If there's one thing that the diverse nation of India absolutely adores, it's food. And let's be real, what's food without a dash of ketchup? In fast food and takeaways, ketchup bags have become an integral part of eating out. Often sold for as little as one rupee, artisan single-serve ketchup seems unaffected by the ever-changing nature of tomatoes. How is it possible for manufacturers to maintain such low prices despite the volatile nature of tomato markets? Let’s delve into the factors that contribute to this enigma, exploring the intricate web of supply and demand, production processes, and market dynamics.
The global ketchup market is estimated to be worth $20.9 billion in 2021/22 and will grow at a CAGR of 2.8% from 2022 to 2028. The growing processed food industry and rising demand for fast food across the world are driving the market. A tangy and sweet flavoured condiment that is prepared using tomatoes, various spices, seasonings, sweetener, and other additives is known as tomato ketchup. Increasing consumption of tomato ketchup with various fast-food items among the millennials and Gen Z is driving the market. In addition, the increasing use of ketchup in various restaurants, cafes, hotels and other fast food businesses in the food and beverage industry is driving market growth over the forecast period.
Retail inflation, driven by factors such as supply chain disruptions, climate change, and increasing demand, has led to a surge in tomato prices. The availability of one-rupee ketchup sachets amidst the backdrop of soaring tomato prices showcases the resilience of the food industry in the face of retail inflation. Hence, these sachets provide an affordable alternative for consumers.
To understand the mystery behind the one-rupee tomato ketchup sachets, we must first explore the nature of tomato price fluctuations. Tomatoes, like many other agricultural commodities, are subject to changes in supply and demand, which can cause significant price variations. Factors such as weather conditions, crop diseases, transportation costs, and seasonal demands all play a role in affecting tomato prices.
One of the main reasons why ketchup bags are so cheap is the concept of economies of scale. Large ketchup companies often produce in large volumes, allowing them to benefit from bulk purchases and efficiency. By purchasing tomatoes in bulk and speeding up the production process, companies can reduce production costs and thus offer tomatoes at a low price.
Tomato ketchup manufacturers also diversify their product offerings to maintain consistent pricing. By expanding their range to include different flavours, such as chilli, garlic, or mixed vegetable ketchup, manufacturers can offset potential price increases in tomatoes by incorporating other ingredients. This diversification allows them to cater to various consumer preferences while simultaneously mitigating the impact of tomato price fluctuations.
Some ketchup companies use forward contracts and price protection strategies to minimise the risks associated with tomato swapping. By signing pre-contracts with tomato producers, firms can guarantee a fixed price for a certain quantity of tomatoes, thus avoiding the impact of the market deficit. These contracts provide stability and predictability in raw material prices, allowing companies to keep a consistent price for their bags.
The world of one-rupee ketchup bags is a system of supply chain management, production, diversification and risk reduction strategies. By taking advantage of economies of scale, using tomato substitutes, diversifying their products, and using forward contracts, companies have been able to control the tomato market.
While any change in tomato prices still does affect tomato varieties, the skills and flexibility of companies in the condiment industry allow them to provide customers with a consistent and user-friendly experience. So the next time you open a rupee bag of ketchup, remember the different processes behind its special price to ensure quality tomatoes are accessible to everyone.