The Indian food tech space is expected to grow from $4 billion in 2019 to $8 billion by the end of 2022, according to a report by Google and BCG (Boston Consulting Group). It has grown 35-fold in the past five years, the report added.
Titled Demystifying the Online Food Consumer, the report said that the growth in the food tech sector is expected to rise due to higher consumption and maturing dynamics on the supply side, which will result in a massive 25% growth rate by the end of 2020.
“Macro trends such as rising internet penetration, increasing ordering frequency, favourable consumer disposition, expanding reach in smaller cities and expanding network of restaurants on food-tech platforms continue to drive momentum in the industry. As a consequence, (the) reach of food tech aggregators has grown six times from 2017 to 2019," the report said.
At the same time, consumers are spending more than double the time to explore and order online, from 32 minutes per month in 2017 to 72 minutes per month in 2019, it added.
Overall, online spending in India is expected to grow at 25% over the next five years to cross $130 billion.
The study cited peer or network advocacy (52%) as a primary trigger behind customers ordering food online food for the first time, followed by marketing and discounts (19%).
"The food tech industry is nascent but one of the fastest growing in the country. It has now made its presence in more than 500 cities in India and with consumer confidence growing, there are new opportunities for the players to win with the consumer in an evolving market," Roma Datta Chobey, director of travel, BFSI, classifieds, telco and payments, Google India, said.
The report said that 20% of the respondents stated a lack of trust in the role of food apps, high delivery charges (18%), food quality concerns (13%) and lack of customisation (10%) as reasons that hinder the adoption of online food ordering via apps.
"... There is now a greater demand for healthy, home-cooked meals, leading to (the) emergence of new business models like cloud kitchens and meal subscriptions," Abheek Singhi, senior partner and managing director at BCG, said.