Swiggy’s private-label food brand ‘Noice’ has passed an early consumer test, but Bernstein believes building a successful brand alone will not be enough to change the trajectory of Instamart. After conducting a blind taste test across multiple packaged food categories, the brokerage said Noice performed better than expected against established FMCG and direct-to-consumer brands.
However, it added that Swiggy’s quick commerce business still needs to improve customer buying frequency, monetise its dark store network more effectively and deliver consistent execution to strengthen investor confidence. Bernstein has an ‘Outperform’ rating on Swiggy with a target price of Rs 430, implying 71% upside.
Noice beats expectations
Bernstein said Noice has entered one of the toughest segments of the consumer market, where brand loyalty, taste and quality matter far more than in staples. The brokerage noted that unlike categories such as rice or pulses, packaged foods require companies to consistently win consumers on taste and texture, while Noice is also priced at a premium to several competing brands.
To evaluate whether Swiggy‘s products could compete on merit rather than branding, Bernstein conducted a blind taste test covering seven Noice products against one leading FMCG brand and one D2C brand.
The brokerage said the outcome was stronger than it had anticipated.
“Noice appears to succeed in many of these aspects in our blind taste test. We tested 7 Noice products vs one FMCG and one D2C brand. In 3/7 categories, Noice had the best score. In 2/7 categories, it has the 2nd-best score with small gap with leader. In last 2 categories, it got the lowest score, but again the absolute score difference was small. A more successful outing than what we had anticipated,” Bernstein said.
According to Bernstein’s survey, Noice ranked first in paneer, salsa dip and whole wheat bread, finished second in butter cookies and orange juice, and ranked behind competitors in bhujia and potato chips, although the score difference remained relatively small across categories.
Private labels are the next battleground
Bernstein said the positive test results come at a time when private labels are becoming increasingly important for quick commerce companies.
India has fewer than 10 consumer brands generating more than $1 billion in annual revenue, while quick commerce platforms now stock around 4,000 brands, of which about 80% are direct-to-consumer brands, most founded after 2013, according to the brokerage. Lower entry barriers, digital marketing, contract manufacturing and the rapid expansion of e-commerce and quick commerce have made it easier for platforms to launch their own brands and compete directly with traditional FMCG companies.
Bernstein noted that nearly every major player has built a private-label portfolio, including Blinkit’s Whole Farm, Amazon’s Vedaka, Flipkart’s Classic, BigBasket’s BBRoyal and Swiggy’s Supreme Harvest. With Noice, Swiggy is attempting to move beyond staples into higher-involvement packaged food categories where consumer loyalty is harder to win but differentiation can be stronger.
Why Bernstein remains cautious
Despite the encouraging consumer feedback, Bernstein said investors should not view Noice as a turning point for Instamart.
“Noice, while very good, by itself, is not enough to turn Instamart’s fortunes. It may be a small building block to retain quality conscious customers in the long run,” the brokerage said.
According to Bernstein, the bigger challenge is improving the economics of the quick commerce business rather than introducing successful private-label products.
The brokerage pointed out that Instamart customers currently place 2.8 orders per month, compared with 3.6 orders per month for Blinkit customers, suggesting there is still considerable room to improve customer engagement and operating leverage. It also said Swiggy needs to generate higher returns from its dark store network before deciding whether additional contribution margins should be retained to improve EBITDA or reinvested to accelerate growth.
“The core work for Instamart, of course, hinges on increasing customer buying frequency (at 2.8 / month vs. 3.6 for Blinkit) and monetization of its dark store network and then deciding whether to bank the incrementally positive contribution margin for EBITDA gain or to reinvest for growth. Strategic clarity, consistency and evidence of this would be important to get investor confidence,” Bernstein added.
Conclusion
Bernstein believes Noice has demonstrated that Swiggy can build competitive products in one of the most demanding consumer categories. But the brokerage argues that the company’s long-term success in quick commerce will depend less on whether a private label wins a taste test and more on whether Instamart can increase customer buying frequency, improve dark store monetisation and consistently execute its growth strategy. In Bernstein’s view, Noice is an encouraging step, but it is only one piece of a much larger puzzle.
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