For many, home is thenew Udupi restaurant

At Mumbai's ubiquitous Udupi restaurants, the price of a cup of tea soared from five rupees to ten, fifteen to twenty.

You even suspected the cup had shrunk in size. Udupi restaurants used to mean value for money.

Faced with overall inflation, it may have been tempting for hotel owners to jack up the price of the fastest moving item.

But a few weeks ago, the local media reported that such eateries were shutting down in increasing numbers, as the operating environment had become unviable.

It is a trend that has been going on for the last four to five years as business districts, consumers, food tastes have altered business fundamentals for the worse. And now, ‘inflation' is changing the fortunes for an old model.

Sensitive to price

With economic uncertainty, consumers are becoming sensitive to price and at the same time, demanding more value for money, among other things, says a recent research report from Mergent on the status of the Asia-Pacific food and beverage (F&B) sector.

“The economic slowdown is benefiting the frozen ready-to-eat business because consumers are likely to go to restaurants less often to save money. A behavioural change towards eating and drinking at home is providing a boost to foods with long shelf lives, such as frozen and canned foods,” the report said.

Food manufacturers have been benefiting from this trend. In the age of department stores and giant retail outlets, companies have been emphasising the quality of their brands so that customers don't down trade to private label products, which are typically cheaper.

F&B

F&B is huge business in the Asia-Pacific. Japan, small in size but economically significant, is a leading market for processed food and the region's largest net food importer with a food self-sufficiency rate of just 40 per cent.

The highest growth potential in the segment in Asia-Pacific is in China and India, the report points out.

Although only 30 per cent of China's food production gets processed, its food processing industry generated revenues of $39.09 billion in the first nine months of 2009.

In India, the industry turnover was $72 billion in 2008. The country has become a preferred outsourcing hub for food processing and manufacturing.

Constraints in India span poor infrastructure, inefficient supply chain, seasonality of raw materials and a cultural preference for fresh food.

Healthier foods

Alongside the emergent fancy for ready-to-eat products, thanks to growing awareness and in some markets, a greying of population, consumers are looking for healthier foods.

According to the report, as consumers cut down on spending and choose to eat at home, the interest in healthier foods such as whole grains, transfat-free, fortified foods and functional drinks is expected to continue in 2011.

“Asian consumers have become increasingly sceptical about the safety and nutritional content of processed foods following several crises in recent years, including avian flu and food contamination. A growing awareness about food safety issues has triggered the growth of functional foods. Aiding the growth are scientific and technological advances that promise an improvement in manufacturing efficiency and nutritional content. The Asia-Pacific, already a leader in the functional food market, thanks to its high quality food products, generated functional food and drink sales of $36.2 billion in 2010, up five per cent from $ 34.5 billion in 2009, according to the US Department of Agriculture (USDA) figures,” the report said.

Home is the new Udupi. You think so?

(The author is a freelance journalist based in Mumbai)

COMMENT NOW