Future Group to invest Rs 1,000 crore to enter food delivery system

Jan 14, 2018

Future Group is stepping into the competitive food delivery space by launching cloud kitchens. According to Future Group Chief Executive Officer Kishore Biyani the plan was to be present during every meal, including breakfast, lunch, snacks and dinner. Whichever way food is being consumed in India, we want to be part of that business.

Future group may also integrate its food delivery business with its mobile application Future Pay to improve penetration. Affordability could be the key route to market, with lunch and dinner meals priced as low as Rs. 40, while snacks could come at Rs. 10.

Online food ordering and delivery is a growing market in India, pegged at Rs. 50,000 crore, according to industry estimates. Key players include Zomato, Swiggy, UberEats and Foodpanda, with cloud kitchen start-ups such as Faasos, Freshmenu, Holachef and Box8 also delivering food to consumers.

Bengaluru-based RedSeer Consulting pegs the rate of growth of online food ordering and delivery in India at 15 per cent per quarter, with the figure expected to grow in the future. Already the order run rate per month of key brands such as Zomato and Swiggy is pegged at 21-22 million, and the two are fighting a stiff battle with each other to improve this number.

Kishore Biyani is also working on improving back-end operations to achieve his objective of becoming the largest food retailer in the country. Setting up smart distribution centres is part of this process — the fifth such centre was launched in Patiala (Punjab) on Friday. The group’s ‘India Food Grid’ project, a network of 38 large warehouses, is aimed at improving efficiencies of scale. The project would be the backbone of Group’s next phase of growth as it would help it add Rs. 70,000 crore worth of goods per annum into the system..

Future is spending Rs. 1,000 crore on the project as food and fast-moving consumer goods (FMCG) emerge as its categories of growth in the coming years.

Future Consumer, the food & FMCG arm of the group, has clocked a compounded annual growth rate of 32 per cent over the last three years in terms of its top line, touching Rs. 3,000 crore in FY18 (2017-18).

The group has also set an ambitious target of opening some 15,000 small-format stores (under the Aadhaar brand name) using the franchise and company-owned models over five years. These stores, billed as modified kiranas, are meant for towns with a population of less than 50, 000. Moreover, the group’s network of Easyday outlets — meant for towns with over 50,000 people — will touch 10,000 from under 1,000 now in five years.

Future is spending Rs. 1,000 crore on the project as food and fast-moving consumer goods (FMCG) emerge as its categories of growth in the coming years.

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