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Food sector poised to be a Rs-63 lakh crore market by FY25, says Edelweiss report

The report expects the overall Foods & Beverages segment to clock approximately 12 per cent CAGR to reach Rs 63 lakh crore by 2024/25 from Rs 30 lakh crore in FY2017/18.

By Ajita Shashidhar  
Friday, October 18, 2019

Despite the economic slowdown adversely impacting the growth of the food majors, they have registered a growth rate of 9.1 per cent between 2015/16 and 2018/19 viz-a-viz the non-food FMCG companies that have grown at 5.9 per cent. Going forward, a recent Edelweiss report expects the food business of listed FMCG companies to post a 13 per cent compound annual growth rate (CAGR) as opposed to a 10 per cent CAGR growth of the non-foods businesses over the next four years.

The report expects the overall Foods & Beverages segment to clock approximately 12 per cent CAGR to reach Rs 63 lakh crores by 2024/25 from Rs 30 lakh crores in FY2017/18.

Also Read: World Food Day: Are you malnourished? Quite possibly

The fastest growing categories that will significantly contribute to the growth of the food sector are packaged foods, staples and milk & derivatives. The packaged foods segment is estimated to jump to Rs 1,63,800 crores from the current Rs 1,03,800 crores, clocking a 9.6 per cent CAGR growth over the next five years. The staples segment is expected to grow to Rs 1,65,800 crores from the Rs 1,07,800 crores, a 9 per cent CAGR growth over five years. The milk & derivatives segment is expected to rise to Rs 1,71,900 crores from the current Rs 1,05,000 crores, clocking a 10.4 per cent CAGR over the next five years, while the beverages segment is expected to reach Rs 1,22,600 crores from the current Rs 73,400 crores, a 10.8 per cent CAGR growth.

With consumers increasingly looking at eating healthy, the Edelweiss Report believes the over-arching theme will be, "Eat Better, Live Better and Feel Better". The traditional drivers of taste, price and convenience are moving towards health & wellness, social impact and experience. Consumers today are looking for packaged foods that undergo minimal processing and are deemed healthy. Social trends with deepening internet and media penetration are propelling consumers to try new cuisines, driving demand for global flavours. "Some of the key product segments that will evolve based on the mega trends include ready-to-eat (RTE) & ready-to-drink (RTD) segments, fortified foods & healthy beverages, intelligent packaging, ethnic & global tastes, among others. Eventually, we envisage tremendous growth prospects for packaged foods-not only in value formats, but also premium as well as offerings more towards the health & wellness segment," says the report.

Food constitutes over 30 per cent of a household's spends in India.

Also Read: DHFL stock at 10-year low after Edelweiss moves Bombay HC to recover Rs 70 cr dues

Also Read: FMCG rural growth lowest in 7 years; poor farm income pulls down retail sales: report

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