The HoReCa business worldwide was probably one of the hardest hit by the pandemic. The Indian food services market was no exception. According to a report by the National Restaurant Association of India (NRAI), it witnessed a 53% degrowth in FY2021 compared to the previous fiscal year. This contraction in the food services industry was the direct cause of closure of over 25% of food business operators, further resulting in the loss of 2.4 million Indian jobs.
However, the story seems very different from how starkly everything started. There was an opportunity to be explored yet again in the middle of a crisis. Before COVID, restaurants, cloud kitchens, QSRs (Quick-Service-Restaurants) did not rely on many Ready-to-Eat (RTE) or Ready-to-Cook (RTC) products.
This sector’s real world dependence on these kind of products was about 8% before the pandemic hit. Two years down, that figure has now rocketed to 40-50% and in the case of bigger brands it’s as high as 80%. Post COVID the same kitchens and restaurants are relying entirely on the manufacturers in the RTE/RTC sector.
COMING IN, HELPING OUT
RTC has proved to be a silver bullet in this time of crisis. The entire HoReCa sector had some very tough choices to make. The unavailability of staff owing to the stay-at-home-advisory, added cost pressures, supply chain bottlenecks and several other factors were pushing the sector into degrowth but thanks to the RTC sector, they found a quick fix to these problems.
The entire HoReCa sector has pivoted massively to RTC products after the pandemic hit to adapt to new demand trends and customer expectations. So much so, that RTC products have now become a part of the regular mix of establishments from the biggest of brands to the smallest of outlets.
The segment is expected to grow ferociously and will drive the boom in the HoReCa segment as it simplifies food preparation and helps streamline the overall operations of restaurants in a big way. The stay at home advisory has given people a chance to expand their culinary palette and bring home the joy of dining out.
Licious, a company that sells ready-to-eat meat spreads, ready-to-cook kebabs, seafood and marinated seafood saw a phenomenal jump in their sales. Amongst other examples, there’s one of the fresh packaged food brand – iD Fresh Foods which saw its packaged paratha sales go through the roof.
This goes to demonstrate the sheer number of people cooking and eating at home. People are choosing safer and better quality food products and this shift in consumer behaviour is expected to be long-term, if not everlasting.
GROWTH DRIVERS
The growth in the market has been driven by increasing urbanization and people moving from tier-2 to tier-1 and metropolitan cities. Changing consumer demographics such as the rise of nuclear families and double-income households coupled with a busy lifestyle have also been contributing factors.
These developments have made it faster and more convenient for consumers to procure better quality, safer ready-to-cook products than before. This change in consumer behaviour has given rise to a new food category – Preservative free RTE and RTC food products.
If you’ve managed to see Sony Television’s new entrepreneurial show ‘Shark Tank India’, companies like Wakao – an RTE food company that advertises the use of packaged, ready-to-eat and cook jackfruit as a mock meat are on the rise. Grocery delivery companies across different models – from daily micro-deliveries to on-demand and full-stack next day delivery players – have also played a vital role in garnering access and visibility for RTC and packaged fresh food brands. At the same time, it solves supply chain bottlenecks to cater to consumers’ needs.
Until now, the major challenge that led to the limited growth of this segment was the lack of infrastructure for the supply and storage of RTC products on the retail shelf. Companies like Solv are solving this problem by providing cold-chain logistics services, making it much easier for Ready-to-Cook manufacturers to grow their reach and business.
OVERCOMING SUPPLY CHAIN CHALLENGES
Talking about the sector from the B2B lens, as traditional supply chains serving Indian businesses dried up amidst COVID-19 imposed restrictions, B2B ecommerce players grabbed the market by coming to the aid of raw material starved businesses. B2B marketplace companies have seen huge percentage growth volumes and revenues since 2020.
The lack of digital options to manoeuvre supply chains was a big problem as raw materials were often sourced from multiple sets of vendors, fragmented players and even SMEs. Traditional supply chains were replete with ad-hoc processes.
There are companies that are helping RTE/RTC companies and manufacturers to not only streamline their supply chains but also offering compelling value propositions in terms of price, variety, quality and conveniences such as door-step delivery all through a simple digital interface – allowing them to focus on growing and expanding their businesses.
Going by the way things stand at the moment, in the days ahead, RTE and RTC markets will develop immensely. The pivot can be considered a breakthrough moment for India’s food manufacturing industry and moving forward the demand for these products will only increase going by the current trends. Which gives the industry immense potential to be a major contributor to the Indian economy.
