Cooking at home proves healthy for food companies, too

KOLKATA | MUMBAI: Increased retail sales of several packaged food categories, such as milk, cheese, paneer, noodles, frozen vegetables, pasta, olive oil and squashes, helped offset the loss of business to hotels and restaurants, pointing to a surge in at-home consumption fueled by indulgent cooking.

Hotels, restaurants and caterers, popularly called HoReCa, account for between 20% and 35% of the overall business for packaged food companies. Food companies and wholesalers such as Amul, Del Monte, Adani Wilmar, Mala's and Metro Cash & Carry said that the packaged foods categories expanded 5-15% through the lockdown despite zero or marginal contribution from institutional sales.

Amul MD RS Sodhi said the closure of HoReCa business was compensated by the increase in household consumption, with sales of milk increasing 5-6% and cheese and paneer by 40% in the last two months over same period last year.

Usually, HoReCa contributes 35% to cheese sales, 15% for milk and 10% for paneer.

“While households continue to buy more, we have also claimed share from several smaller brands that could not supply during the lockdown. As a result, the loss from sales to hotels and restaurants is completely compensated, leading to an overall growth at 15-17% for the company,” added Sodhi.

To be sure, overall consumption of most categories, including food, remained under stress since March. Through the lockdown, shoppers loaded up on packaged, ready-to-eat or cook categories, typically used in bulk at restaurants.

For German wholesaler Metro Cash & Carry, the drop in HoReCa sales was significant, with a decline of more than 50% right from the onset of the corona outbreak – even before the lockdown. Managing director Arvind Mediratta said HoReCa sales were channelised through increased demand from kiranas.

While noodles and pasta grew by 59%, frozen parathas, butter, cheese, paneer, idli and dosa batter grew by 50% over the last two months. “Kiranas bought more per order,” added Mediratta.

Indulgent or fancy cooking at home has created retail demand for many packaged foods usually consumed by restaurants or specialized kitchens.

“It may not be incremental consumption but sales have definitely shifted from institutional segment or outside eateries as consumers craved for indulgent products at home, which reflect in the surge for pasta, olive oil and also large packs of condiments," said Yogesh Bellani, chief executive of FieldFresh Foods, which sells products under the Del Monte brands.

Marketers, however, also believe the trend may be temporary and could reverse once the eating-out market revives.

“Increased demand from direct consumption channels, such as general trade, was overwhelming as consumers tried restaurant-like recipes at home. We expect this demand to normalise once HoReCa recovers," said Murtaza Mala, partner at Mala's Fruit Products that makes fruit based jams, syrups and squashes.

While restaurants are allowed to reopen from June 8, takeaways will be encouraged instead of dine-in, which could mean the food-service industry will take months to reach the pre-Covid level business.