Pandemic-induced acceleration in consumption of bakery items has attracted food majors to venture into the "sweet and convenient" sub-category of packaged cake segment.
At present, the industry estimates the sub-segment's revenue generation capacity of over Rs 2,500 crore per annum.
In the recent past, major food segment players such as Mondelez-owned Cadbury, ITC Sunfeast, and others have entered into this niche category.
Accordingly, market observers cited food safety, in-house consumption and differentiated product offerings as the prime factors for the over 20 per cent annum revenue growth of the sub-segment.
"The current pandemic has led to some profound shifts in buying patterns and consumer preferences," said Madhur Singhal, Practice Leader - Consumer and Retail, Praxis Global Alliance.
"Cakes also produce a higher price realisation per unit of raw material consumed. Therefore, it is not surprising that packaged food brands are looking at doubling down on this product category," he added.
A case in point is the ITC Sunfeast, which had forayed into the cake segment in 2018.
"Within two years after leading category growth in the layered cakes segment, with a 22 per cent market share, Sunfeast decided to expand its cakes portfolio and consolidate it under a new sub-brand 'Sunfeast Caker', which we have just launched," said Ali Harris Shere, Chief Operating Officer, Biscuits & Cakes Cluster, Foods Division, ITC.
"The cake category in India has been growing at a very promising pace. Given that it is a large category, and with our experienced play in the biscuits segment, we believe it is the right time to expand our foothold in the segment."
According to Pinakiranjan Mishra, Partner and National Leader, Consumer Products and Retail, EY India: "The bakery industry in India is driven by changing customer preferences and lifestyles. There is higher demand for healthier products and alternatives post Covid-19 as bakery products are now frequently consumed daily as compared with being a treat."
"The outlook for the Indian bakery industry seems quite optimistic, with the projected market value likely to surpass $12 billion by 2024, growing at a CAGR of 9.3 per cent between 2019 and 2024."