Forecast of pasta market development
The relevance of research
Pasta does not belong to the category of novelties and has long moved into the category of standard food products. The bulk of buyers purchase the product repeatedly or repeatedly. In addition, customers have the opportunity to choose between numerous brands offering pasta for sale.
Purpose of the study
Analysis of the state of the pasta market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the pasta market
Content
Chapter 1. Economic characteristics of the pasta market
1.1. Market size
1.2. Market Growth Rate
1.3. Market trends
1.4. The main problems of the industry
1.5. Industry life cycle stage
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. The pace of technological change and product innovation
1.9. Sales channels
1.10. Compact location of industry companies in certain regions
Chapter 2. General economic environment
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP-analysis of the market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Competition from substitute products
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Studying scenarios for the development of the industry in terms of quarantine in connection with covid-2019
4.3.1. Single Quarantine Scenario (according to the Chinese release schedule)
4.3.2. Scenario of two quarantines
4.4. Analysis of existing cases of business restructuring in the industry
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Part 1. Economic characteristics of the pasta market
1.1. Market size
According to the GidMarket calculation based on the data of the Federal State Statistics Service and the Federal Customs Service, at the end of 2019, the volume of the pasta market in India amounted to … thousand tons,
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1.2. Market Growth Rate
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Diagram 1. Dynamics of the volume of the pasta market in value terms in India, 2013 - 2019, billion Rs.
1.3. Market trends
Consider the trends in the main components of the pasta market in India.
Indian manufacturers are expanding their product range and developing new segments, adjusting to changing consumer interests. The share of ""unusual"" pasta - with healthy additives - or non-standard colors is growing.
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Diagram 7. The share of exports in the production of pasta,%
The balance of exports and imports in the pasta market in the period 2013–2014 was negative.
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1.4. The main problems of the industry
There is fierce competition in the market between existing market operators, when an increase in one's own market share can be achieved mainly by reducing the market share of the nearest competitor. Several large companies are consistently leading the market, and it is quite difficult to win back the share of one of the giants.
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The cost of pasta primarily affects the cost of raw materials. The second important factor is imported equipment.
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Despite the fact that a number of companies have their own mills, this does not make it possible to reduce the cost of pasta. In this case, it is possible to control the quality of raw materials. Flour purchased on the free market is cheaper, but low-quality batches are often found, which can affect the parameters of the final product.
1.5. Industry life cycle stage
The pasta market is at the stage of maturity. This is evidenced by:
Increasing requirements for product quality on the part of the consumer;
Rising retail prices;
Reduction and enlargement of the total number of market operators.
At the same time, the quality of the product is at a fairly high level. The product is presented on the market with a large number of modifications. As is typical for the maturity stage, sales either continue to grow, but at a very slow pace, gradually reaching a maximum value, or remain stable.
Pasta does not belong to the category of novelties and has long moved into the category of standard food products. The bulk of buyers purchase the product repeatedly or repeatedly. In addition, customers have the opportunity to choose between numerous brands offering pasta for sale.
The real capacity of the pasta market is approaching its potential value, since most of the potential buyers have already become actual by this time. In this case, sales growth is possible only due to population growth (due to demographic or migration factors).
At this stage, the role of price competition increases, as the product is offered for sale by many manufacturers. The main emphasis in promotional activities at this time is on attracting a mass conservative consumer who prefers a well-known and tested product at reasonable prices.
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At the stage of maturity, the main task of marketing activities is to extend the life cycle of the product and involves:
improvement of the trade assortment due to product differentiation;
deeper market segmentation and entry into new segments (if there are any left);
encouraging existing customers to systematically and more frequently purchase goods;
conducting competitive advertising campaigns;
search for new consumer groups and encourage them to make a purchase.
When forming a marketing strategy, pasta market operators are advised to pay attention to the fact that the pasta market in India is at an early stage of maturity and communication activities such as encouraging existing customers to systematically and more frequently purchase goods will be effective here. When forming an advertising message, actively appeal to the emotions of consumers, based on key values: family, health, joy, pleasure.
1.6. Estimation of the number of buyers and their financial capabilities
The dynamics of pasta consumption is determined by trends in the indicator of real incomes of the population (see Section 2.2).
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While the demand for pasta among Indian consumers is growing steadily, the main consumers of pasta products are low-income people. For the most part, this segment of buyers chooses a product based on the cheapest options on the market.
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1.7. Estimated consumption per capita
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Diagram 13. Consumption of pasta per capita, 2013-2019, kg/person
1.8. The pace of technological change and product innovation
The pace of technological change and product innovation in the pasta market is moderate. It is expressed in product improvement. Almost all innovations on the market are made in the segment, firstly, of packaged products, and secondly, of durum wheat.
Innovative pasta production methods include:
Production of pasta from non-traditional types of raw materials;
Use of new generation additives as additional raw materials.
Indian institutes, universities and the pasta industry have developed many pasta products with various additives that improve the composition and quality of pasta.
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Dietary pasta - spaghetti and spirals, made from high-quality durum wheat flour of the second grade, the digestibility of which is 85%, has gained wide popularity, it contains much more minerals such as potassium, calcium, phosphorus, and B vitamins.
1.9. Sales channels
The production facilities of enterprises, as a rule, are located in close proximity to the centers of consumption and raw materials and are loaded to a large extent evenly throughout the year.
Sales of pasta are carried out on the basis of confidential contracts, however, some transactions are open when they are carried out through a tender.
This method of selecting suppliers is mainly used by state institutions - hospital organizations, kindergartens, sanatorium organizations, etc.
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1.10. Compact location of industry companies in certain regions
To determine the compactness of the location of companies in the industry, let's consider the production volumes for the union territories and determine the states of India - the leaders in the production of pasta.
Table 2. Structure of pasta production by Union Territories, 2015-2019, %
Part 2. General economic environment
2.1. Economic components
GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used. It is the main, most complete official indicator of public welfare. The absolute and relative values of GDP give an idea of the general material well-being of the nation and the dynamics of its growth / decrease, since the higher the level of production, the higher the welfare of the country.
Diagram 16. Dynamics of India's GDP, 2011-2019, Q1 2020, % to the previous year, trillion Rs.
Let's take a look at some experts' assessments:
According to experts from the HSE Development Center Institute (June 3, 2020) …
According to the World Bank...
On June 10, the Organization for Economic Cooperation and Development (OECD) presented two forecast options depending on the development of the situation with coronavirus in the world. …
The Bank of India on April 24 revised its economic outlook. …
Sberbank predicts a smaller decline in Indian GDP than expected by the Bank of India and the government. …
Thus, experts disagree significantly about the real dynamics of India's GDP in 2020: ...
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The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money.
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Rate of inflation.
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2.2. Social Components
During 2012-2018 India's population is on the rise. The increase in the population in 2015 was not only due to migration and natural increase, but also due to the formation of two new states of the Federation - the Republic of Crimea and the city of Sevastopol.
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Thus, at present, according to the totality of the considered economic and social factors, it is observed: ...
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2.3. Technological components
The quality of pasta directly depends on the quality of raw materials. Flour is required to make pasta. Wheat crop failure can strongly affect price fluctuations in the market and increase dependence on imported raw materials.
Today, the pasta industry may be under pressure from raw material suppliers, as flour is the main component for the production of products. Therefore, the cost of goods is directly dependent on the pricing policy of grain traders and flour mills. Negative influence of the factor.
In the production of pasta, the use of additional raw materials is realized: enrichment additives - eggs, egg products (melange, egg powder), whole and powdered milk, etc.; flavoring and aromatic additives - vegetable and fruit juices; vitamin preparations - B1, B2, PP; improvers - surfactants used to give pasta specific organoleptic and physico-chemical properties.
2.4. Political Components
The tense political situation in interstate relations has a negative impact on all spheres of the Indian economy.
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Industry standardization. The production of pasta is regulated by the Interstate Standard GOST 31743-2017 “Pasta. General technical conditions”, introduced on 01.01.2019
This standard applies to pasta made from wheat flour and water, with or without the addition of additional raw materials and/or food additives.
All products are subject to general safety requirements, and general quality control methods are used in their manufacture. The classification of pasta is a division into groups A (pasta made from durum wheat flour) and into varieties: superior, first and second; groups B and C - to the highest and first. For pasta made using additional raw materials, the designation of the group and variety of pasta is supplemented with the name of the same name with additional raw materials.
Requirements for the quality of pasta in interstate standards are regulated by organoleptic indicators, physical and chemical - the composition of the product, safety indicators - microbiological, the content of toxic elements, mycotoxins, antibiotics, pesticides, dioxins and radionuclides.
For pasta producers, there is a wide choice of packaging, both in terms of packaging materials and shape, as well as the mass of consumer and transport packaging. The standards set provisions for labeling; the procedure and frequency of product control, methods for monitoring oil quality and safety indicators, rules for transporting and storing finished products. The shelf life of pasta is defined by GOST as follows: 12 months. - for eggs; 24 months - for vegetables and without additional raw materials.
Thus, systematic and effective work in the field of standardization is being carried out in the industry. The positive influence of the factor.
Certification of pasta quality conformity. In order to confirm the high quality and safety of pasta products, a voluntary certificate of conformity is issued in the GOST R certification system.
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Import substitution policy. Import substitution is today the driving force behind India's technological progress. The depreciation of the rupee, the decline in real incomes of the population and the Indian embargo on the import of Western products contributed to this process. Some domestic food companies not only did not reduce production, but also began to export products.
Credit policy. Today it is quite difficult to imagine the progressive development of the economy without the active participation of the credit system. It should also be noted that the assessment of the availability of credit resources for both legal entities and individuals is a significant indicator that allows assessing not only the demand for credit funds, but can also serve as a reflection of the real economic situation both in the region and in the economy as a whole.
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2.5. STEP-analysis of the market
Let's consider the main factors influencing the market and, accordingly, demand.
In general, the influence of macro factors on the pasta market can currently be assessed as a negative medium force. A group of economic and social factors has a negative impact. Also, the risks associated with a crop failure of wheat, the use of low-quality raw materials and high import dependence on the equipment and components market also negatively affect the industry.
Political factors have a positive influence, as well as such a technological factor as the use of functional and enrichment additives.
Table 6. STEP analysis of factors affecting the pasta market
Part 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
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In India, the production of pasta products is carried out in almost all regions, the total number of enterprises producing these products is more than 500 units, with a total production capacity of about ... million tons per year.
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The Indian pasta market is experiencing an average level of consolidation, with vertically integrated holdings playing a significant role.
3.2. Number of competitors and relative market shares of the largest competitors
The leaders in the pasta market are large holdings: …
The clear leader is JSC XXX with a market share of …%. In second place is…
Table 7 below shows the major players in the pasta market in India.
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Diagram 24. Dynamics of the total revenue of the largest operators of the pasta market (TOP-5) in India, 2015-2019, billion Rs, %
The dynamics of the total revenue of the top 5 pasta market operators in India until 2017 was positive, but in 2017 it turned into a negative zone. In 2018, the value of the indicator began to grow again, and in 2019 the growth rate increased to …%.
3.3. Competition from substitute products
The pasta market is experiencing competition from substitute products such as cereals, potatoes, other vegetable side dishes and quick cereals.
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An important factor limiting the growth of the pasta market is the development of competing substitute products.
The consumer's choice of a particular product is largely determined by individual taste preferences, in the background - advertising activity, the attractiveness of marketing solutions and packaging.
To reduce the negative impact on the part of substitute products, pasta market operators can be recommended to use more active marketing communications of a reminding and inciting nature.
Part 4. Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
In the first half of 2020, many markets felt the impact of the pandemic and the onset of the economic crisis.
Let us analyze data on the impact of recent crises on the pasta market (the global crisis of 2008 and the currency crisis in India in 2014).
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4.2. Analysis of the impact on the state aid industry at the current date
At the end of March 2020, the government identified 22 sectors that will be the first to receive state support in the context of the economic crisis and the coronavirus pandemic: the government commission on improving the sustainability of the Indian economy, chaired by First Deputy Prime Minister Andrey Belousov, approved the list of sectors of the economy most affected by the deteriorating situation in connection with the spread of a new coronavirus infection, to provide priority targeted support.
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The vast majority of the support measures announced by the president and the government concern only the industries that the government has identified as the most affected. That is, benefits apply only to legal entities and individual entrepreneurs whose main activity code (OKVED) specified in the unified state register (EGRLE) is included in the government list of such industries.
Companies involved in the production of pasta are not included in the list of so-called affected organizations that suffered financial and material losses from the introduction of the self-isolation regime. They can only use the general support measures for SME staff and other organizations that apply to all companies in India, which are presented in the table below.
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4.3. Studying scenarios for the development of the industry in terms of quarantine in connection with covid-2019
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Forecasting the development of the pasta market in India is impossible without understanding the economic situation in the country, as well as the impact of the spread of the covid-19 virus and the measures taken.
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Based on the forecast indicators of the development of the Indian economy and based on the analysis of retrospective data, namely the impact of previous crises on the industry, GidMarket analysts made a forecast for the development of the market within one and two quarantines.
4.3.1. Single Quarantine Scenario (according to the Chinese release schedule)
Under the scenario of one quarantine, the analysts of the GidMarket company predict the growth of the pasta market by …% in 2020, and in 2021-2024. growth rate will slow down.
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4.3.2. Scenario of two quarantines
Consider the development of the market in the conditions of two quarantines.
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4.4. Analysis of existing cases of business restructuring in the industry
Despite the economic situation in the country and the world, pasta manufacturers are expanding production in India.
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The pasta market is characterized by a high level of competition, which will continue to grow due to the shadow sector, which is traditionally activated during crises, as well as due to the opening of new industries by large players.
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Part 5. Forecasting methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
Industry volume over the past 7-8 years
Industry dynamics in 2008-2009, in 2013-2019*
Dynamics of macroeconomic indicators over the past 8-9 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
India Customs databases
Open sources (websites, portals)
Issuer reporting
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals
* Until October 2020 financial indicators for the main market operators and industry coefficients for 2019 - GidMarket forecast based on the dynamics for 2015-2018, except for cases when the operator discloses data on the results of financial 2019 publicly.
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2020-2024)
Diagrams
Diagram 1. Dynamics of the volume of the pasta market in value terms in India, 2013 - 2019, billion Rs.
Diagram 2. Dynamics of the volume of the pasta market in physical terms in India, 2013 - 2019, thousand tons
Diagram 3. Dynamics of pasta production in kind in India, 2013 - 2019, thousand tons
Diagram 4. Dynamics of the volume of pasta imports in physical terms in India, 2013 - 2019, thousand tons
Diagram 5. The ratio of imported and domestic products in the Indian market,%
Diagram 6. Dynamics of the export volume of pasta in physical terms in India, 2013 - 2019, thousand tons
Diagram 7. The share of exports in the production of pasta,%
Diagram 8. Foreign trade balance, 2013 - 2019, thousand tons
Figure 9. Industry life cycle stage
Diagram 10. Structure of retail trade, 2019,%
Diagram 11. The volume of consumption of pasta in India 2013-2020 (3 months), billion Rs.
Chart 12. Monthly dynamics of pasta sales in India, 2018-2020 (Jan-March), %
Diagram 13. Consumption of pasta per capita, 2013-2019, kg/person
Diagram 14. Sales channels
Diagram 15. Compactness of location of companies in the industry in certain regions, 2019, %
Diagram 16. Dynamics of India's GDP, 2011-2019, Q1 2020, % to the previous year, trillion Rs.
Chart 17. Monthly dynamics of the US dollar against the rupee, 2015-2020 (Jan-May), Rs. for 1 US dollar
Chart 18. Dynamics of the inflation rate in India, 2015-2020 (5 months), %
Diagram 19. Dynamics of the population of India, as of January 1, 2012-2020, million people, thousand people
Diagram 20. Population forecast in India for the period 2021-2024, million people
Chart 21. Dynamics of real incomes of the population of India, 2012-2019
Chart 22. Dynamics of the average interest rate on loans, 2015-2020 (April), years, %
Diagram 23. Shares of the largest competitors in the pasta market in 2019
Diagram 24. Dynamics of the total revenue of the largest operators of the pasta market (TOP-5) in India, 2015-2019, billion Rs, %
Diagram 25. Dynamics of the volume of the pasta market in physical terms in India, 2007 - 2019, thousand tons
Diagram 26. Forecast of pasta market volume in 2020 - 2024 – under the scenario of one quarantine, thousand tons
Diagram 27. Forecast of pasta market volume in 2020 - 2024 – under the scenario of two quarantines, thousand tons
Tables
Table 1. Data on tenders for the purchase of pasta over 500 thousand Rs., announced from 01.06.20/20.06.20/ to / / .
Table 2. Structure of pasta production by Union Territories, 2015-2019, %
Table 3. Expert forecasts for the decline in real GDP in India in 2020, %
Table 4. Industrial production index by state of India (in % of the previous year), 2015 - 2019
Table 5. Weighted average interest rates of credit institutions on credit operations in rupees, excluding PJSC Sberbank (% per annum), 2015-2020 (April)
Table 6. STEP analysis of factors affecting the pasta market
Table 7. Main companies participating in the pasta market in 2019
Table 8. Characteristics of pasta substitute products
Table 9. Assessment of the impact of recent crises on the industry
Table 10. Analysis of the impact on the industry of the state aid proposed to date
Table 11. Forecast indicators for the basic and pessimistic scenarios for the development of the crisis, %
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