India’s online food tech industry is forecast to double in value over the next two years, from about $4bn in 2019 to $8bn in 2022, as consumers grow in confidence ordering online and smartphone penetration continues apace.

That is according to a new report from Google India and Boston Consulting Group (BCG), the professional services firm, which said the sector is expected to register a compound annual growth rate of 25-30% over the forecast period.

The study, entitled Demystifying the online food consumer, is based on responses from around 1,500 consumers across 12 cities in India and asserts that the potential for food tech players to increase user frequency is “immense”.

According to the findings, peer or network advocacy (52%) is the single most important driver of first-time usage across all demographics, followed by marketing (19%), which is also a particularly strong driver in metro areas (26%) and among higher income groups (30%).

Discounts (13%), convenience (12%) and novelty (4%) also influence Indian consumers to order food online, although interestingly the survey found that variety of cuisines (35%) is the strongest driver for continued usage.

“Food tech has now made its presence in greater than 500 cities in India and with consumer confidence growing there are new opportunities for the players to ‘win with the consumer’ in an evolving market,” said Roma Datta Chobey, a director at Google India, in comments reported by exchange4media.

“Overall, online spending in India is rising rapidly and expected to grow at 25% over the next five years to reach over $130bn. Riding on the wave of rapid digitisation and steadily growing consumption, the reach of food tech companies has grown six times over the last couple of years and will continue to increase further,” she added.

However, it won’t all be plain sailing for leading food tech companies like Zomato to expand their user base because the report also identifies a series of barriers to adoption.

A fifth of respondents cite a lack of trust in the app as the main barrier to usage, while delivery charges (18%), food quality concerns (13%) and lack of customisation (10%) are other reasons why consumers have so far not experimented with online food ordering.

Sourced from Google, BCG, exchange4media; additional content by WARC staff