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Investment 26 Jul 2017

“How Expansion Helps in Growing”

The country’s nominal GDP is expected to reach USD 3.6 trillion by 2021 from USD 2.3 trillion in 2016. India’s private final consumption expenditure accounts for 60 per cent of the total GDP and is projected to reach USD 2.4 trillion by 2021, surpassing th...

By Charu Sharma Feature Writer

Indian economy is increasingly gaining importance at the global stage and food service sector plays a great role in this. The food industry, which is currently valued at US$ 39.71 billion, is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11 per cent to US$ 65.4 billion by 2018. Food and grocery account for around 31 per cent of India’s consumption basket. The country’s nominal GDP is expected to reach USD 3.6 trillion by 2021 from USD 2.3 trillion in 2016. India’s private final consumption expenditure accounts for 60 per cent of the total GDP and is projected to reach USD 2.4 trillion by 2021, surpassing that of developed economies like U.K, France and Italy.

The Indian food processing industry accounts for 32 per cent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth according to a report by NRAI.

It contributes around 14 per cent of manufacturing Gross Domestic Product (GDP), 13 per cent of India’s exports and six per cent of total industrial investment. Indian food service industry is expected to reach US$ 78 billion by 2018.The Indian gourmet food market is currently valued at US$ 1.3 billion and is growing at a Compound Annual Growth Rate (CAGR) of 20 per cent. India's organic food market is expected to increase by three times by 2020.

India is a foodie country and may be this is a reason that many food brands including the global brands are coming to India. They are innovating different things or even expanding the brands to stand out of the crowd. For example, Cafe’ chain, Chocolate Room looks to raise INR 100 crore to fuel expansion.

"We are looking at raising Rs 100 crore to fund our expansion. We will also use funds in brand marketing. We have already begun talks to raise funds", says Chaitanya Kumar, Co-founder & CMD, The Chocolate Room adding that the Chocolate Room, which reported turnover of INR 100 crore in the previous fiscal, is eyeing up to Rs 300 crore by fiscal 2020." The company is also planning to expand outside India using franchise route. They are looking to raise Rs 100 crore from venture capitalists this year as it eyes doubling its footprint to 500 outlets by 2020. The company is also planning to open stores outside India by next year through franchise route.

We have another example as well, Bengaluru-based food and grocery wholesale marketplace, Jumbotail, has raised $8.5 million in series-A funding led by Kalaari Capital and Nexus Venture Partners. Nexus Venture Partners had earlier invested $2 million in the company.

"About 98% of India’s food and grocery consumption is via kirana stores. We are excited by Jumbotail’s ability to eliminate information asymmetry, aggregate previously unavailable demand-and-supply data, and significantly improve economic outcomes for manufacturers, brands, financial institutions and kirana owners", says Bala Srinivasa, Partner, Kalaari Capital. The company plans to utilise the funds for building technologies and enhance operational capabilities.

Foom, a Bangalore-based startup for drinks has also raised INR 30 lakh in seed funding from a Delhi-based investor. They are planning to invest INR 20 lakh from the funds raised for its subscription-based app.

"We are planning to raise the next round of funds in the next six months and utilise it to expand our operation to all major cities by the end of 2019", adds Lokesh Bevara, Founder & CEO, Foom. The company competes with the likes of Mumbai-based counterparts Raw Pressery, Juicifix and JusDivine, and Delhi-based Antidote.

It shows clearly that investing is the new hype and could raise business in a great manner.

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