Emerging Trends in Indian F&B Segment

By Invite: Joginder Chhabra, Market Intelligence and Insights, LG Electronics, India.

The Indian economic scenario is on the road to recovery with current GDP growth estimates at 6 per cent during 2014-15. Private consumption demand is set to improve marginally and mild revival is expected in industrial growth. CPI Inflation is expected to be 8 per cent in 2014-15, lower than 10 per cent in 2013-14.

Due to slowdown in the Indian economy in 2013, the F&B industry suffered challenges on the cost front, mainly because of increased food inflation, high energy costs and ever increasing occupancy costs. This has impacted both the organised as well as unorganised F&B service operators both on revenue as well as business efficiency part.

Consumer Trends

There is an increasing demand for takeaway and home delivery services. Top most F&B operators in India are increasingly focused on this channel for maximising revenues. They are also increasing investments in infrastructure for the same. In cities like Mumbai and Pune, approximately 78 per cent of the food outlets have started providing delivery services. In Delhi NCR, it is 60 per cent while in Tier II cities like Chandigarh the percentage is 30 per cent.

On the other hand, concepts like food on-the-go and home delivery formats are increasingly being penetrated beyond the metro towns.

Social media has become an integral part of the food industry to enhance their broad connect with the end consumer and also using the channel for direct sales and marketing interface. This growth is aided by the increased penetration of the internet and rising use of smartphones in India.

Major F&B brands are increasing their fans/followers base with Domino’s Pizza having approximately 6 million Facebook fans. Facebook, Twitter, Four Square, Google plus, Pinterest and others, have emerged as the top social media channels.

The other visible consumer trends include increased importance of sides and desserts within the menu, increased usage of health food like organic food, foods with low cholesterol, zero trans fat, slim milk, diet colas etc.

There is also an increased trend of coffee and tea consumption in India. It is believed that increasing number of chained coffee shops stimulates coffee consumption at home.

Business Trends

In 2018, the Indian hotels and motels industry is expected to grow at $7.6 billion, an increase of 80 per cent since 2013.

There is an increase in trend of emergence of new F&B destinations. While malls and high streets have been traditional locations for F&B outlets, a new breed of food centric destinations is emerging.

Popularly dubbed Food hubs typically have zero or negligible retail/entertainment quotient. Their locations include popular malls, high streets and commercial office segments. Other popular location of food hubs include Airports, Railways/metro stations etc.

In near future, the overall economy is expected to improve slightly, F&B operators will have to balance out high input costs and generating additional revenues also taking into account fast changing Indian consumer lifestyle.

Source of data – Zomato.com, Technopak report, Euromonitor