Get the taste of the Indian food industry

Food was always integral part of the Indian culture. Not to forget the food diversity spread across different parts of India. Traditionally, all the meals were cooked at home but over last few years the hectic lifestyle, emergence of the food delivery apps and influence of the global food culture and multiple cuisine resulted in disappearance of the home cooked meals and dining out became the style.  However, the covid-19 pandemic replaced this dining out with the dining in wherein not only the zomato and swiggy is delivering food at your doorsteps but also there is rising number of home chefs largely women who are delivering customised and wide variety of the meals at your doorstep.  Popularity of the home chefs and food delivery apps is also attributed to the fact that cooking fatigue started taking grip after lockdown last year and people were not able to venture out in the restaurants and cafes and started looking out for alternatives.  In this article, we pause to look at how the food industry looks like today in India and the way forward.

Indian food industry        

Food is one of the important elements of India’s tradition and the food industry is the one key contributors to domestic economic growth and world trade. Here are some quick statistics according to India Brand Equity Foundation (IBEF):

• Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of the sales
• India is one of the second largest producer of fruits and vegetables and single largest producer of milk in the world with the production estimated at 137.7 MT
• The country has largest livestock population across the globe which is equal to 512 million, including 119 million milch (in-milk and dry) animals, 135 million goats and 65 million sheep. The segment contributes about 25% to the country’s farm Gross Domestic Product.
• Indian food processing industry is one of largest industry accounting for 32% of the country’s total food market
• Food processing industry contributes around 8.80% and 8.39% of Gross Value Added (GVA) in manufacturing and agriculture respectively
• The food processing industry is exported oriented accounting for 13% of India’s exports wherein the geographical advantage gives India better connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea. The exports of processed food were Rs. 31,205 crores in 2019-20
• Besides, the food processing sector in India has received around US$ 7.54 billion worth of Foreign Direct Investment (FDI) during the period April 2000-March 2017.

The food processing industry has received massive support from the Government of India including reforms such as production linked Incentives (PLI) to boost manufacturing in the food processing sector. This will help to bring in fresh investments from both global and Indian manufacturers and thereby facilitate growth and employment opportunities in this sector.  The government has approved a budget of Rs 10,900 crore boost local production and export of food items in four categories, apart from special support for innovative items and small and medium enterprises (SMEs) in the sector.  The government has relaxed foreign direct investment (FDI) norms for the sector, allowing up to 100% FDI in food product e-commerce through automatic route.

Rise of the food tech market in India

India traditionally had the dominance of the local kirana stores and home cooked meals. However, in the last few years, the food preferences and consumer behaviour have seen dramatic changes. The reasons for change are rising working population which has higher disposable income, rising urbanisation and globalisation leading to change in lifestyle, taste and food preferences, growth of super markets, increase in use of smart phones and digitalisation.  All of these contributed towards emergence of the food tech market which broadly categorized into two segments – online food delivery and online grocery as per the Food Tech Market in India 2021 report featuring on researchandmarkets.com.  The major players in this market are Swiggy, Zomato, BigBasket, Jubilant Foods, Freshmenu, and Licious and was valued at Rs 289.36 billion in 2019 and is expected to reach Rs 1,868.19 billion by 2025, expanding at a compound annual growth rate (CAGR) of ~39% during the 2021-2025 period.

In the revenue terms, the online food delivery segment accounted for 67.13% of the overall revenue in 2020. The online grocery segment is expected to witness high growth during the forecast period and is likely to dominate the market by the end of 2025, accounting for ~55.10% of the sector.

In 2020 while the food tech market was severely hit by the covid-19 pandemic and nationwide lockdown as individuals remained concerned about their health, safety and scarcity of the delivery agents largely due to migration.  However, as the lockdown restrictions were lifted, increasing work from home and millennials shifting their approach from dine out to ‘ordering out’ or ‘eating at home’ and second wave of the covid-19 wherein several elderly and other sick people who do not have help at home or cannot cook started ordering food via these online food delivery apps.  Most of these online delivery apps have managed to tie up with thousands of restaurants, food outlets and several home cooks to meet the food demand and ensuring deliveries are contactless in these pandemic times.  Further, with stay safe at home protocol to be followed, majority of the customers prefer to order groceries online through Amazon India, Big Basket, Grofers or Dmart rather than visiting the stores in person.  All of these have helped food tech market to expand and likely to help them record higher growth in coming years.

While the food industry witnessed massive changes in the last few years, the significance of the home cooked meals cannot be taken away. Home cooked traditional meals still hold a special place in the tier three and rural areas of India.  In addition, with the growing preference to healthy food alternatives customers are looking to strike a balance between traditional food and also looking for healthy food and cuisine options that are famous globally. However, to foster the domestic food industry it is crucial for each of us to give priority to “Eat local and think local” mantra of famous Indian wellness and nutrition expert Rujuta Diwekar who believes that locally grown food gives good health and also keeps small farmers in business and encourages ecological diversity.