Indian food-tech industry to touch US$ 8 billion mark by 2022: Report

In the next two years, Indian food-tech industry is expected to reach US$ 8 billion mark, clocking a CAGR of 25-30 per cent, as per the report by Google and Boston Consulting Group (BCG). The food tech space has been the fastest growing e-commerce segment in terms of reach and engagement, on the back of the rapid advancement in internet adoption and continued investments on consumer trials and delivery satisfaction.

According to the report, titled 'Demystifying the online food consumer', the major reasons for growth in the use of online food ordering apps includes a large variety of cuisines, good discounts and convenience. It said, "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."

The peer or network advocacy is playing an important role in attracting first-time consumers to the food ordering apps. 

Ms Roma Datta Chobey, Director of 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."

Further Mr Rachit Mathur, MD and Partner, India Lead of BCG's Consumer & Retail Practice added, "Overall online spending in India is rising rapidly and expected to grow at 25 per cent over the next five years to reach over US$ 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 major hurdles faced by these app that hinder consumer adoption consist of 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.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.