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Statement:
Price
Considering the products as commodities, we assume that
prices are very competitive
Poultry Industry Growth Positive Change in
Trend Customer Demand
According to one projection report, A large proportion of the Indian
egg production is expected to population is relatively young in the
reach 106 billion by 2020 (Mohanty 2059 year age group
and Rajendran, 2003) People in this age group are high
According to estimates based on a consumers- boost the growth of
Pilot Information Survey project consumption
(Khare, 2003/2004), egg production Income levels across population
will rise to 120 billion by 2020 and segments have been growing -great
poultry meat production to 4.2 growth opportunities
million tonnes Given the price of mutton, and fact that
Poultry vision 2010: the Indian the availability of fish is restricted to
perspective, a study by the All India coastal regions of the country, poultry
Poultry Breeders Association forecasts meat has wider acceptance than
that any other meat
total egg production will reach Slow but gradual shift from
101.8 billion by 2020 vegetarianism to non-
poultry meat production will rise to vegetarianism especially among the
4 million tonnes by 2010 and 8.6 youth in India-implying strong growth
INVEST
millionINtonnes
INCREASING CAPACITY TO GAIN disproportionate
by 2020 share
potential for the of growth
poultry to gain
market
more MARKET SHARE WITH INCREASING GROWTH IN DEMAND
1. Since current capacities are almost completely utilized(assumption), and demand remains
robust, added capacities are likely to contribute to volume immediately
2. Client should invest in increasing capacity by investing in increasing capacities and
modernize plants
Increase in QSR
Changing Lifestyle Of
businesses(Quick Service
Indian Customer
Restaurants)
Indian lifestyle is slowly changing Indians are slowly adapting to
The number of women working is globalization and the trend of eating
increasing, as are nuclear families out, especially at QSRs, is increasing.
With a greater focus on careers,
individuals are unable to spend more
In urban areas, QSRs are considered
time at home, cooking fast and convenient eating options
This results in increased purchases of in Tier 2 and Tier 3 cities, QSRs are
convenient and packaged foods perceived as a symbol of status.
changing lifestyle is resulting in higher The QSR market in India is estimated
consumption of processed foods and at Rs. 45,000 cr, of which, the
more people eating at restaurants organized market is still the minority
(less than 20%)
Organized players are likely to
Client should take benefits a lot from
dominate the QSR industry within
this lifestyle change.
five years
1. shift focus to value-add
products to improve revenue Organized QSRs in India are growing
and margins the at ~20-25% CAGR
Client will ride on this change, as
2. company could further change
growth in QSRs will lead to increase in
focus from grown birds to
demand of Clients products. Hence
processed chicken
increasing Capacity would help.
3. Invest in express outlets(QSR),
reduceIN
INVEST intermediaries and gain and QSR to reach new market and
Value added products
newmargins
customer segment which eventually bring more market share
2nd Assumption:
Client is unable to get disproportionate
growth in growing market to increase
market share
We can look at following options:
Acquisition
Client may look at acquisitions which bring synergies to
business and help in gaining the market share which is not
yet attainable
Vertical Integration
Integrate vertically to bring economies of scale in organized
poultry industry to get greater investment capacity over
small players with less capacity and investment capabilities
Invest to differentiate from Competitors
Invest to fight against common challenges in Poultry
industry like epidemic break out, perishability, poor
infrastructure(cold storage facilities) to take edge over
smaller competitors
Understanding Demand, Supply and
Investment Cost
Investment
Demand Supply
Cost
According to the report, According to one We assume that client
Vision for Indian Poultry projection report, egg can afford the
Industry: Current production is investment in increasing
Scenario and Future expected to reach 106 capacity
Prospects billion by 2020
The consumption of eggs (Mohanty and Rajendran, Two options to carry out-
will increase from 34 2003) Organic
billion in 2000 to 106 According to estimates Inorganic- acquisition
billion in 2020; based on a Pilot
poultry meat Information Survey
project (Khare, Challenges/Opportunity
consumption is predicted
to increase to 1,674 2003/2004), egg cost-
million kilos in 2020 production will rise to Wait for breakeven
Organized QSRs in India 120 billion by 2020 and Payback period
are growing at ~20-25% poultry meat
CAGR production to 4.2
million tonnes
Exploring
Inorganic Growth v/s Increasing Capacity