Solar Becomes A Bright Spot In Autos Manufacturing

Food - India - Q2 2014

Drink - India - Q2 2014

Mass Grocery Retail - India - Q2 2014

Food - India - Q2 2014

SWOT Analysis

Strengths

  • Foreign food companies continue to target the Indian market, with sub-sectors such as edible oils benefiting from significant investment.

  • India's abundance of natural agricultural resources makes the market attractive to investors from all food sub-sectors.

  • The long-term story for Indian food consumption is promising, as a young and increasing population, coupled with rising incomes, will drive growth.

Weaknesses

  • The processed food industry is less developed than other comparable countries as a result of logistical and distribution problems.

  • The country's agricultural industry, despite having huge potential, suffers from a lack of investment and dependency on erratic climatic conditions.

  • Specific state-by-state legislation governing aspects of high-value business, such as retail store opening hours, hinders nationwide business strategies and can be time-consuming and cumbersome.

  • Agriculture remains inefficient and is vulnerable to climatic changes. Two-thirds of the population depends on farming for its livelihood.

  • Despite rapid economic growth, India remains a very poor country.

Opportunities

  • The government is actively seeking investment in the food processing and agribusiness industries, suggesting that companies expressing an interest would be granted a very liberal investment climate.

  • Rising disposable incomes and increasing urbanisation mean higher-value processed foods are likely to experience strong growth rates, especially with the levels of investment being committed by many multinational companies.

  • The immense size of India's population and landmass ensure that market maturity is a distant prospect.

  • Although non-essential consumer goods are barely established at the mass-market level, 'premiumisation' is already becoming a viable growth option, particularly among younger consumers in major urban centres.

Threats

  • Logistical problems, underdeveloped service networks and poor infrastructure hinder development in fresh food industries, such as dairy.

  • The division between the urban rich and the rural poor is as great as ever, meaning food manufacturers do not have access to the entire population, or even the majority of it.

Drink - India - Q2 2014

SWOT Analysis

Strengths

  • Foreign drink companies continue to target the Indian market, with sub-sectors such as soft, alcoholic and hot beverages benefiting from significant investment.

  • India's abundance of natural agricultural resources makes the market attractive to investors from all beverage sub-sectors.

  • India has an enormous and still-growing population of 1.2bn, with a rapidly expanding middle class.

  • Per capita consumption of alcoholic beverages is very low by global standards, indicating plenty of room for growth.

Weaknesses

  • Specific state-by-state legislation governing aspects of high-value business, such as alcohol taxes, hinders nationwide business strategies and can be time-consuming and cumbersome.

  • Alcoholic and soft drinks are still considered a luxury by a large percentage of the population.

  • Poor infrastructure remains a significant deterrent to investment from multinational companies.

  • Despite rapid economic growth, India remains a very poor country.

  • Companies have to invest large amounts in advertising, marketing and distribution along with each new product launch.

Opportunities

  • Rising disposable incomes and increasing urbanisation mean higher-value beverages are likely to experience strong growth rates, especially with the levels of investment being committed by many multinational corporations.

  • A number of drinks sectors offer substantial potential in India for further growth, including bottled water, beer and soft drinks.

  • The immense size of India's population and landmass ensure that market maturity is a distant prospect.

  • Although non-essential consumer goods are barely established at the mass-market level, premiumisation is already becoming a viable growth option, particularly among younger consumers in major urban centres.

Threats

  • The division between the urban rich and the rural poor is as great as ever, meaning drink manufacturers do not have access to the entire population - in fact, not even the majority of it.

  • India has experienced terrorist attacks, which have had a negative impact on tourism levels and drinks sales, in particular alcoholic drinks. Any future attacks would exacerbate the problem.

Mass Grocery Retail - India - Q2 2014

SWOT Analysis

Strengths

  • India's mass grocery retail sector is developing, and there is scope for considerable expansion across all formats and across all regions of the country.

  • New and existing retailers have announced a series of expansion plans, with companies targeting growth outside their established region. This is partly in preparation for the now-inevitable arrival of foreign retailers, which will heighten competition dramatically.

  • India has a very large domestic market, and rising domestic demand is a major driver of economic growth.

Weaknesses

  • Widespread poverty and the country's size and regional diversity act as impediments to the development of the mass grocery retail sector; sector growth to date has been confined to major urban areas, where salaries are higher and infrastructure is better developed.

  • Distribution remains a major challenge to retail expansion, with retailers often having to invest heavily in the supply chain before opening new stores.

  • India's infrastructure is notoriously inadequate. A 500km road journey can take as much as 24 hours owing to poor road conditions, congestion and tolls.

  • Government restrictions on foreign investment in the retail sector remain overly confusing and draconian, preventing further foreign involvement in the industry.

Opportunities

  • Investment in the discount retail sector provides a means of targeting lower-income consumers outside of major urban centres, who will become a key market once the sector begins to mature.

  • Likewise, investment in the convenience sector will enable retailers to capitalise on the increasingly busy lifestyles of consumers living in urban areas.

  • For multinational corporations, the hypermarket sector is a good opportunity, with few hypermarkets present owing to many local operators being unable to afford the higher set-up costs of such outlets.

  • In the long term, well beyond the current forecast period, rural retailing represents an opportunity for financially powerful firms that can afford to offer low prices.

  • India's emerging middle class will continue to drive demand for new goods and services.

Threats

  • Many consumers remain wary of modern retail owing to its perceived detrimental impact on the role of traditional retail in society.

  • Low prices remain integral to luring shoppers away from traditional retail formats; elevated operating costs could undermine retailers' efforts to offer these.

  • The government's previous move to backtrack on its decision to allow foreign direct investment in India's multi-brand retail sector has sent out a negative message to foreign investors about the lack of stability in the country's policymaking process and could potentially deter foreign investments in the sector.

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Sector: Autos, Renewables
Geography: Global
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