Organised food services industry attracts Rs 500cr from PEs

NEW DELHI: Private equity firms invested Rs 500 crore in the organised food services industry in the first half of this year and the sector is expected to see more such investment in the future, industry body Assocham said today.

The organised food services industry has grown to a size of Rs 80,000 crore, driven by rapid urbanisation, growing disposable incomes and need for convenience.

The chamber said food services industry is likely to become one of the fastest growing industry in the country driven by rapid urbanisation, growing disposable incomes and need for convenience.

"The industry is likely to become one of the fastest growing industries in coming years...This has triggered interest among private equity investors who made investments worth Rs 500 crore in the first half of 2011. More such investments are expected going forward due to rising consumer appetite," Associated Chambers of Commerce and Industry of India (ASSOCHAM) Secretary General DS Rawat said.

In 2010, the sales of 20 largest private retail chains had 50 per cent contribution from food items with sales of Rs 12,500 crore. This amounts to five to six per cent of the urban food retail market compared to only one per cent six years ago.

The chamber said while the market size is small, it has been growing rapidly. By 2020, the share of supermarkets in food retail in cities is expected to touch 20 to 30 per cent. The advent of multi-brand retail is likely to accelerate this growth.

India is among the world's major food producers and ranks as the largest in production of livestock, milk and cereals, the second largest in fruits and vegetable products, and among the top five in rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds.