COVID-19 Impact on RTE Food in Food and Beverages Industry | DBMR

Posted by Prakash on May 24th, 2021

COVID-19 Impact on RTE Food in Food and Beverages Industry

The pandemic have impacted the food and beverages industry by pouring in their consumption globally. Whereas, due to the extended lockdown food service sector have been hugely impacted in Americas, Europe and all over world. However this lockdown have been made an opportunity to the ready to eat food owing to their demand because of high shelf life and time saving and attractive availability of products.

Before the pandemic, ready to eat food was considered as a comfort food by the consumers. However, the pandemic have changed the preference with the awareness of functional ingredients in diet and are shifting towards healthy ready to eat food. Hence, this pandemic has influenced on the demand for ready to eat food in positive manner which eventually provides health benefits. Though the COVID-19 lockdown has deprived many of business, it has created an opportunity and chances to grab the growth for few industries.

For instance,

• Gurugram, India based ready-to-cook player claims to have grown 100% month on month during the lockdown. Company has sold over 500 thousand meals since launch from its single kitchen while bootstrapping.
• According to Indian food processing minister Harsimrat Kaur Basal, lockdown has created an new opportunities for food processing sector particularly for RTE food such as frozen food and superfood among others emerging as leading segment.

Raised sales of RTE food is mainly due to lucrative offers in combo packs, festive offers, flat discounts and coupon discounts by retailers. Further rapid urbanization and progressively hectic lifestyles are also driving the growth of the segment. There was a 40% increase in the demand for frozen, packaged and luxury food items. In addition, digitalization’s provides end to end information regarding food processing’s, precautions and safety measures that have been taken during food processing’s. Hence, it impacts on the demand for RTE food.

For instance,

• MTR Foods, one of India's leading ready-to - eat food firms, claims to acquire approximately 20%, amid issues such as supply chain, manufacturing, market access.

A substantial increase in demand can be attributed to people who want a change from daily home-cooked food. Most customers buy fried cheese, pasta, ready to eat kebabs among other food products of this type. Class reported that the demand for their products, such as batters, instant mixes, desserts and frozen snacks, was growing. In retail demand for frozen snacks has risen from the pre-COVID-19 era by 25% to 30%.

For instance,

• Haldiram’s a leading RTE food supplier providing its ready-to-eat products through Flipkart and Amazon and further, company has now tied up with Zomato and Swiggy to market its products.
• According to the Food and Health Survey of the International Food Information Council (IFIC) 2020, 85% of Americans have made changes to the food they eat or how they prepare food due to the Coronavirus pandemic (COVID-19).

Due to the extended lockdown consumers have more dependent on the processed food including different type RTE food and others. Consumers preferably turns to RTE for their comfort, before COVID-19 have fuelled number of food and service sector. Due to the current scenario, consumers are looking for function food products with perspective of immunity booster with mental benefits and relaxation. Creating a new twist to old favorite food could be a good option for RTE manufacturers.

The RTE industry have shown a significant growth in purchasing in the month of March as consumers stocked up their food supplies to be prepared to stay at home as per the government orders. The potential increase in purchasing of the RTE food due the pandemic may have more lasting impact in fiscal year 2020.

The Food & Grocery market in India is the sixth largest in the world. Food & Grocery retail market in India further constitutes almost 65% of the total retail market in India. The industry engages approximately 1.85 million people in around 39,748 registered units with fixed capital of USD 32.75 billion and aggregate output of around USD 158.69 billion. Major industries constituting the Food processing industry are grains, sugar, edible oils, beverages and dairy products.

Growing preference of function RTE food and target of the consumers providing on e-commerce services have led the development and initiative by the manufacturers to enter in RTE market which will target consumers by using various channels and with the balanced quality and price. These steps taken by companies will boost the growth of overall RTE industry with the strong volume sales in 2020.

INITIATIVES

"Demand for frozen snacks in retail has increased by 25% to 30% when compared to the pre-Covid period. The demand is continuing to grow especially for high quality and trusted Indian brands."

• Sachid Madan, Chief Executive – Frozen Fruits and Vegetables, ITC Ltd told BrandWagon Online.

"We have also tied up with a few corporate houses as conventional catering has taken a backseat among rising concerns around health and safety."

• Gaurav Mahajan, head of marketing, Haldiram, noted.

 “Through our study, we have seen that the top three contributing factors to the growth of the RTE segment is time-saving (72%), good taste (62%) and convenient cooking (60%).”

• Jasal Shah, Managing Director & CEO of Velocity MR,

"Ready-to-eat food is a fast emerging and a significant segment, given the changing lifestyles of urban millennials. The current round will help us address this emerging consumer segment via multiple channels."

• Mumbai Mirror

“Fresh ready-to-cook category will see around 35-40% increase in demand. This is on the basis of the estimates from China's recovery story in the post COVID period and also our experience in the last six weeks." 

• P.C. Musthafa, Chief Executive and Co-Founder of iD Fresh.

“Gits Food Products echoes the sentiment. He says that their ready-to-eat meals category such as dal makhani, matar paneer, rajma masala became a hit during lockdown.”

• Sahil Gilani, Director Sales and Marketing

"There are times when they would like to put a meal together from scratch but at other times they would want something quicker, minus the chores. This is where ready-to-eat and ready-to-cook is seeing increasing demand."

• Kanwaljit Singh, Founder of Early-Stage Venture Capital (VC) Firm Fireside Ventures.

“CureFit has launched its ready-to-eat meals to take on rivals such as MTR and expects this category to make up 50% of its food-tech revenues by December-end.”

• HT Digital Streams Limited

“In order to serve quality and hygienic ready-to-eat food (RTE) packets to COVID-19 isolation centres amidst the pandemic, a startup plan is underway in Maharashtra’s Satara district by the Institute of Chemical Technology (ICT) Mumbai, and Trilok Food India, under public-private partnership (PPP) model. The plan would also help in reducing food wastage.”

• Ranjana Sharma, Mumbai

“ITC Ltd had recently partnered direct selling company Amway India for distributing its new immunity beverage to stay relevant and to compete with rivals Dabur, Coca Cola and PepsiCo in the breakfast market this summer. With the partnership, Amway’s micro-entrepreneurs now sell the FMCG conglomerate’s packaged fruit beverage with immunity boosters that was launched under its juice brand B Natural.”

• ITC Limited

CONCLUSION

As the effects of COVID-19 has been seen around the world, the ready to eat consumer product manufacturers have been significantly impacted by raised consumption. With regulatory norms around social distancing across multiple nations, reduced social gatherings was expected to impact the RTE industry to a high extent. However, ready to eat manufacturers have been seeing a stable sale in their products and hence foresee a stability in demand during the coming months of this fiscal year.

There have been vast changes in the consumption pattern among consumers, wherein “at-home” experimentation with new snacking items has been gaining popularity. In addition, many of ready to eat manufacturers are providing lucrative packages to the customer so that they are able to grab the opportunity during this lockdown. Though there has been a stable growth in demand for the purchasing behavior among consumers but it has greatly disrupted the distribution channels for these products, while many of the online platforms are providing time consuming deliveries.

In addition, digitalization’s provides end to end information regarding food processing’s, precautions and safety measures that have been taken during food processing’s. Hence, it impacts on the demand for RTE food. Thus, there is high response to for ready to eat products through e-commerce sites, major manufacturers have been focusing on e-commerce as the primary channel for [product distribution.

Also, owing to the COVID-19 outbreak, there has been an increasing awareness among consumers, on healthy diet, wherein demand for healthy ingredients has been on a rise. Thus, heavy meals and other foods from healthy ingredients have been gaining demand in the global market. Segment of healthy ready to eat in this industry is anticipated to grow substantially during the coming years, with the rising awareness among consumers.

Thus, the impact of pandemic has been neutral for the ready to eat industry across many nations, compared to other food product segments, and hence a stable growth can be observed in the industry during coming years, with many opportunities of new product development for manufacturers.