Supermarkets and retail stores showcase a diverse range of new food products and new categories, reflecting ongoing trends in food delivery, manufacturing and marketing. Rajat K Baisya discusses these trends, particularly the rise of convenient food delivery models, highlighting the success of start-ups targeting busy professionals.
Rise of Convenient Food Delivery Models
Supermarkets and food retail stores are indications of the kind of processed food products that are being produced by food manufacturers and marketers. The retail shelf can be seen full of new products and new categories. We also see various kinds of models of business of processed food nowadays. A recent trend is seen mainly in cosmopolitan cities with large working populations with high disposable income. Enterprising start-ups have been doing successful business by targeting busy office-goers and offering different menus for seven days according to taste and customer preference.
The options would be available from vegetarian, non-vegetarian, vegan, organic and natural products to suggest different choices, and there could be more permutations and combinations that customers can create themselves from attractively designed menu cards and product leaflets with illustrations that are being provided to be ordered online which will be delivered at home when needed. They also can be picked up from retail stores.
There are many conveniences in this. Housewives need not have to think every day about what to cook for lunch and dinner or even snacks. This task is taken care of by the food marketers. Consumers can get a variety of foods, and that makes them happier. Housewives would not be required to cook food at home, which would greatly relieve them. This comes in cardboard boxes arranged in trays for each meal.
I have spoken to people who buy what they call a food kit. They are happy and said not only varieties and taste, but they can have seven different meals from a tray of five meals as the quantity is large enough and it costs less than what it would have cost them in the restaurant. Some of them even said cooking at home will not be less costly. So, there is significant value delivery. They get a food menu with wide options and variations to choose from, costing less or value for money. It also offers great convenience. This model of ready-to-serve food thus is seen doing well.
Ready-to-Serve and Ready-to-Cook Options
In another model, marketers offer only food ingredients and that too the exact quantity with recipe and process for cooking at home to make varieties of dishes for the number of people required. You are only to order a particular item and indicate the number of persons who would be eating that dish. Everything comes as required, and a housewife can serve innovative dishes every day to surprise and delight the family members without even thinking about what to cook for the next meal. For every day and seven days a week, both lunch and dinner menus are taken care of. In this model, housewives also get the satisfaction that they are doing something and adding further value for their loved ones in the family.
Market Segmentation and Consumer Preferences
In one model, you get the ready-to-serve dishes, and in another model, you get the ready-to-cook dishes. There is also no need to go to the market and buy anything. No need to stock anything and store anything. Even disposable food trays to serve foods are also provided if required.
Everything is for convenience. People now want to do and engage in other activities even if they are not working. They want to pursue whatever interests them and not get confined to traditional, monotonous, everyday cooking rituals. Food marketers made use of this consumer preference in a business model. The vendors are also actually aggregators. They source these items and dishes from a central kitchen like what the aviation industry supplies to passengers.
Success Stories in Food Delivery Industry
This online model caters to various choices, needs and customer segments. They are thriving alongside the typical home food suppliers, which are run and managed by enterprising housewives, and that is limited to a specific locality where physical delivery can be taken care of. Whereas, the online food delivery players operating on a national or even global scale, as discussed, are serving office goers, young couples, both working and small families with Western style habits and health consciousness.
These sections of society have literally stopped cooking at home. These models are different, but they can be clubbed under the food delivery industry. Earlier, we saw that many food delivery ventures closed down. Few succeeded, and few are still struggling. This new generation of food delivery players really upgraded the category with innovation.
Albert Heijn is a very successful food retail chain selling their own store-label brands in ready-to-serve category.
HelloFresh is the largest meal kit provider based on the theme -cooking now made so easy. It has operations all over Europe and the United States, as well as in other countries, including the UK, New Zealand, Canada, and Australia. Its annualized revenue is now USD 6 billion. Headquartered in Berlin, Germany HelloFresh has 7.5 million users. They run a subscription model but also cater to individual orders.
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Another trend that I see is changing the breakfast menu and style. Muesli seems to be doing better than typical cornflakes. We already have many types of flakes, including wheat, corn, and now multi-grain flakes. There are many types of bread, including multi-grain bread, which is slightly costlier.
Muesli is also called by different names in different countries. I have seen people take different types of breakfast on different dates, and for everything, there are ready-to-cook, semi-finished basic ingredients available to make the product quickly at home.
Cow milk, or typical dairy milk, is now almost disappearing. Traditional cow milk is consumed mainly as milk products, including sweetmeats, cheese, yoghurt, and dahi. Fresh milk consumption has already switched to all kinds of vegetable milk, which tastes very close to cow milk. Earlier, we saw full cream, toned, double-toned, fresh, pasteurized, sterilized, and long-life milk. But now, fresh milk consumption is mostly vegetable milk. Some of these products, like, say, oats or almond milk, taste so good that you will not miss cow milk. If the stocking of the milk on retail shelves is any indication, we can conclude that over 70% of fresh milk consumed now is not typical dairy milk abroad.
Challenges and Opportunities in Indian Food Market
However, this trend is still not visible in India, and the bulk of the pasteurized fresh milk is buffalo milk in India. But the vegetable milk is slowly growing. The varieties that are available in the Indian market are mostly imported or made locally in limited quantities by small food processors. The cheese market in India has not grown that way, and as such, we don’t have good cheese not to speak of a variety of cheese. You get those in select stores which are imported into India.
Even though India is the world’s largest milk producer, milk products are still limited to a select few. We don’t even have good-quality Greek yogurt. We have set yoghurt, but not Greek yoghurt, that you get from high-fat content cow milk. It has an excellent creamy mouthfeel and taste as such, made from full cream milk. For good quality cheese production, we need cow milk. In India, the bulk of the milk is buffalo milk.
Another trend is also being witnessed, which is that there are numerous brands and local products made by small companies. Still, the quality is good and comparable to the best available in the country. Small processors are able to make good presentations and merchandise their product offerings to get good shelf appeal.
Conclusion
In India, we have such small processors and aggregators operating in metro cities like Delhi, Mumbai and Bangalore, selling salads, office meals and ready-to-serve meals in packaged form following food delivery models. Many failed in the traditional food delivery business and have withdrawn from the market. However, another set of players has introduced newer models and shown remarkable success.
*The author is the chairman of Strategic Consulting Group and served as Professor and Head of the Department of Management Studies, IIT Delhi, India.
