Spicing Up the Plate: India’s Packaged Food Market Sizzles as Ready-to-eat Delights Take Center Stage

The desire for convenience items driven by busier lifestyles is consistently giving India's packaged food industry a big boost. Due to the introduction of modern technology, as well as other developments like urbanization, busier lifestyles, a rise in the number of women working, and the growth of nuclear families, Indian cooking methods have seen significant changes in recent years. To save time on meal preparation, people are increasingly turning to ready-to-eat food options. People are becoming more aware of the health and sanitary standards linked with food products due to increased media exposure, literacy rates, and standards of living. Recently, especially in urban and semi-urban areas, there has been a movement in the customers' priorities from price to quality. The consumption of hygienically packaged fortified foods has been replacing openly or loosely offered food goods.
Here is an overview of India’s Packaged food industry directly from the Ken Research exclusive report. Read out to know the exciting trends and future possible opportunities in the market.

1. India is classified as an emerging and developing country (EDC) which is currently experiencing rapid economic development changes leading the country to be one of the largest economies

GDP and Inflation Rate from 2017 to 2027F¹

Percentage of GDP Composition Sector wise 2021²

Metro, Tier II & Tier III Cities in India 2021

India’s Exports and Imports in 2021³

Exports

INR 39,120.6 Bn (Exports Value)

Imports

INR 44,682.4 Bn (Import Value)

Major Goods Exported

(Mineral Fuels, Precious Stones, Machinery, Iron & Steel, Organic Chemicals)

Major Goods Imported

(Mineral Fuels, Precious Stones, Electrical Machinery, Organic Chemicals)

Major Exporting Countries

(China, UAE, USA, Switzerland, Saudi Arabia)

Major Importing Countries

(USA, UAE, China, Bangladesh, Hong Kong)

2. In the country, there has been a noteworthy change in the eating habit in Metropolitan Cities. Due to the fast-paced life in urban cities, about 79% of the urban people prefer to have ready-to-eat food in their regular meal

Packaged Food Industry of India

• India’s packaged food Market is currently valued a lot more than previous years. It has grown significantly in last five years on account of changing lifestyles, rising incomes and urbanization.
• After COVID strict SOP are followed aligned with states standard production procedures based on temperature ranges, volume of ingredients, way to mix ingredients and how to mix them, etc.

Change in the eating habit in Metropolitan Cities

• Reasons behind the increase in the use of packaged food in urban cities are the steep rise in income, the standard of living and convenience.

1

New product launches and variants in market

• RTE meals, diet snacks, processed meat, health products and drinks trend is increasing. Packaged food has attracted a lot more companies to launch new products and variants of packaged food.

2

Unorganized Players Domination

• Unorganized Players sell their products within a local Radius . They can afford to sell 5-10 Rupee SKUs that sell widely in Local Markets. Organized Players relying on extensive Distribution networks have significantly higher Operational & Logistic costs and fail to compete.

3

Key Takeaway

• Rural India provides a great opportunity for the packaged food and beverages industry. As almost 65% of the total Indian population lives in the rural region.
• They are attracted to food products of urban cities. They are more inclined towards packaged chocolates, biscuits, chips, cakes etc.
• Popularity of packaged food offered in a hygienic pack is giving a fillip to the packaged food industry and revolutionizing it.

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3. Due to this, the packaged food market has seen multiple changes in terms of packaging or distribution along with an increasing number of supply-side entities to meet the rising consumption demands

I: Emerging Phase < 2000

• Starting around the 1920s, there were only a few companies present in the market with limited brands. For example, Parle products that started in 1929.
• Traditionally, Indian families liked to prepare snacks at home to eat between meals or during travelling, hence the market for packaged snacks in India was not that prominent until the 1990s.
• Owing to the limited market players traditional snacking was popular and competition in the market was relatively low.

II: Growing Phase 2000 - 2030

• Many new players started entering during early 90s, the industry witnessed tremendous growth and innovation and rise in competition.
• The market’s growth phase is driven by Increasing foreign investments, shift of customers towards packaged snacks instead of loose snacks for hygiene and cleanliness especially post pandemic and changing lifestyle of the consumers.
• Western Snacking in India has become a new trend and due to which many players entered the market.

III: Maturity Phase < 2030

• Major improvements are being observed across manufacturing, processing, distribution and marketing within entities.
• Loose snacks that were once the are facing denial especially post pandemic. As a result, packaged snacks are emerging with the promise of safe packaging and hygiene.
• Market is expected to see changes in the distribution pattern and consumer choices in future.

Key Takeaway

• Market competition was low and more concentrated at the local level.
• Early entrants in the organized market have an advantage of better penetration and brand awareness in this sector.
• In the recent time competition has increased in both organized and unorganized segment due to the improved packaging and branding practices.
• However the market is expected to experience high competition in the future from the high nutrition value products, vegan products and other such product lines.

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4. Presently, India’s Packaged Food Market is driven by the changed consumer behavior over the years considering healthy substitutes, safety and hygiene, shelf life, and more

Change in consumer behavior such as looking for snacks with nutrition, safety and hygiene and better shelf life has improved the sales of packaged food market.

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5. The market is anticipated to grow owing to the changes in the population growth trends with the rise in working population along with their rising preferences for packaged snacks food

Macro-trends supporting India Packaged Snack Industry growth

Growing, Young, Working-Age Population

• India enjoys a favorable demographic profile, as evidenced by the increasing share of its overall working-age and young working-age population.
• Population age from 15-34 years contribute almost 34% of the overall population.¹

Growing E-commerce Sales

• Growth of the online grocery segment, which was already on an upward pre-pandemic growth trajectory, received a huge boost from the pandemic and the resultant changes in lifestyle and demand preferences.
• Strong growth of the online grocery segment is expected to remain in place during the forecast period as well, driving e-commerce demand for packaged, ready-to-eat foods.

Rising Disposable Income

• Net NDI, a key determinant of consumer demand, is expected to rise from INR 185.3 Tn in 2019-20 to INR 319.2 Tn by 2025-26.²
• An increase in disposable income levels, indicative of a higher standard of living, will help improve affordability and demand for packaged foods and savoury snacks and sweets.

Consumer Preference for Packaged food

• Pandemic caused changes in buying patterns of customer. Packaged food segments such as spices, salty snacks, noodles saw rise in sale post pandemic.
• Many of these segments had gradual or stagnant penetration growth rate pre-covid, which was reversed as sudden demand for the products such as hygiene and packaged food took precedence during lockdown.

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