Rotting Produce Means Big Potential

In a report last year, Sangeeta Taneja of the U.S. Commercial Service said that India grows nearly 15 percent of the world’s vegetables and 9 percent of all fruits, and that rising incomes and growing consumer preference for fresh produce are stimulating internal trade. Still, utilization of fruits and vegetables for processing is only 2.2 percent because of the huge spoilage.

For companies big and small that want to meet the cold-food storage demand, the challenges are huge in a country where power outages are common, the roads are unreliable, and communicating with small farmers can be difficult. There’s also a lag in developing health and safety standards for produce compared to the progress made by other countries.

Minnesota’s General Mills and Cargill already have a presence in India. Cargill is doing some food processing at a wholesale level, and General Mills is marketing flours, baking mixes, and snacks to Indian shoppers. Zaheer cites General Mills as an example of a company that really did its homework about Indians’ eating habits before distributing products to store shelves, something she sees as key for success in that market.

Consumers New to Cold Storage

Perhaps the biggest obstacle facing companies looking to India to expand their food processing and storage business is that most Indian shoppers don’t buy refrigerated and frozen food, so the concept of cold-food storage is a relatively new one, making it difficult to do market research on the industry.

“Cold storage for fruits and vegetables is something that we are very familiar with in the U.S. as well as other markets, but [we] do not have an understanding of the market in India,” says Jim Butts, a senior vice president at C. H. Robinson Worldwide, a provider of multimodal transportation services based in Eden Prairie. “We are currently exploring ways of developing greater transportation and distribution capabilities in India.” Butts says distribution is a “tangential topic” to the cold-food storage issue.

Making the Indian market even more attractive to American companies are incentives that the Indian government is offering to firms that partner with Indian companies in this sector, Aulik says. Finding the right match isn’t easy, though.

“The issue is, quite frankly, finding and educating local partners as to why they want to do this and how they’re going to make money as a supplier of cold storage,” Aulik says.

“And that’s going to take a little bit of time.”