The foodtech industry is driven by rapid digitization, smartphone and internet penetration and consumer demands. The food delivering and marketplace segments are dominating the foodtech industry in India. Though the domestic foodtech industry is at its nascent stage, still it is showing great promises in the coming years. The numbers of foodtech startups are rising in India catering to the demands of the consumers. Around the world as well, the technological advances are creating milestones in the expanding foodtech industry.
The future of food production, engineering, manufacturing and delivering are looking very different and distinct. The penetration of technological advances and disruptive innovation has been prominent. The Indian innovation ecosystem is now booming with around 4500 startups and almost 100 foodtech startups. These were nonexistent a few years ago. The expanding middle class, increasing smartphone penetration, convenient accessibility of internet facilities, and increasing numbers of online users are some of the primary growth drivers of the burgeoning market. The market is now endowed with certain serious assets that can attract profitable business investments and developments of startups. It will not be wrong to say that the Future of Foodtech has certainly arrived in India.
Between 2011 and 2018, Indian foodtech sector has received $10.8 billion, which is much higher than the $688 million in France. The domestic foodtech sector has witnessed an increase in investments, from $288 million in 2016 to $4.8 billion in 2017. Even though the foodtech sector is at a nascent stage, still it shows great promises. India is accounted for four major players in the sector, Zomato, Big Basket, Swiggy and Flipkart, which mirrors 93% of the global investments of India. The $2.3 billion invested in the Indian foodtech sector has made the country hold the second position in the Asian market after China with a global investment share of 16%. With the majority of foodtech startups cropping up in Bangalore, the country is progressing at a commendable steady pace.
Booming Online Platforms
The main players in the delivery startup ecosystem are Swiggy, Zomato and Faasos dominating the restaurant delivery. Flipkart, Big Basket, Licious work for the marketplaces. Chaayos and Chai point serve chai tea delivery, Milkbasket specializing in the delivery of eggs, bread, milk and juices. In the FoodScience sector, Bira 91 specializes in flavoured beers, Paperboat in natural fruit drinks, and ID Fresh Foods in manufacturing batter and ready to eat foods with natural ingredients. In the Agtech sector, Ninjacart dominates the agricultural marketplace.
As reported by Digital Food Lab, “2017 was a prolific year for India thanks to the $3.9B raised by Flipkart (in 3 different deals), the biggest Indian e-commerce platform. In 2018, Swiggy raised $1B from the South African Venture Capital Naspers. 97% of the Indian investments between 2011 and 2018 have been made in the delivery sector. 74% in the marketplace sector (Flipkart raised $7.1B on the $10.8B) and 30% in the restaurant delivery sector (Swiggy raised $1.5B on the $10.8B).”
Technology in Foodtech
Besides India, the rest of the world is witnessing a spike in the rise and developments of the foodtech sector. Several disciplines are being incorporated in the singular process of food production. The adoption of technological advances like 3-D printing, lab-grown meat, vertical farming, Blockchain, cellular culturing, and several other tools can reform the traditional models of food production and manufacturing.
The reputed institute TNO, headquartered in Hague, Netherlands is developing techniques for 3-D printing of food. This solution will offer extensive possibilities for determining the shape, texture, composition and taste of the final food product.
One of the major concerns of the food manufacturers around the world is how to expand the shelf life of the food, without compromising with its taste and quality. This has been an ever-existent problem since time immemorial with certain traditional solutions like curing with salt, fermentation, etc. Modern-day technologies have come up with High-Pressure Processing (HPP) technique, which is a cold pasteurization method. In this technique, the food is sealed into a high isostatic pressure environment packaging, which ranges between 300-600 MPa. The combination of low temperature and high temperature inactivates bacteria. Thus preserving the original quality, taste and texture of the food. Another positive impact of the HHP is this whole process is devoid of any chemical preservatives.
Advanced Operations of Foodtech
Blockchain technology is known for its potential application in tracing the agri-food supply chain. This technology can make every transaction in agricultural supply chain transparent, traceable and verified without any third-party oversight. Giants like Wal-Mart, Nestle, and Unilever etc have already started working in Blockchain technology in collaborations with IBM.
As published by Forbes in a report, “During a pilot program conducted with Walmart, testing found that by applying blockchain to trace food cut the time it took to trace a package of mangoes from the farm to the store to just two seconds – from days or weeks. And, highlighting matters just today over 100,000 mangoes from a Queensland supplier in northern Australia were recalled by Biosecurity SA after fruit fly larvae were discovered in mango in the Adelaide foothills.”
All the technological advances taking place in the foodtech industry target the quality of the food and the customers’ preferences. Several startups have cropped up in recent years, not only food delivery aggregators but also marketplace centred. Rapid digitization and steady growth of consumption have cushioned the food tech industry to grow six times over the last couple of years. As opined by Boston Consulting Global (BCG), “Overall online spending in India is rising rapidly and expected to grow at 25% over the next five years to reach over $130 billion.” The average time spent on online food apps has increased from 32 minutes in 2017 to 72 minutes in 2019 per month. The report also added, “Higher-order frequency though offset by lower average order value.”
Growing Foodtech Startups
Apart from the food delivering apps, which can bring your favourite meals at your doorstep, the Patna based startup RailRestro has started venturing on a bit different land since 2015. In collaboration with IRCTC, RailRestro helps the users to get their meals delivered on the train stations. The user needs to give the train information and PNR number, and the meals will be delivered to him on time. The company is now located in more than 800 cities and 400 railway stations dotted across the country.
The growth of foodtech industry in India is driven by:
- higher consumption rates in the evolving foodtech market,
- maturing dynamics on the supply side,
- expanding in smaller cities,
- an expanding network of restaurants and foodtech platforms,
- the increasing frequency of orders and
- favourable consumer dispositions
- The foodtech sector is estimated to grow at CAGR of 25-30% by 2022. It is reported by BCG in the study, titled “Demystifying the Online Food Consumer”.
Conclusion
Foodtech industries have incorporated the disruptive innovation and escalated customer experience. Nowadays, customers can select the dishes and restaurants on the basis of reviews. The online reviews give a glimpse of first-hand experiences to the customers, on the basis of which they can make their choice. The foodtech industry is exploring the social media platforms for reaching the vast expand of users within a short period of time.
In the Hollywood movie Chef, which deals with a food truck business, the protagonist is seen becoming prosperous with the help of the social media platforms. Just like all other industries, foodtech industry is also affected at large by the innovative technology.
In a developing country like India, where still now the majority of the population is hailing from the rural sector, availability of foods becomes a major concern among the masses. Eradicating hunger from developing nations like India and several other parts of the world must be the penultimate goal of the global foodtech industry.