What is common between, India Gate basmati rice, Fortune cooking oil & Good Day biscuit ? Seems odd at first to look at 3 disparate brands & items together. However take a closer look and you will find that these are brands from companies listed in the Indian stock market.
India Gate Basmati Rice – KRBL NSE: KRBL
Fortune cooking oil – Adani Wilmar NSE: AWL
Good Day Biscuit – Britannia NSE: BRITANNIA
One more important commonality between these brands is that they are available in a grocery store near your home. If you want to start investing in stock markets and don’t know where to start, then your nearby grocery store is the best place.
Consumer space in India
The Food market includes all kinds of fresh and processed foods. The market is divided into following segments: Dairy Products & Eggs, Meat, Fish & Seafood, Vegetables, Fruits, Bread & Cereal Products, Oils & Fats, Spreads & Sweeteners, Sauces & Condiments, Convenience Food, Confectionery & Snacks, Baby Food and Pet Food. Food represents a significant part of household expenditure and hence you get to see some many brands on the grocery store shelves.
India is 3rd largest consumer economy in the world. While their are many sub categories within consumer economy, today we specifically talk about consumer food. Revenue in the Consumer food market in India amounted to US$900 bn in 2023*. In global comparison, most revenue is generated in China (US $1,259.00 bn in 2023). The India market is expected to grow annually by 8.01% (CAGR 2022-2027) and clock a revenue of 1300 bn USD. The market’s largest segment is Bread & Cereal products with a market volume of US$ 200 bn in 2023*.
Challenges for listed stocks
All these numbers point to a growing opportunity for brands & expectantly growing competition too. The traditional brands are facing an onslaught from new age D2C brands that are creating a niche for themselves across categories. This also has led to market fragmentation. Another important aspect affecting growth of consumer brands is the advent of food delivery businesses. This has reduced the dependency on cooking for the young urban population.
The competition & evolution in consumer preferences has made sure that the traditional listed consumer food companies up their game. This will also lead to companies passing on costs to consumers.
Overall the consumer food industry will have a steady growth over the next few years. Good listed stock in this space will act as defensive stocks in your diversified portfolio ( Read more about portfolio diversification). So, the next time you buy a product, quickly look for the company that is making the product. You never know you might just be looking at a stock that might fund your next Bali trip !