Insight – The growing appetite for international food and beverage in India
Australian food businesses will find a warm reception in India, where the
expanding middle-class population, modern retail formats and entry of
international e-commerce platforms are driving growth in the country’s food
and beverage (F&B) retail sector.
According to Boston Consulting Group, India is projected to become the
world’s third largest consumer economy by 2025. The country’s economy grew
6.8% in the 2018–19 fiscal year.
Of India’s 1.3 billion population, it is the nation’s rapidly growing
middle class that presents the Australian F&B industry with the
greatest opportunities. Each year, India’s middle class adds approximately
20 million people to its ranks. Increasing purchasing power, the rise in
double-income, no-kids households, and consumers moving away from a saving
mindset towards living a better quality life are all driving consumption
and consumer aspiration.
F&B sector set for growth
India’s F&B retail business was worth an estimated US$500 billion as of
2018 (up from US$380 billion
in 2017), according to private estimates.
The market share held by modern retail formats (such as convenience stores,
supermarkets and hypermarkets) versus traditional outlets (including market
stalls) is expected to double from 2% currently to 4% by 2020, based on
developments in 2017–18.
Some of the significant sector developments in India in the last year have
included the entry of Lots Group fromThailand, which has opened three
stores in the National Capital Region (NCR), and the commitment by 7Eleven
to open more stores through Future Group. The sector has also witnessed
Spencers Retail’s purchase of the Nature’s Basket chain from Godrej;
Walmart investing in Flipkart; and Amazon India in the advanced stages of
taking a stake in Foodhall (Future Group). Meanwhile, other modern retail
outlets continue with their expansion plans.
The simplification of India’s tax system took a step forward with the 2017
introduction of the Goods and Services Tax (GST), replacing various
indirect taxes. The Indian Government has also reduced the time and cost to
import by implementing the electronic sealing of containers, upgrading port
infrastructure and permitting the electronic submission of supporting
documents with digital signatures in 2018–19. These reforms helped India
jump to 63rd place out of 190 countries (from 77 the previous year) in
The World Bank’s Doing Business 2020
report. In addition, the Food Safety and Standards Authority of India ( FSSAI) has streamlined and
simplified the process for imports.
The number of food categories imported into India is rapidly increasing.
The size of the imported food category has more than tripled in the last 10
years from US$1.7 billion in 2009 to US$5.3 billion in 2018. This is despite a strong domestic food processing sector and high
import tariffs of 30% to 50%.
Globally aware consumers
This growth can be attributed to the rapid increase in exposure of Indian
consumers to international food concepts, brands and cuisines. Between 2012
and 2018, the number of Indians travelling internationally increased from
15 million to 25.85 million (estimated to be 27.92 million in 2019).
The growing diaspora is also making a difference to F&B tastes. There
are around 800,000 Indians living in Australia with extended families in
India and around 100,000 students from India in Australia.
India’s consumer story is being shaped by its 440 million millennials and
390 million generation Z (those born after 2000) 
population. The sheer size of India’s youth combined with improved
education paves the way for sustained growth in purchasing power and makes
India’s consumer story one of the world’s most compelling for the next 20
According to Euromonitor, a conservative estimate of the target market for
high-quality imported foods is approximately 30 million Indians with the
propensity to spend over US$30,000 per year, and another 4.8 million
Indians with annual incomes in excess of US$150,000 (comprising 960,000
households with five members each). This is the target market for
Australia’s premium F&B industry.
In summary, the primary dynamics affecting India’s F&B sector include:
- a young population with growing affluence
a growing middle class that travels internationally and has exposure to
international F&B players entering the market and modernising Indian
growth in imported food categories with dedicated aisle space in modern
implementation of the GST in July 2017 and eased regulations for domestic
and imported foods
better synergies across markets, reduced waste and trimmed costs.
E-commerce opens up opportunities
The growth opportunities in India’s F&B sector have attracted interest
from major Indian corporations that have diversified into retail with
long-term plans for this vertical. Companies such as Tata, Reliance,
Spencers and Bharti have been investing in India’s booming F&B retail
Along with these retailers, a number of international brands such as Metro
and Wal-Mart have entered the market. New retail trade formats such as
supermarkets and hypermarkets are also stepping up to fulfil the needs of
Significantly, it is e-commerce that is driving the biggest change in
Indians’ F&B retail market experience. India has the second highest
number of internet users in the world at 451 million.
According to an Economist article, every second, three more Indians
experience the internet for the first time. By 2030, more than 1 billion
Indians will be online. By the end of 2018, one in two mobiles used in
India was a smartphone, up from one in five in 2016.
E-commerce has given Indians in Tier 2 and Tier 3 cities the ability to
purchase products they could not otherwise buy in India. E-commerce has
helped leapfrog bricks-and-mortar retail, created entrepreneurs across
India and generated commerce and employment.
Australian companies can take advantage of e-commerce and a large user base
to test the waters. Australian companies and brands using e-commerce to
market to Indian consumers include Capilano, Orgran, San Remo, Sanitarium,
SPC, Vegemite and Yes You Can.
In the past few years, several online grocery retail sites have been
launched, including BigBasket and Amazon Grocery, that offer
international foods. Amazon India is looking at F&B contributing US$1
billion to its bottom line by 2020. While online grocery retailing is the
smallest retail channel (representing 5% of total retail grocery sales), it
is the fastest-growing retail segment and the one with the highest
Internet retailing is expected to increase by almost 27% in 2019. At
present, analysts estimate online grocery sales will reach between US$500
million to a little over US$1 billion, with expectations of sales growing
to over US$5 billion in the next three to four years.1 Prospects look good
for the sector as the consumer base is made up of millennials and affluent
consumers who prioritise convenience and quality over price and who are
more open to popular foreign brands.
Amazon first launched its online grocery business in 2016 in Bangalore. As
of 2018, Amazon’s grocery business has expanded to 40 cities. Last year,
Amazon launched a network of 15 specialised fulfilment centres (warehouses)
to increase delivery speeds. These fulfilment centres are equipped with
temperature-controlled zones to store and deliver perishables and frozen
products. However, the sector continues to be limited to metropolitan
The role of media and the ‘Masterchef impact’
For the last two decades, India’s food industry has undergone a sea change.
People in India now like to experiment with different tastes and flavours
but often add some kind of ‘Indianisation’ to suit regional palates.
Burgers, pasta, pizza and many other international cuisines have made their
mark around the country and are often ‘regionalised’ with local flavours. Twenty-four-hour fast-food outlets are open across India
and are exploding in popularity. For example, India is Domino Pizza’s
second largest market outside the US, operating 1,200 stores in 271 cities
(as of 2018). Other popular restaurant cuisines include Italian, Mexican,
Thai, American, Mediterranean, Japanese and Korean.
The ‘cult of celebrity’ has also played a huge role in promoting Australian
F&B to Indian consumers. The best known Australians in India used to be
cricketers or actors, but that was before the advent of cooking shows likeMasterChef Australia. Now heading into the 2019 season of MasterChef India, the show’s three host judges – Gary Mehigan,
George Calombaris and Matt Preston – are huge celebrities in India.
is a highly popular show in India, taking not only cooking but a bit of
Australia into every Indian home. Retail managers report that shoppers
enter stores and look to repeat menus and recipes from shows aired the
previous evening. As a result, retailers have experienced a growth in
demand and increase in expenditure for exotic and niche items. Increased
exposure to foreign foods and the opportunity to consume them is expected
to continue growing India’s F&B sector.
Popular imported F&B categories
The rise of the middle class has brought a cultural shift in attitude
towards health and wellbeing. F&B retailers and producers in these
categories can expect an increase in demand. ‘Healthier’ food – for
example, digestive biscuits, wheat/oat noodles, multigrain flour, heart and
diabetic-control edible oils and fortified milk – are emerging as popular
growth categories. Convenience and on-the-go snacks, including liquid
breakfast drinks, will be another popular category among the middle class.
Popular imported F&B products include:
- Edible oils
Beverages (fruit juices, concentrates, alcoholic beverages and carbonated
Canned and packaged fruit juices
Berries such as cranberries and blueberries
Dry fruits and nuts
Fresh fruits and vegetables
Canned and frozen food
Preserves, jam, jellies and marmalades
Health food products
Pasta and noodles
Soups, syrups and seasonings
Sauces and salad dressings.
Australian F&B businesses interested in exporting to India can contact Austrade for more information.
Please provide your product name and HS code, and Austrade will revert with
a brief ‘Quick Market Assessment’ outlining the potential of your product
in India, competition, tariffs and other recommendations.
 USDA Foreign Agricultural Service, India – Retail sector expansion creates new opportunities for high-value products, July 2019, accessed September 2019.
India – Travel and Tourism, May 2019, accessed September 2019.
 Goldman Sachs,
The Rise of India’s Young Consumers, accessed September 2019.
 The Economic Times, India has second highest number of Internet users after China: Report,
September 2019, accessed September 2019.
The Economist, India Online, 5 March 2016,accessed September 2019.