Food and grocery is the largest segment in the Indian retail sector, accounting for 65% of the share in retail. The market is expected to grow at a CAGR of 10%, driven by the increasing consumption of processed foods, and benefiting from rising diary consumption and premiumization trends.
Owing to the uncertainties of the pandemic, there has been a transformation of the grocery landscape due to factors such as:
- Digital adoption: With close to 500 Mn Indians connecting on the Internet and more than 100 Mn making transactions, the country has seen one of the fastest accelerations in digital adoption anywhere in the world
- Innovation: Rapid digitization has made way for new start-ups, which have built or adapted their operating models to the Indian context
- Direct-to-consumer (D2C): A market-shifting force that is transforming the way Indians shop
Although conventional categories like Staples and Fresh put together account for ~80% of the total food retail spend, but emerging categories of packaged snacks, confectionery, and beverages are growing rapidly at a compounded rate of 15%. Increasing awareness around health and wellness is set to increasingly shape consumer preferences across categories.
Online grocery
With the onset of the Indian e-Commerce revolution, online groceries have been gaining prominence. The Indian e-grocery market has seen a CAGR of over 50%, estimated to be $2 Bn to $3 Bn in 2020, and projected to grow to $10 Bn to $12 Bn by 2025.
Within the e-Commerce sector, there is a growing significance of quick commerce, that contributes of 13% of the overall online Food and Beverage sales.