PMA’s International Council recently met in Mumbai, India’s commercial capital. Together with PMA members from every continent, we studied the country’s produce distribution and marketing through tours, meetings, and discussions with Indian leaders. This was research by observation, seeing a very different world and trying to make sense of its opportunities.
Trying to make sense of the massively complex social and economic values in this country of more than 1 billion people is daunting. It is mysterious, it defies labeling. But don’t for a moment think India won’t grow in power and influence on our global industry.
We were all products of Western education and culture raised on rational thought. Order, symmetry, and reason rule our thinking and our business practices. How would we respond to what A Passage to India author E.M. Forster called India’s “muddle,” and others have called a study in contrasts or organized chaos?
Consider these Indian snapshots:
• The economy has been averaging 8.5 percent growth per year
• It is currently the world’s largest producer of fruit and the second largest producer of vegetables (China is first)
• Its high-quality grape exports (certified by GlobalGAP) now compete late season in European markets with established southern hemisphere producers
• 80 percent of Indian produce imports are apples; the U.S. supplies 1/3 of those
• India has the world’s largest vegetarian population
The Vashi wholesale market near Mumbai is a massive sprawling place where horns honk as trucks, boys pushing carts and others carrying baskets filled with produce jostle for a place on the narrow paths between buildings. Multicolored, highly decorated trucks back up to decrepit concrete loading docks to offload pineapples, grapes, onions, garlic and more. The items are piled high on the truck and are offloaded by men with large baskets — three feet wide by one foot deep. They stack as much as they can from the truck into the basket and then make their winding way, basket on head, through a mass of humanity to the stall of the wholesaler. You’re hard-pressed to find corrugated or plastic packaging.
When the hauler gets to a stall, the basket is unloaded — usually onto the concrete floor — and the produce is piled up for sale. Then a strange “covered hand” ritual often takes place, with buyer and seller making and accepting or rejecting the offer to buy by placing their hands together under a cloth and using hand signals nobody else can see to make the deal!
Trash is everywhere in the market, dogs are common, and someone remarked that a U.S. food inspector coming close to this market would be in shock. A foreman stands knee-deep in a huge pile of onions on the floor being sorted by women, dressed in colorful saris and seated on their ankles as he shouts direction. But return late in the day, and you will find everything tidied up; the muddle has disappeared, magically.
Markets like these will likely go through 50 years worth of upgrading in the next five to 10 years if they’re to meet the demands of the growing retail and foodservice sector. The incoming trucks were completely without refrigeration as were most of the market vendors themselves. I’d estimate 98+ percent of the produce didn’t see the inside of a cooler. Labor is everywhere; work is done by hand.
Organized retail outlets comprise less than 3 percent of the consumer food market today but staggering expansion is planned. A Reliance Fresh store (around 12,000 square feet) is one of 500 now operating in India with thousands more in the works by 2010. The produce was clean and merchandised well. The much larger, 2-level HyperCity store showcased produce near the entrance with lots of fresh-cut produce (cut in the store’s backroom), and multiple freestanding wooden bin displays for the rest of the bulk product. The manager of HyperCity talks enthusiastically about plans for another two dozen stores to be added soon.
Demographic trends are with the retailers. The working population and household disposable income are growing fast. There are many more working couples, and younger professionals are savvy about global brands and the Western shopping experience. But to get there will require massive investments in public and private infrastructure: good roads, refrigerated storage, and transportation, packaging enhancements, training and more.
Making sense of — and money from — Forster’s “muddle” is where leading companies are heading. Just days after our visit, one of our host companies, the agribusiness giant Mahindra, along with South African global fruit marketer Capespan announced a 12-month pilot project to investigate forming a long-term joint venture. The goals are lofty, yet they focus keenly on the critical needs of the Indian marketplace: technical support to farmers, developing import and export capabilities, and acting “as a receiver, handler, and distributor of selected produce into the emerging retail and foodservice sector.”
In China two years ago, our PMA group saw the marvels of modernization. There, the pace of change is amazing as the government decides, then acts, brushing people out of the way, carving new freeways and railways where before there were houses. The development comes first, people second. India is a democracy, though, and the pace of infrastructural development has been painfully slow.
Then I remembered the metaphor one Indian produce leader shared: “India is like an elephant: difficult to see all at once, moving slowly, with a vegetarian diet. But when it runs, look out — it is unstoppable.”