Stay-at-home consumers push ready-to-eat sales; segment may double in 2 yrs

As safety and hygiene gains importance in the Covid-19, ready-to-cook and ready-to-eat segments, be it instant noodles, pasta, snacks, frozen foods, or do-it-yourself meals, are flying off the shelves

Arya Bose has been making frequent trips to her neighbourhood store, but her favourite brand of pasta and frozen foods is simply not available. The proprietor of the outlet has just one response to give her: Stock out.

As safety and hygiene gains importance in the Covid-19 pandemic, ready-to-cook and ready-to-eat segments, be it instant noodles, pasta, snacks, frozen foods, or do-it-yourself meals, are flying off the shelves.

A report by consultancy firm Red Seer says the ready-to-cook category, which is pegged at Rs 2,100 crore in size, will double in about four years. But analysts and food company executives say the market could actually double in two years due to an acceleration in the pace of growth of the category, led by in-home consumption.

Estimates are that from around 20-22 per cent per annum, which was the rate of growth of the category prior to the pandemic, rate of growth is now at over 50 per cent per annum. This trend is expected to continue into the future, well after the crisis is over. “Cooking or eating at home is a top trend due to the Covid-19 pandemic and lockdown,” says Prasun Basu, president, South Asia, Nielsen. “It continues even now in the Unlock phase because people remain largely nervous about eating out and will remain so in the foreseeable future.”

While many people are rediscovering their culinary skills as they remain confined at home, there is still a large proportion of people, say experts, who want convenience when preparing meals.

Ready-to-cook and ready-to-eat food, say analysts, provide the necessary ease and variety in the kitchen. “People are working and learning at home, even as they juggle their day-to-day activities. Time spent in the kitchen therefore can be constrained providing room for convenience foods,” says Kaustubh Pawaskar, associate vice-president, research at brokerage Sharekhan.

Companies such as Godrej Agrovet, which has the Yummiez range of frozen foods, Licious, ITC, MTR, and packaged food companies such as Nestle, Britannia, and Amul have all benefited from this eating-and-cooking-at-home trend.

“Our frozen food products under Yummiez have got excellent consumer response in the past few months. We have gained market share, both in our vegetarian and non-vegetarian product range,” Nadir Godrej, chairman of Godrej Agrovet, said. Analysts say Yummiez’s vegetarian range now has a share of close to 10 per cent from 6.5 per cent earlier. While the non-vegetarian range has a market share of 30 per cent from around 22 per cent earlier.
 

R S Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation, says offtake of food items such as cheese, packaged sweets, and flavoured milk was high through the lockdown months of April-May-June, prompting the company to launch as many 33 products during the period.

The next set of launches from Amul will include froze food and ready-to-eat products to capitalise on in-home consumption, he says.

For frozen foods company Sumeru, based in Bengaluru, domestic business has seen a 10 per cent month-on-month growth, while exports have risen by 100 per cent due to the pandemic.

Meat start-up Licious, on the other hand, has seen a threefold jump in demand for its ready-to-cook range and a twofold rise in demand for its ready-to-eat range, which includes chicken and prawn spreads.

“Given the fact that most of us have already adjusted to the new normal, the behavioural shifts are expected to be long- term and, in all likelihood, permanent,” Licious co-founders Abhay Hanjura and Vivek Gupta said in response to a questionnaire.

The traction in these segments has made meat brand Nandu’s reassess its medium to long term targets as well. The company expects this segment to account for nearly 20 per cent of its revenue as compared with 10 per cent now. “Brands that listen to their consumers and evolve to cater to their needs will be in a position to drive growth in the future,” said Narendra Pasuparthy, founder and CEO, Nandu’s.

Bengaluru-based MTR Foods, which has seen sharp growth in sales of its breakfast and gulab jamun mixes in the past few months, is targeting the Rs 1,000-crore-mark in terms of revenue by the end of this year. 

Azim Premji-funded iD Fresh Foods, meanwhile, has launched products such as Smart Sip Tender Coconut and iD Grated Coconut, in keeping with consumer preference for fresh food.

Analysts expect food companies to be the big gainers of the pandemic and those adapting quickly to changing eating habits will have a loyal base of consumers.