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May 29, 2008

"Cold chains becoming a hot opportunity"

Business Today has an article on how a slew of companies are setting up cold chain infrastructure across India service the needs of modern retailers.
The business rationale for entering a country like India is visible in the numbers. Consider: India is the leading producer of fruits in the world—at 32 million tonnes (MT) annually, that translates into 8 per cent of global production; in vegetables, it is second in the world (after China), producing 71 MT per year, which gives the country a 15 per cent share of the world market. Now for the bad news: As high as 40 per cent of the fruits and vegetables grown in India (that’s some 40 MT—worth a staggering $13 billion) gets wasted. In fact, India’s waste is huge enough to feed countries like Brazil and Vietnam. The reason for this colossal wastage is the yawning gaps in the cold chain, or even the absence of a cold chain to preserve fruits and vegetables. Such infrastructure is virtually non-existent, cold storage capacities are insufficient, cold storages in close proximity of farms don’t exist, transportation is inefficient, and temperature-controlled transportation extremely rare.

...So what has changed in the last couple of years that’s pushing companies to plunge into this hitherto-neglected segment? Without doubt, it’s the scorching pace of growth in organised retail, which is expected to be a massive $30-billion pie by 2010.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.