Processed food sector earnings to treble: F&S

Domestic processed food manufacturers have a reason to cheer. A Frost & Sullivan (F&S) study said the food preservative industry would grow three-fold by 2012 at 20 per cent a year.

According to the report, the industry earned $16 million (Rs 73.7 crore) revenue in 2005, and the revenue is expected to touch $56.5 million (Rs 260 crore) in 2012.

It is not just preservative manufacturers, but even the organised segment of processed foods will benefit from this growth because about 85 per cent of preservatives are used by food companies.

The balance, however, is used by personal care products.

Aparna Singh, programme manager - chemicals, materials and food practice, Frost & Sullivan, said the preservative industry was expected to grow at 20 per cent over the next five years.

"The domestic food and personal care industries are rapidly moving towards further processing and value addition," she said, adding "a combination of rapid urbanisation and more hectic lifestyles is fuelling this trend, leading to an increased demand for preservatives to sustain products between production and consumption."

Further, Singh said the domestic food processing sector was just taking off, and while that would result in growth for local manufacturers, it would also intensify the MNC threat.

Incidentally, Camlin Fine Chemicals, Gujarat Organics and Milestone Preservatives are a few of prominent domestic companies in the sector.

"So far the sector was not significant enough for international firms to set up manufacturing units in India. With that changing, companies like Clariant have started actively looking at the Indian market," she said.

At another level, the technological advances in the industry have resulted in certain segments such as ready-to-eat food brands "� moving away from preservatives altogether.

The rising time lag between production and consumption of perishables, on the other hand, has led to increased demand for preservatives.