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Indian food-tech industry is expected to touch the $8-billion mark in the next two years, clocking a CAGR of 25-30 per cent, according to a report by Google and Boston Consulting Group (BCG). The food tech space has in fact emerged as the fastest growing e-commerce segment in terms of reach and engagement, thanks to the rapid advancement in internet adoption and continued investments on consumer trials and delivery satisfaction.
The report, titled 'Demystifying the online food consumer', pointed out that factors such as a large variety of cuisines, good discounts and convenience are some of the key reasons driving “recurrent” use of online food ordering apps. “In fact, once users are satisfied with the service and start becoming habitual, they become more discerning about value – this behaviour is observable independent of town, class, social status, age and gender,” it said.
The study also noted that peer or network advocacy is playing a critical role in drawing first-time consumers to food ordering apps.
Roma Datta Chobey, Director - Travel, BFSI, Classifieds, Gaming, Telco & Payments, Google, said, “The food-tech industry is nascent but one of the fastest growing in the country. Food tech has now made its presence in more than 500 cities in India and with consumer confidence growing, there are new opportunities for the players to 'win with the consumer' in an evolving market.”
Added Rachit Mathur, MD and Partner, India Lead of BCG’s Consumer & Retail Practice, “Overall online spending in India is rising rapidly and expected to grow at 25 per cent over the next five years to reach over $130 billion. Riding on the wave of rapid digitization and steadily growing consumption, the reach of food-tech companies has grown six times over the last couple of years and will continue to increase further.”
The key barriers that hinder consumer adoption include lack of trust in the app, delivery charges, food quality concerns and lack of customisation, the report noted. “Interestingly, these observations vary based on the maturity of the market. While delivery charges is the top reason for not ordering food online in metro cities, in tier-I cities, lack of trust in apps is the primary roadblock,” it added.
The report is based on feedback of about 1,500 respondents across 12 cities.
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