How to set up a Frozen Food Business in India
Majority of Indian households in urban India are working couples who have hardly much time for each other or to spend with their children. Also, there are unmarried young professionals living away from their parents, even the home-makers who are home are quite influenced by western culture and overall with rising disposal incomes and the fact that there is an increased likeliness to Western food, the doors to the frozen food business has been wide opened to thrive in India.
Market Trend of Frozen Food Business in India
A report submitted by ASSOCHAM in 2015 states that between 2010 and 2015, the average increase in the annual sale of ready-to-eat food has been 32.5%. Packaged food like packaged beverages, dairy products, snack items, frozen food, ready-to-cook and eat food is bought by around 80% of urban households in India.
Today the frozen food market has branded retail chains and stand-alone grocery stores selling packaged food and ready-to-cook food. The good part about frozen food is that it preserves the nutrient value of the product. The frozen food market is divided further into processed frozen vegetables, vegetable snacks, poultry, fish and seafood, and red meat. The garden pea is the most popular selling frozen food item in India followed by mixed green vegetables and baby corn, as per data available of 2013.
Starting a Frozen Food Business
- Market research: Conduct market research of the location where you are planning to launch the business. Study the demographics of the area, food habits and the presence of competition in the local market.
- Look for the perfect location to rent the space for the business – since the shop will deal with customers directly, it needs to be located at the convenient location and there is ample space to keep the freezer and other equipment.
- Permits: all legal business needs government approvals and permits to function properly. The permits required for this type of business are:-
- Incorporation of the Business – The new business needs registration under Sole Proprietorship if owned and managed by a single person, Partnership Firm or One Person Company which does not require an audited annual return to be submitted to the Ministry of Corporate Affairs.
- FSSAI Registration – The Food License is mandatory to run any business related to food production, processing, distribution, selling, import, export or stock. For an annual turnover of less than Rs. 12 lakh, registration under the Food Safety and Standards Act 2006 is required. For earnings between Rs. 12 lakhs to Rs. 20 crores annually the State FSSAI license is required.
- Small Scale Industry License
- No-objection certificate from Municipal body
- GST Registration – Visit the online site https://www.gst.gov.in to enroll for GST. Enrollment is common for Central and State GST. In case the annual turnover of the store is Rs. 20 lakh or more, it is mandatory to register. To complete the formalities, the following documents are required:-
- Valid mobile number
- Valid email address
- Bank account number
- Bank IFSC
- Provisional ID or GSTIN and password issued by the state government
- Current Bank account details for transactions
- The trademark for protecting the brand name
- Professional tax license
- Initial Investment: It includes
- Cost of renting a shop facility
- Purchasing freezers, trays, knives
- Procuring frozen food supplies
- Hiring manpower
- Marketing the business:
- Circulating pamphlets, brochures and newspaper inserts to residential areas as well as restaurants, hotels, caterers in the vicinity
- Use social media platforms, create blogs and advertise
- Create a website for your company
- Join the local frozen food association and list with the local yellow pages
- Advertise in local newspaper, radio and television channels
Though the frozen food business in slowly evolving and is still in its initial stages in India, there are major challenges that the new entrepreneur has to do with. They are:-
- Specialized skill is required for this industry but it faces two major problems –
- The brain drain of skilled people
- Shortage of employees with the required skill set
- An already cluttered retail space with many popular brands fighting for attention
- Expensive infrastructure for preserving raw meat and non-vegetarian items as well as semi-cooked non-vegetarian snacks
- Consumer awareness levels are low in the rural and semi-urban market
- The under-developed frozen food distribution network
- Lack of freezer space at the retail stores