Navigating the Culinary Landscape: 2023 Trends & a Glimpse of the F&B Industry in 2024

by  EVENTFAQS Bureau Industry Watch | December 28, 2023 | Feature

Food & Beverages Industry

India's food and beverage (F&B) industry stands as one of the most extensive and rapidly advancing sectors, encompassing various segments and sub-segments. Projections for the domestic food processing segment suggest a surge to USD 470 billion by FY2025, a significant climb from the $263 billion recorded in FY2021. The industry's momentum is propelled by factors such as evolving lifestyles, increasing incomes, burgeoning urbanization, and supportive government policies.

As per Inc42, the direct-to-consumer (D2C) realm in India sees a substantial 27 percent presence from the food and beverage (F&B) sector. The influx of new startups introducing inventive product lines has injected fresh vigor into this segment. Despite contributing 3 percent to the GDP, F&B commands nearly two-thirds of India's total retail market. Projections indicate that by 2027, the F&B market is poised to expand, reaching an estimated size of nearly USD 504.92 billion.

The food and beverage sector, sustaining the livelihoods of over 7.3 million individuals, stands as the largest single employer in India. Moreover, it serves as a pivotal catalyst for the growth of diverse economic segments, including retail, transportation, agriculture, and hospitality services. Within the F&B industry, there are various sub-segments encompassing dairy products, confectionery, frozen foods, convenience foods, processed fruits and vegetables, as well as alcoholic and non-alcoholic beverages.

Decoding the food service segment

In the realm of the food service segment, projections from Wazir Advisors indicate a notable ascent from USD 57.2 billion to USD 78.8 billion by the year 2026. Notably, the organized food service market contributed USD 27.1 billion in revenues, with USD 5.9 billion originating from organized chains and the remaining portion from independent establishments. The growth witnessed in the food service sector is attributed to widespread internet accessibility, particularly through smartphones, enabling seamless one-tap payments and mobile wallet transactions.

Presently, disruptions in food services are evident, primarily driven by the emergence of cloud kitchens, constituting a significant 20 percent of orders. The appeal of cloud kitchens lies in their advantages, including a modest initial investment, operational cost efficiencies, simplified geographic expansion, and enhanced profit margins. Consequently, these factors are drawing substantial investments and reshaping the landscape of the country's food service industry.

With these favorable trends, the patterns of food service consumption are undergoing changes driven by the fast-paced lifestyles of consumers, the increasing presence of women in the workforce resulting in greater disposable incomes, and the time constraints faced by families in preparing meals.

Major trends in the food industry

Irrespective of the sub-segments, some common trends are driving all domains. The top ones are:

Social media presence: The societal shift towards digitalization and the rise of social media have prompted F&B entities to establish a dynamic online footprint. Social media serves as a platform for industry participants to share narratives and engage directly and consistently with their customer base. Online platforms are now instrumental in enabling brands to achieve organic growth rapidly and cost-effectively, connecting with their target audiences regardless of geographical boundaries. Beyond maintaining engagement with existing customers, a social media presence aids F&B establishments in attracting new visitors, thereby increasing overall revenues.

Emphasis on convenience: While convenience has traditionally held significant importance in the F&B industry, the pandemic elevated its relevance to unprecedented levels in 2020 and beyond. Extending beyond mere convenience, the home delivery of F&B items through various channel partners has become a crucial aspect of socially responsible behavior.

Another notable shift occurred in the seamless process of making online reservations, just a few clicks away through third-party platforms or apps. This stands in contrast to the inconvenient traditional practice of calling restaurants to secure a table. Additionally, there has been an increased preference among consumers for ready-to-eat, ready-to-cook packaged foods, and frozen products, driven by the convenience they offer in consumption.

Preference for organic, healthy, sustainable options: In the present day, terms like 'organic,' 'gluten-free,' 'dairy-free,' 'vegan,' 'non-genetically modified,' and 'superfoods' have become integral to people's dietary lexicon as consumers actively pursue healthier products. Moreover, consumers are increasingly opting for F&B items that are produced or sourced sustainably, aiming to ensure a minimal carbon footprint.

Growth and Investment opportunities in 2024 and beyond

As mentioned previously, the food and beverage (F&B) sector stands out as one of the rapidly expanding indigenous industries. The industry's growth is propelled by the substantial production base of raw materials available. India holds the top position as the largest producer of various commodities, including milk, mangoes, bananas, papaya, guavas, ginger, and okra. Additionally, it holds the second position in the production of rice, wheat, vegetables, fruits, cashew nuts, and sugarcane, and ranks third in the production of coconut, cereals, chicory, cardamom, mace, nutmeg, pepper, and lettuce.

Driven by the series of supportive steps, the F&B industry offers robust investment opportunities in prime spheres that include food processing as well as fine dining and hospitality, among others. In food processing, the entry of large multinationals has boosted demand for processed products. In the post-pandemic period, the need for organic products, ready-to-eat items and other convenience foods has also surged.

The pandemic also transformed consumer buying behaviour. While online F&B orders accounted for barely 3 percent of online sales, the situation changed after March 2020. As a result, 80 percent of people who purchased a food or beverage online turned into repeat customers. Taking all these elements into account, there is no doubt that India’s F&B industry offers significant growth prospects and substantial investment opportunities for both national and international investments.