Food & Beverages Set To Be The Fastest Growing Segment Within Indian Ecommerce

India’s ecommerce market is touted to become a $400 Bn opportunity by 2025. According to Inc42’s latest report, ‘The State of Indian Startup Ecosystem Report, 2022’, the food & beverages (F&B) segment is set to be the fastest-growing ecommerce subsector, with a three-year compounded annual growth rate (CAGR) of 29%.

The F&B segment is set to become a $35 Bn market opportunity by 2025, outpacing all other segments within the ecommerce sector in terms of growth.

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Key Factors For F&B Ecommerce Growth

Amid the fast-growing footprint of D2C brands in the country, F&B startups have created a niche for themselves. Here are a few key factors behind the growth of the F&B brands:

• Inclination Towards Healthier Food Choices: New products such as gourmet street food, healthy food (such as protein bars), classic snacks and drinks (Paper Boat’s range of nostalgia-inducing drinks such as Jal Jeera and Aam Panna) and ready-to-eat food and drinks are becoming the norm as the demand for healthier and cleaner food and beverages has seen a rapid increase post-COVID.
• A Modern Approach to Traditional Snacks: From a fresh take on traditional food and snacks to a more modern, sustainable approach to a range of health-conscious snacks, Indian startups have been able to make a mark in a market dominated by legacy players such as Parle, ITC, and Haldiram.
• Digitisation: Digitisation has been a core factor for F&B startups’ growth. Most of the big names in the industry have their own apps and ecommerce stores and are also available via major ecommerce and grocery delivery apps. 
• Tech Adoption: With tech-enabled supply chains, production techniques and marketing approaches, F&B startups are looking at a large market opportunity by 2025.

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Burgeoning F&B Startup Ecosystem

Raw Pressery, Paper Boat, Curefoods, Happilo, The Whole Truth, Chai Point and iD Fresh Food are some of the biggest names within the F&B segment. It has produced four soonicorns so far – Country Delight, Chaayos, Box8 and mCaffeine.

The Indian F&B startups raised more than $600 Mn between 2014 and H1 2022, according to Inc42 data, becoming one of the best-funded startup subsectors within ecommerce.

Some of the most funded startups within the segment include Country Delight ($156 Mn), Curefoods ($125 Mn), Paper Boat ($57 Mn), Epigamia ($50 Mn) and Wow! Momo ($47 Mn).

There are multiple business models that these F&B startups follow. Most of these companies are omnichannel, that is, selling across multiple retail channels (like Paper Boat). Recently, there has also been a rise in direct-to-customer (D2C) F&B startups (like mCaffeine).

With the upcoming Open Network for Digital Commerce (ONDC), F&B startups are set to receive more exposure and increased customer acquisition. The government is looking to sign up 900 Mn digital buyers and reach a gross merchandise value (GMV) of $48 Bn over the next five years through the ONDC.

Thus, with increasing internet penetration resulting in a rise in the number of Indians shopping online, the use of multiple sales channels, and newer avenues like ONDC, the F&B segment in the country is all set for a paradigm shift over the coming years.

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