Ready-to-cook and ready-to-eat meals have existed as a category for decades. But most of these companies have not grown the way Indians are ordering in.
Never mind the cookery shows, Youtube channels, or the Masterchef hysteria. Indians don’t want to cook. Earlier this month Ministry of Statistics and Program Implementation along with ICICI Securities came up with a report on India’s spending habits on foods and beverages. While the report reveals an alarming shift towards processed food and beverages’ consumption especially in urban areas.
If you say that’s obvious given the swarm of food delivery riders in every nook, we say hold on; there is another bunch of brands that should have benefited from this “away from kitchen” trend. Brands such as ITC Master Chef, Kitchens of India by ITC, Godrej Yummiez, MTR, Venky’s, Sumeru’s, Prasuma, McCain, and Haldiram’s are all pushing this category.
Have consumers made these brands their preference? Let the data answer this. A quick look at the finances of these companies will show that despite being around for decades unless backed by the distribution metal of a FMCG giant such as ITC, McCain’s and Godrej, most of these companies have barely crossed Rs100 crores mark. A big part of the sales for these brands also come from B2B revenue.
What is going on, why have Indian consumers never warmed up to this category? Why do Indians prefer ordering in an oily fried rice over a healthy ready-to-eat Bissi bele bhaat, which is just a 2-minute microwave away?
The stagnation of ready to cook/eat category
“Ready to cook and ready to eat meals have existed as a category for decades, many players have come and gone. While Indians are perhaps moving towards cooking lesser, they continue to prefer ordering in rather than these packaged options. And in all honestly, pricing wise it comes out to be the same, so why wouldn’t they?” asks Devangshu Dutta, founder, Third Eyesight Retail Management Consultancy.
Dutta adds, “If you go to any southeast Asian country, the need to cook at home is negligible. You have well-prepared, nutritious, tasty food available at the supermarkets like Seven Eleven or similar stores.”
It’s the same thing in Europe and the US as well. A visit to any supermarket will reveal the massive number of semi cooked options for those who do not wish to cook, and do not wish to cook, and more often than not cheaper or at the same price as a restaurant take out.
“We don’t have any frozen or ready to eat packaged foods in our store. We mostly have fresh groceries, pulses, some beauty and personal care.” Says a Bangalore based small corner of the street kirana store.
Now this is a vicious cycle. These ready-to-eat brands while have existed in the country and can be seen in big supermarkets often, but not in smaller kirana stores clearly seem to be struggling with doing big volumes. Perhaps the lack of discounts, and fixed packaged foods type pricing combined with love for freshly prepared meals, don’t give customers any reason to switch away from ordering-in, and hence no interest from the kirana stores.
“Retailers offer the shelf space for a price. So, what you see on the shelves is often because the same brand/manufacturer has a fast-moving product in the same store, and the shelf space for the ready to cook/eat option is part of a pricing deal.” Adds the above source.
“More often than not, you see these products (ready to eat) in big supermarkets and hypermarkets, but these are definitely not moving as fast as you would expect considering the shelf space given to these products.” Says a senior industry consultant, anonymously.
Even though the potential market for such meals exists, as the table above shows, the poor performance of all brands in this category, means just one thing – Indians are preferring to order in.
Ordering in is here to stay
According to Zomato’s Q3FY24 report, food delivery grew by 27% on year-on-year basis, and 6.3% on a quarterly basis. In FY23 the company fulfilled 647 million orders, with an average of monthly transacting customers being 17 million, which grew by 16%.“
Yes, the demand environment was muted in the last quarter (Q3FY24) and that is true even for the broader restaurant industry. Hence, food delivery GOV growth was lower than our expectations.”
“One of the things driving the growth of our food delivery business is the fact that our platform is still underserved from a supply standpoint. The monthly active restaurant base on our platform has grown by 20%+ YoY in Q3FY24,” says Rakesh Ranjan, CEO, Zomato, in the Q3FY24 shareholder’s letter.
The final cut
Ready meals are expected to grow at a CAGR of 6% in value during 2024-2028, as per Euromonitor International. Limited-service restaurants (defined as a combination of fast food and 100% home delivery/takeaway outlets) are expected to grow at a CAGR of 8% from a much larger base.
Clearly, the potential for growth for ordering in and the extensive reduction in home cooking will continue in the coming years.
https://economictimes.indiatimes.com/prime/consumer/india-has-a-new-eating-habit-and-its-not-ready-to-cook-meals-/primearticleshow/109403082.cms