Much time and energy is expended analyzing India’s organized, branded Food and FMCG market – valued at Rs.4 lakh crores by some estimates. The pink papers and electronic media obsess over the size of this prize, but we may be missing the wood for the trees.
By some estimates the total size of India’s Food and FMCG industry when we include all consumption – across organized and unorganized, unbranded markets - is in excess of Rs. 25 lakh crores. Which means that the branded economy is less than one-sixth of the total market!
We have much to learn from India’s many informal, and often fail-proof, micro-economies. By way of illustration, a few pieces of anecdotal evidence: 1) The entire economy that exists around temples and religious places feeds millions of Indians every single day; 2) The average Indian household spends one fifth of its accumulated lifetime wealth on wedding related expenses; 3) Private tutorials for school children is a multi-billion dollar industry in India.
These large sub-economies – around weddings, exams and temples – enjoy high degrees of consumer engagement, are regular parts of the calendar and tend to be highly recession-proof. Food and FMCG brands in India have so far not leveraged the potential of these massive sub-economies, to drive sales and growth.
A deeper dive might help illustrate the magnitude of the opportunity that is not being seriously addressed by branded players today:
- Thelangar at the Golden Temple in Amritsar uses 12,000 kg of flour a day and feeds 40,000 people every day for free. In the 7 months starting July 1st, 2017 the Golden Temple paid Rs.2 crore as GST on the purchase of various food items needed for preparing the langar.
- Durga Puja celebrations across India generate a business of Rs. 40,000 crore every year, of which Rs. 50-60 crore are generated in the F&B sector alone. West Bengal alone hosts 25,000 pandals every year. Meanwhile Uttar Pradesh alone holds about 2,250 religious fairs a year.
- The average metro Indian wedding brings together several industries, including but not limited to food-catering, event-management, travel, accommodation, gold, jewelry, fashion and durable goods. Weddings in Indian metropolitan cities cost anywhere from Rs. 25 lakh to Rs. 70 lakh on average. 400 million Indians will attain marriageable age in the next 15 years, 80% of whom are open to taking personal loans to fund their dream wedding.
- Sweet shops see a 10-15% increase in their sales on exam result declaration days. The back-to-school season from April to June accounts for nearly half the annual sales for categories as varied as children’s shoes, stationery and laptops or devices for children.
Snacking is the other recession-proof pan-Indian cultural obsession. Online food delivery services see a 30-40% rise in traffic during the IPL season, with 60% of the orders coinciding with match timings. The size of the online food-ordering market (Swiggy, Zomato etc.) is already more than twice the size of all multi-national quick-service chains combined in India!
Thanks to these online food delivery apps, advertisements celebrating the freedom of Indian women, who have been yoked to domesticity for millennia, are all the rage today. Can we imagine a future where urban Indian kitchens are active only once a day or a few times per week? Why manage a kitchen when you can receive fresh meals home-delivered every day at a lower cost than what it takes to prepare the same dish from scratch? Might such a kitchen-less future become a reality for young Indian professionals in Bangalore and Gurugram?
India is not just a country of pluralistic societies but also of plural micro-economies. The business opportunity available to organized players who are able to offer value-propositions that take share from these vast micro-economies is immense. A fresh imagination, an empathetic understanding of consumer needs, and a disruptive mindset that re-thinks all elements of the value-chain is the key. May the best companies win!