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Foodservice profile – India

February 2020

Executive summary

India is the second largest country globally with 1.3 billion people of which 62.3% are under 35 years of age. India is one of the fastest growing economies in the world, attaining a gross domestic product (GDP) valued at US$2.7 trillion in 2018.

India is the third largest foodservice market in Asia after China (US$618.7 billion) and Japan (US$274.6 billion) with a sales value of (US$158.5 billion) in 2018.

The foodservice market in India is highly fragmented, with independent restaurant operators (quick service and full service restaurants) accounting for the vast majority of retail sales. Foodservice chains are anticipated to expand faster than independents, partially through adopting elements of localism and authenticity that are traditionally elements inherent to independents' offerings.

In 2018, the total value of India's foodservice was valued at US$158.5 billion. Restaurants are India's largest subsector with value sales of US$78.9 billion in 2018, and a compound annual growth rate (CAGR) of 11.3% from value sales of US$57.3 billion in 2015.

Domino's Pizza Inc. was India's top food service company with value sales of US$413.4 million in 2018, representing a 0.3% of the foodservice market in India.

Note: this report focuses on profit operators rather than cost operators (institutional catering sector: education, healthcare or hospitals).

Consumer profile and trend

India is the second largest populated (aside from China) country globally with 1.3 billion inhabitants of which 62.3% are below the age of 35. India has one of the world's fastest growing economies attaining a GDP valued at US$2.7 trillion in 2018 making India the third largest foodservice market in Asia.

The Indian economy has experienced strong economic growth since 2010 however, in 2017, the economy slowed as a result of the negative impact of the demonetization of high-value currency notes and the goods and service tax (GST). Also, India remains a developing country with high levels of poverty, with more than half of all Indian households earning less than US$10,000 per year. Further, income inequality has a distinct rural-urban split. Urban households are more likely categorized within the more affluent income brackets and are more likely to visit and have access to foodservice outlets. Despite the variances in income and rural-urban locations, there remains significant potential for foodservice operators to deliver to the consumer, especially the growing urban consumer, who present significant opportunities to rapidly increase transaction numbers at prime locations within the various channels of the foodservice industry.Footnote 1 Subsequently, opportunity remains and is crucial for foodservice operators to accommodate those consumers with limited spending power, as evidenced by those living in rural areas.

Growing pressure to succeed both professionally and personally has resulted in consumers with busier lifestyles coupled with less time. Convenience in relation to meal preparation and consumption is increasing in demand. Prepared or ready meals and snacks that replace meals, offered via online ordering and delivery, appeal to the time pressed consumer and offer supply potential to the Canadian exporter.

Since 2018, the economy is recovering supported by growing industrial production, exports, auto sales and investment. Economic growth is expected to continue, despite high inflation, characterized by rapid urbanization and a fast-growing middle class and spending power.Footnote 2 The resulting increase in consumer spending power has benefitted the foodservice industry as consumers increasingly frequent the foodservice market, especially in urban areas, despite the economic challenges of inflation and poor infrastructure which serve to limit the potential growth, and expansion outside of urban centres of the foodservice market.

In addition, India has strengthened its position as a key destination for tourists to visit and is now ranked thirty-fourth globally in terms of the most improved countries in the travel and tourism competitiveness index 2017.Footnote 3 With growing domestic and international tourists, in addition to a recovering economy, the Indian foodservice sector continues to remain a promising market for exporters of products and ingredients and value-added products and ingredients that reflect both domestic and international cuisines.

The overall foodservice market

India is the third largest foodservice market in Asia after China (US$618.7 billion) and Japan (US$274.6 billion) with a sales value of (US$158.5 billion) in 2018. Other top foodservice markets include South Korea (US$87.8 billion) and Indonesia (US$49.5 billion). India's foodservice market had the largest compound annual growth rate (CAGR) registering 10.7% from 2015 to 2018 and is forecast to grow moderately, albeit at a lower rate, of 8.6% from 2019 to 2022. The foodservice market in Japan, in contrast, yielded the lowest CAGR of 1.1% from 2014 to 2018 and is forecast to remain relatively low with a growth rate of only 0.5% from 2019 to 2022.

Sales value of top 5 Asian foodservice markets, in US$ millions, 2015 to 2022
Country 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
China 540,791.6 618,665.7 4.6 649,318.4 746,762.2 4.8
Japan 265,753.5 274,585.7 1.1 276,333.5 280,318.5 0.5
India 116,707.6 158,456.0 10.7 175,076.8 224,380.3 8.6
South Korea 79,137.0 87,783.0 3.5 90,913.8 101,189.0 3.6
Indonesia 43,773.7 49,510.6 4.2 51,349.1 56,730.3 3.4

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

The Indian foodservice profit sector market is expected to increase in sales value growth into the forecasted period. The countries' large, young population in addition to a high urbanization rate, as well as the presence of the domestic and international tourism industry are anticipated to positively impact the Indian foodservice industry.

The foodservice market in India is highly fragmented, with independents accounting for the vast majority of sales. Foodservice chains are anticipated to expand faster than independents, partially through adopting elements of localism and authenticity that are traditionally elements inherent to independents' and local offerings.Footnote 3 Variety in food choices, changing demographics, culture and consumer attitude are leading to an increased willingness to try new and international cuisines, in addition to remaining true to local cuisines. This trend suggests growth prospects exist for Canadian imports for food and value-added products by both large independent operators and international chains.

Eight foodservice subsectors in India have been highlighted and are comprised of the following; restaurants, pubs, clubs and bars, accommodation, leisure, mobile operators, workplace, travel and retail (on-trade only). They are operated by either independent consumer foodservice or chained consumer foodservice providers.

In 2018, the total value of India's foodservice was valued at US$158.5 billion. Restaurants are India's largest subsector with value sales of US$78.9 billion in 2018, and a CAGR of 11.3% from value sales of US$57.3 billion in 2015. The restaurant subsector will continue to have moderate growth of 9.4% in the forecast period of 2019 to 2022 as value sales are expected to reach US$114.9 billion by 2022. The pubs, clubs and bars were India's second largest subsector with values sales of US$48.6 billion in 2018, followed by accommodation (US$9.6 billion), leisure (US$8.5 billion) and mobile operators (US$5.2 billion). Leisure had the largest CAGR of 13.4% generated between 2014 to 2018 and is expected to attain the second largest CAGR of 9.3% in the forecast period. All subsectors reached moderate growth within the 2014 to 2018 period and are expected to maintain these growth levels, albeit at slightly lower rates, in the forecast period.

Sales value of India's foodservices by subsector, in US$ millions, 2015 to 2022
Subsector 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Restaurant 57,253.3 78,999.0 11.3 87,827.5 114,964.0 9.4
Pub, club and bar 36,284.2 48,559.5 10.2 53,327.2 66,957.2 7.9
Accommodation 7,299.4 9,558.7 9.4 10,394.8 12,857.6 7.3
Leisure 5,854.7 8,540.7 13.4 9,716.6 12,702.7 9.3
Mobile operator 3,946.3 5,195.2 9.6 5,653.9 7,020.1 7.5
Workplace 3,828.4 4,822.0 8.0 5,180.7 6,288.2 6.7
Travel 2,071.5 2,564.4 7.4 2,742.9 3,305.6 6.4
Retail 169.8 216.5 8.4 233.2 284.9 6.9
Total 116,707.6 158,456.0 10.7 175,076.8 224,380.3 8.6

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Within the restaurant subsector, Quick Service Restaurants (QSR) (fast food) recorded the largest sales of US$46.5 billion in 2018, followed by full service restaurants (US$23.4 billion). These top two outlets accounted for 88.5% (US$69.9 billion) of the total sales within the restaurant subsector (US$78.9 billion). Growth in both outlets was moderate at a CAGR of 11.6% (QSR) and 12.1% (FSR), respectively from 2015 to 2018 and is forecast to grow at a CAGR of 8.4% and 12.2%, accordingly from 2019 to 2022. All restaurants outlets are expected to grow at lower rates within the forecast period, with the exception of full service restaurants, which are anticipated to maintain consistent growth.

Independent or home-grown QSR operators such as Goli Vada Pav, Fast Trax and Faaso's offer localized and 'authentic Indian' flavours meeting consumer demand. International chain operators are represented within the QSR with brands such as Domino's, McDonald's, KFC and Subway, who are market share leaders within the channel.Footnote 4 Rapid urbanization, relatively low average transaction values, increasing levels of disposable income and the growing influence of Westernization in addition to the emergence and adoption of food delivery companies such as Swiggy, Zomato and Uber Eats are expected to promote growth within this channel. In a recent GlobalData survey, 74% of QSR consumers aim to find the healthiest food or drink options available. The potential for exporters exists with the ability to provide convenient food and drink options that offer a 'healthy indulgence'. In terms of food products, bouillons and stocks, potato chips, and nuts and seeds are forecast to experience the strongest growth from 21.0% in 2017 to 26.1% in 2022, while dried food (led by wheat and grains) remains the most valuable food category. The fastest growing non-alcoholic drink products to 2022 are forecast to be flavoured water, nectars, iced or ready to drink (RTD) coffee drinks and soymilk and soy drinks increasing from16.3% to 27.4% by 2022. Milk, however, remains the core non-alcoholic drink product within this channel due to the Indian QSR's strong reliance on milk as an ingredient in food preparation. Curry, meat substitutes, bread, rice and kebabs represent the highest menu penetration within the QSR channel.

The Indian Full Service Restaurants (FSR) channel is also driven by rapid urbanization and rising levels of disposable incomes.Footnote 5 There are growing consumer trends within this sector to accommodate healthy eating by offering fresh, natural and higher standards of quality products. Family meals and socializing with friends were primary reasons to frequent FSR's. Meat substitutes and vegetable dishes have higher menu penetration rates than meat mains, highlighting the large share of Indian consumers adhering to a vegetarian diet. Staple food products such as rice, flour, wheat and grains are set to experience strong growth while snacking foods, including potato chips and ethnic and traditional snacks are forecast to experience stronger growth by 2022. Alcoholic beverage values remain marginal with still wine and fortified wine forecast to represent just below 50% of alcoholic drinks value by 2022. As with QSR, milk dominates the non-alcoholic drink category due both to its use in the preparation of core vegetarian, cheese and curry based offerings and to the popularity of milk and yogurt based drinks such as Lassi and milky teas. The FSR channel is highly fragmented and dominated by independent operators. Top food chain operators generated only 1.3% of the channel's total sales values in 2017 yet over half of surveyed Indian consumers indicated a preference for QSR and FSR chains, primarily due to the higher standards of quality and hygiene that food chain operators are perceived to offer. In addition, increasing internet penetration and exposure to social media has resulted in better informed consumers. A presence on online media platforms and mobile apps like Uber Eats, Zomato, Dineout, are becoming increasingly important for FSR operators to improve guest engagement and remain market relevant.Footnote 5

India's coffee and tea shops had sales values of US$7.3 billion in 2018, as sales grew at a rate of 8.5% from sales of US$5.7 billion in 2015 and are forecast to attain sales of US$9.6 billion by 2022. Coffee and tea shops are growing as a neutral meeting place to have a snack and socialize, especially among the older consumers. Bread and other baked goods (17%) and sweet treats such as cakes, pies and pastries (16%) comprise the majority of food purchases, with consumers frequently opting for snacks and light meals. Health considerations were less important in coffee and tea shops than in the FSR channel, with just 16% of consumers choosing a specific outlet because it offered healthier food and drink options versus 25% within the FSR channel. Sugars and sweeteners and butter and spreadable fats were the two largest food product categories in 2017 while growth in snacking foods such as potato chips, nuts and seeds, and ethnic and traditional snacks is forecast to 2022. Soymilk, soy drinks and packaged water are expected to attain the fastest growth by 2022 while the popularity of traditional Indian hot drinks such as Chai tea, remains widespread. Coffee and tea shops are dominated by independent operators like Chayoos' and Chai Point's who have specialized in preserving the popularity of Indian products and local, authentic flavours. International operators like Starbucks, have recently entered the Indian market as of 2012, partnering with the conglomerate Tata Group and expanding their operations to over 110 locations, with plans to further grow its network into India's core cities by 2022.Footnote 6

Indian pubs, clubs and bars are the second largest subsector within the foodservice industry with value sales of US$48.6 billion in 2018, and a compound annual growth rate (CAGR) of 10.2% from value sales of US$36.3 billion in 2015. Young, urban consumers with full time work were responsible for the largest share of transactions in 2017. Approximately half of pubs, clubs and bar visits were for a drink-based occasion, with a further 34% of consumers visiting for a light or main meal in 2017. Among those consumers who frequented for a purely drink based occasion, beer (33%), alcoholic cocktails or spirits (28%) and red wine (12%) were the three most popular beverage options. Whiskey held a 46% value share in 2017 while still, fortified and sparkling wines are forecast to attain the strongest growth by 2022. Trends toward premium artisanal craft beers are expected to continue as consumers' disposable incomes and awareness about alcohol options increase. In terms of non-alcoholic drinks, packaged water represented 35.4% of the market share while carbonates, the second largest product, held a 34.1% share in 2017. Within this subsector, pubs and bars had the largest sales valued at US$45.4 billion and market share of 93% in 2018. Growth in the pub and bar sector was 10.1% from 2015 to 2018 and is expected to continue to grow by 7.7% with sales of US$62.2 billion by 2022.

The pubs, clubs and bars subsector is dominated by independent operators as the four leading chain operators generated less than 1.0% of the channel's total revenues in 2017. Sales value growth within this channel are expected to be driven by increases in average transaction prices by operators gradually providing enhanced food offerings in attempts to attract both frequent drinkers and non-drinkers. Subsequently, the strong prevalence of teetotalism, especially amongst women, has the potential to incentivize growth through differentiation and diversification offerings amidst this channel.Footnote 7 This sector will benefit from India's strong economic growth, rapid urbanization and an upwardly mobile youth, who as young, working consumers looking to spend, search for 'exclusivity' in product offerings such as craft beer, and 'vibrant atmospheres' to gather in.Footnote 7

Sales value of India's foodservice by subsector and outlet, in US$ millions,2015 to 2022
Subsector Outlet 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Accommodation Bed and breakfast 92.4 120.2 9.1 130.3 160.6 7.2
Guest house 1,739.4 2,231.7 8.7 2,407.5 2,949.6 7.0
Holiday park 341.1 452.7 9.9 493.9 614.8 7.6
Hostel 120.0 156.8 9.3 170.0 210.0 7.3
Hotel and motel 4,929.7 6,497.5 9.6 7,085.0 8,789.5 7.5
Others 76.8 99.9 9.2 108.1 133.2 7.2
Leisure Entertainment 4,987.1 7,373.8 13.9 8,432.9 11,094.3 9.6
Venue 306.4 414.4 10.6 458.7 576.2 7.9
Visitor attraction 561.3 752.5 10.3 825.0 1,032.2 7.8
Mobile operator Other mobile operators 1,734.0 2,211.0 8.4 2,383.3 2,906.6 6.8
Vans 2,212.3 2,984.2 10.5 3,270.6 4,113.5 7.9
Pub, club and bar Nightclub 1,888.4 2,575.7 10.9 2,870.6 3,927.1 11.0
Private club 430.7 599.4 11.6 663.5 848.9 8.6
Pub and bar 33,965.2 45,384.4 10.1 49,793.0 62,181.2 7.7
Restaurant Coffee/tea shop 5,698.8 7,283.4 8.5 7,850.3 9,590.0 6.9
Full service restaurant 16,621.5 23,385.2 12.1 26,292.9 37,101.0 12.2
Ice cream parlour 1,424.7 1,817.8 8.5 1,957.8 2,387.6 6.8
Quick service restaurant and fast food 33,508.3 46,512.6 11.6 51,726.5 65,885.3 8.4
Retail (on trade) Baker 151.9 193.6 8.4 208.4 254.6 6.9
Convenience store 2.1 2.6 8.1 2.8 3.5 6.8
Other retail 0.1 0.2 8.1 0.2 0.2 6.7
Service station forecourt 2.2 2.9 8.9 3.1 3.8 7.0
Supermarket, hypermarket 13.5 17.3 8.6 18.6 22.8 6.9
Travel Air 496.1 610.5 7.2 651.1 780.4 6.2
Rail 1,573.5 1,951.7 7.4 2,089.5 2,522.5 6.5
Sea 1.8 2.2 5.6 2.3 2.7 6.5
Workplace cafe Government 124.1 155.0 7.7 166.3 200.9 6.5
Industrial 1,632.7 2,030.4 7.5 2,176.8 2,627.6 6.5
Retail, financial 2,071.5 2,636.7 8.4 2,837.6 3,459.7 6.8

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Foodservice: chain franchises versus independent operators

The independent operators dominated the foodservice industry in India with value sales of US$142.3 billion in 2018, an increase in growth rate of 10.6% from sales of US$105.1 billion in 2015. Independent operator sales are forecast to increase by an additional 8.5% with expected sales of US$200.4 billion by 2022. Comparatively, chain operators attained lower sales of US$8.8 billion in 2018, despite a larger growth rate of 15.1% from 2015 to 2018, as more affluent consumers are willing to spend more for well-known brands. Chain operator sales are likewise, anticipated to increase 12.7% to attain sales of US$14.3 billion by 2022.

Within India's foodservice industry, the restaurant subsector dominated sales in both the independent and chain markets for the 2015 to 2022 periods. Independent sales were valued at US$73.7 billion and accounting for 93.3% of the total restaurant sales, while chain restaurant sales were valued at US$5.3 billion in 2018. Chain restaurant operators are expected to experience faster rates of growth (15.3%) in comparison to independent restaurant operators (8.9%) due to the increasing urbanization and growing affluence within India.

The pubs, clubs and bars subsector was the second largest within the independent operator market with sales of US$48.1 billion, while the leisure subsector within the chain franchises was the second largest with sales of US$1.4 billion in 2018. The retail (on-trade) subsector in both chain and independent markets attained the lowest sales with independent operators attaining US$188.6 million and chain franchises US$28.0 million, respectively, in 2018. The growth for all subsectors in both chain franchise and independent operators are moderate in both 2015 to 2022 periods, however, the anticipated growth rate is lower for all subsectors in both markets, in the forecast period.

Retail sales of India's foodservice: chain franchises versus independent operators, in US$ millions, 2015 to 2022
Chain vs Independent Subsector 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Chain Accommodation 814.6 1,077.0 9.8 1,174.9 1,459.9 7.5
Leisure 975.8 1,375.1 12.1 1,541.6 1,981.5 8.7
Mobile operator 400.2 528.0 9.7 577.2 745.6 8.9
Pub, club and bar 347.0 487.1 12.0 540.2 694.0 8.7
Restaurant 3,177.3 5,256.1 18.3 6,149.8 9,431.7 15.3
Retail (on-trade) 21.8 28.0 8.6 30.2 37.0 7.0
Subtotal for chain 5,736.8 8,751.3 15.1 10,013.8 14,349.7 12.7
Independent Accommodation 6,484.8 8,481.7 9.4 9,219.9 11,397.7 7.3
Leisure 4,878.9 7,165.6 13.7 8,175.1 10,721.2 9.5
Mobile operator 3,546.1 4,667.2 9.6 5,076.8 6,274.4 7.3
Pub, club and bar 35,937.2 48,072.4 10.2 52,787.0 66,263.2 7.9
Restaurant 54,076.1 73,742.9 10.9 81,677.7 105,532.3 8.9
Retail (on-trade) 148.0 188.6 8.4 6.9
Subtotal for independent 105,071.0 142,318.3 10.6 157,139.4 200,436.8 8.5
Unspecified Travel 2,071.5 2,564.4 7.4 2,742.9 3,305.6 6.4
Workplace 3,828.4 4,822.0 8.0 5,180.7 6,288.2 6.7
Grand total 116,707.6 158,456.0 10.7 175,076.8 224,380.3 8.6

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Transactions will continue to be the primary drivers of sales value growth, as transaction numbers are forecast to rise at a CAGR of 5.1% between 2017 and 2022. This growth is reflective of the country's growing economy and increasing disposable incomes, especially among the urban middle class.Footnote 8 In terms of transaction highlights, growth in all channels is strong, driven by increasing urbanization and overall population growth, and future growth across most channels is expected to remain consistent. Moreover, transaction growth is, and will continue to be strongest in the leisure channel (8.0%) historically and (7.3%) forecasted, fueled by the growing domestic tourist industry and the consumer's ability to spend more time enjoying themselves.Footnote 9

In India's chain sector, the highest value per transaction in 2018 was in the hotel and motel outlet (US$11.6), followed by the pub and bar outlet (US$7.0). The pub and bar outlet similarly, attained the largest CAGR of 5.3%, while visitor attractions and private member and social clubs recorded the second largest CAGR of 4.3% respectively from 2015 to 2018. The QSR's and fast food restaurants are expected to attain the largest grow rates of 3.5%, and the FSR's are expected to grow 3.4% in the forecast period.

Value per transaction in chained foodservice providers by outlet, in US$ millions, 2015 to 2022
Chain: Subsector Outlet 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Accommodation Holiday park 4.9 5.4 3.4 5.5 5.6 0.6
Hostel 1.2 1.3 3.3 1.3 1.3 0.6
Hotel and motel 10.6 11.6 3.0 11.8 11.9 0.4
Leisure Entertainment 3.2 3.5 3.5 3.7 3.7 0.1
Venue 5.8 6.4 3.7 6.7 6.7 0.8
Visitor attraction 1.3 1.5 4.3 1.5 1.6 1.2
Mobile operator Other mobile operators 0.5 0.5 2.0 0.5 0.5 0.2
Vans 0.6 0.7 2.9 0.7 0.8 2.6
Pub, club and bar Private member and social club 3.6 4.1 4.3 4.2 4.3 0.7
Pub and bar 6.0 7.0 5.3 7.3 7.8 2.3
Restaurant Coffee and tea shop 0.8 0.8 2.3 0.8 0.9 2.2
Full service restaurant 3.9 4.3 3.4 4.4 4.9 3.4
Ice cream parlour 1.0 1.1 4.0 1.1 1.2 1.4
Quick service restaurant and fast food restaurant 1.0 1.1 3.7 1.1 1.2 3.5
Retail Baker 0.7 0.8 2.7 0.8 0.8 0.4
Convenience store 0.6 0.7 2.3 0.7 0.7 0.3
Service station, forecourt 0.7 0.7 1.9 0.7 0.7 0.0
Supermarket/hypermarket 0.9 0.9 2.8 1.0 1.0 0.5

Source: GlobalData, 2019

*CAGR: Compound Annual Growth

In India's independent foodservice outlets, the highest value per transaction in 2018 was in the nightclub outlet (US$12.1), followed by the hotel and motel (US$6.3) and pub and bar (US$5.5) outlets. The pub and bar outlet also recorded the highest CAGR (4.7%), followed by the visitor attraction outlet with a CAGR of 4.3%, and private members club and ice cream parlours with CAGR's of 4.0% respectively, from 2015 to 2018. Full service restaurants are expected to attain a CAGR of 3.8%, while the travel and workplace subsectors are forecast to achieve negative growth ranging from −0.6% to −0.1% from 2019 to 2022.

Value per transaction in independent foodservice operators by outlet, in US$ millions, 2015 to 2022
Independent: Subsector Outlet 2015 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Accommodation Bed and breakfast 1.7 1.9 3.6 2.0 2.1 1.9
Guest house 1.6 1.7 3.2 1.7 1.8 1.0
Holiday park 3.9 4.3 3.4 4.4 4.5 0.6
Hostel 1.1 1.2 3.2 1.2 1.3 0.6
Hotel and motel 5.7 6.3 3.0 6.4 6.4 0.4
Others 1.3 1.4 3.0 1.4 1.4 0.5
Leisure Entertainment 1.6 1.8 3.6 1.9 1.9 0.1
Venue 3.2 3.6 3.7 3.7 3.8 0.8
Visitor attraction 1.3 1.4 4.3 1.5 1.5 1.2
Mobile operator Other mobile operators 0.4 0.5 2.0 0.5 0.5 0.1
Vans 0.6 0.7 2.8 0.7 0.7 0.6
Pub, club and bar Nightclub 10.9 12.1 3.6 12.6 13.8 3.2
Private members club 4.1 4.6 4.0 4.7 4.8 0.6
Pub and bar 4.8 5.5 4.7 5.7 6.1 2.0
Restaurant Coffee and tea shop 0.6 0.7 3.4 0.7 0.7 1.3
Full service restaurant 2.8 3.1 3.7 3.2 3.6 3.8
Ice cream parlour 0.9 1.1 4.0 1.1 1.1 1.9
Quick service restaurant and fast food restaurant 0.7 0.8 3.2 0.8 0.8 0.0
Retail Baker 0.7 0.8 2.6 0.8 0.8 0.5
Convenience store 0.6 0.7 2.3 0.7 0.7 0.3
Other retail 0.7 0.7 2.5 0.8 0.8 0.6
Service station, forecourt 0.7 0.7 1.9 0.7 0.7 0.0
Supermarket/hypermarket 0.9 0.9 2.8 0.9 1.0 0.5
Travel Air 3.6 3.7 1.2 3.7 3.7 −0.1
Rail 0.8 0.8 1.2 0.8 0.8 −0.2
Sea 1.6 1.6 1.2 1.6 1.6 −0.6
Workplace Government department and local authority 0.5 0.5 1.6 0.5 0.5 0.1
Industrial 0.5 0.5 1.2 0.5 0.5 −0.5
Retail, financial and office based 0.6 0.7 1.5 0.7 0.7 −0.2

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Dine-in vs takeaway foodservice channels

India's foodservice channels (dine-in and take-away) had sales valued at US$158.5 billion in 2018. More urban consumers are choosing to eat out rather than cook at home, in addition to changing family dynamics (growing number of single households), creating greater opportunities for the foodservice industry to accommodate the evolving habits and dynamics of the consumer and their families.

Dine-in sales were valued at US$130.9 billion and represented 82.6% of the market in 2018. Take-away sales were valued at US$27.5 billion (collection take-away US$23.8 billion and delivery take-away US$3.7 billion) and represented the remaining market share of 17.4% in 2018. Both dine-in and take-away channels experienced moderate growth, 10.4% and 12.6% from 2015 to 2018 and are expected to increase in the forecast period, albeit at lower rates, of 8.4% and 9.7%, accordingly.

Sales value by channels: dine-in vs takeaway, in US$ millions, 2015 to 2022
Channel Sub-channel 2015 2018 Market share % 2018 CAGR* % 2015-2018 2019 2022 CAGR* % 2019-2022
Dine-in Dine-in 97,444.3 130,958.4 82.6 10.4 144,339.2 183,836.4 8.4
Take-away Collection take-away 16,914.0 23,753.8 15.0 12.0 26,387.8 33,993.4 8.8
Delivery take-away 2,349.3 3,743.8 2.4 16.8 4,349.9 6,550.5 14.6
Total for take-away 19,263.3 27,497.6 17.4 12.6 30,737.6 40,543.9 9.7
Grand total 116,707.6 158,455.9 100.0 10.7 175,076.8 224,380.3 8.6

Source: GlobalData, 2019

*CAGR: Compound Annual Growth Rate

Top 10 foodservice companies in India

Domino's Pizza Inc. was India's top food service company with value sales of US$413.4 million in 2018, representing a 0.3% of the foodservice market in India. Yum! Brands, Inc. was the second largest foodservice company with value sales of US$401.4 million, followed by McDonald's Corporation (US$313.7 million), Coffee Day Enterprises Ltd. (US$271.8 million), and Indian Hotels Company Ltd. (US$166.2 million). India's growing young, urban population, with rising income levels, experimental tastes and growing need for convenience provide opportunity for Canadian food and beverage suppliers to expand into this landscape.

Domino's Pizza is one of India's largest foodservice QSR companies in terms of revenue. Incorporated with Jubilant Foodworks in 1996, Dominos Pizza in India has since expanded its network to 1,117 Domino's Pizza chains across 264 cities. Product innovations such as the Choco Pizza, Burger Pizza and Navrata Pizza, launched specifically to cater to the Indian customer fasting during the Navrati festival, have assisted in securing the company's position within the industry.

Yum! Brands entered the Indian QSR market in 1996 in Bangalore. KFC's first years in India were mired in controversy as the Bangalore locations were protested citing globalization and inequality in India. Only in 2004, did the chain expand outside of Bangalore as the Indian economy grew, to 345 KFC outlets in more than 100 cities.Footnote 10

McDonald's opened its first location in central Delhi in 1996. The QSR chain has expanded to most major cities, located primarily within urban locations such as shopping centers and entertainment areas. The operations are split into north/east operated by Connaught Plaza Restaurants Pvt. and south/west is operated by Westlife Development. McDonald's has collaborated with delivery networks such as Zomato, FoodPanda and Swiggy and has experienced substantial sales addressing a larger base of consumer and growing demand. The company has catered to India's taste and preferences by introducing a varied selection of menu options based on their palates such as the McAloo Tikki burger, Veg Pizza McPuff and the Maharaja Mac.Footnote 11

Top 10 foodservice companies in India by value sales and share, in 2018, in US$ millions
Company US$ million Share %
Domino's Pizza Inc 413.4 0.3
Yum! Brands, Inc. 401.4 0.3
McDonald's Corporation 313.7 0.2
Coffee Day Enterprises Ltd. 271.8 0.2
Indian Hotels Company Ltd. 166.2 0.1
Gujarat Cooperative Milk Marketing Federation Ltd. 126.2 0.1
Doctor's Associates Inc. 112.6 0.1
PVR Ltd. 108.7 0.1
EIH Ltd. 94.3 0.1
Haldiram Foods International Pvt Ltd. 71.3 0.1
Others 138,085.3 97.6
Total 141,452.6 100.0
Source: GlobalData, 2019

Market opportunities for Canadian exporters

India's foodservice sector continues to expand and develop as the number of restaurant diners grow. The growth of household income fueled by the rise of dual-income households are making family vacations and dining out more accessible. With the recent depreciation of the Indian Rupee, various channels like the hotel and restaurant sectors have provided operators with the opportunity to attract both importers and domestic and foreign tourists, encouraging spending within the sector.Footnote 12 While opportunities for importers in the hotel, restaurant and remaining foodservice sectors are improving, the Indian market poses unique challenges due to fluctuating tariffs, certain import restrictions, price sensitivity, the weakening of the rupee, and strong competition from the domestic industry.Footnote 13

In addition, some third-country competitors enjoy a freight and preferential trade advantage, and may subsequently, supply the Indian foodservice industry at lower costs. Canadian exporters are encouraged to work diligently with their Indian counterparts to ensure that India's import requirements are met and that the necessary documentation are provided and recognize that significant commitment and market development efforts are required to both preserve and grow Canadian and Indian trade relations. The prospect remains for Canada to increase its presence and positive brand image within the Indian market and encourage trade growth based upon strong and established trade relations.

Subsequently, the Government of India's safe food initiative (Surakshit Khadya Abhiyan) intends to ensure quality food at all levels of the value chain. This initiative can present additional opportunities for imported products and ingredients; however, effective marketing from both the exporter and importer are essential in establishing the quality and health benefits of the product or ingredient to the consumer.Footnote 14

Basic Market Entry Strategies

According to the report entitled Agriculture, Food and Beverage Sector Profile - India, Canadian companies looking to enter the Indian market should act on the following points before making major investments and other commitments:

Marketing:

Business:

The CanExport SME Program

The CanExport SME program (those small and medium-sized enterprises that were formerly eligible under the AgriMarketing Program) provide(s) direct financial assistance to small and medium-sized businesses (SME's) registered in Canada to help them develop new export opportunities and markets, especially high-growth emerging markets. CanExport provides financial support for a wide range of export marketing activities.

India Import Duty Calculator

To assist Canadian exporters interested in supplying their products to the Indian market, the India Import Duty Calculator is a website maintained by India's Central Board of Indirect Taxes and customs and is updated regularly with all recent notifications and applicable import duties, social welfare charges and GST, according to commodity. Due to recent fluctuations in tariffs, it is suggested that exporters consult the India Import Duty Calculator website to verify potential tariff applications in accordance with some tariff lines.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on Food & Hotel (FHC) China 2019, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-food Canada
ben.berry@canada.ca

Resources

Foodservice profile – India
Global Analysis Report

Prepared by: Laurie Bernardi, International Market Research Analyst

© Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2020).

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