Growth Opportunities For International F & B Brands in India 2024

on Feb 27, 2024 | 6948 views

Written By: Shruti Agrawal

With a population exceeding 1.4 billion and being the country in terms of population and having a rapidly growing middle class, India continues to present lucrative opportunities for international Food and Beverage (F&B) brands seeking expansion.

Also in the world of liberalisation, globalisation and rapid urbanization, the Indian F&B market in 2024 remains dynamic and ripe for investment. The evolving preferences of Indian consumers, coupled with socio-economic developments and technological advancements, have created a fertile ground for international F&B brands to thrive.

Why International F&B Brands in India are Growing in India

  • Urbanization and Migration
    • Rapid urbanization in India has led to the emergence of bustling cities with diverse populations.
    • The migration of people from smaller towns and rural areas to urban centres has created a demand for global culinary experiences.
  • Changing Consumer Preferences
    • Indian consumers are increasingly exposed to global cuisines through travel, media, and digital platforms.
    • There is a growing curiosity and willingness among consumers to experiment with new and exotic flavours.
  • Rise of Urban Middle Class
    • The expanding urban middle class with higher disposable incomes is driving demand for international F&B brands.
    • Consumers seek quality, authenticity, and variety in their dining experiences, which international brands often provide.
  • Liberalization of F&B Sector
    • Favourable government policies and liberalization of the retail and F&B sector have encouraged foreign investments.
    • Streamlined regulations and improved ease of doing business have facilitated the entry and expansion of international brands.
  • Niche Market Segments
    • International F&B brands are tapping into niche market segments such as gourmet, organic, and specialty foods.
    • These brands offer unique products and experiences that cater to specific consumer preferences and lifestyles.
  • Digital Transformation
    • The proliferation of digital platforms, food delivery apps, and e-commerce websites has accelerated the growth of international F&B brands.
    • Brands are leveraging digital channels to enhance accessibility, engage with consumers, and drive sales.
  • Strategic Expansion
    • International brands are adopting various expansion strategies, including franchising, partnerships, and direct investments.
    • They are expanding their presence beyond major cities to reach a wider audience in tier 2 and tier 3 cities.
  • Adaptation to Local Tastes
    • International brands are customizing their menus and offerings to suit Indian tastes and preferences.
    • They are incorporating local ingredients, flavours, and culinary traditions into their offerings to resonate with Indian consumers.
  • Diversification of Product Portfolios
    • Brands are diversifying their product portfolios to cater to evolving consumer preferences and lifestyle choices.
    • They are introducing new products, variants, and limited-edition offerings to appeal to different segments of the market.

Market Trends of International F & B Brands in India

The Indian F&B market is projected to grow to nearly USD 622.67 billion by 2029 with a CAGR of 11.05% during the forecast period.

The eating-out trend has been growing exponentially in India, and the restaurant industry has evolved to a market size of USD 48 billion, expected to grow to as much as USD 78 billion by 2018.

International brands have a large market share in the Quick Service Restaurant (QSR) segment, with some of the major known brands such as McDonald's, Domino's, KFC, Subway, and Starbucks operating in India.

Despite the challenges of catering to diverse regional tastes and preferences, navigating regulatory frameworks, and establishing effective supply chains, international food and beverage brands continue to see India as an attractive opportunity for growth.

How To Expand The International F&B Brand in India

Expanding an international F&B brand in India requires a strategic approach that takes into account the unique characteristics of the market.

Here are several ways through which international F&B brands can expand their presence in India:

  • Market Research and Localization: Conducting thorough market research and understanding the cultural, dietary, and regulatory nuances of the Indian market is crucial. The F&B brands should tailor their marketing strategies, menu offerings, and operations to resonate with Indian consumers.
  • Franchising: Franchising is a popular and effective method for brands to expand. By partnering with local entrepreneurs or established franchisees, brands can leverage their expertise, local market knowledge, and resources to establish and operate outlets across various locations.
  • Company-Owned Stores: Establishing company-owned stores allows brands to have greater control over operations, branding, and customer experience. This approach is suitable for brands with the resources and infrastructure to manage their outlets directly.
  • Joint Ventures: Forming joint ventures with local companies or investors can provide brands with access to capital, distribution networks, and regulatory expertise. Joint ventures enable brands to share risks and resources while benefiting from the local partner's knowledge of the market.
  • Licensing Agreements: Licensing agreements involve granting a local entity the right to use the brand's intellectual property, such as trademarks and recipes, in exchange for royalties or fees. This allows brands to expand their presence in India without directly managing operations.
  • Strategic Partnerships: Collaborating with other businesses, such as hotels, malls, or retail chains, can help international F&B brands gain access to prime locations and a ready customer base. Strategic partnerships can also enhance brand visibility and credibility in the Indian market.
  • Online Delivery Platforms: Leveraging online delivery platforms and food aggregators allows international F&B brands to reach a broader audience and tap into the growing trend of online food ordering and delivery.

Partnering with popular platforms can significantly expand a brand's reach in India.

  • Social Media and Digital Marketing: Leveraging social media platforms, digital marketing campaigns, and influencer partnerships can help international F&B brands build brand awareness, engage with customers, and drive foot traffic to their outlets in India.

Top International F&B Brands Franchise In India

Subway Franchise

Founded in August 1965 by Fred DeLuca and Peter Buck in Connecticut and by 1982, Subway claimed to be the largest "sub chain" in the United States.

The brand entered India in 2001. The first restaurant was opened in New Delhi, and since then, Subway has expanded its presence to over 100 Indian cities with over 1000 restaurants as of 2017.

To start a Subway franchise in India, the requirements are:

  • Franchise fee: INR 6,50,000
  • Total investment: Between INR 75 lakhs and INR 1 crore.
  • Space requirements: Non-food court areas require at least 350 square feet, while food courts require at least 170 square feet.
  • Running costs: Approximately INR 1,00,000 per month.
  • Royalties and advertising fees: 3.5% to 8% of annual revenues.

Domino's Franchise

Domino's Pizza originated in 1960 in Michigan. Domino's began expanding into foreign markets in the mid-1980s. Domino's entered the Indian market in 1996, partnering with Jubilant FoodWorks Ltd., which now manages the majority of Domino's operations in India.

To start a Domino's franchise in India, the requirements are:

  • Franchise fee: To set up the first franchisee approximately INR 4.5 lakhs are required and for subsequent ones INR 2.25 lakhs.
  • Total investment: Between INR 50 lakhs and INR 75 lakhs.
  • Space requirements: Between 1,500 to 2,000 sq ft.

McDonald's Franchise

The brand was named after the founders, Richard and Maurice McDonald, who opened their first hamburger stand in California in 1940. The restaurant was later turned into a franchise by Ray Kroc, who bought the franchise rights from the McDonald brothers in 1955 and opened his first restaurant in Illinois.

McDonald's entered the Indian market in 1996. The brand predominantly operates in India through a franchise model. The first McDonald's franchise in India opened in New Delhi. Since then, McDonald's has adapted its menu to suit Indian tastes and cultural preferences, offering vegetarian options and unique products tailored to the local market.

To start a McDonald's franchise in India, the requirements are:

  • Franchise Fee: Approximately 30 lakh rupees (USD 38,000).
  • Minimal Investment Required: Around 1.5 crore rupees.
  • Required Total Investment: Includes 10 crore rupees in cash or bank balance.
  • Break Even Point: Estimated within 2–3 years.
  • Profit Margin: 14.60% on sales of 10 lakh rupees.

KFC Franchise

KFC, which stands for Kentucky Fried Chicken, was founded by Colonel Harland Sanders in the 1930s. The first "Kentucky Fried Chicken" franchise opened in Utah, in 1952.  KFC's presence in India has grown significantly since entering the market in the early 1990s. The brand focuses on appealing to young, urban Indians who seek Westernized dining experiences.

KFC India also offers vegetarian options, including the "So Veg, So Good" campaign. As of 2024, KFC has 395 restaurants in India, with plans to continue expanding its presence in major cities and metropolitan areas.

The requirements to start a KFC franchise in India are:

  • Franchise fee: INR 36 lakhs
  • Total investment: Between INR 1 cr-2 cr.
  • Space requirements: Require at least 1000-1500 square feet.
  • Royalties fees: 2% of annual revenues.

Overall, the outlook for international F&B brands in India in 2024 is optimistic, provided they navigate the market landscape strategically and deliver compelling offerings that resonate with Indian consumers' preferences and aspirations.

With the right approach, India holds immense potential as a key growth market for F&B companies seeking to expand their global footprint.

To learn more about the International F&B brands and the franchise opportunities, contact FranchiseBAZAR.

Disclaimer: The brands mentioned in this blog are the recommendations provided by the author. FranchiseBAZAR does not claim to work with these brands / represent them / or are associated with them in any manner. Investors and prospective franchisees are to do their own due diligence before investing in any franchise business at their own risk and discretion. FranchiseBAZAR or its Directors disclaim any liability or risks arising out of any transactions that may take place due to the information provided in this blog.

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