Local demand affects Food exports

Middle India's growing ability to indulge its palate is rapidly pushing up domestic demand for premium foods, crimping exports of these quality products as traders find it more profitable to sell them in the home market.

The new-found Indian craze for 'export-quality' specialty teas and coffee, premium seafood, dry fruit, spices and the famed long-grained basmati is posing a new challenge for the food industry that is now looking at ways to meet the ever-increasing local demand.

Prices of several products are equal to and in certain cases more than what foreign consumers have to pay. And clearly, no one is complaining.

"It is the emerging middle class with high purchasing power and changing food habits which is driving this consumption boom. They have become more quality conscious and are going after luxury goods. (And all) this will go up in the coming years given our economic growth," says Laveesh Bhandari, Director of Delhi-based economic research firm Indicus Analytics.

Coffee breaks for the Globalised Indian today means beans sourced from a single-estate plantation crop.

(And) it will not be just a generic version... but a coffee from a specific estate in a definite region with particular variety," says Kaapi Royale Managing Partner Nishant Gurjer. "People see involvement and a sense of belonging when they buy such products."

Yearly domestic consumption of coffee rose to 94,400 tonne in 2008, even as exports fell by 20.09% to 2.04 lakh tonne in 2009-2010 compared to 2.45 lakh tonne in 1999-2000. And the cuppa that cheers is no longer brewed from the crush, tear and curl variety. It is green tea, orange pekoe or a muscatel.

"The market is growing within India too," said D Senthil Kumar, Managing Director of Qualfis, which deals in personal and healthcare and food products. People can afford specialty products now. "Earlier, the spices were used for blending into masala powders. Now, they are also used to season soups and salads."

Agrees Ajay Mariwala, MD of Vallabhdas Kanji Ltd , a leading spices processor and exporter. "As eating out has become common, there is a huge demand for seasonings from restaurants and snack food producers. When the local production is not sufficient, they are forced to import, which ultimately may trigger food inflation."

"Youngsters in the IT sector prefer to eat out rather than cook at home. They are stressed for time and have enough disposable income on their hands. So this change in food habits is a reflection of the lifestyle changes," says Carol Upadhya, Professor of social sciences at National Institute of Advanced Studies, Bangalore.

Demand for cashew has been growing at a healthy 15%. "India is today the largest consumer of cashew nuts in the world," says Kannan S Pillai, Partner, Anu Cashews. No wonder then the export of cashew nuts declined from 1.26 lakh tonne in 2004-05 to 1.08 lakh tonne in 2009-10. Cashew exports witnessed a 4% yearly fall from 2006-07 to 2008-09. In the subsequent year, the rate of decline was 1.28%.