Going nuts in India on Californian pistachios

April 10th, 2008 - 1:38 pm ICT by admin  

By Chitra Narayanan
Lost Hills (California), April 10 (IANS) Noticed the avalanche of branded pistachios at the supermarket next to your house in India? As Californian pistachio growers make a determined pitch to up their volumes, supermarkets in India are seeing a lot of ‘nutty’ action. As part of the effort to increase its market share in India, Lost Hills-based giant Paramount Farms will invest $5 million in setting up a unit in that country to process and package pistachios. The location of the plant is not finalised yet.

With its production capacity ranging from 4.5 to 9 million kilograms of pistachios annually and employing about 100 people, it could be located in or around New Delhi or in Gujarat, said Mark Masten, vice-president, sales, Paramount Farms.

While proximity to the high pistachio consumption Middle Eastern market - another big potential market for American growers - could tilt the scale the Gujarat way, the company is also mulling over the benefits of the National Capital Region (NCR). As Masten points out: “The primary domestic nut market is in the north.”

India consumes 4.5 million kg of pistachios a year. Of this, only 600,000 kg are Californian. The bulk of it comes from Iran and Afghanistan, routed through Dubai-based exporters of Indian origin or Pakistani traders.

Paramount hopes to change this ratio by setting some “stretch targets” for itself. In the next five years, it aims to achieve 22.5 million kg of sales of Californian pistachios in India.

US trade representatives are seconding the Californian growers’ efforts by demanding import duty cuts on the nut. In February, at the bilateral trade policy forum meeting in Chicago, pistachios figured among the six items the US delegation urged the Indian government to reduce import duties on.

Although the plea was ignored and duties continue to be high at 30 percent (as a result of which importers in India say they pay as much as Rs.85 a kg as duty on the nut), India is very much on the radar of Californian pistachio farmers seeking new global markets in the wake of a bumper crop in 2007.

Masten says: “We see tremendous potential in the Indian market. Not only are nuts and dry fruits a part of the traditional Indian diet but the purchasing power of the middle class spells an opportunity.”

However, the high prices are definitely a deterrent in the consumption of pistachios, which are among the most expensive nuts retailing in India. In-shell pistachios cost around Rs.600 ($15) a kg, while the Californian kernel retails for around Rs.1,000 a kg. Kernel from Iran is cheaper.

In comparison, almonds, which have seen a huge surge in consumption in the last two years following a sharp price drop, retail for around Rs.350 a kg. Incidentally, India consumes about 27 million kg of Californian almonds, making it the second largest export country for almonds from the US.

Now the pistachio growers are hoping to take a leaf out of the almond marketers’ book and grow in the Indian market. “We want to radically change the nut market in India,” declares Masten.

For this, they are taking the supermarket route. The change in the way nuts are sold in India is already evident.

Pistachios were typically sold loose through the wholesale channel in India. It’s only recently that branded pistachios in the roasted and salted snack category have started becoming visible across retail shelves in India. This is the segment Paramount hopes to tap into.

Masten says: “Currently, there are hardly any branded pistas in India - it’s a greenfield territory and our canvas to paint.”

Paramount has already tied up with Reliance Retail. Its SunKist and Wonderful brands of snack pistachios are displayed prominently across 500-odd Reliance Fresh stores.

According to Ravinder Mehta, business head (dry fruits and nuts division) of Reliance Retail: “Branded nuts are essentially being marketed against chips and such items. Roasted Nuts are cholesterol free.”

Indeed, Paramount’s Wonderful Pistachios are being sold wholly on the health platform. Says Dominic Engels, vice-president (marketing): “These are snacks we want the world to consume - not potato chips and donuts.”

Mehta points out that since there is no national brand really in the nuts and dry fruits category, this spells huge domestic opportunity for Paramount.

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