You are reading Entrepreneur India, an international franchise of Entrepreneur Media. </p><div> <p>With restaurants closed, demand for ready-to-eat (RTE) and ready-to-cook (RTC) categories has soared during pandemic-led lockdowns. The absence of home and chefs prompted consumers to search for options that would save them time in the kitchen. However, with things resuming to normal and restaurants opening, have the RTE and RTC categories lost their charm, or has the food and beverage (F&B) business achieved habit formation in these categories? This is what we explore in this article. <figure class="mx-auto max-w-2xl">
<img src="https://assets.entrepreneur.com/content/3x2/2000/1659621755-roosa-kulju-O594WRcWphI-unsplash.jpg?auto=webp&quality=95&crop=16:9&width=675" width="675" height="379.6875" alt="" class="rounded-lg shadow mx-auto mainheroimage "/> </span> <i class="text-xs text-gray-600 mb-2">Unsplash</i> </figure> <b>Opportunity in a post-pandemic world</b>
According to reports, the ready-to-eat food market in India reached $261 million in 2017 and is expected to grow at a compound annual growth rate of over 16 percent during 2018-2023 to reach $647 million by 2023.
RTE and RTC are two completely different divisions. The former does not involve cooking at all, and the latter gives consumers a certain control over the ingredients, cooking process, etc. Over the past few years, the RTC segment has also shown strong year-over-year growth. According to one report, unfrozen RTC is expected to grow at a faster pace compared to frozen RTC foods and the mix of frozen and non-frozen RTC is expected to grow from 73:27 percent in 2019 to 70:30 percent by 2024.
“RTC categories went up during COVID as people requested a variety of foods to bring the dining experience out of the home. In fact, RTCs were among the few categories that saw an increase in sales during the peak lockdown. However, post-pandemic consumers are focusing more on foods The healthiest and most convenient to prepare. We will continue to see the growth of ready-to-eat/RTC products that are healthier and aligned with consumers’ preferences for sustainable living,” said a Licious spokesperson.
Licious claims that the category has been growing at an astonishing rate for the company and contributes to 20 percent of total revenue.
Speaking about the influx of capital into the sector, Angkor Mittal, co-founder of Inflection Point Ventures said, “Over the past two years, $42.3 million has already been invested in financing businesses that have entered this industry in India alone. It is being eaten in India in expansion due to the increasing demand for fast food, the freshness of the products and their high nutritional content.”
India has more than 400 companies operating in the ready-to-eat market. “Newer companies have seen an investment of over $53.2 million in 2022 alone. And as we know, lifestyles will continue to become busier and more active for most of the working population and this is the primary target group for startups in this sector,” he added.
“While RTC has been around for quite some time in the form of instant noodles, instant soups, frozen foods etc., the demand for products other than snacks – something for main meals/family meals and not frozen – has seen a great deal of increase. It was two years of the pandemic. An inflection point for the RTC sector, in terms of building awareness and acceptance of the category.After the pandemic, we’ve seen that cooking is no longer seen as a chore, it’s an adventure for some, an indulgence, a convenience or a reward for others.So products that make that easier and more joyful, are something Customers test it. They still want to cook at home, but with a little help from RTC products, like Curry Pastries,” said Richa Sharma, co-founder of CurryIt.
Favorable factors and target group
Factors such as rapid urbanization, family nuclearization, and the scarcity of time due to women joining the labor force can be attributed to the growth of these categories. And most dishes are prepared with just one pot, which greatly reduces clean-up and clutter for those who live outside. “Increasing urbanization and increased disposable income for the middle class is contributing to the expected expansion of the market. Ready-to-eat food is becoming more popular among consumers because it can be used to replace a regular diet and has a longer shelf life, making it easier to save for later use,” Mittal said.
“We’ve seen that customers value convenience but don’t want a meal fully cooked out of the package. They prefer cooking but with a little help, preferably something that reduces 80-90 percent of the slicing effort or slicing and getting the recipe right,” Sharma said.
The ideal client groups for RTE and RTC are working professionals, young couples, nuclear families, young adults away from family for study or work, and those traveling abroad. The Indian population residing in other countries has also created an opportunity to export ready-to-use products and ready-to-eat supplies. Moreover, when parents travel to meet their children who live in other counties, they often carry products from these categories.
“Not all people in this target market will be the same, and ready-to-eat and ready-to-cook items are not different because each person is an individual with certain preferences and tastes. Brands must distinguish between the many types of people in their target audience by creating buyer personas, which will That enables them to see customers as real people,” Mittal said.
Capture remote areas and obstacles
Startups claim that second and third tier cities are also seeing faster adoption. They claim that rural areas of India also provide ample opportunity for RTE and RTC companies to expand. “We have seen acceptance of ready-to-eat products and nutritional supplements in two categories such as breakfast, cereal and snacks. But growth has been slow compared to urban areas due to restrictions related to product distribution in small towns and consumer skepticism regarding respectability,” said Ankur Bansal, Co-Founder and Managing Director, BlackSoil:
Companies that have been around for more than a decade now, such as Haldirams and Venky’s, have already established well-established distribution channels in smaller towns. Major FMCG and FMCG conglomerates such as ITC and Amul have also recognized the potential of this sector and introduced newer versions of their existing products to capture the attention of consumers. “Today, social media has also helped the ready-to-eat and RTC categories in gaining popularity, thus increasing the demand for ready-to-eat foods in different cities in India,” Mittal said.
However, there are still some challenges that need to be addressed. “The main challenges businesses face are – skepticism regarding nutritional benefits and product freshness, consumer perception that a ready-to-eat or RTC product will cost more on a per-serving basis, and maintaining product taste and quality due to increased competition.”
Mittal feels that with so many options already on the market, companies in this sector must determine if there is a market for the product or if it is oversaturated. Determine if a similar version of your product is already available. Examine your target market, geographies, and the main ways your product differs from that of the competition, he said.