Beyond being an effort to flatten the curve of Covid-19, the lockdown has been a changemaker in many ways. For millennials who had become so used to paying for convenience, the responsibility had shifted to cooking rather than choosing from a menu on Swiggy or Zomato. However, while many struggled, as apparent on social media feeds, others turned to convenience here too — with ready-to-eat, ready-to-cook, ready-to-serve categories which have exploded and become a go-to choice for many young consumers.
With restaurants restricting services to takeaways besides the fear of a rising number of Corona virus cases has led to people cooking at home, thereby leading to an increase in the consumption of ready-to-eat products. In the last few months, several companies in the ready-to-eat category have claimed to see a rise in demand for their products such as curries/ meals, batters, instant mixes, desserts as well as frozen snacks.
A holistic study of the market is made by considering a variety of factors, from demographics conditions and business cycles in a particular country to market-specific microeconomic impacts. The study found the shift in market paradigms in terms of regional competitive advantage and the competitive landscape of major players.
In these past few months, fresh packaged food brands have seen sales rise by 60 per cent compared with the previous quarter, while meat products and seafood brands have seen a more than 300 per cent jump in sale of ready-to-eat meat spreads, a two-fold increase sale of ready-to-cook kebabs, marinated meat and seafood.
Retailers say that they have seen a growth of 60-70 percent in the ready-to-eat and frozen foods space.
Sales of frozen foods like fries, patties, meat and fish products and products such as curries, batter, pastes and desserts jumped in urban areas as consumers stocked up during the lockdown. The demand is largely concentrated in metro and tier-1 cities that have modern retail and high-end stores with refrigeration facilities.
As demand for such items shoots up, companies struggle to ensure steady supply; manpower and transportation pose major hurdles to supply chain. The demand for ready-to-eat food has shot up during the lockdown and the supply cannot keep up.
Clubbed under the convenience food segment, these products which had been slow in scaling up have seen huge scope for growth now. Over the past decade, money spent by Indians on ready-to-eat food outside the home has doubled. The positives for the segment is that the industry is witnessing large-scale transformation, advertisement spends, distribution of free samples with the focus on improving the distribution network to make a strong presence in the Indian market. However, in the foodtech space, dominated by food delivery, dining SaaS and cloud kitchens, the RTE market holds a minute share.
Till now the RTE industry has mostly struggled to grow in the right direction amid larger players. For instance, Yumlane, which started in 2016 to sell frozen pizzas, decided to pivot to the cloud kitchen model, the hot bet in foodtech. Another player, Fingerlix has been struggling with limited products available on Amazon and the website has disappeared. However, the Covid-19 lockdown which has devastated many businesses has also created a host of opportunities and brought growth for a few players.
Foodtech giants had started a pilot of DIY meal kits, which lets users order the ingredients of a specific dish from restaurants using Swiggy to be able to cook it themselves. It was launched in select cities including some parts of Bengaluru and Gurugram. Even cloud kitchen firm Rebel Foods started offering DIY food kits but has not seen much success yet to boast of.
The increase in new distribution channels is also a reason behind the rise in the sale of these products. For instance, few brands which earlier sold its ready-to-eat products through Amazon and Flipkart, have now tied up with Swiggy and Zomato to market its products.
Indian exports are also getting enquiries in the spices category, organic food products as well as Indian ready-to-eat dishes. There is huge opportunity amid this Covid-19 crisis for Indian food sector. The coming few months is crucial for leveraging India’s advantages in terms of exports. There are also certain challenges for exporters, including shortage of containers, vessels getting delayed owing to fumigation and complying with norms of various countries, delays in clearances, advisories for not entering particular port, and delay in payments.
In the RTE segment, the quality of product is a bigger challenge, as while there are many brands, very few of them are actually able to match up to the customer expectations. The ready-to-eat market in India is expected to expand at a compound annual growth rate (CAGR) of 16.24% (based on value) during the 2019-2024 period, to generate revenue of Rs 68.47 bn by 2024.
To increase the sales volume of ready-to-eat products, retailers are offering lucrative offers in the form of combo packs, day-specific discounts, festive offers, flat discounts and coupon discounts. Further, rapid urbanisation and increasingly hectic lifestyles, along with the aggressive geographical expansion of ready-to-eat retailers, are also propelling the growth of the segment. However, the RTE market is yet to be cracked by startups, since even cash burn has failed to produce the right results.
(The author is founder of What the Buns. He can be reached at sagar@nevehospitality.com)