>
Advisory Insights>
India’s food sector boom continues unabated – Pandemic or No Pandemic
The Indian food sector has suddenly become the centre of attention. The recently-concluded Zomato IPO and the upcoming Devyani International listing shine the light on the massive potential of the food delivery and restaurant sector. So It is interesting how has the Indian food sector evolved and potential is massive. where do future opportunities lie? The lifestyle and consumption pattern of the Indian middle class asses especially when it comes to food has undergone a change over the past few decades. This is thanks to urbanisation, more disposable income and job growths. A considerable amount of India’s 1.3 billion population belongs to the working class. Limited availability of cooking time means more consumption of items like ready-to-eat food. Indians are also dining out or getting food door delivered much more than before. From a linear farm-to-fork model, the sector has developed into an inter-dependent models backed by technology. The pandemic has further given a fillip to certain industries within the food sector, such as packaged food and online food delivery.Estimates have valued the Indian food services industry at Rs 4.2 trillion in FY20. It is likely to touch Rs 6.5 trillion by FY25 (9% CAGR).
Two decades ago, the Indian food landscape was fragmented and relied largely on the unorganised sector. Standalone specialityIndependent restaurants were popular for dine-ins.served the needs of those wanting to eat out. And large players such as Britannia and Parle (biscuits) and Amul (dairy) dominated the packaged food industry. The arrival of quick-service restaurant chains such as McDonalds and Domino’s upped the Indian consumers' aspirational quotient. Indian QSR chains such as Barista and Café Coffee Day appealed to the coffee drinking youth. too emerged. Alongside,Meanwhile, restaurant chains such as Barbeque Nation, among others, expanded their bandwidth.
As lifestyle changes induced by economic progress took place, Indians started warming up to ready-to-eat foods. Nestle’s Maggi Noodles continued to build on its strong legacy. While established companies introduced new ready-to-eat products such as ITC under (Yippee/MasterChef brand), Marico under the (Saffola) brand and Tata under the (Q brand.) launched ready-to-eat products. ,Homegrown MTR Foods established a sizeable share for itself in the market. The market for the ready-to-eat segment has grown at a CAGR of 15-20% in the last five years. According to Research & Markets, India's ready-to-eat market stood at $261 million in 2017. It is estimated to grow at a CAGR of around 16% during 2018-2023 to touch $647 million by 2023.
It wasn’t until the rise of Swiggy and Zomato that the food delivery market exploded. Between FY18 and FY20, the food delivery industry grew at over 140% CAGR. The apps gave wings to the restaurants business – both full service and quick service. The online food delivery platform is still at a nascent stage with an industry size of $4.2 billion. Compared to this, the USA has a size of $21 billion while China’s market stands at $90 billion. Here's a stat: India has only 45–55 million online food delivery users compared with 740 million mobile broadband subscribers. The penetration is low and has huge potential.
Over the past five years, several Indian QSR brands have emerged. Key QSR brands include Faasos, Behrouz Biryani and Ovenstory Pizza -- all owned by Rebel Foods. Other notable players in the cloud kitchen space are Box8, Mojo Pizza (Poncho Hospitality) and FreshMenu. This emergence of cloud kitchens aided the growth of several “FoodTech” platforms. In this model, companies run low-cost delivery-only operations by operating through centralized kitchens. During the FY 2016-FY2020 period, the QSR market grew at 17.27% CAGR. Estimates peg the market to grow at 23% over the next five years, according to an Edelweiss report. The report adds that the pandemic has aided growth of this market.
The growth in the food sector is not limited to restaurants and cloud kitchen space. The past few years have seen the emergence of companies that combine food and technology to meet specific market needs. These are companies that are revolutionising the food supply chain (Ninja Cart) or working in niche but fast-growing areas such as synthetic meat (Eat Just) (Note: Through it’s Private Markets offering, Kristal closed recently enabled and closed a pre-IPO round transaction with Eat Just). There are brands that try to bring unique tastes to existing food products. This is either through organic or proprietary products. Some of these are Bira91 (beer), Paper Boat (non-alcoholic beverages) and ID (South Indian food).
The listed space in India offers many investment options. It has legacy players such as Britannia and ITC to dairy firms such as Kwality, Parag Milk Foods and the recently-listed Dodla Dairy. The packaged food and the QSR space, too, have seen plenty of market action. Devyani International, which recently launched its IPO, is one of the largest franchisees of Yum Brands Inc in India. It operates brands like Pizza Hut, KFC, and TACO Bell. Burger King India listed last year while packaged food firm Mrs Bector’s Foods, too, had a strong listing. But a bulk of the action remains in the private market space. If you wish to know how Kristal can help you invest in pre-ipo rounds of private food companies., contact us.
The COVID-19 outbreak hit the restaurant industry hard as lockdown rules prohibited dine-ins. Sales at restaurants, which had to quickly adapt to the online food delivery model, still fell 60% on an average. Experts expect the overall growth trajectory for the entire food industry, including for restaurants, to continue to remain strong. Investors should especially keep an eye out for foodtech companies that have the potential to disrupt existing business models and bring innovation to the market.
By
Kristal Advisors
August 12, 2021
Liked it?
Share it with your friends & colleagues!
A fully digital onboarding process that can be completed within 15 minutes.
No more voluminous paperwork and queuing!
.svg)
We are licensed in Singapore, Hong Kong and India. Kristal Advisors (SG) Pte. Ltd. presently operates under the CMS license by the Monetary Authority of Singapore (MAS). Kristal Advisors (HK) Ltd is licensed and regulated by the Securities and Futures Commission (SFC) to carry out Type 4 and Type 9 regulated activities and is not involved in the discretionary management of any collective investment scheme. Kristal Advisors Private Ltd. presently operates as a Registered Investment Advisor under the jurisdiction of the Securities and Exchange Board of India (SEBI).
Read more about our privacy policy - Here
Copyright © 2023 Kristal Advisors (SG) Pte. Ltd. UEN: 201711235E
.png)
.png)
We are licensed in Singapore, Hong Kong and India. Kristal Advisors (SG) Pte. Ltd. presently operates under the CMS license by the Monetary Authority of Singapore (MAS). Kristal Advisors (HK) Ltd is licensed and regulated by the Securities and Futures Commission (SFC) to carry out Type 4 and Type 9 regulated activities and is not involved in the discretionary management of any collective investment scheme. Kristal Advisors Private Ltd. presently operates as a Registered Investment Advisor under the jurisdiction of the Securities and Exchange Board of India (SEBI).
Read more about our privacy policy - Here
Copyright © 2023 Kristal Advisors (SG) Pte. Ltd. UEN: 201711235E
WE ARE LICENSED IN SINGAPORE, HONG KONG, ABU DHABI, AND INDIA. KRISTAL ADVISORS (SG) PTE. LTD. PRESENTLY OPERATES UNDER THE CMS LICENSE BY THE MONETARY AUTHORITY OF SINGAPORE (MAS). KRISTAL ADVISORS (HK) LTD IS LICENSED AND REGULATED BY THE SECURITIES AND FUTURES COMMISSION (SFC) TO CARRY OUT TYPE 4 AND TYPE 9 REGULATED ACTIVITIES AND IS NOT INVOLVED IN THE DISCRETIONARY MANAGEMENT OF ANY COLLECTIVE INVESTMENT SCHEME. KRISTAL ADVISORS PRIVATE LTD. PRESENTLY OPERATES AS A REGISTERED INVESTMENT ADVISOR UNDER THE JURISDICTION OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). KRISTAL.AI MIDDLE EAST LIMITED IS LICENSED AND REGULATED BY THE FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) FOR CAT 3 A LICENSE.
Read more about our privacy policy - Here
Copyright © 2023 Kristal Advisors (SG) Pte. Ltd. UEN: 201711235E
USD 10,000
Minimum investment amount
ETF
Available Investment Products
Financial guide
Use while investing on Kristal
We encourage our India investors to use a financial guide. Kristal does not charge any additional fees for investing through them.
In case you already have a guide, we will try to bring them onboard. In case not, we can recommend one of our qualified partners to advise you through the journey.
I understand the financial products and would want to proceed with investing without a financial guide
Proceed
.png){kind=icon}
