The cold storage segment in India is expected to witness significant growth over the next few years on the back of a strong consumer and industrial base, informed a report released by CBRE on Monday.
CBRE in its report stated that following the COVID-19 outbreak, the demand for cold storage is being further fueled by a wider omnichannel distribution of Food & Groceries (F&G) across tier I and tier II cities in the country.
Further, the cold chain network would also play a vital role in reducing the loss of the produce and improving cold storage efficiencies, said the report
The report revealed that states including Uttar Pradesh, West Bengal, Gujarat, Punjab Andhra Pradesh, Bihar, Madhya Pradesh, Maharashtra, Haryana and Karnataka accounted for 91% of the total cold storage capacity in India in 2019. And, the overall Cold Storage Real Estate stock in the country is estimated to reach 1,400 – 1,500 million sq. ft. by 2023.
“Cold storage facilities play an integral role in improving the shelf life of products and are an important enabler for several industries working across fresh food production and delivery; along with healthcare and other products such as flowers and chemicals. Considering the potential of the cold storage segment in the country, we expect that consumer/industry-led factors in India would continue to attract the interest of leading players in the coming years.”~ Anshuman Magazine, Chairman, India & South East Asia, Middle East & Africa, CBRE
“The cold storage segment has the potential to positively impact the ecosystem around the F&B industry. In this age of digitisation and improved internet access, we expect the demand for OFD services in both rural and urban areas to grow and further propel the demand for CS facilities in India.”~ Ram Chandnani, Managing Director, Advisory and Transaction Services India, CBRE South Asia
Other factors driving growth of the Indian cold storage segment
As per the finding, the growing preference for healthier food without preservatives by the young and working-age population is likely to boost the need for cold storage facilities. Additionally, traditional preferences in India have always been higher for fresh produce, thereby further driving the need for setting up cold storage facilities closer to residential areas.
The report also said that the emergence of the ‘cloud kitchen’ concept along with Government initiatives to reduce post-harvest waste, encourage investment and improve logistics efficiencies are also expected to boost the overall cold storage capacity.
The size of the online F&G retail industry which is likely to quadruple by 2022; and the size of the dairy industry which is likely to be more than double by 2023 will also certainly take the growth of the Indian cold storage segment to a next level.
The projected growth of F&G, online F&G, dairy, food processing and pharma industries over the next few years is thus likely to drive demand for cold storage and reduce product wastage, the report stated.