Cracking India’s F&B market: Strategic route-to-market planning

India’s food and beverage market is on fire, growing faster than ever! Valued at US$332 billion in 2023, it’s set to more than double, reaching over US$691 billion by 2030.

What’s fueling this massive growth? For starters, more people are joining the workforce, bringing in higher disposable incomes and embracing new, fast-paced lifestyles. In urban areas, the hustle is real, with busy schedules leaving little time for home-cooked meals and creating a booming demand for convenience. Plus, with increased international travel, Indians are eager to explore new flavors and trends, adding more spice to their food choices, literally and figuratively.

This shift has opened up a huge appetite for premium, aspirational brands, and global players are lining up to fill the gap. But as enticing as the market is, India’s F&B sector is famously tricky to navigate.

That’s why we turned to GourmetPro expert Praveen Dhawan for some of that insider scoop. With over 15 years of experience in the Indian retail industry and international trade, Praveen is a supply chain consultant and channel strategist who’s seen it all. He’s worked across India, Europe, and Africa, specializing in merchandising, category management, and strategic sourcing.

In our chat, Praveen shared his expert tips on cracking India’s fragmented distribution system, tackling logistical challenges, and making the most of the country’s booming economy and young, adventurous consumer base. Keep reading to discover his game-changing insights!

GourmetPro: What are the key factors driving the growth of India’s F&B sector?

Praveen: Several factors are fueling India’s F&B market growth, but the key ones are:

• A growing economy: India’s economy is one of the fastest-growing globally, with an annual growth rate of around 7%. This has led to rising disposable incomes and improved purchasing power, allowing consumers to upgrade their food choices.

• A young population: With 65% of the population under 35 years, India is one of the youngest large markets in the world. Younger consumers are more open to experimenting with new products, driving demand for a broader variety of F&B offerings.

• Demand for quality: As incomes rise, Indian consumers are increasingly focusing on the quality of their diets. This includes a shift towards protein-rich, non-vegetarian options, which tend to be more expensive.

The rise of e-commerce and quick commerce platforms offers brands unprecedented opportunities to reach consumers quickly and efficiently. As these services expand, they promote the growth of new markets and make India an attractive destination for both local and international brands.

GP: What are the primary routes to market for F&B products in India that global brands need to know?

Praveen: India’s F&B market offers two main routes to market: own distribution and third-party distribution. The choice between the two depends on whether your product is B2B or B2C, and how it’s positioned.

Own Distribution is best for premium or niche products that need strict quality control, like high-end products requiring temperature-sensitive logistics. For example, luxury brands selling caviar or other delicate products would need to oversee logistics from the point of origin to delivery. This option is ideal for brands that can manage their own warehouses and staff due to the higher margins.

Third-Party Distribution is more common in the mass market for products like snacks and beverages. It allows brands to scale faster by partnering with distributors that have an extensive network. Third-party distributors in India often focus on either specific cities or have pan-India reach, depending on the brand’s target audience.

In the B2B space, third-party distributors focus on supplying premium venues such as five-star hotels and top-tier restaurants. In B2C, distribution gets trickier due to India’s size and diversity. Brands often work with several distributors, each covering different regions, as a distributor excelling in one area may struggle in another.

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GP: How can brands optimize their route-to-market strategy for different regions in India?

Praveen: India’s geographic size is comparable to the European Union, and just as a brand wouldn’t launch across all of the EU at once, it’s not feasible to cover all of India immediately. A one-size-fits-all strategy just does not work. The key therefore is to focus on strategic cities first. India’s major markets include six metro areas – Delhi, Mumbai, Bangalore, Kolkata, Chennai, and Hyderabad – along with another 10 to 15 Tier 1 cities. When planning a pan-India strategy, brands should prioritize these 16 to 20 cities.

Rather than launching across the entire country all at once, brands should take a phased approach. Focus on regions where your product aligns with the local consumer preferences and infrastructure. For instance, a distributor excelling in Gujarat may not have the same success in West Bengal due to differing logistical challenges and consumer behavior. This approach allows brands to establish a solid foothold in key regions before expanding further.

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GP: How does this model differ from those in more developed markets?

Praveen: In more developed markets, the gap between mass-market and premium products is smaller. A single distributor can often handle both, thanks to uniform quality standards and advanced infrastructure. In India, the distinction is much sharper. High-end products like Norwegian salmon are only sold to top-tier restaurants, while mass-market goods like processed cheese are available widely.

Geographically, India is also much more fragmented. Pan-India distributors are rare, as each region has different needs, from infrastructure to consumer behavior. This complexity requires a tailored approach that is far more regionalized compared to developed markets.

GP: How beneficial are joint ventures for global brands entering India?

Praveen: Joint ventures can be incredibly advantageous, especially when entering the food service space. A great example is Starbucks, which partnered with Tata Consumer Products to expand to more than 420 stores across India over the last decade. Without Tata’s local expertise, such growth would have been difficult.

For retail products that can easily be sold through e-commerce or supermarkets, setting up a local office might be sufficient. However, when a product requires deep understanding of consumer behavior or regional nuances, a joint venture is invaluable. A local partner provides insights into regional preferences and can help navigate the complexities of India’s market diversity.

GP: What are the key challenges in distribution and logistics for F&B companies entering the Indian market?

Praveen: The biggest challenge is India’s fragmented infrastructure. There are several logistical hurdles that global F&B companies need to navigate:

• Cold chain logistics: For products that require temperature control, India’s infrastructure is still developing. The availability of reliable, temperature-controlled logistics is limited, and the few providers who offer these services charge a premium. This lack of competition drives up costs, especially for niche or premium products.

• Geographical diversity: India is vast, and what works in one region might not work in another. Major cities like Delhi and Mumbai have better infrastructure, but rural and semi-urban areas often lack facilities, making distribution uneven across regions.

• Import regulations: Importing food products into India involves navigating complex regulations from the Food Safety and Standards Authority of India (FSSAI). Delays in customs clearance due to stringent checks and documentation can slow down market entry.

• Finding reliable distribution partners: India’s distribution ecosystem is fragmented, so brands often need to work with multiple local distributors who specialize in different regions. This adds complexity and requires careful selection of partners to ensure smooth operations.

While there are a number of challenges still to importing to India and distributing within the country, the situation has improved significantly over the past decade. India is becoming more open to global brands coming in, especially since consumers are also showing a lot of interest in new products. Just to highlight this point, India’s Ease of Doing Business rank jumped from 142 in 2014 to 63 in 2019. 

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