in color

because of cooler conditions, than others• Soil Conditions: The saline condition of the soil is higher, therefore,

stronger taste, as in other similar Persian varieties• Cracking facilities: Hand-cracking • Yield per hectare: 1.5 -2.0 tonnes

INDIAN WALNUT PRODUCTION

2017/2018 2018/2019

COUNTR

Y

BEG.

STOCKCROP

TOTAL

SUPPLY

ENDING

STOCK

BEG.

STOCKCROP

TOTAL

SUPPLY

ENDING

STOCK on

march

2019

INDIA 0 37,000 37000 2700 2,700 34000 36,700 5500 tonnes

Production of Walnuts

In Metric Tonnes

43000

3500033000 34000

3700034000

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

India Walnut Crop 2017-18 Distribution

Domestic; 24000; 65%

Export; 10300; 28%

Carry Forward; 2700; 7%

Consumption of Walnuts in India

In Metric Tonnes

WIT

H

MAR

KETI

NG

SU

PPO

RT

2800032000

4400050000

100000

130000

0

20000

40000

60000

80000

100000

120000

140000

2015/16 2016/17 2017/18 2018/19 2023/24 2023/24

Source of Walnut Sold 2018

Domestic; 54%USA; 33%

Chile; 13%

Domestic USA Chile

2400014000

6000

In Metric Tonnes for FY 17-18

Import Duty

• Before 23rd May 18 - 30% + 10 %=33%• Present -100 % + 10 %=110 %

Impact of Tariff Increase

NONE

Short Term

International Prices Reduction

Origin(US$) India(US$) Duty

USA Crop 2017

1.75 2.27 30%

USA Crop 2018

1.00 2.00 100%

Chile Crop 2017

4.00 5.2 30%

Chile Crop 2018

2.8 5.6 100%

Short Term Reasons:

International Soft Drinks

Cashews

WalnutsAlmonds

Pistachio

THE GREAT INDIAN POPULATION & PENETRATION PYRAMID

For Illustration Only

Indi

an P

opul

atio

n

Long Term Impact

Growth Trajectory Slowdown

100000 Tons3 years 5 years

What India Needs

Marketing Campaigns & Support

India China

Population 1.35 Billion 1.41 Billion

Production(InclImports)(Tonnes)

35000 900000

Consumption(tonnes) 50000 850000

Per Capita Consumption(pound/year)

0.01 0.62

Future Production(Tonnes)

30000 1000000

India V/s China

Total consumption of Tree Nuts

• Cashew – 280,000 MT

• Almonds – 150,000 MT

• Walnuts – 44,000 MT

• Pistachios – 25,000 MT

28%

63%

5% 4%

Almonds

Cashews

Waln

uts

Pistach

ios0%

10%

20%

30%

40%

50%

60%

70%

Almonds

Cashews

Walnuts

Pistachios

Almond & Walnuts are on inshell basis

Walnut Promotion

•

Are you the lion or the gazelle?

Indian Nuts & Dried Fruit Trade

Really it does not matter ………………

Gunjan Jain+9+91 99710-95415

gunjan@vkcnuts.com