The RTC market in India, RedSeer says is expected to grow at a CAGR of 18% to reach Rs 4,800 crore by 2024
With work-from-home becoming the norm and consumers seeking convenient food options, the ready-to-eat (RTE) and ready-to-cook (RTC) categories have been seeing a lot of action. The RTC market has seen the entry of companies such as Jubilant FoodWorks, Veeba Foods, Adani Wilmar, Licious and Cure.fit. Amul, too, has forayed into the RTC segment, while expanding its RTE portfolio.
Food products that need some preparation, such as heating or boiling before consumption, fall under the RTC category, while the RTE category comprises packaged food items that are ready for consumption. Industry experts say the renewed interest in these categories has also been fuelled by the decline in out-of-home consumption of food. A study by RedSeer Consulting has found that consumer spending on home cooking during the pandemic has seen a 61% rise.
The RTC market in India, RedSeer says, stood at Rs 2,100 crore in 2019, and is expected to grow at a CAGR of 18% to reach Rs 4,800 crore by 2024. Analysts predict that the Rs 8,000 crore organised RTE category is set to double in the next five years.
What’s (not) cooking
Dairy brand Amul launched an array of products in the April-June quarter, including several RTE and RTC products — packaged sweets and products like dahi tikki in the RTE category, and the brand is also testing frozen products like pizzas, paranthas, patties, potato wedges and samosas in the RTC category.
“After testing them in various markets, we have expanded frozen foods to about 60-70% of our retail network,” says RS Sodhi, MD, Amul. The company is betting big on the frozen foods category, and plans to invest Rs 400 crore in the same.
Meanwhile, Adani Wilmar, known for its Fortune brand of edible oils, is focussing on traditional fare. Last year, the company launched ready-to-cook khichdi in the market. “The RTC category needs new additions at regular intervals; and hence, we plan to add more regional, contemporary variants and flavours to our khichdi range,” says Ajay Motwani, head of marketing, Adani Wilmar. A 200 gm packet of khichdi is priced at Rs 49. Smaller packs targeting younger, college-going consumers are in the offing.
Licious expects both RTC and RTE categories to drive growth. The meat delivery player currently gets about 20% of its revenue from the RTC segment, which includes products like kebabs, and marinated meat and seafood. It had introduced a chicken-based spread (RTE) in the market last year, and recently added a prawn-based spread to the mix. “The spread category in India is dominated by products like jams, ketchup and mayo-based products, but there is little on offer for meat lovers,” says Vivek Gupta, co-founder, Licious.
Although an internet-first company, Licious is tapping modern trade stores, besides its own app and e-commerce players like Dunzo, Swiggy and Amazon Fresh, for retailing its RTE products.
Maintaining taste remains the biggest challenge in the RTC and RTE categories, as most of these products have preservatives, and go through processing. “These companies have to match the individual taste preferences of consumers, which varies throughout the country; and, at the same time, keep economics in mind and do it profitably,” says Subhendu Roy, partner, consumer and retail industries, Kearney.
Ankur Bisen, senior vice president, retail and consumer, Technopak, says the expansion into frozen categories is going to be tough for the newer players. “A lot of pieces have to fall in place to develop the category,” he says, adding that in the brick-and-mortar stores, retail shelves where temperature can be controlled are needed. Similarly, in e-commerce, delivering frozen food to consumers at a controlled temperature could be tricky.
The RTE and RTC categories will see the entry of several small and regional players, and expansion into niche categories, says Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY India. However, he adds, “to scale up, a lot of capital will be required as it is a fairly complicated category.”
Despite the challenges, industry watchers believe that, going ahead, RTC and RTE products will find wider acceptance in the Indian market.