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 880 Mn Indians connecting on the Internet and number of digital transactions being 9,192 Cr in 2022-23 (till 31st Dec 2022), 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.