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Food Sector Sees Demand Surge Post-GST
9 Sep
Summary
- GST cuts boosted food demand, making products more affordable.
- Inflation is a concern, with edible oil prices rising significantly.
- ITC is expanding into fresh food with short-shelf-life products.
The Indian food sector is in a new phase of demand, benefiting from GST rationalization that reduced prices and increased affordability.
While GST cuts significantly boosted demand across urban and rural markets, rising inflation, especially in edible oils, presents a challenge. ITC has absorbed some price hikes through cost management and supply-chain efficiencies. Geopolitical uncertainties and weather disruptions remain key monitoring points.
ITC Foods aims for leadership in all segments, capitalizing on the substantial growth potential in India's packaged food market, which has only 14-15% penetration. Consumer demand for healthier options, low in sugar, fat, and salt, with higher protein content, is a significant driver. The company is innovating to combine nutrition, taste, and affordability.
Festive seasons are increasingly opportunities for premiumisation, with consumers trading up due to rising aspirations and incomes. ITC is curating premium gifting options, including chocolates and health-focused products, leveraging quick commerce. Affordable premiumisation is a focus, offering innovative products at accessible price points.
El Nino's potential impact on agricultural produce quantity and quality is being closely monitored. ITC's fresh food initiative, launched earlier in 2026, includes short-shelf-life products like ready-to-eat chapatis and fresh snacks, requiring precise demand forecasting and supply chain management.
The fresh food business is also scaling up through food delivery apps, offering freshly cooked cuisine under various brands. This expansion requires careful management of short shelf lives and precise replenishment.
