Foodtech market represents the online food ordering and delivery ecosystem.

Over the years, foodtech

market in India has been growing at a robust pace on account of increasing personal disposable
income, growing internet penetration and rising number of smartphone users. A large base of the
countrys population is getting busier, with lesser time to get involved in household activities or to
indulge in cooking, thus driving the market for foodtech in India. Further, due to improving standard of
living, the country is witnessing a paradigm shift in consumer tastes & preferences, wherein, they are
foregoing conventional food products. Attractive cashback offers and discounts offered by foodtech
companies are also contributing to the growth of India foodtech market.

According to TechSci Research report India Foodtech Market By Operation Type, By Source of
Order, By Payment Method, Competition Forecast and Opportunities, 2011 2021, the foodtech
market in India is projected to grow at a CAGR of over 12% during 2016 - 2021. Over the last couple of
years, the countrys foodtech market has been witnessing huge fund inflows from domestic as well as
foreign investors. On the basis of operation type, the market has been segmented into two categories,
namely, food aggregators and restaurant based. Among these categories, restaurant based segment
dominated the overall market in 2015, and the segment is anticipated to maintain its dominance over
the next five years as well, owing to consumer loyalty and frequent cashbacks/discounts offered by the
companies. In 2015, Cash on Delivery was the most preferred mode of payment among Indian
consumers. Moreover, web based source of ordering dominated the India foodtech market in 2015 as it
offers seamless customer experience in terms of ease of ordering, choosing alternate payment options
and order tracking. India Foodtech Market By Operation Type, By Source of Order, By Payment
Method, Competition Forecast and Opportunities, 2011 2021 discusses the following aspects
related to foodtech market in India:

When industry veterans in the year 2015 debated on whether

hyperlocal will be able to replace ecommerce in India, one
segment that grabbed maximum investor attention was
the FoodTech. The reasons were simple touted to reach $78 Bn
by 2018, growing at 16% YoY, it was creating high demand, looked
promising for higher returns and obviously showed an option for a
profitable exit.
But, as they say all that shines is not glitter. Soon, the sector
became overflowed with me-too startups lacking both
differentiation and innovation. The results were obvious. To date,
out of the 105 FoodTech startups launched in India, only 58 are
active. In past few months, there has been over
37 shutdowns while 9 went off the picture consolidation via
M&A route.

Where on one side startups

like iTiffin, Eazymeals, Zeppery, Zupermeal,Dazo, Spoon
Joy, have to shutdown operations, on the other
side, Tinyowland TastyKhana grew well initially but got
acquired much earlier than expected. The entry and exit of UK
based JustEat was faster than one would order something online.
Even among the biggies, Zomato was forced to shed its
workforce and roll back international expansions, while
Rocket Internet backed Foodpanda has still not found a buyer
even with a rock bottom price tag of $10-15 Mn.

So what happened in past one year that slammed this sector, forcing
investors to pull their legs up and stop the lavish lunches? Was it the
business model execution failure or the timing is not right or its the
tightening of investors purse strings that drowned the companies
amidst cash crunch? Lets have a closer look into the market.

Evolution Of FoodTech Market

In India
A few years earlier, the biggest problem was discovery of
restaurants.People faced problem in figuring out restaurants
that were available nearby and how good they were? Companies
like Zomato absorbed this pain by building a simple platform to
address the problem of the Indian foodies.
Once the discovery problem was sorted, next came the problem
ofordering/booking on these restaurants. And thats what
food ecommercecompanies like JustEat, FoodPanda, TastyKhana
tried to solve by working as the aggregator. The next in value chain
was reliability in delivery and thats what Swiggy is trying to
solve.
So this is how food market has evolved till
now: Discovery ->Ecommerce -> Delivery
If you noticed, none of these companies do anything to the food as
such. They are a content platform, ecommerce platform
and logistic services serving the food market. Each of these
companies has done a great job by delivering great values to the
consumer. And with time these companies have gone up the value
chain while also taking care of lower set of values. For e.g.
FoodPanda answered both discovery and ecommerce needs
whileSwiggy answered all of discovery, ecommerce and delivery
needs, saidKumar Setu, Founder, Petoo.

Companies which entered late or couldnt deliver additional value

other than above three have thus failed in recent past.

But none of these have touched the top of the value chain which
is fooditself. When I say food it can be companies coming
up with non-traditional innovative foods, companies working on
extending the life of food, companies working on a vegetarian
substitute for egg and chicken and even those who are backward
integrated till farms to deliver organic food experience,
added Setu.
The Twisted Model Maze Of
FoodTech In India

After on-demand delivery, restaurant and food discovery, concierge,

home cooked food, and kitchen cloud are the most sought business
models in the current FoodTech space.
On-demand delivery is the most crowded segment presently. Within
top 25 cities having around 75000 restaurants, the number
of daily orders over the phone for food range between 0.7 Mn and 1
Mn. Overall FoodTech startups cater to less than 50,000 orders a
day. Thats just 5% of the total daily orders.

Startups working on restaurant/food discovery model initially

attracted investors as well as consumers. The model offers upto 80%
margins and revenues through ad sales. Zomato is a leading startup
in this segment with 5000 restaurants in India advertising on its site.

Later, the startups also experimented with discovery plus

concierge model, wherein they provided consumers an app
for discovering restaurants and placed their own delivery personnels
to pick the order from the restaurant and deliver to the
customer. However, only a few have been able to make a mark in
this kind of setting. For most business models, deep discounts
worked in a short term, but in later stages, only those who focused
on leveraging the technology and scaling in a timely manner
survived, as in the case of FoodPanda and Swiggy.
Next is the Cloud Kitchen model. Cloud kitchens are
basically online breakfast and brunch units that do not have a
physical restaurant. Their business model runs around virtual
websites/apps via which they take orders. Here the startups such as
HolaChef, FreshMenu, Bhukkad own the food and delivery part of
the business. This gives better margins but the challenge is to scale
up with an army of chefs in various cities.
The one most sought after business model in India after these
is home-cooked food model, wherein tackling the quality
and complexity issues is really a daunting task. As Rajesh
Sawhney, founder, InnerChef and GSFAccelerator says,
Home-cooked-food-delivery is a very tough business. Its based on
this premise that young migrants into big metros crave for home-
cooked food. But the math doesnt add up. People dont want to pay
any premium amounts for home food, but logistics and operational
costs are far heavier than the Kitchen in the cloud business model
that InnerChef follows.

In past few years, 65% of startups in home-cooked food segment

either got acquired or were shutdown. Angel Investor, Ajeet
Khurana, aptly says, Its not enough to merely automate the food
ordering experience. One need to put forward some outstanding
examples such as in lines of InnerChef (great food), FreshMenu
(great menu), and Zomato (strong social presence).

However, in the opinion of Setu, home cooked food delivery

has been a business with huge operational and quality control
challenges, which cannot thrive in the long run.

Imagine how will you put quality check processes in place when
food is cooked at multiple homes spread across city and how will
you manage the operational challenge of picking up food,
packaging it and delivering it to the customer economically while
also scaling it up across geographies. The solution itself is too
complex to solve a problem. So I dont think a home-cooked food
business can thrive, let alone survive, and they have to transition to
central kitchen model or come up with some other innovative
solutions to simplify the solution, said Kumar.
The FY 2015-16 Funding Trends
In FoodTech

The quarterly funding trends observed a definite drop in total deal

value and a total number of deals between Q4 2015 Q1 2016 (by
31% and 86% respectively).
Where even the early stage startups like Chaipoint, Fassos,
TinyOwl, etc. were able to raise funding in the second half of 2015,
the current year witnessed major fundings into late stage startups
like FreshMenu and Swiggy.
Of the total 105 FoodTech startups, 76% are in early stage. Of these,
only 24% survived the early stage and are able to raise Series A and
Series B funding.
As interpreted from above analysis, 95% of the total deal value is
secured by 24% of late stage deals. Does that mean the market is
heading towardsPareto Optimality? Not actually, said
Krishna Vinjamuri, Principal, Lightbox Ventures. I think this is a
temporary dip in early stage funding. Startups that tailor their
offerings around changing customer lifestyle trends will get funded
in the future, Krishna added.

Setu, however, put this forward in a different manner. According to

him, if we just talk about the food delivery market, its moving
towards Pareto Optimality and thus its in everyones best interest if
companies start consolidating in this space letting 1-2 winners
emerge out of it. But if we talk about this in the context of funding
for FoodTech companies, we are nowhere close to Optimality.

There are hardly any real FoodTech companies and the worst, there
are hardly any investment going into this sector. The time has come
for funding to support the growth of real FoodTech companies even
if these are not so lean in nature (and hence not liked by the typical
investor). There are no more lean businesses which can be created
in food market as all the lower value chains have been taken care of
by some amazing companies in recent past and time has come to
pump the money to grow the businesses in the higher value chain.
The time has to come up for the real FoodTech to stand up and
investors/media to provide the support it deserves and needs,
added Setu.
Whereas, Sawhney and angel investor, Sanjay Mehta, are neutral
on this and believe that capital eventually consolidates towards the
players with a long term vision, strong execution and sound unit
economics. The food business is no different and it will always be
the case where maximum investments are garnered by top few
performing startups but there is scope for many to exploit the food
space with innovation.
Future Of FoodTech In India

In the first wave of exuberance, there is always a rush of startups.

This happened in EdTech, ecommerce, hyperlocal grocery and also
in FoodTech. According to Sawhney, the year 2016 is a year of
cleansing while 2015 was a party year for startups. Startups that
continue in hangover will die, however, the one who change, pivot
and adapt will survive this capital squeeze and will eventually
emerge stronger in 2017.

Krishna, on the other hand, believes that the current FoodTech

market is very large and unorganised. The game is still early and
new businesses can be created provided they add value that
customers care about. There are multiple business models like full
stack, marketplace, etc. that can co-exist and grow into large
businesses.

Further, there has been a definite fall in funding for FoodTech

startups, and major number of shutdown are happening in the early
stage. Ajeet added that, of the entire spectrum from full stack
business models (e.g. Box8) to thin layer business models (e.g.
Runnr), its the thin layer ones that are dying fastest.

Sanjay further explained that one should understand that food

technology is not IT but how innovative one is in providing the food
experience using real food technology. For e.g how juices were
made by cold pressed methods to retain nutrition is true FoodTech
& not an app?

But does this suggest that the FoodTech sector is moving towards
saturation? Its a no according to Setu. He believes that funding
slow down has nothing to do with saturation as funding can not be a
yardstick to measure the potential of a market. But it does affect and
slow down the growth of a market for sure.

Unfortunately, shutting down of companies serving lower value

chain has affected the fund flow to actual food tech companies
trying to address the top of value chain. And I can just hope and
wish that there are enough visionaries in media and investor
community who can see through this maze and support the real
FoodTech companies who are actually trying to transform the food
market. He doesnt see FoodTech companies shutting down because
there are hardly few which are actually FoodTech companies. What
we have seen in recent past is hyperlocal delivery startups (which
are nothing but logistic companies operating in food space) or
delivery focused food companies (can be called QSR 2.0) with only
differentiation being dark stores compared to customer facing
outlets taking a hit.
Its unfortunate to label these companies as FoodTech and marking
the sector as a failure when the sector has not even taken off and
there is a lot that needs to be done in food. Its like labeling textile
market as a failure if one of the ecommerce companies selling
clothes shut down. There are a lot of pain areas in food market
which can be addressed with the proper use of technology and
science. And thats why I believe food tech hasnt failed. Its the
media and ecosystem in general which has painted the wrong
picture by labeling anything to do with food as food tech, added
Setu.

All in all, the Indian Startup ecosystem is too nascent to make any
solid forecasting of its market future. The ecosystem, being flooded
with too many Me-too models, has made recognition of disruptive
ideas or technologies in food industry difficult. However, the shift
in the funding scenario in the market would churn out the flawed
businesses and is expected to allow execution and growth of true
innovation in the FoodTech industry.

[With inputs from Ankan Das And Pooja Sareen;

Graphics by Satya Yadav]

FoodTech industry, today, has taken center stage. It has stolen the limelight
from eCommerce startups in India. We Indians, in particular, have an untamed
love for food. Food has always been the top priority for our nations citizens.
Dont believe me? Well, let me just tell you that the FoodTech industry is going
to make over $50billion in revenues in 2015 alone and this is set to grow by 16-
20% every year.

So what made the FoodTech industry such a hit in India apart from the
love for food we have and why so late?

The thing with the startup industry is that in every 3-4 years a new challenge
poses itself and its the technological advances that contribute vastly to arriving
at a solution. Rewind back to 5 years and the FoodTech industry would be a
distant and rather unfeasible dream. today, however, there are more than 10
high profile food tech startups that are killing it.

With the advent of Smartphones,App ecosystem, maps and Cloud telephony,

getting food ordered has become a piece of cake (Yes, we love food too!).

How does cloud play a role in Food Tech industry and where did telephony
come into play? Well, the FoodTech industry and Cloud telephony go hand in
hand. It has enabled FoodTech to cut down losses drastically and improve their
efficiency. According to KPMG , Technology such as social media and Cloud
based services has allowed these industries to engage more with customers
and explore more business opportunities.

Lets go through some of the things Cloud and specifically cloud-telephony did
for the Food Tech industry and opened it up so wide. we can then discuss why
is cloud telephony better than its traditional counterpart.

The Food tech aspect of Cloud-based

telephony
Lets look at this from an industry specific point of view. What can cloud
telephony specifically do for the foodtech industry?

Well, there are a lot of things that cloud-telephony can do for you. You can
automate a lot of operations that are being done on a daily basis. Whats really
cool about this is that it saves you a whole lot of time as well as human effort.
Lets show you how.
 Integrate Cloud-telephony right into your apps
First things first, Cloud telephony can be tightly integrated to your frontend and
backend system. You can use APIs to integrate these systems with customer
facing websites and apps so that communication between your customers and
you becomes seamless.

Automate various call and SMS operations

Using automated calls and SMSes, you can perform operations such as:

Order verification and food delivery verification

Connecting a customer automatically to the right restaurant
or franchise based on their queries or order
notifying your customers about your events and offers

Maintain privacy between customers and

restaurants
Apart from the above, you can also maintain utmost privacy between the
customer as well as the delivery boy, the restaurant and more using cloud
telephony.

Using cloud telephony, you can connect two people via a virtual number that
first connects to the dialer and then the dialed person. This allows restaurants,
delivery services etc to contact their customer while maintaining the customers
privacy.
Assign the right outlet depending on the
location
Another advantage is the ability to track locations using the number from which
a call has been placed. This feature has allowed the Food tech industry to re-
route calls to the right outlet. Therefore minimizing the possibilities of failed
orders due to wrong outlet connection.

There are various food and beverage franchises using this feature such as
Barbeque Nation, which has just one customer facing number. Whenever we
dial this number, we are always connected to the nearest outlet to our location.
This makes the call flow much more simple and easy to use for both, your
customer representative as well as the customer who wants to order food.

Cloud Telephony is easy to setup and manage

Any kind of business or startup works only when their target audience is happy.
The only way to ensure that they are happy is to engage with the customers
from time to time and keep checking on the feedback they have for you.

Telephony is the best way to interact with customers. Even today, telephony has
an adoption rate of 70% for customer support and engagement and is only
second to word of mouth interaction.

So, in short, setting up a call center or a telephonic customer support and

engagement system is a must.

There are two ways of doing this. Either you can go ahead and set up a
traditional call center or use Cloud telephony. Cloud telephony is quite honestly
a much better option than traditional setups because it is easier to deploy and
manage.

Cloud based services have no physical requirements and require zero to

minimum tech understanding. They are more of a plug and play type, whereas a
traditional one takes weeks or even months to be set-up.

Addition of new features and users are handled via a simple web interface,
whereas to do the same task with a traditional telephonic system you need to
make hardware and software changes to accommodate new features and
users. Plus, these systems need a hell lot of maintenance and monetary
investment.

Cloud-based Telephony allows you to get more

out of your business
Cloud services are way smarter than their traditional counterpart.

Cloud telephony offers great data insights into your customers. With features
like call recordings and call frequency mapping, it enables you to understand
your customer base better and therefore you stand a better chance to make
business decisions that can drive more profits and more business opportunities
to your door.

Apart from these inbuilt functionalities, cloud telephony also has out-of-box stuff
like easy integration with CRMs, a daily report of all calls made (incoming and
outgoing), calls missed and probable opportunities you converted or missed.
Other features include email alerts for a specific event, SMS, call alerts and
much more.

In short, cloud-based telephony offers a lot more to a user than a traditional

system and all of it is handed to you the way that you want it.

Takeaway..
So you see how Cloud telephony can help you get more out of the food tech
industry. You can not only just make calls and send SMS but make your
telephonic system smart, make it aware of your customers. Maintain customer
privacy as well as verify orders and delivery with small and simple methods.

There are a lot of things that Cloud telephony could help with and make your life
easier. So if you want to know more dont hesitate to call us on +91 8088-919-
888 or email us at hello@exotel.in . Wed love to hear from you!