The Coconut Boy, an iconic Goan eatery, is now welcoming guests in the vibrant neighborhood of Bandra, Mumbai.
At the core of Coconut Boy are Hitesh Keswani, chef Rohan D’Souza, and Praveena D’Souza, a trio known for their successful culinary ventures in Goa. Building on their previous achievements, they’re now embarking on a fresh journey with Coconut Boy, ready to infuse the essence of Goan cuisine and the lively coastal spirit into the heart of Mumbai.
Leveraging his profound Goan heritage and culinary expertise, D’Souza has meticulously crafted the menu at ‘The Coconut Boy.’ This culinary repertoire epitomizes the authentic flavors of traditional Goan cuisine, featuring delights ranging from grilled squid brimming with crab stuffing to Chicken Cutlets paired with a Kokum Relish, and fresh coconut-infused Clams. Vegetarian options, such as Local Vegetable Vindaloo and Mushroom & Vegetables Slow Cooked Xacuti Masala, are also woven into this diverse tapestry. The menu doesn’t stop there; it delves into a realm of signature cocktails, including the tropical allure of the Coconut Caipirinha and the classic Pina Colada, offering patrons a journey to the sunny beaches of Goa. By utilizing locally sourced ingredients like kokum and tender coconut, Chef Rohan’s menu not only brings the finest of Goan flavors but also encapsulates the carefree spirit of Goan vacations, right in the heart of Mumbai.
“We’re thrilled to bring the true flavors of Goa to Bandra West,” says the team behind The Coconut Boy, “Our aim is to transport our guests to the lively streets and beautiful beaches of Goa through the food we serve, the cocktails we create, and the atmosphere we curate. We want ‘The Coconut Boy’ to be the go-to destination for those seeking an authentic Goan experience right here in Mumbai.”
Costa Coffee, a coffee brand owned by Coca-Cola in India’s commercial beverage industry, recently announced the opening of its 150th store in Rajouri Garden, New Delhi.
In 2005, Costa Coffee made its entry into the Indian market by opening its very first café in Connaught Place, New Delhi, marking the start of its journey in India.
Over the last year, Costa Coffee partnered with Devyani International for a significant expansion effort in India, bringing about the establishment of approximately 60 new stores.
The brand’s continuous goal is to set up additional outlets in the key 8-10 cities across India, placing specific emphasis on specialized venues like airports, highways, and healthcare facilities.
India’s coffee industry is in the midst of an intriguing evolution, marked by an increasing emphasis on specialty coffee and premium offerings. This transformation is notably driven by urban millennials who have turned coffee shops into lively social hubs.
This transition is especially remarkable in a country that has traditionally been linked to tea culture.
The 150th Costa Coffee establishment serves as a testament to Costa Coffee’s commitment to providing artisanal coffee created from locally sourced ingredients.
“India is a key market for us globally and we are proud to commemorate the opening of our 150th store. This milestone truly highlights the overwhelming love and support we have received from coffee enthusiasts across India. Our aim is to extend our presence to every corner of the nation, and we remain committed to achieving this vision through our continuous expansion efforts, ensuring remarkable coffee experiences for all.” said, Vinay Nair, General Manager, India & Emerging Markets, Costa Coffee.
Costa Coffee presents a varied menu that showcases an array of unique coffee concoctions, including well-loved options like the Flat White, Classic Corto, Café Caramela, and others, all made with locally-sourced coffee beans.
PepsiCo CEO Ramon Laguarta brushed off growing worries about the potential effects of GLP-1 drugs on the food industry during discussions on October 10th.
This coincides with the company revising its annual earnings projection upwards, even amidst declining volumes in the third quarter.
The CEO characterized the influence of appetite-suppressing drugs as “insignificant” in relation to PepsiCo’s operations during a discussion with analysts and investors after the release of the company’s third-quarter results.
He said, “Overall, if you take global consumption, there are obviously a lot of question marks with regards to the obesity drugs when it comes to medical testing or scalability of the usage of this or what is the impact really on consumer choices. So, a lot of question marks.”
GLP-1s like semaglutide, available under brand names such as Novo Nordisk’s Ozempic and Eli Lilly’s Mounjaro, were originally designed for the treatment of type 2 diabetes but are now being prescribed for weight loss.
Laguarta talked about how PepsiCo has observed “enduring favorable trends” that outweigh any potential impact from GLP-1 drugs, yet the company, which owns brands like Lays and Quaker Oats, maintains a “robust strategy” for “portfolio transformation” in case these trends shift.
In the wake of the earnings announcement, the company emphasized portion-control packaging, sugar-free beverages, and wholesome food options in their official statements.
“Everything we’ve been doing for the last five, six years when it comes to reducing sodium, reducing fat, reducing sugar, reducing the portions of our products, adding some new cooking methods to our snacks, those are all very positive trends that will help us pivot the portfolio if needed in the future. We’ll continue to do it. Obviously, it’s one of our key strategic pillars,” the CEO stated.
He added, “Our portfolio strategy, we think, is very solid when it comes to a potential protection against some of these future developments five, ten years from now.”
The increasing utilization of GLP-1 drugs in the United States for appetite suppression and subsequent weight loss is raising concerns among investors in the food and beverage industry.
As stated by Trevor Stirling, a managing director at AllianceBernstein and an analyst specializing in the beverage alcohol market for the US bank, the monthly administration of doses for Ozempic, Wegovy, and a third brand, Mounjaro, has reached approximately 11 million and is on the rise.
He further notes that this level of treatment suggests that roughly 2.4 million individuals, constituting slightly less than 1% of American adults aged 18 and over, are presently utilizing these medications.
The stock prices of certain food and beverage companies listed in the United States did experience a decline last week following statements from Walmart. Walmart mentioned that it had noticed an influence on the food shopping behaviors of individuals using medications like Ozempic and Wegovy.
“We definitely do see a slight change compared to the total population, we do see a slight pullback in [the] overall basket,” John Furner, the CEP of Walmart’s US business, told Bloomberg. “Just less units, slightly less calories.”
Over the past few days, high-ranking executives from American food producers have been questioned about the potential impact of the increasing demand for these drugs on their businesses, both during earnings calls and in media interviews. Their response has been that, at present, they are maintaining a vigilant stance and would adjust their product strategies as necessary.
“If we end up seeing changes in consumer eating patterns – let’s say they go to smaller portions – then we evolve the innovations and we design smaller portions. If they switch to different types of nutrients, we evolve the innovation, we switch to different types of nutrients. If they change the kind of pack sizes they snack on, we’ll change that,” Conagra Brands CEO Sean Connolly said when the company reported its first-quarter results last week. “So this is the kind of stuff that will happen over five, ten, 15 years, not over the next six months.”
On October 10th, PepsiCo saw a premarket trading surge of more than 2% following its announcement of earnings at $2.25 per share on an adjusted basis, surpassing the projected $2.15 and exceeding analysts’ expectations.
The company’s favorable outcomes were propelled by ongoing price hikes, despite a 2.5% decline in organic volume for the quarter. Within its snacks portfolio, volume slumped by 1.5%, and its Latin America convenient foods business experienced a 5% decrease in volume. It’s worth noting that the company does not disclose the volume results for its individual brands.
When inquired about overall volumes and whether consumers are showing a preference for smaller packaging, Laguarta outlined two significant factors the company is actively striving to optimize.
“One is consumer interaction with our brands. And the proxy we’re using for that is units or specific purchasing act. And then the other one is obviously margin for the overall business. And those are the two variables that we’re maximising. In both cases, units are growing much faster than volume.
“You mentioned consumers moving to smaller packs. We’re also, in a way, facilitating that through our pricing and mix strategy. Then we’re obviously optimising margin that, as you saw, it was a good improvement in our margin across the company.”
Nevertheless, PepsiCo raised its forecast core earnings per share growth to 13% at constant currencies this fiscal year, up from a prior estimate of 12%. Its organic revenue growth forecast remains unchanged at 10%.
The group also gave unusually early guidance for its fiscal 2024 – organic revenue growth of 4-6% and EPS growth in high single digits.
Lauren Lieberman, a Barclays analyst covering PepsiCo, wrote that a “beat and raise” was unexpected, “let alone the very early and constructive commentary on 2024 expectations”.
She said, “To us, results in aggregate speak to the increasing balance in the business model across US and non-US markets, and we see this as also supporting the company’s confidence in discussing the high-end of the long-term algorithm for next year.”
PepsiCo’s net revenue rose 8.9% year-on-year to $23.45bn for the three-month period, while operating profit jumped to $4.02bn.
The Frito-Lay North America unit reported a 7% jump in organic revenue to $5.95bn increase while volumes fell marginally. Quaker Foods North America increased to $747m.
Meanwhile, Latin America revenue – which includes food and beverages – was up 21% to $3.05bn and Europe up 2% to $3.7bn.
Home cooking, once considered a diminishing skill, is experiencing a renaissance. In response to this culinary resurgence, upliance.ai, an innovative home appliance startup, has introduced its AI Cooking Assistant, delishUp, and is delighted to present its comprehensive debut food trends report. This report embarks on a flavorful journey through the evolving tastes of young Indian households, enriched by meticulously curated, data-driven insights.
Drawn from a comprehensive dataset spanning 3,000 households and more than 15,000 cooking sessions on delishUp in 11 cities, the report unveils compelling discoveries that provide captivating insights into the continually evolving culinary choices of the nation. While it confirms certain assumptions, it also challenges stereotypes, weaving a multifaceted fabric of tastes and preferences.
Approximately 80 percent of delishUp users belong to the male demographic, with a predominant representation in the 25-40 age bracket. This user base has enthusiastically embraced home cooking and is exploring various culinary realms.
Surprisingly, even though 51 percent of users identify as non-vegetarians, a remarkable 85 percent of households on delishUp opt for vegetarian meals, primarily driven by perceived challenges in handling meat. Beloved vegetarian dishes like Veg Pulao and Kadai Paneer consistently hold sway over the taste preferences of users.
In contrast to the common belief that South Indians primarily favor rice-based dishes, chapati dough surprisingly stands out as a leading recipe, accounting for 3.5 percent of cooking sessions on delishUp.
Roughly 40 percent of users express a wish for healthier eating, yet fewer than 10 percent consistently integrate wholesome alternatives into their cooking routines on delishUp.
Young Indian households are broadening the variety of their homemade meals, with 40 percent showing a preference for Indian cuisine, 20 percent for Continental dishes, 20 percent for Italian fare, and the remaining 20 percent delving into beverages, soups, salads, and Asian recipes.
India, a country often associated with a predominantly vegetarian diet, reveals a more varied culinary panorama. Roughly 51 percent of homeowners proudly identify as non-vegetarians. Nonetheless, numerous novice cooks are drawn to vegetarian dishes due to the perceived challenges of working with meat, leading to 85 percent of households on delishUp preparing vegetarian meals. Traditional favorites like Veg Pulao and Kadai Paneer continue to enjoy immense popularity, with other classics such as Poha and Rasam also earning widespread acclaim.
Challenging the misconception that South Indians solely prefer rice-based meals, chapati dough emerges as a frequent choice, comprising 3.5 percent of meals prepared on delishUp. Conversely, North and West Indian users are increasingly drawn to South Indian delicacies like Upma, Lemon Rice, Bangalore-style Sambar, and Cabbage Pachadi. In the South, an exploration of dishes like Gujarati Kadhi, Mumbai-style Pav Bhaji, Rice Kheer, Surti Cold Coco, and more reflects cross-regional culinary curiosity.
AI has smoothly become an integral part of everyday life, including the culinary domain. Historically, venturing into new dishes has presented challenges in terms of locating suitable recipes, mastering techniques, and acquiring the necessary ingredients. However, thanks to delishUp’s ChefGPT feature, even those new to cooking can now confidently explore fresh recipes at home. This advancement has given rise to inventive creations like Mexican-inspired beer concoctions, the clever Rotli nu Shaak that ingeniously repurposes leftover roti, and the delightful Ada Pradhaman, a beloved dessert from Kerala, all making their way into the modern kitchen.
While street food holds a special place in Indian culinary tradition, it remains a compelling influence on home kitchens nationwide. Data from DelishUp demonstrates that timeless favorites such as Pav Bhaji and Bhel are frequently prepared in households rather than being ordered or consumed outside. In addition to these classics, unconventional dishes like Bread Paneer Poha, Beetroot Rasam, Pudina Palak Khichdi, Creamy Peanut Noodles, Beetroot Halwa, and Chicken Tagine are steadily gaining popularity, signaling a growing inclination to embrace diverse flavors and engage in culinary experimentation at home, particularly when convenience is a priority.
In a world that’s increasingly health-conscious, it’s worth noting that while 40 percent of individuals express a desire for healthier eating habits, fewer than 10 percent consistently incorporate these practices into their daily cooking routines. This highlights the ongoing challenge of balancing the aspiration for health-consciousness with the allure of comfort food in meal preparation.
Furthermore, there’s a widespread yearning for restaurant-style cuisine, with nearly 500 individuals expressing the wish to recreate their favorite restaurant dishes at home. This desire spans across various culinary traditions, with 40 percent favoring Indian cuisine, 20 percent leaning towards Continental fare, 20 percent opting for Italian flavors, and the remaining portion exploring a diverse range, including chaats and Asian dishes. This aligns with the aspiration to make “outside food” healthier by preparing it at home.
A remarkable 80 percent of delishUp users fall into the male demographic, predominantly aged between 25 and 40, with many of them setting out on their culinary adventures for the first time. The perception of cooking as a complex and labor-intensive task, involving intricate recipes and culinary skills, has undergone a transformation thanks to modern kitchen appliances. The convenience offered by these devices has empowered individuals, especially men who might have previously been intimidated by traditional cooking methods. Their attraction to cooking technology and the convenience it affords has nurtured a greater sense of independence in the kitchen, motivating them to explore a wide range of dishes and broaden their culinary horizons.
In the rich tapestry of Indian cuisine, timeless classics such as Poha, Pulao, and Kadai Paneer hold a special place in the hearts and palates of the nation. Mornings kick off with quick delights like Poha and Upma, while dinners embrace the comforting embrace of Chapatis paired with an assortment of sabzis, including Kadai Paneer and Aloo Tamatar Sabzi. Lunchtime offers variety but frequently includes rice-based dishes like Veg Pulao and Sambar. For dessert, the all-time favorite Rice Kheer reigns supreme, with Vermicelli Payasam adding a delightful Southern twist.
In the world of non-vegetarian cuisine, Butter Chicken takes the throne, delighting enthusiasts from all corners of the country. These culinary trends exemplify the enduring affection for traditional flavors and the harmonious fusion of regional and national tastes within Indian cuisine.
In the ever-changing culinary scene of India, this research provides invaluable insights into the recent changes in food preferences throughout the nation. As home cooking undergoes a revival, the accessibility of kitchen appliances that simplify the cooking process is democratizing culinary experiences and enabling young Indian households to enjoy a broader and more adventurous range of homemade meals.
Elephant Gin has expanded its distilling capabilities, investing €4 million ($4.2 million) in a new distillery site in Germany, effectively doubling its production capacity.
Located in Wittenburg, near Hamburg, the facility will serve as the brand’s official home and will open its doors to the public for distillery tours starting later this month.
Within the new establishment, you’ll find a bar and a specially crafted copper still that the company claims is “double the size of the previous one.”
The former distillery was situated in Hagenow, to the southeast of Wittenburg.
Founded in 2013 by Tessa and Robin Gerlach, the brand donates 15% of its profits to support African elephant charities and conservation initiatives. To date, it has successfully raised €1 million through a combination of sales and fundraising events.
The product range is accessible through on-premise, off-premise, and direct-to-consumer (D2C) channels, which include platforms like Amazon, The Whiskey Exchange, and the company’s own website. The founders emphasized that each of these channels holds significant importance in their distribution strategy.
Tessa and Robin Gerlach said, “The on-trade was where Elephant Gin started its journey when we launched in 2013, and it remains an incredibly important channel for us to continue to build the brand and ensure bartenders are inspired to use Elephant Gin every day.
“Both off-premise and D2C are also important and we work tirelessly to ensure we build visibility and community across both of these channels.”
The lineup comprises Elephant London Dry Gin, Elephant Sloe Gin, Elephant Gin at 57% ABV, and Elephant Orange Cocoa Gin.
To commemorate its ten-year anniversary this year, the company is introducing a unique 40% ABV gin named “African Explorer.”
The company has committed to contributing 15% of the profits generated from African Explorer to the African Wildlife Foundation. This support will be facilitated through the recently established Elephant Gin Foundation, which operates as a grant-making nonprofit organization.
Elephant Gin is currently exported to more than 40 markets, which encompass regions such as the UK, Italy, Spain, Benelux, and, most recently, the United States.
Its co-founders added, “We are always looking to expand into new markets so long as the opportunity and partner is right for us. However, it is equally important to continue to build the brand within the current markets we operate in as there is still huge opportunity to scale and grow market share.
“For example, we recently launched in the USA which is a huge market behaving similarly to separate countries within one. It is therefore important we continue to focus on building Elephant Gin in key states with support from our distribution partners.”
South Korean food tech startup Gopizza, renowned for its robot-prepared single-serving pizzas, has revealed its intention to launch a branch at Singapore’s Changi International Airport on November 1st.
This marks the debut of a South Korean food brand at the airport, which, in March, was globally recognized as the best airport by Skytrax, a consulting company specializing in airport rankings and evaluations.
Following extensive facility renovations, Changi Airport has become a hub for premier global food brands, consistent with its status as the world’s top aviation center. Gopizza’s new branch will be located in the departure section, alongside renowned international giants such as Starbucks and McDonald’s.
Positioned adjacent to a duty-free shop, Gopizza successfully met Changi Airport Corp’s rigorous standards for quality, safety, and hygiene, despite fierce competition with a daunting ratio of 200 applicants for every slot. The inaugural Singapore branch, established in March 2020, has rapidly claimed the third spot in market share among local pizza franchises, making it a compelling reason for the opening of the Changi outlet.
Gopizza’s latest establishment is a part of its ambitious strategy to grow to approximately 50 branches in Singapore within the next year, with the goal of securing the second-highest market share in the region.
The Changi branch will showcase Gopizza’s cutting-edge food technologies. These high-tech innovations, developed by the Gopizza Food Tech Institute, encompass a “goven,” a proprietary oven that streamlines and automates the pizza-making process, an AI-driven smart topping table that continually monitors and records the precision of toppings in real-time, automated pizza baking and slicing immediately following topping placement by employees, and the Gobot Station, an integration of robotic cutting technologies.
“We will work even harder to make Go Pizza available at all airports worldwide,” Go Pizza CEO Lim Jae-won said.
First expanding abroad in 2019 by opening in India, Gopizza now runs around 200 stores in five countries including South Korea and Singapore.
APAC CEO Josh Kilimnik, DPE Group CEO and Managing Director Don Meij and Domino’s Koto Furuishiba Store Manager.
Domino’s Pizza Enterprises Ltd (DPE), the largest franchisee of Domino’s outside the United States, is celebrating the grand opening of its 1,000th restaurant in Japan. This milestone officially establishes Japan as the primary market for the group in terms of the number of restaurants.
The occasion was marked today at the Koto Furuishiba restaurant in Tokyo, with the presence of DPE Group CEO and Managing Director Don Meij, APAC CEO Josh Kilimnik, Domino’s Pizza Japan CEO Martin Steenks, and esteemed guest Ernest M Higa, the founder of Domino’s Pizza Japan, who all participated in the official ribbon-cutting ceremony.
DPE initially acquired a controlling interest in Domino’s Pizza Japan in 2013. According to Meij, this acquisition was viewed as a daring step back then, given that pizza in Japan was predominantly perceived as a premium dining option reserved for holidays and special events, rather than a choice for individual or routine consumption.
“We knew Japan was an opportunity like no other, but pizza purchasing behaviour was quite different to our other markets. At the time, Domino’s only operated in 17 of Japan’s 47 prefectures and only 43 of its 259 stores were franchised. We could see we had extremely experienced operators, but without the means to grow,” Meij said.
Meij stated that DPE successfully harnessed its operational, franchising, and marketing proficiency to tap into the nation’s potential. Simultaneously, they crafted a tailored local strategy aimed at delivering an authentic Japanese customer experience.
In 2018, Domino’s had grown its presence to 550 stores in Japan, which then surged to 900 by the end of the following year. Just a little over 18 months later, they achieved the significant milestone of 1,000 stores.
Domino’s currently has a presence in all 47 prefectures in Japan and holds the distinction of being the largest pizza chain in more than half of them, specifically in 30 of these regions, in terms of store count.
Century Pacific Group, Inc. (CPG) and JE Holdings (JE), companies headquartered in the Philippines, have acquired the ownership stake held by Singapore’s sovereign wealth fund GIC in Shakey’s Pizza Asia Ventures, Inc. The purchase was executed through their affiliate, Arran Investment Pte Ltd.
The acquisition was carried out through a private placement, and the specific value at which the shares were acquired has not been disclosed.
GIC previously held 283 million shares, constituting a 16.8% ownership in the company. CPG acquired 185 million shares, increasing its ownership to 62%. Simultaneously, JE Holdings obtained 98 million shares, raising its stake in PIZZA to 14.9%. These shares were acquired at a price of Php 9.50 each.
CPG and JE are privately-owned firms belonging to the Po and Gokongwei families. Among the businesses within CPG’s portfolio is Century Pacific Food Inc., a prominent canned food company in the Philippines. On the other hand, JE has investments in the insurance company Maxicare.
As of now, Shakey’s boasts a global presence with nearly 2,000 stores and outlets worldwide. In its most recent earnings report, the company reported a remarkable 51% year-on-year increase in systemwide sales for the first six months of the year, and its net income nearly doubled, experiencing 96% year-on-year growth. The company has also recently revised its full-year outlook, projecting growth exceeding 30% year-on-year for both revenue and profit.
Chivas Brothers, the Scotch whiskey division of French distillery Pernod Ricard, has emphasized that the successful completion of the free trade agreement (FTA) with the UK, aimed at reducing whisky import duties, is critical and will determine the company’s fate if not concluded by the end of October.
“It’s kind of make or break if it doesn’t happen in the next few weeks. If we don’t have something substantial by the end of October, early November, it means that we need to wait for the next wave of discussion. I think it’s gone for a while because the election period is never good for any FTA,” said Jean-Etienne Gourgues, the chairman and chief executive of Chivas Brothers, which sells Royal Salute, Glenlivet and Ballantine’s.
Within the proposed Free Trade Agreement (FTA), both Scotch whiskey producers and the UK are advocating for an immediate reduction in import duties from 150% to 75% upon the FTA’s signing, followed by a gradual decrease to 30% over the course of three years. Conversely, Indian whiskey manufacturers are pushing for a more gradual reduction, aiming for a 10-year transition period to bring the duty down to 50%.
“We are definitely hopeful because it will be a very good thing for the development of whisky in India. It has to be a level field, and today any Indian whisky can be exported to the UK with zero tariff. But the opposite isn’t true, and this is providing a huge barrier to get super high-end quality of malt in India,” said Gourgues.
Pernod holds the title of being the largest whiskey producer in the nation, commanding a significant 25% share of the market. This stronghold is bolstered by renowned brands like Royal Stag, Imperial Blue, and Blenders Pride. Additionally, as the world’s second-largest distillery, Pernod also possesses the distinction of owning India’s top-selling scotch, 100 Pipers, with an impressive annual sales volume exceeding 1.5 million cases.
Nonetheless, the company, which achieved a remarkable 13% sales expansion in the last fiscal year, is not exclusively banking on the Free Trade Agreement (FTA) to fuel its growth strategy in India, a market that has surpassed France to become the world’s largest scotch importer in terms of volume. In terms of value, the United States remains the company’s most significant scotch market, followed by France and India. Chivas underscores the pivotal role of India in its global inventory forecasting and planning, particularly for malt varieties that require years of aging. In fact, the company even encountered supply constraints due to the surging demand in India, necessitating the shipment of products from other markets to meet this demand.
“When we design any forecast, we always look at India first because of the size, interest for the category and the size of the population. It is good to have demand which outstrips the supply. But then the challenge is how can we keep on servicing those consumers,” added Gourgues.
“India is one of the most difficult if not the most difficult market to operate, because of all the different regulations and excise by state, and this is quite unique in the world. Even in terms of FTA, it’s at the federal level, not at the state level. So even if FTA is going to happen or not, the way it’s going to learn from the state level to the federal level is another story.”
Over the last two years, the sales of Scotch in India have seen a substantial nearly twofold increase. This remarkable growth can be attributed to the increased consumption among millennials and a burgeoning middle class that has gradually shifted toward higher-end whisky options. According to the most recent data gathered from industry executives by global alcohol market analysts IWSR, the market witnessed an impressive year-on-year growth rate of 33%, reaching a total of 7.5 million cases (each containing nine liters) in 2022.
According to a report from UBS Securities, the food delivery market in India is anticipated to have recorded a 10% sequential growth in the quarter ending on September 30. This news provides a significant boost to Zomato and Swiggy, who dominate this segment, especially considering the traditionally slow nature of this quarter.
UBS projected that Zomato experienced a month-on-month volume growth of 2% in July and 4% in August. However, this falls short of Swiggy’s volume growth, which stood at 7% and 6% for the same months, as per UBS’s analysis.
“If we extrapolate July and August data to September, we are seeing a 10% QoQ (quarter-on-quarter) growth in July-September, which could be a positive surprise to the market, given Q2 is seasonally weak (adverse monsoon-related seasonality and lack of IPL). We model Q2FY24 gross order value (GOV) growth for Zomato to grow 7% QoQ, which is better than the company’s own guidance and consensus estimates,” it said.
In the analysts’ call that took place after Zomato’s June-quarter results, the Chief Financial Officer, Akshant Goyal, had outlined the company’s goal of achieving a 25-30% growth in both the current year and the next. Zomato had previously disclosed an 11% quarter-on-quarter growth in Gross Order Value (GOV) for food delivery in the April-June period. Notably, this quarter also marked Zomato’s first-ever quarterly profit of INR 2 crore.
The UBS report also highlighted that Zomato experienced a sluggish six-month period ending on December 31, 2022, due to a slowdown in the market following the Covid-19 pandemic and a loss of market share to Swiggy.
“This, in turn, can primarily be attributed to the suspension of Zomato Gold loyalty programme and heightened focus on profitability which resulted in lower discounts (as a percentage of average order value (AOV)) and higher delivery fee passed to customers. Based on data in January-June 2023, Zomato has regained the bulk of the lost market share since the relaunch of its loyalty programme,” the report said.
In its earnings report for the June quarter, Zomato announced that the increasing popularity of its Gold loyalty program led to more frequent orders, accounting for more than 30% of its Gross Order Value (GOV) in the food delivery segment.
On Swiggy, the UBS research note said, “The data also shows a modest spike in discounts from Swiggy (up around 120 basis points over July and August) and reduction in delivery fees (down around 70 basis points over July and August), which could be Swiggy’s response to market share losses in the prior six months”.
In the year 2022, Swiggy’s losses surged by 80% compared to the previous year, reaching approximately $540 million, as reported by its investor, Prosus, in June. The Bengaluru-based company’s Gross Merchandise Value (GMV) for food delivery increased by 26% year-on-year, as stated by Prosus, the Dutch-listed subsidiary of South African technology investor Naspers.
According to the report, the delivery fees collected from consumers in India by food delivery platforms were considerably lower compared to other markets. In India, these apps levied delivery fees at the rate of 5-7% of Gross Merchandise Value (GMV), whereas in other markets, the fees ranged from 10-15%. The relatively lower delivery charges in India indicate the potential for an increase in these fees over the medium term.
“While this is not an immediate focus (as platforms emphasise market expansion), the recent introduction of INR 2-3 platform fee per order in effect allows platforms to monetise consumers. This is particularly noteworthy as almost a third of GMV is now coming from subscription programmes where consumers receive free or discounted deliveries,” it said.
Reports indicate that consumer-centric internet platforms like Uber, BigBasket’s swift commerce division BB Now, and Zepto are charging a per-order or per-booking fee as a step towards enhancing their unit economics.
According to the UBS report, these fees imposed by food delivery platforms on customers are essentially a source of increased revenue and contribute to improved unit economics. The report highlighted that Zomato’s introduction of the platform fee could directly result in a 70 basis point increase in its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin as a percentage of Gross Merchandise Value (GMV).
“While the immediate priority is to drive growth, the experience of mature markets shows consumers may be willing to pay more for delivery fees over time. Indeed, the recent introduction of Rs 2 platform fee by Zomato and Swiggy (without any visible impact on demand) demonstrates that consumers are broadly agnostic to marginal increases in costs. More importantly though, despite the delivery fee being flat as a % of AOV for Zomato (5-6% of AOV since FY20), contribution margin has improved from -11% to 5%, showing the flexibility on other revenue or cost levers,” it added.
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