Even as most consumer-driven sectors reel under an economic slowdown, the farm-to-fork sector is still going strong. Investments of $218 million in the agri-allied segment accounted for almost 75% of the total PE investments of $293 million in the consumer-driven sectors between January-October.

The big consumer draw of 2010, apparel retail?which saw an investment of $117 million ? did not find any investors in 2011. Drug retail that clocked $90 million last year didn?t garner any buyers either. Nor did consumer electronics, which had seen investments of $44 million in 2010. Consumer-driven sectors are going through a dry patch as far as private-equity investments are concerned in line with the gloomy economic sentiment in the country.

January-October witnessed investments of $293 million against $375 million recorded in the corresponding period last year. On the other hand, farm-to-fork has seen the maximum deals, with investments in restaurants, soft drinks, and packaged foods standing at $116 million, $67 million, and $35 million, respectively, according to VCCEdge, the data division of PE and venture capital tracking firm VCCircle.

Rajesh Srivastava, CMD, Rabo Equity Advisors, India?s only agri-focused PE fund, estimates that the quantum of investment in agri and allied sectors shall exceed $2 billion annually in five years. ?More agri-focused companies will come up, which will be promoter-held and smallish, and in the range of R10-15 crore top line; not yet ripe for private equity, but looking for the expansion push in two years? time. All sub-sectors are growing at anything between 10% and 30%. You won?t find many such sectors across the board,? he adds.

Out of the top five deals in the consumer-driven space, four have been grabbed by the farm-to-fork segment. RJ Corp?s Varun Beverages International and Devyani International got investments worth $55.89 million from Standard Chartered Private Equity and $55.7 million from ICICI Venture, respectively. India Equity Partners invested $39.63 million in Sagar Ratna Restaurants, and Sequoia Capital India Advisors invested $30 million in Prakash Snacks.

Sequoia Capital also invested $5 million in fast-food chain Faaso?s in October. ?There are many structural trends such as income growth, greater participation of women in workforce, increasing farm labour cost, which will create opportunities to build capital efficient, consumer-facing branded business. It?s an interesting long-term opportunity and we will continue to pursue it,? said VT Bharadwaj, MD, Sequoia Capital.

The Food Franchising Report 2011 by FICCI states that PE players are providing capital for these high-gestation businesses and consumer discretion will increasingly play a pivotal role in growth. The report forecasts that the size of the Indian food industry will reach $300 billion by 2015 from $200 billion in 2007.

Within the sector, there?s been substantial traction in the restaurants space, with six deals this year, and the Barbeque Nation deal in the works. ?Changes are evident. The sector is getting organised and better price points and margins are the key drivers. There?s traction in all segments, right from last mile distribution to retail,? said Prashant Purker, executive director, ICICI Venture, which has invested in Devyani International that runs KFC, Pizza Hut, and Costa Coffee.