Investment in foodtech platforms has exploded in the past few years. Food delivery, being the largest segment has attracted over $2 billion since 2014.
India’s growing internet population and online buyers coupled with higher-order frequency (though lower in value) and expanding size of foodtech firms such as Zomato and Swiggy in India to small cities will expand the size of the foodtech market from $3.5-4 billion in 2019 to $7.5-8 billion by 2022. The growth will be at a CAGR of 25-30 per cent, according to a report by Google and Boston Consulting Group (BCG). While this growth in the booming foodtech is expected, what perhaps surprising is the variety of cuisines listed on foodtech platforms and not discounts is the strongest driver. Apart from Zomato and Swiggy, India’s foodtech sector has multiple startups including Faasos, Ola’s Foodpanda, Freshmenu, Innerchef, Box8, EazyDiner, Magic Pin etc. targetting various models such as cloud kitchen, table reservation etc.
The research — Demystifying the Online Food Consumer — based on around 1,500 respondents across 12 cities in India claimed 35 per cent respondents citing the ability to order from a range of cuisines to order food online. However, for 16 per cent of respondents discounts were still the pull for online food ordering while 13 per cent claimed convenience to be the driving factor. In fact, the first time use of foodtech platforms is not driven by discounts. 52 per cent first-time users said advocacy or recommendation from peers or people in their network is what led them to online platforms initially, followed by 19 per cent, which were led by marketing by companies and 13 per cent still were pulled by discounts.
“We see that consumers are deeply engaged and have high expectations from Food Tech players. There is an opportunity to bolster the growth factor with five key value propositions – deep personalization, focused marketing, increased quality assurance, constant value for money and advanced convenience features,” the report said. The time spent by consumers on foodtech apps has also more than doubled from 32 minutes per month in 2017 to 72 minutes per month in 2019. Also the ordering frequency would likely grow by 18-20 per cent while average order values may go down by 5-10 per cent.
Investment in foodtech platforms has also exploded in the past few years. Food delivery, being the largest segment has attracted over $2 billion since 2014 followed by $364 million invested in cloud kitchens and $54 million poured into online table reservation platforms. Overall the market has raised nearly $2.5 billion since 2014 — highest being $1.7 billion in 2018 followed by $268 million in 2019. India’s internet population, the report said, is expected to grow from over 600 million in 2020 to more than 800 million in 2025 even as online spending will increase from $40-50 million in 2020 to $130-150 million in 2025 — growing at around 25 per cent CAGR.