Q&A: getting the "early bird advantage" in India

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Q&A: getting the "early bird advantage" in India

All eyes are on grocery chain opportunities in India now that the country has opened its doors to foreign supermarket retailers. As is the case in other parts of the world, the produce section will be a key breadwinner for these outlets, but India's cold storage capacity is still lacking. Senthil Natarajan from specialty retailer Kovai Pazhamudir Nilayam says this infrastructure shortage is bound to change and exporters who get in early will reap the rewards. At www.freshfruitportal.com we catch up with the specialist who describes how different fruit suppliers are faring in the South Asian country.

To start generally, what are India's top fruit items for consumption and how has the list been changing?

Bananas, grapes, papayas, mangoes, apples and oranges have been India's top fruit items in terms of consumption, and that list has stayed steady over the years. But with the availability of apples and oranges increasing due to imports from various countries, their consumption has been steadily rising too.

What would say have been the key trends for fresh produce in India over recent years?

The acceptance of certain new fruit varieties has been a key trend. Take for example, items like kiwifruit that were not accepted by the general public before but are now. Even Royal Gala and Golden apples are slowly being accepted. Indians primarily eat mandarins for oranges, but now even Navels and Valencias are being accepted.

What sort of flavor and appearance are Indian buyers looking for in fruit?

Indians generally like their fruits sweet and bright. If it's apples they want it to be red - Goldens and Granny Smiths still don't have even 1% of the whole market share. We keep pushing new varieties but we get very little acceptance.

What is the overall profile of Indian consumers who shop at supermarkets compared to traditional markets, and how do you attract more customers who might be used to a different kind of shopping?

The younger generation are mostly coming into supermarkets and the modern retail. The older generation are the ones who still go to the traditional markets. To attract more customers, the supermarkets should give the consumers the look, feel and quality of traditional market, or even better yet they should also have the conveniences of modern retail like parking, good ambience and shopping trolleys.

What are the biggest obstacles that Indian supermarkets have faced or are facing in fresh produce?

The lack of a proper temperature controlled supply chain right from the harvest point is the biggest obstacle. The produce sees a cold chain only after it reaches wholesaler level, which is almost 12 hours after harvest. Overall wastage is close to 30-40%. The most difficult part for the Indian supermarkets is that we are already selling a half-dying product and have very little time before we have to finish selling it. No vegetable can be sold on the second day. No fruit can be sold 72 hours after the receiving time.

What have been the top cold storage developments seen in India recently?

Apples have been getting maximum attention in the last few years. Close to 10 cold storages have come on, and people are seeing moderate to good success from this. The trend will continue to improve.

India is one of the world's top fruit producers. How would you describe the breakdown between domestic and imported consumption?

There are two Indias - rural and urban. In rural markets, domestic produce accounts for more than 90% whereas in urban markets, imported produce has been selling more and more every year. Close to 30% of fruits sold in urban markets are all now imported, primarily with U.S. and Chinese fruit.

Who are the top countries supplying fruit to India and what are their most notable products?

The U.S. is number one and sells apples, citrus, pears, grapes and plums. China comes in second and is noted for its apples and pears. In third place you have New Zealand and Chile with apples and kiwifruit, while the latter is also known for its grapes and plums.

In joint fourth place you have Egypt and South Africa for their citrus, in fifth you have Australia with citrus, grapes and plums, then Italy in sixth with apples and kiwifruit.

What fruit do you think Indians would like to see more of, but perhaps aren’t getting enough of?

India's top selling products are grapes and mangoes. Grapes costing cheaper from around the world will have a big impact in the coming years? Apples and citrus continue to be dominating fruits and grow every year as new markets open up. Egypt and and South Africa proved to be game changers last year with low cost citrus in the last two years, and a lot of Indians who had never tasted Navels or Valencias have started eating them.

You mentioned New Zealand. How would you explain its apple deal and where it's heading?

New Zealand primarily supplies Royal Galas, apples which are red, sweet and non-waxed. The apples hold very well even if they are non-waxed and in some Indian states where waxing has become a big issues with media outlets, New Zealand apple sales have increased.

But what the Washington State Apple Commission has done in terms of promotions and building their brand, nobody has come even close. There is not a known board for New Zealand apples, so even if they've got potential, New Zealand cannot make it to the number one spot without a proper board here.

Fotolia, Nomad_Soul

Are there any trade access negotiations with specific countries and products for India that you are watching intently?

There are a lot of them. Berries from the U.S., and apples and citrus from more North American and European players. TheIndian phytosanitary department is somewhere where you have to knock and knock persistently to get your products cleared. So it is a combination of business houses like exporters, in hand with their embassies, who have to contantly supply all sorts of paperwork. This is where a board helps a country a lot.

In May India opened up access to Peruvian avocados. How do you think they will go?

Indian people honestly haven't had much access to avocados. Even though most hill stations in India grows some avocados, the process of ripening it and having it at the right maturity is still not known to 99% of consumers. If you keep an avocados on a table and ask people to pick the best one to eat, nine in 10 will pick a green one over a black one.

So a lot of education and promotions are required. Since avocados are not typically a very sweet fruit either, they need to be explained how it can be consumed. Avocados, like mangoes, are not suitable for longer duration of travel and cannot be kept long after shipment like apples. So, avocados will not take off in India without huge promotions.

Are there any points of note for other Southern Hemisphere suppliers to the Indian market?

Australia was once a dominating force, but their dollar's rise against the U.S. dollar has made their products more and more expensive for Indian consumers.

In terms of New Zealand, Zespri changed the Indian kiwifruit market. Many said kiwifruit would never be accepted in India but now it is a widely accepted fruit and will continue to grow. Despite Italy bringing in much cheaper kiwifruit, almost half the price, Zespri is synonymous with the fruit in most markets. There you have the early bird advantage and strong promotional benefits.

For Chile there is too much traveling time at 40-50 days, but they do make an impact if their apple crop is good. The only problem is that they cannot give container loads of specific sizes and grades. It's always a lot of a mix and that makes it a bit difficult for importers.

Peru's grapes have been good. They still have very little presence in the market, but if they take the Indian market seriously they can improve. I haven't seen much coming from Argentina so far.

Is it difficult for Northern Hemisphere suppliers to compete in India in terms of clashing with local supply?

The U.S. will continue to be a dominating force with their supply chain efficiency, year-round supplies and promotional work.

China is geographically close and continues to occupy the cheaper apple market with their Huaniu Apples, Red Star and other Fuji alternatives. Fuji has its own market in India and even though it has gotten very expensive, it still sells well.

India and Pakistan have been trying to improve their trade relations. Is this being seen in the fruit and vegetable sector?

Definitely yes. Traditionally there had been lot of exchange of fruit and vegetables between both countries. If the barriers are lower, both the countries will benefit immensely. Pakistan grows some amazing mangoes and India is a big mango market. Our onions and potatoes are being exported already and a lot more products can be added. This can make people come closer.

On the topic of mangoes, there are so many varieties of the fruit in India. How much space do they take take up in grocery stores and how do you go about differentiating them all?

Even though so many varieties are available, the major selling ones are Alphonso, Banginapalli and Kesar. A typical supermarket will not keep more than two or three varieties whereas a specialty retailer like us will keep up to 10 varieties. It occupies close to 30% of shelf space in the fruit department during the season but sells well also. Most fruit retailers look forward to the mango season.

Mango consumption is quite low in some other parts of the world. What do you personally think supermarkets in other countries can do to get more people eating this wonderful fruit?

Again acceptance by people is the major factor. Indians like sweet fruit whereas in other parts of the world people like savory tastes that are tart or tangy. Mangoes come with various brix levels and varying tangy levels, so knowing what consumers like in that part of the world and exporting the variety that suits each country is the key. An association or board could do that. Also, more technologies in postharvest and packaging can help India send them to more countries with stringent phytosanitary procedures.

Just for fun, given Indians love their spicy food, do you see opportunities for chile peppers from other parts of the world like Mexico, the U.S., Australia or Peru?

India will never import vegetables in a big way. Some might do it here and there, but the cost of Indian chiles is so low that it could be the other way round. On a lighter note, I would personally love to taste chiles from around the world.

Is there anything else you would like to add?

I believe this will be read around the world and I urge exporters to continue to take India seriously. Foreign direct investment (FDI) has opened in retail and the big format stores are coming in. If some countries have not knocked on Indian doors yet, there could not be a better time. Better infrastructure is bound to come. Indians will patronize good products, so it is up to the countries and exporters who are willing to take the early bird advantage.


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