Growth in Indian domestic poultry demand, although from a low per capita consumption base, offers a huge untapped potential for the industry, Rabobank states in their latest report.
The industry is expected to grow at a rate of 8% to 10% per year; a rate which Rabobank believes is sustainable far into the future. Indian poultry is still largely sold through wet markets, although sales are slowly declining, as growth in foodservice drives the development of the poultry processing industry.
The increase in the number of fast food restaurants, both domestic and foreign in India has spurred investments in Indian chicken processing facilities. Their presence should drive improvements throughout the industry as they work with suppliers to ensure sustainable supplies that meet their global food standards and their rapid expansion plans should continue to drive growth.
Processing capacity might grow by 50% in just the next two years, accoring to Pawan Kumar, an analyst at Rabobank’s Food and Agribusiness Research and Advisory team in the latest report on the Indian Poultry Sector.
The rapid growth of India’s cities is also expected to reinforce growth trends, chicken is cheaper than beef, pork or goat, it does not have any religious restrictions on its consumption and unlike fish it is not confined mainly to coastal regions.
Despite the growth in processing capacities, the challenges for the processing sector remain due to large wet markets and limits to the foodservice industry’s ability to absorb all of the production from the processing plants. Processing companies are looking to create new demand by selling frozen chicken products, value-added, ready-to-eat products through branded retail shops.
Chicken processors’ own retail shops were a good distribution channel for ensuring an outlet for meat products not absorbed by quick service restaurants and for encouraging consumers to shift from the wet market to the retail market, Kumar stated. However, the process of changing consumers’ consumption habits will evolve slowly.
With the retail and foodservice industries as the most important drivers for the processors, there is little doubt about the growth prospects for the Indian poultry industry, but questions remain around how fast it can evolve to international standards.
Policy level changes, such as regulations of wet market, trade liberalisation and foreign direct investment in retail have the potential to stimulate growth and drive the process of transition to a more modern industry.