Why There Aren't Many International Food Brands From India
Reasons why companies are finding it difficult to operate outside and companies like Dominos are minting money in India at the same time
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The Indian QSR industry is a massive pie, at almost USD 40 billion and is continuing to grow at a staggering CAGR of 19 per cent. If the unorganised sector could be accounted for, then the total quick meals category in India would be estimated to almost USD 150 billion. With such a huge pie, when international brands are finding homes in India, why is it that Indian brands are reluctant to go international? In fact, why should they?
When in India…
While we are a rapidly developing economy, we still have high identifications of being a third-world country. Still, we have international brands across domains & categories, opening up at both top& mid-level centres. The QSR industry has also seen a surge in international (read American) brands opening up in metros, tier-II centres and several upcountry locations. But Indian QSR brands do not seem keen on exploding out of the country anytime soon.
With a population strength of 1.25 billion growing at an annual rate of almost 1.5per cent, we add approximately 18 million consumers annually. This is the population of Australia and half of Europe combined. With a market so huge, it makes sense for any player to not just open up, but also cater to localised taste buds to stay relevant. So, while KFC died out during its first stint for having stuck to a western hemisphere menu, in its second continuing stint it has become synonymous with Indian tastes and connects well with audiences both from its communications and product offerings. For Indian QSR chains, let's say Haldiram's, the expertise & comfort with the palette mixes and consumer demand understanding puts it at a distinct advantage for operating in India, rather than going outside and work to acclimatise the Indian diaspora & challenge local flavour profiles.
Why reinvent the market?
Dominos sells more pizza in India than anywhere else in the world. With 800+ of its almost 1200 stores in India, the demand is clearly peaking as compared to the rest of the world. India is an ever-rising market and it isn't economical for Indian players to operate outside of India. This is because of two reasons.
The number of consumers
The Indian diaspora in the US stands at 4.4 million, 4 million in KSA, 2.4 million in Malaysia, 2.8 million in the UAE, 1.8 million in the UK and almost 1.5 million in Canada. Assuming that Indian flavours are homogeneous (an oxymoron), the numbers are to small to work with multiple stores in a country, when one can have that many footfalls from a single region in India. A paper from the New York University states that there are 40,000 restaurants each for Chinese & Mexican, while only 5000 for Indian food across the continental United States. At such limited scope for Indian 'flavours, why should a QSR from India waste efforts in pushing for launching & break-evens in a foreign land?
Pricing & labour
Food production for Indian QSRs is a labour-intensive process With cheap labour & establishment costs easily available, it is a substantial expenditure to venture into the ENA markets with higher rentals, higher wage rates.
QSRs move primarily with younger consumers and India has the highest number of people in the age of 26, almost 200 million. The youth loves this food format because of the many flavours available, the fact that it is a go-to meal and that it doesn't hold them down physically to any place. Even with so many international brands, the Indian youth keeps to an Indian QSR at comfort level because of the flavour affinity and a service level which is closer home than just a cold transaction.