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India’s Food & Grocery Market to reach $790 billion by 2024

Promising government policies and market trends are sending India’ food and grocery market to a different level, all while online groceries hoard a growing market share. Amid 2013 and 2019, India’s food & grocery market just doubled from $300 billion to $600. Growth in this period was motivated by old retailers – prevalent local corner shops that provide a variety of products. Researchers from RedSeer Consulting and BigBasket Brand Intelligence expect another ~$200 billion jump – in the lead up to 2024, but this time driven by new segments.

Standard retail’s shrinking market share will remain central, in and around the 90% level. On the incline, however, is modern retail – arranged versions of corner shops that are in the focus as retailers observe better-standardised business models.

If kept rising at a compound annual growth rate (CAGR) of 16%, modern retail will reside in more than 6% of the food & grocery market by 2024. A number of factors are pushing this growth, most remarkably the government’s verdict in February this year to permit 100% foreign direct investment (FDI) in the food retail market.

Considering the size of India’s grocery market, few foreign investors would require another invitation to enter, even though most will look for organised retail channels. Money has already been sliding in, and the collateral benefit has been a development across the entire food processing ecosystem, varying from product development to cold storage and logistics.

As a result, it is now simpler and more profitable than ever to enter the organised retail space – an observation that is spreading across the country. Retailers are manipulating business models to provide a greater product range in a better-optimised space – benefits of organised retail. As per the RedSeer report, the trend has even expanded to Tier 2 cities in India, which generally indicates an upsurge due to the high population share in these small urban centres.

These are a few of the fundamental factors steering growth in modern retail. Most significant is the Covid-19 crisis and all its consequences on consumer behaviour. As people crouched to wait for the pandemic to get over, several food & grocery product segments observed a boom. Growth was highlighted in segments such as comfort food, health foods and hygiene products – particularly as an outcome of the pandemic.

For example, the snacks & branded foods segment, which was mounted by 5% every quarter up until this year. In the second quarter of 2020, the segment rose by 75%. Beverages – mainly tea & fruit juice – saw a less substantial but likewise extraordinary jump of 50% compared to a pre-Covid-19 growth rate of 2%. Then there was an increase in personal care products – bath, face and handwash – which rose by 24% in the second quarter of 2020, up from 5% in each quarter last year.

Sustaining on this demand growth is modern retail for one – due to flexible payment & delivery models – even though the most significant boom was in the online retail space. Almost immediately in response to the pandemic and the subsequent lockdown, online media became the medium of choice for shopping, also for the daily grocery runs.

Suddenly, India’s 100 million-plus online shoppers – much like their global counterparts – were increasing their activity, while others put their first step into the eCommerce landscape. E-groceries rose by almost 75% in the lockdown period itself. Many assume this attraction for online platforms to persist. A report described a ‘new Indian consumer’ who had risen from the Covid-19 crisis – as optimistic, tech-savvy and cashless.

The is expected for the online groceries to expand gradually for the rest of the year at least, reaching a gross merchandise value (GMV) of over $3 billion – compared to nearly $2 billion last year. Considering the eCommerce boom being a permanent fixture, it’s predicted that a CAGR of nearly 60% for online groceries in the lead up to 2024, pushing the section past $18 billion GMV.

Presently residing in under half a percentage point in market share, online groceries will rise to more than 2% of India’s food and grocery market over the coming four years. All along the total sector climbs up to almost $800 billion in worth.


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