[Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries

Economy68 Comments

  1. Prologue
  2. What is supply chain management?
    1. What is upstream-downstream?
    2. What is Forward-Backward Integration?
    3. Vertical integration
  3. Food Industry: Supply Chain
    1. FHEL’s Apple Business: Optimized Supply Chain
      1. FHEL’s Apple Upstream
      2. FHEL’s Apple Downstream
  4. Fruit Veggies Processing (F&V)
    1. Fruit-Veggies SCM: Upstream Requirements
      1. #1: Need New Varieties
      2. #2: Need more Cold Storages
      3. #3: Transport
        1. Horticulture trains
        2. Kisan Vision Project
    2. Fruit and Veggies SCM: Downstream Issues
      1. Export Transport
      2. Export: Regulatory issues
  5. Chocolate /Confectionery Business
    1. ChocoSCM@Upstream
      1. #Sugar
      2. #Cocoa
    2. ChocoSCM@Downstream
  6. Misc. useless Tables
    1. Leading States: Fruits
    2. Leading States: Vegetables
    3. Big Companies: Fruit/Veggies Processing
    4. Big Companies: Chocolate business

Prologue

In the previous articles we saw

  1. Food processing industry: Awesomeness and Obstacles
  2. Food processing industry: Truckload of Government Schemes and bodies
  3. Marketing of agricultural produce: issues and constrains, Nuisance of APMC Acts and Commission Agents
  4. Agro/Food Processing: Export, Dumping, FDI, Finance, Taxation, Budget Provisions, CODEX, NWR, BRGF, RKVY

Moving on, in this article we see topics

UPSC General studies Mains Paper 3 Syllabus TopicTopics touched in this article
Food processing upstream and downstream requirements, supply chain management.
  • Fruit-Vegetable
  • Confectionary
  1. Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
  2. transport of agricultural produce and issues and related constraints;
Horticulture trains

What is supply chain management?

  • Supply chain is a system that links a company with its suppliers and customers.
  • Supply chain management (SCM) tries to optimize ^this system by…
  1. getting the right things
  2. to right place
  3. at right time
  4. In a cost-effective manner.

What is upstream-downstream?

  • In any business, you get input (men/material)==>process it==>output (goods/service).
  • In Supply chain, Upstream-downstream depends on the point of reference. For example,
Point of referenceUpstreamDownstream
farmerTraders of seeds, fertilizer, pesticides and agro-machinery.
  1. middlemen @Mandi
  2. Food company (if he has contract farming agreement)
  3. households (if he is directly selling to final customers)
food processing company
  1. Farmers,
  2. Mandi-agents
  3. Suppliers of food-preservatives, edible-colors, plastic-aluminum packaging etc.
  1. distributors
  2. wholesalers
  3. retailers
  4. final-customers
Kirana shopWholesalerAam-admi
Flipkart.com
  • Book publishers
  • Mobile/electronics/computer companies
  • Suppliers of packaging boxes, bubblewrap plastic etc.
Online buyers

In short,

Upstreamdownstream
towards suppliers to your company (+ intermediaries if any)towards consumers (+intermediaries if any)

What is Forward-Backward Integration?

IntegrationBackwardForward
WhatCompany expands its activities to upstream areasCompany expands its activities to downstream areas
Why?Company aims to get raw material @cheap rates, uniform quality, steady supply and eliminate any middlemen.Company aims to get more control over sales, consumer-contact and eliminate any middlemen/kiranawalla/wholesellers/retailers.
Examples
  1. Amul sets up dairy farmers’ cooperative in villages to collect milk.
  2. In the late 60s, Dhirubhai started Reliance for textile manufacture. But since polyester is made from petrochemicals, so he entered in Petrochemical business. But petrochemical is derived from Petroleum refining, so he moved into Petroleum refining as well.
  3. Andrew Carnegie’s main business was Steel. Later he bought coalmines, iron-ore mines, even the ships and railways that transported raw material to his steel factories.
  4. Starbucks (chain of coffee bars) buys coffee plantations in Central America.
  5. When a Car company acquires a tire company, heavy engineering company acquires a steel plant etc.
  1. Amul has its own pizza outlets and ice cream parlors.
  2. Raymond opened an outlet in Karachi this year.
  3. Nike, Adidas, Apple have their own retail outlets in big cities.
  4. Flipkart has its own courier “Ekart logistics” so they don’t have to rely on Bluedart, DHL and other courier companies to deliver packages.
  5. And of course, if some Desi-liquor mafia opens dance-bars and gambling dens, that is also an example of Forward integration.

Vertical integration

  • When company’s backward and forward integration is so good that it practically runs everything from making raw material to selling final product to final customer. Example Oil giants such as Shell/BP have their own oil wells (supply), refineries (processing) and petrol pump (retail).
  • In other words, Vertical integration is achieved when Single firm absorbs several firms involved in all aspects of a product’s manufacture from raw materials to distribution.
  • For Indian food processing industry, Vertical integration is extremely difficult because like we saw earlier:
    • Indian food entrepreneurs are small sized and loan starved, while Vertical integration requires deep pockets and truckload of cash.
    • FDI permitted only in a few specific sectors of Agriculture. Many states have outdated APMC laws. = backward integration is difficult.
    • FDI in Multibrand retail is permitted but with many conditions.= Forward integration also difficult.

So, what we can have is “linkage”. For example

Setuppromotes ____ linkagefrom ____’s point of view

Mega Food parks
Backwardfood industry’s
Rythu Bazarforwardfarmers’

Food Industry: Supply Chain

Indian Food processing supply chain has two type of Stakeholders

stakeholderWho?
those included in Supply Chain
  1. Creators: Farmers, Food Entrepreneurs
  2. Contributors: Middlemen, Retailers, Commodity Exchange
  3. Consumers: Domestic And Foreign
those influencing supply chain
  1. Government: Laws, Taxation, Incentives
  2. Infrastructure: Transport, Storage, Power

Based on level of processing, we can classify food products into:

Processed ProductsWhat?
Primary Products consumed in the original state. Don’t have any no value addition. (e.g. just chop apple from the tree, pack it in wooden-boxes and send to market)
SecondaryBasic level of processing: grading, sorting, cleaning, cutting, drying, grinding etc. before they are consumed. (e.g. dried fish, turmeric powder, chili powder, wheat flour.)
TertiaryCombining multiple primary, secondary products from above and doing high value addition (e.g. ice creams, biscuit, jam, cakes, pastries etc.)
  • As you can imagine: tertiary food products ought to have a longer supply chain than primary products because tertiary food products need variety of inputs.
  • But in India, even primary processed food too has a lengthy supply chain thanks to dozens of intermediaries before farm produce reaches the fork. Observe the following diagram:
Supply Chain Fruits Vegetables Food processing

click to enlarge

As you can see this supply chain is lengthy and fragmented= high cost and wastage. An ideal fruit supply chain should be similar to FHEL’s.

FHEL’s Apple Business: Optimized Supply Chain

  • Container Corporation of India (CONCUR)= a PSU under Railways ministry.
  • Fresh and health Enterprises ltd (FHEL) = subsidiary company under CONCUR, started in 2006
  • to create world class cold chain infrastructure in the country

FHEL’s Apple Upstream

Raw Material
  • FHEL directly procures Apples from Shimla & Kinnaur districts of Himachal Pradesh and transports them to Sonepat for sorting, grading, packing & storage.
  • Company has its own trucks, as a result apples reach to from HP to Sonepat within a day.
Uniform Quality
  • FHEL sends Agro-scientists to the Apple farmers on its own cost.
  • These scientists interact with the farmers, help improving apple quality and productivity, post-harvest management.
  • FHEL also arranges all inputs required by the farmers like nutrient packages, pesticides/ fungicides, packing materials, farm implements, etc.
MiddlemenFHEL was among the first companies to procure apples directly from the farmers and has now refined the procurement system. This has eliminated middlemen in the chain.
Price
  • FHEL works in an open and transparent manner (unlike UPSC), therefore, when FHEL procures apples, all the farmers in Himachal Pradesh know the rates offered by it.
  • This acts as a benchmark and all the farmers are able to bargain well with other apple traders.
Storage
  • The company has state-of-the-art storage technology to ensure that the apples last upto 8 months in the storage + sorting, grading, packaging facilities.

FHEL’s Apple Downstream

FHEL sells its apples

  1. via Marketing Associates in Delhi, Mumbai, Chennai, Ahmedabad and other big cities
  2. Via Cash and Carry wholesale or Retail Chains such as Bharti Wal-Mart, Big Bazaar, Aditya Birla retail, etc.

With the above upstream and downstream arrangements, FHEL has shortened and optimized its supply chain and as a result

  1. less spoilage / wastage of apples
  2. More profits to both company and farmers, since middlemen are eliminated.
  3. Apple available at cheaper price to consumers

Ok well and good for FHEL’s apples but most of the Indian food processing industries don’t have such supply chains. From the last three articles on [Food Processing], we can derive a few common points

What are the upstream requirements for efficient supply chain management? (From Food entrepreneur’s point of view)

Upstream requirementsolution
  1. Need backward linkage with farmer: via contract farming
  2. Need to eliminate middle-men.
  1. Amend State APMC laws.
  1. need uniform high quality raw material
  1. R&D and exertion services in agro
  2. introduce new fruit/veggie hybrid varieties
  3. farm mechanization
  4. land reforms
  5. farmers should easily get loans
  6. FDI only permitted in a few specific agro-sectors. Relax this policy.
  1. Need steady supply of inputs @reasonable prices
  1. cold storage infrastructure for seasonal raw material e.g.potatoes
  2. Reduce indirect taxes on agro-produce, packaging material, preservatives, food colors and other chemicals.
  1. quick transport
  1. railroad connectivity

Next, What are the Downstream requirements for efficient supply chain management? (From Food entrepreneur’s point of view)

Downstream-Requirementsolution
  • Organized retail stores, for efficient distribution of products
  • FDI in Multibrand retail
  • Reaching the costumers in foreign countries
  • compliance with CODEX, HACCCP standards
  • R&D, product development, packaging keeping those foreigners in mind
  • Promotion of Indian products abroad
  • less taxes on air-cargo
  • more efficient cargo handling at ports
  • better railroad connectivity with ports

Fruit Veggies Processing (F&V)

In the first article we had seen the scope-significance of entire food processing industry. Now let’s get more additional points specific to Fruit-veggies industry:

Top 5 States

VEGGIESFRUITS
  • UP
  • WB
  • Bihar
  • Odisha
  • TN
  • Andhra
  • MH
  • Guj
  • TN
  • Karnataka

Big list of individual fruit/veggie grower states= given at bottom under the title “Misc.”

Export potential

Processed Fooddemand and export potential in
Mango PulpSaudi Arabia, Kuwait, UAE, Netherlands and Hong Kong
Pickles, ChutneySaudi Arabia and UAE, USA, UK and Germany
Tomato Paste, Jams, Jellies And JuicesUSA, Russia, UK, UAE and Netherlands.

Fruit Juice demand

  • More youth + Higher disposable incomes + ‘heath’ consciousness=> Urban junta preferring fruit juices over carbonated drinks (e.g. Thumbs up, Coke)
  • In 2012, Fruit Juice segment was more than 50 billion rupees.
  • This shift is creating newer opportunities:
    • Exotic flavors: cranberry, lychee and pomegranate,
    • Vitamin, nutrient or fiber-enriched fruit juices.
  • Big players have responded to this trend by focusing on their non-carbonated soft drinks (+More ads using Bollywood celebrities like SRK, Kat, Bips)
Fruit juice productBoss
Slice, TropicanaPepsico
RealDabur
MaazaCoca Cola
FrootiParle Ago

Fruit-Veggies SCM: Upstream Requirements

#1: Need New Varieties

Almost 1500 mango varieties are grown in India but only 3-4 of them are worthy of export but they too face problems:

Alphonso MangoFamous and highly valued. But due to its thin skin, it can only remain fresh for 20 days (even in cold storage) = low shelf life.
Totapuri mangoesCheaper than Alphonso mangoes and have higher pulp content. But Totapuri mangoes banned in some foreign countries due to ‘stone weevil’ pest

Similar problem for other fruits/veggies:

Raw materialquality problem
Potato
  • Most Indian potato varieties = don’t have uniform size and length=> can’t make good chips/French fries.
Orange
  • Very old variety grown in India= high bitterness level and pip content.
  • Pepsi and Dabur import orange juice concentrate for their juices
Apple
  • India grows “red delicious” variety = very cheap and hence preferred by Desi costumers
  • But this apple varieties has cardboard-like texture and peculiar taste that foreigners hate. Hence US/EU consumers prefer New Zealand / Australian Apples over Indian.

Nuisance of Middlemen

  • For most fruits, the cultivation/gestation period at least 3-4 years. But banks don’t easily give loans to farmer for such long period.
  • Hence difficult to encourage farmers to experiment with new varieties of fruits/veggies, even if the new variety has more profit/export potential.
  • Given this lack of timely financing from banks / financial institutions, the fruit-farmer goes to middlemen, who advance money to the take the farm on lease.
  • Then middlemen manipulates selling prices, to enhance their margins. e.g. Indian Mangoes=wide price fluctuations in Middle-east.
  • South American countries offer more consistent prices and are a threat to India.  India’s dominance in the pulp sector is gradually eroding due to this factor

What is the solution/requirement?

  1. Research-development (R&D) to make new varieties of fruits n veggies with longer shelf life, disease resistance and export quality-uniform size-length-color-texture.
  2. Government should promote cultivation specific fruits and vegetables in a specific states. It would lead to ease in monitoring of new verities + uniform quality=> easier to process + export worthy. For example
Raw MaterialWhat to do?Where to focus?
OrangeDevelop varieties with low-bitterness, suitable for juice-processingMaharashtra, Andhra Pradesh
Potato Develop varieties suitable for processing into French fries, Chips (low sugar content, uniform length)UP , West Bengal, Gujarat
AppleEncourage cultivation of foreign Varieties from NZ, S.Africa etc.Jammu & Kashmir, Himachal Pradesh
MangoIdentify other varieties for processing, and reduce dependence on Totapuri, AlphonsoUP , AP , TN, Maharashtra
SapotaFocus on cultivation of uniform size, firm fruits with longer shelf-lifeKarnataka, Maharashtra,
LitchiCultivate varieties with higher shelf life, and smaller seed sizeBihar, West Bengal
OnionsCultivate sweet and white onions- they have export demandMaharahstra

Partnership/Collaboration

  • As we saw above, Indian orange=bitterness=not good for juice making. Pepsi imports FCOJ (Frozen Concentrate of Orange Juice) as raw material for its Tropicana juice brand
  • Recently Pepsi and Government of Punjab have partnered to promote cultivation of new orange variety in Punjab, to reduce dependence on the imported FCOJ.
  • More such partnerships are necessary in the Fruit-veggie sector R&D.

#2: Need more Cold Storages

Why is Cold storage important?

  1. Reduces losses due to spoilage
  2. Reduces gluts and distress sale by growers,
  3. Reduces transport bottlenecks at the peak period of production,
  4. Maintains quality of the produce
  5. Ensures that a crop harvested over a period of one or two months is capable of serving the round the year market demand.

#investment in cold storage

Broadly, fruits & vegetables can be classified into three segments, based on their shelf-life in cold storage

Shelf lifein Cold StorageExampleDoes it attract investment?
ALong (6-8 moths)Potato, Apple, ChiliesMost investment comes here. Especially for potato- for hoarding during lean season.
BModerate(8-10 weeks)Grapes, Pomegranates, Banana, Tomatoesnot much investment coming here, Except few export oriented chains.
Csmall (few days)Papaya, Melons, Gourds, Cabbage, Cauliflower, Leafy Vegetables.hardly

Needless to say, for category B and C, government needs to provide innovative tax-reliefs/incentives to attract more investment.

Non Horti
  • There has been a relative neglect of the non-horticulture cold chains especially those relating to meat, poultry and fishing.
  • State Governments need to actively work on these cold chains via their Animal Husbandry & Fisheries Departments.
New techIn cold storages, following technologies need to be adopted

  1. Use of Global positioning system (GPS),
  2. better electronic weighing systems,
  3. local language billing machines
  4. General Packet Radio Services (GPRS) for updating the details on the central server for storage and movement of produce in and out of cold storages

#Electricity

  • Desi cold storages have high operation cost than their foreign counterparts, mainly because of high consumption of electricity.
  • Reason: Food entrepreneur doesn’t buy efficient (and expensive) equipment on Engineer’s advice. Instead, they buy cheap quality equipment on CA’s advice. Why? Because we saw earlier, government schemes have ‘low-ceilings’ + if project cost increases too much food-entrepreneur won’t get loans under Priority sector lending of Bank and won’t be eligible for various tax benefits available to MSME industry.

#3: Transport

  • Government: enhance road-connectivity to rural areas.
  • Entrepreneur: needs to get easy loans for reefer vans and refrigerated trucks.
  • Railways: Introduce dedicated horticulture trains. More frequency of freight trains in agro-regions.

Horticulture trains

Who?
  1. National Horticulture Board (NHB)
  2. Container Corporation Limited (Concor), under Rail Ministry
Why?Because conventional goods trains have following problems

  1. have no ventilation => fruit/veggie gets rotten
  2. Since there is no ventilation, they keep the doors open =>theft during transport.
  3. slow speed
When?
  • 2009: idea mooted under Kisan Vision Project of Indian Railways in 2009.
  • 2012: Horti train between Maharashtra and Delhi, with banana and potato as core cargo.
  • 12th FYP: 100 crores to be spent on this project

Benefits/Features of Horticulture trains:

  1. Specially designed containers with good ventilation=>increases the shelf life of the produce
  2. Container train has been designed to run at a top speed of 100 kilometre per hour (kmph) as against the maximum speed of 75 kmph of conventional railway wagons and trucks= faster delivery less rotting.
  3. Accepts small quantities, to the unit of one container without agents or middleman. Even small farmers who wish to transport goods to various destinations now have the chance to do so without coughing up huge sums to middle-men or clearing agents.

Let’s see an example, “Banana Train”= connects Maharahstra to Delhi. Lauched in Sept.2012

core cargodirection
BananaJalgaon (MH) to the rail yard of the Azadpur mandi in Delhi.by the way, Azadpur Mandi @Delhi= Asia’s biggest market for fruits and vegetables.
Potatosin the return journey (i.e. from Delhi to MH).

If train returns empty with no cargo=uneconomic. In Delhi-Maharashtra route, we connected them with Banana and potatoes. Similarly following projects should be considered:

  1. Delhi to W.Bengal (Apples) and return WB to Delhi (potatoes)
  2. JK to Delhi (Apples) and return Delhi to JK (potatoes: originally from WB)

Kisan Vision Project

Who?Railway Ministry
When?Mamta’s rail budget 2009*
Why?To encourage creation of facilities of setting up cold storage and temperature controlled perishable cargo centres through Public Private Partnership (PPP)
How?PPP via public sector logistics viz.

  1. Container Corporation of India Ltd. (CONCOR)
  2. Central Warehousing Corporation (CWC)
  3. Central Railside Warehouse Company Ltd. (CRWC)

*Although topic is from 2009 but been in news in August 2013 for:

  1. Rail Minister’s reply in Parliament (available @pib.nic.in)
  2. News reports on how it is #epicfail

And for us, it becomes important for GS Paper 3 because UPSC syllabus contains

  1. Infrastructure: Energy, Ports, Roads, Airports, Railways etc.
  2. transport of agricultural produce and issues and related constraints;

Anyways, under this Kisan Vision project, 6 Perishable Cargo centers were to be developed at:

  1. Nasik (Maharashtra)
  2. New Azadpur (Delhi)
  3. New Jalpaiguri (West Bengal)
  4. Singur (West Bengal)
  5. Dankuni (West Bengal)
  6. Murshidabad (West Bengal)

A Pilot project was started @Singur, WB in 2009 itself but yet to take off because

  • Although facility has the capacity to store more than 1,000 tonnes of potatoes, but lack of proper roads for trucks to enter the area. Recall the criticism of government schemes from earlier article…. Most schemes seek to get investors to pump money in (Cold storage) infrastructure without providing the necessary (road) support for the utilization of the infrastructure.
  • Cold storage projects have to be near the market, especially the multi-purpose ones. This project was located far away from the market and could not find many takers.

Fruit and Veggies SCM: Downstream Issues

Export Transport

  • It takes about 3 weeks to send Mango from India to EU via sea=> sea transport is unsuitable for Alphonso Mango export. You’ve to transport it via air
  • Indian air-cargo-transport=> fuel surcharge and variety of taxes. Combine that with exchange rate difference =Pakistani mangos are cheaper in EU compared to Indian mangos.
  • Similarly Terminal handling charges at several ports are also high (compared to Hong Kong etc).
  • poor frequency of ships / flights leaving from various ports / airports
  • need customs clearance=>inefficiency, delays, bribes

All ^these results into

  1. wastage of perishable food/veggies
  2. Higher cost of transport => product price increased in destination country = pricewise, it becomes uncompetitive.

Export: Regulatory issues

JapanIndian mangoes without Vapour heat treatment (VHT)=banned.
AustraliaIndian mangoes import facing problem due to fruit fly
USAIndian mangoes import facing problem due to Stone weevil.
  • EU and in the Middle East follow CODEX standards when importing fruit based products.
  • India’s problem: Lack of post-harvest treatment facilities such as for vapor treatment – Lack of packhouses from farm to port.
  • Even after complying with these requirements, Indian exporters need to invite and sponsor visits of the quarantine departments of the relevant importing country for lifting of the ban. Such visit / inspection costs about ~ USD 100,000/visit/person
  • Similarly for grape exporters: the cost of EurepGap certificate Rs.75000 / farmer.
  • APEDA (under Commerce Ministry) provides financial help for Eurepgap certification, more fruits and veggies need to be given similar help to meet with the certification/ requirements in foreign markets.

Retail

As we saw in the first article, The Kirana-wallas in USA (known as mom and pops stores) have cold storage / refrigeration hence they can sell fresh fruits/veggies but our cart-pullers, small-veggies sellers don’t have such facilities=wastage. Hence FDI multi-brand=necessary for the growth of fruit-veggie industry and to contain food inflation.

let’s move to next sector:

Chocolate /Confectionery Business

Scope/significance:

The per capita chocolate consumption in India is much lower than most European countries. But there is lot of potential in upcoming years, because:

  1. Increased disposable incomes, newly rising middleclass = higher propensity to spend on impulse categories such as chocolate.
  2. Chocolates-sale no longer confined to children only. Companies trying the power of advertisement to attract:
    • Youth= Those ads involving romance/valentine day angle.
    • Middle-aged= Chocolate gift boxes for Diwali and Raksha-bandhan etc. This advertisement model has been successful in China, chocolate box gift has become a routine-gift for wedding receptions.
YearChocolate business in billion Rs.
201260
2017 (Projected)140

(^doesn’t include the income of Dentists.)

ChocoSCM@Upstream

#Sugar

  • (same can be used for soft-drink industry)
  • woolly aphid (an insect pest) causing high damage to sugar crops in Maharashtra and Karnataka
  • UP’s yields are much lower than TamilNadu.
  • successive increase in sugarcane prices in past years, mainly politically driven= abnormally high cost of production of sugar
  • This Increase in raw material (sugar) prices has hurt profit margins of confectionary units because companies are unable to pass on the higher costs to consumers.
  • ^To put this in other words- the dairy owners can form a cartel and raise milk prices every month, but you’ll still purchase it, because milk is an essential item.
  • But If toffee makers form a cartel and raise price of 1 toffee from one rupee to two rupees, then most people will stop buying or giving additional pocket money to their kids! Meaning toffee-maker cannot ‘pass’ the increased raw material cost to the final consumers.
  • Hence Desi confectionary industry wants rationalization of the sugarcane pricing policy. For more read Ranagarajan Sugar committee article click me.

#Cocoa

  • Kerala is the leading cocoa producing state in the country but industrial demand is significantly higher, estimated at nearly three times the cocoa cultivation.
  • But cocoa cultivation= Inadequate marketing network + fluctuations in prices =farmers feel insecure.
  • Indian varieties of cocoa=low chocolate yield.
  • Need R&D, Need to introduce superior varieties using clonal technology to improve yields.
  • Cocoa buying attracts >10% purchase tax in Kerala= input cost increased for confectionary unit.
Base Gum
  • We’ve to import most of the basegum (for chewing gum) from Europe and South East Asia=>manufacturing cost increased.
  • Need to promote R&D and production for base gum within India.

@Processing

Innovation
  • To create new demand and to attract health conscious adult consumers, industry needs to develop sugar-free, fruit based gum, vitamin-enriched products, breath strips etc. like the Americans are doing to attract the diabetes patients.
Packaging
  • In developed markets, consumers buy chocolate/toffees in large pack.
  • But Indian consumer=price conscious, hence toffees usually sold in single unit (e.g. 1 éclairs for 1 rupee)
  • smaller/Individual package=need more plastic=Operation cost increased

ChocoSCM@Downstream

Taxation
  • Unorganized/non-branded toffee makers= evade taxes.
  • This puts organized confectionery (branded players) at a disadvantage, especially in rural areas.
Reach
  • local kirana stores and large retailers, paan and cigarette outlets are covered extensively
  • But cost of distribution is high particularly to rural outlets
freebies
  • In Toffee business you’ve to lure kids by offering free tattoos, stickers, toys etc.
  • In the aspect, Indian toffee makers are far behind their American/European counterparts.
Export Potential
  • Currently, African countries= dominated by Brazilian confectionary import. Much potential for Indian toffee makers.
  • In China, the recent trend of gifting chocolate at wedding banquets has led rise demand for premium-chocolate gift packs, we can make an entry Chinese market too.
  • Indian confectionery products don’t find demand in US/EU due to lack of innovative products/flavors compared to their local producers. But The Indian industry can engage in contract production for foreign brands, given the lower manufacturing costs in India. (chocolate “outsourcing”)

Misc.Useless tables

Just some stupid Tables for informative purpose only, otherwise hardly relevant from exam point of view.

Leading States: Fruits

Fruitleading producer
BananaMaharashtra, Tamil Nadu, Karnataka
MangoAndhra Pradesh, Uttar Pradesh, Bihar
CitrusMaharashtra, Andhra Pradesh, Karnataka
PapayaAndhra Pradesh, Karnataka, West Bengal
GuavaBihar, Maharashtra, Karnataka
GrapesMaharashtra, Karnataka, Tamil Nadu
PineappleWest Bengal, Assam, Bihar
AppleJammu and Kashmir, Himachal Pradesh, Uttaranchal
LitchiBihar, West Bengal, Assam
SapotaKarnataka, Maharashtra, Tamil Nadu, Andhra Pradesh
Total fruits (incl others)Maharashtra, Andhra Pradesh, Tamil Nadu, Karnataka

Leading States: Vegetables

PotatoUttar Pradesh, West Bengal, Bihar Punjab
BrinjalWest Bengal, Orissa, Bihar
TomatoMaharashtra, Karnataka, Bihar, Andhra Pradesh
TapiocaTamil Nadu, Kerala, Andhra Pradesh
CabbageWest Bengal, Orissa, Bihar
OnionMaharashtra, Karnataka, Gujarat
CauliflowerWest Bengal, Bihar, Orissa
OkraBihar, Orissa, West Bengal,
PeasUttar Pradesh, Jharkhand, West Bengal
Sweet PotatoOrissa, Uttar Pradesh , West Bengal
Total veg. (incl others)West Bengal, Uttar Pradesh, Bihar Orissa

Big Companies: Fruit/Veggies Processing

JamHindustan Unilever, Mapro, Marico , Malas
PicklesPriya foods, Praveen, Desai Brothers, Cavin Kare, GD Foods
Sauce / KetchupHindustan Unilever, Nestle, Heinz
Juices / Fruit based drinksPepsi, Dabur , Parle, Godrej, Mother Dairy
SquashesHindustan Unilever, Haldiram, Mapro
Ready to Eat VegetablesTasty Bite, ITC, MTR
Potato chipsPepsi
Cooking pastesDabur, Hindustan Unilever

Big Companies: Chocolate business

Companybrands of chocolate/chewing gum etc.
PerfettiBrooklyn, Big Babool, Alpenliebe, Center Fresh, Chlor Mint, Golia, Cofitos
Parry’s/ LotteCoffy Bite, Lacto king, Coconut punch, Caramilk, Madras Cafe, Soft-Spot, Flavoured Candy, Mango, Sunshine, Shakti, Pineapple
Parle’sMelody, Mango bite, Kismi, Poppins, Rola cola, LuxDairy, Peppermint, Rosemint
GDC/ JoycoBoomer, Bonkers, Donalds,PimPom, Mickey,Bonkers
CandicoMinto, After smoke, Candy king, Americano, Orange-tutti frutti, Drum Beat, Vanilla Roll, Elaichi roll, Big Freedom, Jumbo-Gumbo, LocoPoco, Minto-Fresh
RavalgaonPan pasand, Mango mood, Coffee breakSupreme,
NestlePolo, Allen’s Splash, Soothers, Toffo Butter, Fruit Rings, Fox’s
Cadbury’sGoogly, Mocka, English toffee, Frutus, Gollum, Eclairs, Pops.

Next time we see upstream downstream issues related to milk-meat-marine, tea-coffee-liquor-oil etc.





So far 68 Comments posted

  1. Niharika Pandey

    Hello Sir,

    The article covers almost everything in a simple language. Just wanted to know if the latest amendments or changes in APMC law too have been covered in this? Changes in APMC law were made in July.

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