Quick commerce players roll out premium food, grocery sub-brands in search of profits

For any retailer, higher sales value equals higher absolute margin per basket. According to a recent Bernstein report, most large quick commerce platforms now report an average order value in the range of Rs 500-700. A premium basket, in comparison, could be worth Rs 1,500-2,000. “Net-net, the basket sizes for premium products can be anywhere from 30% to 200% higher compared to mass product baskets,” says Santosh Sreedhar, partner, Avalon Consulting.

Premium demand gathers pace

But it’s not just about margins — it’s also about fulfilling a growing demand.

The gourmet food segment has seen rapid growth in recent years. Valued at around $5.4 billion currently, it is projected to reach $24.5 billion by 2034, expanding at a compound annual growth rate (CAGR) of close to 18%, according to data published by IMARC Group. The volume occupied by super-premium products in the e-retail spending basket is growing at 12% or so and is now visible even in rural demand. “It’s a small share growing much faster than the whole,” says Sachin Modgil, associate professor, operations & quantitative techniques, IMI Kolkata.

Premium products also feed the advertising pipeline for quick commerce brands because some of them are still quite young and brand discovery is everything for them. “While premium baskets offer stronger margin potential than mass baskets, the opportunity extends beyond margins to product discovery,” says Nikhil Sethi, partner & national leader, consumer goods, KPMG India.

Additionally, while the large FMCG houses drive volume and offer lower commissions to these platforms, fragmented premium and D2C brands have no such leverage and accept higher take rates (the percentage of total transaction value that a platform or marketplace keeps as fee or commission for facilitating a sale). 

Uphill task 

Experts argue that urban consumers have got accustomed to ultra-fast delivery timelines and are increasingly willing to trade up for immediate, last-minute celebratory treats, specialty coffee, or gourmet snacks. For their part, having moved past the initial phase of rapid customer acquisition, platforms like Blinkit, Zepto, and Instamart want to offer existing users new reasons to stick to their apps rather than move on for better choice.

But there are challenges in scaling the gourmet category. Experts say inventory forecasting in this segment is far from easy. Since premium products do not drive volume and the customer base is small, managing perishable product storage is tricky. Then there is the challenge posed by niche players like FirstClub that have built their brand on the promise of cleanliness and quality. Kushal Bhatnagar, partner, Redseer

Strategy Consultants, says such platforms offer products from niche D2C brands that are not available on regular quick commerce platforms.

In any case, “the absolute scale for gourmet stores is yet to be tested”, says Vinay Singh, co-founder & partner, Fireside Ventures. Physical gourmet supermarkets like Foodstories or Freshpik continue to navigate the challenges of scaling luxury and gourmet grocery retail profitably in a price-sensitive Indian market. For instance, the operating revenue of Spencer’s Retail subsidiary Nature’s Basket fell 14% YoY to Rs 59.3 crore in Q1FY27 with a loss of Rs 19.5 crore in the same period.

On the bright side, the Spencer’s Retail subsidiary has been able to stabilise its annual revenue run rate at around Rs 323 crore. The company has improved gross margins sequentially in the June quarter by sharpening focus on premium food retail and experiential formats, moving away from aggressive mass-market expansion toward a sharper emphasis on affluent urban catchments and higher-margin categories.