The number of Australian food and beverage brands in India has increased steadily during the pandemic as consumers turn to pre-prepared items. Since early 2020, customer demand for packaged goods has risen by 30 to 50 per cent.
Simultaneously, India’s consumer preferences are evolving from unbranded to branded meals. According to local sources, this is helping to improve sales of Australian items, particularly cookies, ready-to-eat snacks, protein-rich foods, and immune-boosting foods.
Simplot Australia, Leggo’s parent company, is a Victoria-based agricultural and food manufacturing company. It employs approximately 2,000 people and has five manufacturing plants around Australia.
Leggo’s is a nearly 100-year-old iconic Australian food brand. Its Italian-themed sauces, pestos and pastes are available throughout Asia, including China, Korea, and Southeast Asia. In 2020, Austrade advisers proposed a new strategy to Leggo’s team: To venture into the Indian market.
This resulted in the company launching in India on the e-commerce platform Amazon India, following a virtual meet-a-buyer session organised by Austrade. Sales are now increasing rapidly across many platforms and in physical stores.
Leveraging India’s burgeoning e-commerce sector
E-commerce has proven to be a successful distribution channel for Australian food firms in India and a convenient way to buy groceries in major Indian cities.
Exporters say it enables them to test markets before expanding into offline retail. According to Austrade data, 35 Australian exporters have used the Australian Store on Amazon India to enter and test the market.
Australian firms are also using social media sites such as Instagram and Snapchat to attract Indian e-commerce platforms. In India, Swisse, Sand & Sky, and Orgran are now using social media to establish brand equity.
According to David Malone, Manager of International Sales and Marketing at Simplot Australia, India was not a strategic target market for Simplot at the time. “Enthusiasm from Austrade advisers in India was the trigger,” Mr Malone explained.
“India is, without a doubt, a developing market. Consumers in India are willing to try new and different things.”
Mr Malone said that e-commerce platforms are critical to Simplot’s food export plan.
“They [ecommerce platforms] are able to overcome many of the distribution issues that come with selling food into India. They’re also a wonderful way to reach out to customers who are unfamiliar with Leggo’s brand,” he explained.
“Because our target market is so fragmented, e-commerce platforms are a natural way to reach them..
“We create seamless connections to customers because marketing is digital, and so is purchasing.”
Amazon India’s pivotal role
Mr Malone said that it was simple for Leggo’s to conduct business with an established e-commerce platform.
“Amazon India was very positive about our brand,” Mr Malone said.
“They were also willing to work with us to build the brand. And there are lots of opportunities with Amazon to direct traffic to our products. Amazon India makes themselves easy to do business with.”
“If we went early, we could build our brand and give it some heritage before global competitors arrived. Also, lockdowns in India accelerated trends towards home-cooking, so demand rapidly increased in early 2020.”
“We simultaneously launched with Amazon and some physical stores,’ he continued.
“By mid-2021, we were also selling via two more e-commerce platforms – Food Hall and Nature’s Basket. These are Indian retailers that have a physical presence and specialise in western foodstuffs.”
Amazon India has also opened an Australia Store on its platform in an effort to promote Australian businesses in India. The store intends to introduce a variety of Australian goods to India for the first time, including Swisse, a healthcare brand.
Simon Birmingham, Australia’s Trade Minister, met with business executives in Mumbai to discuss the launch of the Australia Store in February this year.
“Australia’s premium products, our high-quality education and tourism services and our innovative infrastructure, energy and agribusiness solutions are well-placed to meet India’s needs into the future,” Minister Birmingham stated while visiting India.
Birmingham also stated that by 2035, Australia hopes to make India one of its top three export markets.
“We want to ensure that Australian businesses remain front and centre as India’s economy grows over the next 20 years,” Birmingham said.
How Austrade helped find partners
Leggo’s executives were invited by Austrade consultants to a virtual “meet-a-buyer” event in India. Its goal is to connect potential Australian food exporters with potential Indian importers and wholesalers.
“Virtual meet-a-buyer sessions are a good opportunity to examine India as a potential export market,” Mr Malone said.
“I would recommend them to companies that are interested in exporting. During the event, Austrade introduced us to five pre-vetted buyers.”
Mr Malone claims that partnering with established retailers has helped expand Leggo’s products into many supermarkets and hypermarkets in some of India’s most populous cities.
“Austrade fast-tracked our entry into India by making vital connections to reliable distributors,” he says.
“The consumer response has been very encouraging. We are selling well in-market, and the distributor is steadily increasing purchases. We are still in the early days, but India is a long-term play.”
Stuart Rees, Senior Trade and Investment Commissioner for Austrade, South Asia, formally launched Leggo’s pasta and pizza sauces in Mumbai on March 11, 2021.
According to Forrester Research, India’s retail sector was expected to be US$883 billion in 2020, with grocery retail accounting for US$608 billion. By 2024, the market is expected to be worth approximately US$ 1.3 trillion.
The retail industry in India is predicted to rise to US$ 1.1 trillion by 2020, up from US$840 billion in 2017, with contemporary trade expected to increase at a rate of 20-25 per cent per year, boosting income for FMCG companies.
FMCG revenue reached US$52.75 billion in FY18. The Indian FMCG business expanded 9.4 per cent in the January-March quarter of 2021, according to Nielsen, driven by consumption-led growth and value expansion from higher product prices, notably for basics.
The rural market increased by 14.6 per cent in the same quarter, whereas metro markets increased after two-quarters of negative growth.
Link to Austrade: https://www.austrade.gov.au