2019 Indian Cashew Kernel Market:

Review and Outlook

Somnath Chatterjee
Head- Procurement & Logistics

ITC Limited- Foods Division

 Presentation Flow
• FMCG Industry

• Consumer Trends

• Usage of Cashew

• India
• Consumption & Production trends

• Challenges
• Internal
• External

• 2019 Prospects
Softening FMCG growth. . largely stable over the last few years . .

FMCG Value Crores & Growth

70.00 Val Billion $ GOLY FORECASTED 0.3
27%
60.43
60.00
0.25
53.96
22%
49.21
50.00
19% 19% 0.2
43.15
40.00 38.01
15%
33.56 14% 14% 0.15
31.32 13%
30.00 28.03 12% 12.4% 12%
23.53
20.44 0.1
20.00 17.24 7%
13.58
11.14
0.05
10.00

- 0
MAT DEC'07 MAT DEC'08 MAT DEC'09 MAT DEC'10 MAT DEC'11 MAT DEC'12 MAT DEC'13 MAT DEC'14 MAT DEC'15 MAT DEC'16 MAT DEC'17 MAT SEPT'18 MAT Dec'19
Branded Food Industry nearly 30 Billion $ & Growing the fastest
Value% Value%
36
6 Top 8 Metro
38
FOOD Next 27 Metro

Other Metro
NON-FOOD 20
Town Class 1
OTC
9 Rest of Urban
55 16 16 3
Rural

FMCG : 53.96 Billion $

Food : 29.80 Billion $
CAGR over MAT Store
Market Growth % CAGR over MAT Jun 2016 Market Growth %
Jun 2016 Contr. %
FMCG 12.40% 13.40% All India 12.4% 13.4% 100%
Top 8 Metro 10.6% 12.5% 7%
Food 13.50% 14.40% Next 27 Metro 11.0% 11.3% 5%
Other Metro 13.0% 12.8% 2%
Non Food 11.00% 12.20%
Town Class 1 13.5% 13.0% 11%
OTC 11.70% 12.30% Rural 14.5% 14.9% 61%

Store Base : 10.1 Million Stores

 Consumer trends are evolving…
BUSY LIVES - CONVENIENCE SEEKING ON THE RISE
Consumers seeking out products and services that either help facilitate their busy lifestyles or help free up time on less
enjoyable tasks

PERSONAL SPACE & TIME

Consumers seeking out products that offer moments of escapism and comfort, and encourage them to step back from the
pressures of everyday life

HEALTHY LIVING
Consumers are becoming increasingly skeptical of product claims and conscious about the traceability of products and
want manufacturers to address these issues

VALUE WORTHINESS
Consumers becoming more discerning and showing a willingness to trade-up or trade-down if they feel an alternative
product offers better value for money

EXPERIENCE SEEKING
Consumers seeking out products that are novel and unusual, even when buying everyday groceries such as exotic flavours
or unique packaging

TRUST & AUTHENTICITY

Focus on full disclosures, ingredients and process information. Brands coerced to build relatable & authentic RTBs.
Factors resulting in shift of demand to dry fruits

• Increasing awareness of health needs

• Increasing disposable income levels
• Nuts and dried fruits carry an overall healthy image
• Nuts and dried fruits also carry rich emotional
associations, making them one of the most popular
choices for gifting in India
 Indian Cashew Consumption (Kernel
Basis) (Million MT)
0.30

0.28

0.26

0.24

0.22

0.20

0.18

0.16
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

• India leads the cashew consumption charts in the World

• Recorded a growth of over 75% cashew consumption over a period of last 7-8 years
Wide Usage of Cashew
 . . . On the production front !!!
Cashew Production (Kernel Basis)- In Million MT
0.20 0.85

0.80
0.19
0.75
0.18
0.70

0.17 0.65

0.60
0.16
0.55
0.15
0.50

0.14 0.45
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Indian Production World Production

• 18% increase in India in cashew production over a period of last 10 years

• However, World cashew production increased by 47% over a period of last 10 years
Production related challenges
Poor farm mechanisation

Low cashew productivity

Higher dependency on imports

Stringent factories and labour laws

Indian RCN Imports (in Million MT)

1.00

0.90

0.80

0.70

0.60

0.50

0.40
Other Internal Challenges. . .
 External Challenges. . .
Competition from key producing countries
Reduced raw nut supplies & raw nut suppliers turning out to be competitors

Geo-political concerns

Low cost of raw material and processing cost in the raw nut producing countries

Subsidized production inputs and external funding in competing countries

Counterparty Risk

Product Substitution
Likely shift towards. . . Product substitution !
 Prospects- 2019
Good cashew crop foreseen in India for 2019

Higher carry over stocks to put pressure on cashew markets

Indian markets are expected to grow at 4-5% on consumption

Exports might continue to decline to cater to increasing Indian demand

Shift from Import-Process-Export to Import-Process-Consume

Stiff competition from other nuts like almonds, peanuts