India Food and Beverage Market Outlook to 2028

India Food and Beverage Market Overview

The India Food and Beverage Market size was valued at USD 334 Bn in 2023. The growth is primarily driven by the increasing disposable income, urbanization, and changing consumer preferences towards convenience and ready-to-eat products. The growing middle-class population, coupled with the expansion of modern retail channels, has further accelerated market growth.

Key players in the market include ITC Limited, Nestl India, Hindustan Unilever, Britannia Industries, and Amul. These companies have established a strong foothold in the market through extensive distribution networks, innovative product offerings, and strong brand equity.

In December 2023, India's food processing industry invested 7,126 crore under the Production Linked Incentive (PLI) scheme, generating sales of 49,825 crore between April and September. This significant investment underscores the industry's commitment to enhancing domestic manufacturing, with 584.30 crore disbursed as incentives for the financial year 2021-22.

The western region of India, particularly Maharashtra, making it the largest contributor to the Indian F&B industry. The regions proximity to key export markets in the Middle East and Africa has further enhanced its position as a leading food processing and distribution center.

India Food and Beverage Market Segmentation

The market is segmented into various factors like product, distribution channel, and region.

By Product: The market is segmented by product into beverages, dairy products, and snacks. In 2023, beverages held the largest market share, by the growing popularity of functional beverages like energy drinks, flavored water, and health-focused drinks. The increasing consumer shift towards healthier beverage options, such as plant-based and low-calorie drinks, has also contributed to the growth of this segment.

By Distribution Channel: The market is segmented by distribution channel into modern trade, traditional trade, and online channels. In 2023, modern trade channels, which include supermarkets and hypermarkets, with the growth of organized retail and the increasing consumer preference for one-stop shopping experiences have significantly contributed to this segments dominance.

By Region: The market is segmented by region into North, South, East, and West. In 2023, the western region emerged as the largest market, due to the regions advanced infrastructure, strong agricultural output, and the presence of major food processing units.

India Food and Beverage Market Competitive Landscape

Company

Establishment Year

Headquarters

ITC Limited

1910

Kolkata, India

Nestl India

1961

Gurugram, India

Hindustan Unilever

1933

Mumbai, India

Britannia Industries

1892

Bengaluru, India

Amul (GCMMF)

1946

Anand, India

Nestle India: Nestl India announced plans to invest INR 4,200 crore(~USD 500 million) by2025to enhance its manufacturing capabilities, which includes setting up a new factory in Odisha. This investment is part of a broader strategy to meet increasing demand and expand production for key products like Maggi, Kit Kat, and Nescaf.

ITC Limited: In August 2023, ITC launched Farmland Potatoes, featuring natural low-sugar and antioxidant variants. These potatoes have sugar content below 2% and fat content below 0.2%, addressing health-conscious consumers' needs. ITC's entry into fresh fruits and vegetables aims to meet the growing demand for safe, nutritious produce in India.

India Food and Beverage Market Analysis

Market Growth Drivers

Rise in Health-Conscious Consumer Behavior: In 2024, the health and wellness food sector in India saw significant growth, driven by rising consumer demand for nutritious and functional foods. The market, valued at INR 2,40,000 crore, is expected to double by 2026. This growth is fueled by increased awareness of diet-related health issues and a shift toward preventive health measures.

Expansion of Organized Retail: The expansion of organized retail in India has been a major growth driver for the F&B sector. In 2024, organized retail channels, including supermarkets and hypermarkets, generated high sales. The growing footprint of these retail channels has improved product accessibility and availability, particularly in urban and semi-urban areas, leading to increased consumer spending on food and beverages.

Investment in Cold Chain Infrastructure: The cold chain infrastructure is crucial for reducing post-harvest losses, enhancing food security, and increasing farmers' incomes. The Government of India has taken several measures to improve cold chain infrastructure, including the Pradhan Mantri Kisan SAMPADA Yojana, which aims to leverage investment of INR 11,095.93 Cr and generate 5,44,432 direct/indirect employment by 2025-26.

Market Challenges

Supply Chain Inefficiencies: Despite advancements, the Indian F&B sector continues to face challenges related to supply chain inefficiencies. In 2024, it was reported that inefficiencies in the supply chain led to an estimated loss due to delays and poor handling of perishable goods. This challenge is particularly acute in rural and semi-urban areas, where infrastructure is still underdeveloped.

Limited Access to Financing for SMEs: Small and medium enterprises (SMEs) in the F&B sector face difficulties in accessing financing, which limits their ability to scale operations or invest in technology. In 2024, it was reported that over 60% of F&B SMEs struggled to secure loans from formal financial institutions, largely due to stringent lending criteria. This lack of access to capital restricts growth and innovation in the sector.

Government Initiatives

National Food Security Mission (NFSM): The NFSM, aimed at increasing agricultural productivity and ensuring food security, saw an allocation of INR 12,500 crore in 2024. This initiative has led to increased production of essential commodities like pulses and cereals, with total production rising to 310 million tonnes in 2024. The programs success in enhancing food availability directly supports the F&B sector by stabilizing raw material supplies.

Agri-Infrastructure Fund: The governments Agri-Infrastructure Fund, launched with a corpus of INR 1,00,000 crore, continues to play a crucial role in developing infrastructure for the F&B sector. In 2024, INR 25,000 crore was disbursed to projects focusing on cold storage, warehousing, and food processing units. This initiative is instrumental in reducing post-harvest losses and enhancing supply chain efficiency, thereby supporting the sectors growth.

India Food and Beverage Market Future Outlook

The future trends in the India food and beverage industry include a rise in demand for functional foods, the expansion of Direct-to-Consumer (D2C) brands, the adoption of plant-based alternatives, and the integration of Artificial Intelligence (AI) in food processing.

Future Market Trends

Increase in Demand for Functional Foods: Over the next five years, the demand for functional foods is expected to grow, driven by increasing health awareness among consumers. By 2028, functional food sales in India are increasing as consumers continue to seek products with added health benefits such as probiotics, vitamins, and minerals. This trend will be supported by innovations in product development and marketing.

Expansion of Direct-to-Consumer (D2C) Brands: The D2C model is expected to witness rapid growth in the Indian F&B market over the next five years. By 2028, it is estimated that D2C brands will contribute to the total F&B sales. This growth will be driven by the increasing penetration of e-commerce, consumer demand for personalized products, and the ability of D2C brands to build direct relationships with customers through online platforms.
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