In our previous food services newsletter, we had focused on the organised food services market and different brands that were likely to emerge. This takes us to the next set of relevant questions around the evolution of the market landscape. For instance, how big can the existing brands get? Is it a winner-takes-all market? Which type of brands are more likely to succeed in India? How attractive is the opportunity for new entrants?

We have been working on answering these questions for you for years, especially finding a solution to this: Identifying what food brands work and what don’t in India.

Through our experience in the space, aided by several thousand consumer surveys and big-data analysis of consumer ordering behaviour, we have tried to answer this question in our report, ‘How India eats’. This is a one-of-a-kind report that not only tells you whether Indians like Biriyani more or Chinese, it also tells you about what kind of Biriyani is loved more – is it Hyderabadi, or Moradabadi or something else? We have covered all major cuisines in India. It also answers questions like ‘when do Indians eat outside food, beyond the special occasions or when guests visit? Aggregating these bottom-up analyses, we try to answer the larger questions around the market landscape. We are excited to unveil this report soon. Watch this space for the official unveiling of the report.

Meanwhile, through this newsletter, my colleague Abhijit Routray and his team give you a bird’s eye view of the report.

1. India’s $65 Bn food services market is extremely heterogenous

India is a large and diverse country. That manifests in extremely diverse food habits across the country. For instance, while Northern and Western regions prefer breads, Eastern and Southern regions prefer rice. While Western India is predominantly vegetarian, Eastern and Southern regions are predominantly non-vegetarian. These are only a few of the macro examples. The variances are deeply entrenched across ingredients, cooking techniques, eating styles, tastes etc. So, a brand that is loved by consumers in one region, and scaled easily there, may often be not successful in another.

2. Therefore, Indian food services is not a winner-takes-all market; The next decade will witness proliferation of several small and mid-sized brands

In countries like the USA, sizable food services brands are the norm. For instance, McDonald’s in the US is almost a $8.7 billion revenue brand, Starbucks is $15-20 billion. Beyond these household names, there are numerous $1 billion+ revenue brands there. In contrast, owing to the heterogeneity in Indian food habits, it’s difficult for brands to scale beyond a limit. It’s not a winner-takes-all market. However, with more than half of the market still unorganised, there are large opportunity pockets for entrepreneurs to innovate and create well-known, mid-sized brands. The next decade is likely to witness several such small to mid-sized brands getting built.

3. One of the keys to building such brands is selecting the right cuisines – Cuisines like Asian, Italian, and ‘Healthy’, and a few others, are sizable and highly conducive for brand creation

While regional cuisines are hard to scale, there are a few cuisines which are ‘neutral’, that is, they are relatively less localised. These cuisines are not completely new for Indian consumers, are preferred by the younger consumers and can’t be easily cooked at home. For instance, in case of Asian and Italian, Indian consumers are well-acquainted with dishes like noodles and pizza.

Further, increasingly sedentary lifestyles of knowledge workers, acknowledgment of the same, consensus that changing the diet is the most needle-moving solution available and most importantly, the easy access to such information have increased the demand for ‘Health’ oriented foods and created an attractive opportunity for businesses.

Additionally, cuisines like desserts and beverages are growing fast as well because of their current size, future growth potential, attractiveness of the meal-slots they are consumed in, popularity among younger consumers, compatibility with online food delivery, among others.

4. Identifying niche dishes within these cuisines can further open attractive brand creation opportunities

While the larger buckets of cuisines like Asian, Italian etc. are attractive, they are dominated by large and well-known players. While opportunities still exist in those penetrated cuisines, it is worth identifying market opportunities in relatively less penetrated dishes. For instance, owing to the popularity of Pizza, Indian users are decently acquainted with Pasta, but it is relatively less penetrated. Similarly, sub-cuisines like Japanese that fall under the broader ‘Asian’ category of foods are growing fast. Another example here would be juices within beverages. Identifying such niche offerings can lead to easier market opportunities.

With India’s $65 Bn food services market being highly fragmented, building large brands can be tricky. Selecting the right cuisines is perhaps the first and most important step to create successful brands.