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Combined factors driving growth of ready-to-eat food product market

12 Aug 2019

Ready-to-eat or RTE food products, as the name suggests refer to that form of animal or plant derived food or a combination thereof that can be offered to the customer after being pre-washed, pre-cooked, processed, frozen and hence does not require elaborate processing of the food by the end-consumer before consumption; thus saving time and energy of the consumers.

Currently, RTE foods, also synonymously called ready meals, packed foods or instant ready meals in some places, is the largest segment globally in the overall conventional and non-conventional food industry owing to higher consumer acceptance of such foods. While the global RTE foods market is expected to grow at a 21.8% CAGR during the period 2018-2023, the Indian RTE food market stood at $261 million in 2017 and is projected to grow at a CAGR of over 16% during the same period 2018-2023 to reach $647 million by 2023 as reported by Research & Markets, Ireland, in their various reports published on the RTE foods category.

The concept of Indian RTE foods was probably introduced as early as 1995 by a Pune-based company named Tasty Bite. The products launched initially did not get much popularity among the contemporary Indian consumers. However, in recent years, improving consumer lifestyle, rapid urbanisation, growth in tourism and foreign travel leading to greater exposure to different cultures, cuisines and food habits, changing food consumption behaviour among consumers, increased willingness to spend on such food due to higher disposable income and the lack of time to cook at home are increasing demand for ‘on-the-go’ convenience foods, thereby fueling the RTE food market growth.

Meanwhile, rising health-consciousness among consumers and sometimes poor sensory and organoleptic properties of RTE foods could restrain the growth of the RTE food market. Innovations in product offerings as well as the use of organic foods and functional ingredients, convenience, preference for single serving frozen products, advancement in areas of packaging technology and sustainable packaging as well as aggressive marketing & promotional strategies are expected to provide future growth opportunities in the sector.

Some of the major players currently operating in the Indian RTE food market include McCain Foods India Pvt. Ltd., Sumeru Frozen Foods Ltd, MTR Foods Pvt. Ltd, ADF Foods Ltd, Gits Food Products Pvt. Ltd., Haldiram Snacks Pvt. Ltd, ITC Ltd, Bikanervala Foods Pvt. Ltd, Godrej Tyson Foods Ltd, Al Kabeer Exports Pvt. Ltd, and Venky’s India Pvt. Ltd.

Listed below are some of the key growth factors driving the RTE foods business (opportunities) and some of the key threats (challenges) from the Indian context.

Factors driving RTE Foods Business (Opportunities)

The average income level of Indians has been increasing in recent years. In addition to this, nowadays in many families both men and women work, resulting in the number of people earning in a given family increasing; which in turn has raised the per capita spending capacity. On the flip side, both spouses working and often having challenging career demands has resulted in lack of time for elaborate cooking procedures at home. These combined factors of high disposable income coupled with lack of time are increasing the average consumption of RTE food products in India.

As per the United Nations (UN) World Urbanization Prospects 2018 report, the rate of urbanisation has increased to a considerable level since the 2009 census. The fast-changing urban lifestyle as well as the new trend of living away from home for studying and employment purposes have gained popularity in recent years and has eventually resulted in a growing demand for RTE food in India. Many of the marketing communications are centred around the possibility of still having the taste of home-cooked food while staying away from home through RTE foods.

Food processing technology has developed significantly in recent years and has become a boon with regards to mass production of RTE foods on a commercial scale.

Many Indian companies are also now investing much more in terms of budgets and manpower towards food related R&D. This is resulting in a variety of products reaching the Indian consumer.

Key Threats to Future Growth (Challenges)

The Indian food processing market still faces serious problem due to the lack of effective food product distribution system. As a result, the RTE foods business is a phenomenon which is by and large still majorly restricted to metros and semi-metros for the present. While the infrastructure is definitely improving, further penetration into other areas would need significant strides in the current food product distribution system.  

A large portion of the Indian population still prefers home-cooked food (ghar kha khaana). Besides, many among the elderly population of the country still have a negative perception about the nutritional value and freshness of packaged RTE products. Such mindsets coupled with increased health concern among Indians tends to affect the consumer behaviour adversely. Proper consumer education is very important in this scenario.

With RTE foods, storage and handling become major issues especially in regions where there are frequent powercuts, load shedding or shortage of power supply which necessitates the need for good backup power supply and development of foods that do not need refrigerated storage.

India is a vast country with diverse tastes and food habits which vary widely across regions. In this scenario, it becomes often difficult to have products with pan-India preference. There is need to develop a variety of offerings to suit different tastes; and getting the right taste, flavour, organoleptic attributes often poses one of the most difficult challenge in this category.

A good food, no matter how tasty it is, tends to become boring on repeated consumption. With home cooked food this problem is sometimes solved by trying out new recipes. Similarly, with eating out, one can try out different restaurants. However, on a commercial scale, this can pose to be a significant challenge and companies seeking to become leaders in the RTE foods business would need to have innovative means of introducing new varieties, flavours and continuous excitement in the minds of the consumer to keep coming back for their products.

Preservation in RTE foods is yet another important area to be dealt with effectively. On the one hand, being processed food, there is need for better preservation since the consumer is likely to consume it directly or with minimal processing. On the other hand, there is a growing concern about the use of preservatives and the desire for preservative-free options.

Most RTE foods, barring a few, require heating prior to consumption. This is still an activity that needs to be done by the consumer. Further, if the pack is not amenable to heating directly, then the food would need to be transferred to a separate vessel for heating prior to consumption. This means additional washing and cleaning in the kitchen. As opposed to this, the coming in of Zomato, Food Panda, Swiggy, Uber Eats and so on in the food distribution business has made it much easier to get fresh, hot food from restaurants of one’s choice thus eliminating the issues of monotony in taste and the need to heat the food prior to consuming. This can continue to present a challenge to the concept of RTE foods on commercial scale.

Most RTE foods still use a lot of plastic since this is still the most effective packaging option available for this category. However, the growing concern over plastic and its impact on the environment would mean that the industry would need to proactively look at more environment-friendly options that can effectively protect RTE foods in order to avoid future surprises arising from governmental policy decisions while also satisfying the discerning consumer who wants to do his or her bit towards saving the environment.

In conclusion, The RTE food industry in India is here to stay and its significant growth in the years to come as well as the establishment of market leaders in this category would largely depend on their ability to leverage the opportunities mentioned above while effectively addressing the challenges mentioned herein towards a sustainable business.

(The author is CMD, EnvisBE Solutions Pvt. Ltd. He can be contacted at

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