India’s online food services have plenty of room to grow

Mumbai: The post-pandemic revival of India’s online catering industry gave the country its first publicly listed food delivery company and has now created a cloud kitchen unicorn.

And the future only looks brighter, according to a recent report.

Online penetration of catering services in India is expected to double by 2025 – recording a gross goods value of almost $13 billion, management consultancy RedSeer Consulting said in a report dated August 30. GMV is the total value of goods sold over a given period of time before any fees or expenses are deducted. This is a key performance indicator for online businesses.

“Although the market has been impacted by the pandemic, it has also accelerated the pace of online adoption,” RedSeer’s Rohan Agarwal and Abhijeet Routray said in the report. “Similar to many other markets, this market is also experiencing growing online growth, especially post-pandemic, and gaining prominence in overall market share.”

On Thursday, Rebel Foods became the first cloud kitchen to enter India’s unicorn club after raising $175 million in a funding round led by Qatar Investment Authority (QIA) with participation from existing investors Coatue and Evolvence India. . Operator of food brands Faasos and Behrouz Biryani said it is aiming for an IPO in the next 18 to 24 months.

Almost three months ago, Ltd. listed on Indian stock exchanges at a premium of more than 50% to its issue price, a week after its IPO was subscribed to more than 35 times. In response, its main rival, Swiggy, raised $1.25 billion from Japan’s SoftBank Group Corp. and others at a $5 billion valuation. It is currently in talks to raise $500-600 million in a funding round that would double its valuation to $10 billion, ET reported on September 28.

Yet while million dollar fundraisers, unicorns and initial public offerings (IPOs) are welcome, India’s online food industry still has a long way to go as the market remains severely under -penetrated compared to the United States and China. This leaves plenty of room for online catering services to grow.

In the food delivery space, stand-alone restaurants dominate the market. This also represents a significant opportunity for online food delivery platforms to aggregate supply across their platforms, similar to what happened in China.

“India is projected to be the third largest consumer market by 2030, which will be a major boost to the overall consumer economy,” according to the RedSeer report. The adoption of digital services by small towns and the ecosystem of branded catering services will promote the growth of online food delivery, he added.

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