133628In view of reduced inflation and expenses, will it be right to invest in IT stocks?

Is a tool-down strike spreading in Indian kitchens? Rhetorical as it might sound, such a trend seems to be creeping in, thanks to multiple drivers, government data has indicted. Latest data from the Ministry of Statistics and Program Implementation (MOSPI) and ICICI Securities suggest that Indians are spending more and more on processed food and beverages while spending less and less on cooking in their own kitchens.

As a result, compared to a decade ago, Indians are already cooking less at home, relying more on out-of-home consumption and processed food and that is significantly set to rise even further aided by the spread of food delivery platforms, quick commerce and more demanding work hours.

According to news reports, urban elite families which are at the top of the economic pyramid spent about 50% of their food budget on packaged food, restaurant meals and food delivery in 2022-23. This was considerably higher than the 41.2% of their budget on food items that they spend on such heads a de- cade ago.

Paras Jasrai, senior analyst, India Ratings and Research told The Economic Times, “Given the proliferation of food delivery and quick commerce apps, the share of processed food would have increased. As households move up the income ladder, their consumption trends also change.”

The middle-income households are catching up fast. While the money spent on processed food rose 220% for the elite urban households in the past 10 years, that for middle-income households rose 330%. Incidentally, this trend is taking place even as the portion consumed by food items as a fraction of overall household expenditure has gone down.

Middle-income households spent about 25% of their food budget on beverages and processed food in 2022-23 compared to 16% a decade ago.

Chief economist of Bank of Baroda, Madan Sabnavis told the newspaper, “With the spending power of the middle class going up, demand will rise. Also, more working couples add to the demand.” He said that low-sugar and organic food and drink appeal to higher-income groups and contribute to sales.

An ICICI Securities report said that for the top 5% of urban population, there is a reduction in absolute spend on staples. This trend “indicates the kitchen is slowly dying for elite urban households.”

Its report states that in urban elite households the expenditure per head on food delivery rose to Rs 971 per month in 2022-23 against Rs 60 per head in a mid-to-high income family. It further claims that this expenditure rose by 18% in FY24.

“There is a movement from ea ting staples to more valued-added and experiential food in urban households which by nature has to be processed. Of course, food delivery has been the phenomenon of the last decade apart from premiumisation in food experiences. Hence, several households are moving away from the necessity to cook all meals at home and buying more processed food even when at home,” brand specialist Santosh Desai told the newspaper.

Data from MOSPI revealed that a sharp increase in expenditure on processed food and beverages has accompanied the increase in income level of urban households. Expenditure on cereals, egg, fish, meat and edible oil remains flat. There is only a marginal rise in the expenditure milk and milk products.

Another distinctive feature in the urban households is that even when members are getting active in kitchens, they are using more branded packaged food as ingredients for cooking in place of plain unbranded staples. According to senior category head at Parle Products, B Krishna Rao, this trend has also triggered demand for processed food. “Even the latest fad of millet-based food sold by companies would fall into (category of) processed food,” Rao remarked.

For example, expenditure on dry fruits has gone up to 1.3% of total household expenditure last year compared to 0.8% 10 years ago for the urban population. For rural households, the rise is from 0.6% to 1.2% in the same period. The amount spent on buying salt and sugar has gone down by 50% in the past decade from 1.2% to 0.6% of the urban households.