The Hindu Business Line : Cold chain, a hot venture: KSA

The supply chain management is the toughest hurdle in the food value chain with intermediaries taking up to 30-35 per cent of the final price for fresh produce. And 30-40 per cent wastage of food occurs due to insufficient support facility and inefficient handling.

The solution, according to research consultancy firm KSA Technopak, lies in developing the small but high potential `minimally processed food' industry. Even as the supply chain and distribution logistics for dry foods (such as biscuits, noodles, ketchup, bread and so on) is fairly evolved, the minimally processed food sector (fresh produce including fruits, vegetables and meat) presents huge opportunity, an area that has been ignored almost entirely by large food marketers and retailers.

So while a Kellogg's corn flakes bombed, basic peeled and sliced potatoes will drive the market, according to KSA Technopak. ``Ethnic foods packaged well, prepared hygienically, with standardised quality, along with optimised supply chain integration will surely succeed,'' Mr Parag Rastogi, Manager, KSA Technopak, said.

The four big myths that have come in the way of this sector's growth are that the consumer does not demand ethnic processed foods, she is unwilling to pay for these, such foods are invariably high-priced, and that the business is a low-profit one from the marketer's point of view.

``With efficient cold chain management and optimisation of supply logistics, ethnic processed foods will actually turn out cheaper than what's available in traditional formats. The problem persists not at the cold chain level, but with optimisation of the supply chain,'' Mr Rastogi said.

According to KSA Technopak, institutional users could also be huge growth drives for the category.

Of the total food services (restaurants and catering business) market estimated at Rs 27,000 crore, for example, quick service restaurants account for almost Rs 2,400 crore.

The current commercial refrigeration market is worth Rs 400 crore, and this sector is expected to witness high growth and consolidation.

For example, while McDonald's estimated spend on cold chain development hovers around Rs 300 crore, Amul plans to invest Rs 100 crore for the same. HLL and Nestle too have been developing cold chains for their refrigerated products.

Cold chains, poultry products and the processed foods industry are three areas likely to see huge investments in the future, according to projections by KSA Technopak.

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