Friday, June 14, 2024

Agri-tech and retail innovations transforming the future of food

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India is experiencing a food industry transformation, powered by agri-tech and retail-tech integration. Agri-food tech startups secured $2.4 billion in 2022. Notable advances in pre-harvest agriculture, receiving 55% of agri-tech funding, enhance efficiency. Agri-tech solutions address post-harvest challenges, receiving 22% of funding, while market linkage  agri-tech and grocery retail tech drive e-commerce growth.

India is one of the top four food-producing countries in the world and the most  populous one. Despite the inherent complexities and fragmentation within India’s food value chain, it is currently undergoing a rapid and transformative shift, driven by the integration of agri-tech and retail-tech solutions. Agri-food tech startups in India raised a total of US$ 2.4 billion in funding in 2022.2 The Agribusiness Marketplace & Fintech as well as e-Grocery emerged as the most dynamic categories in terms of deal volume.

As per a report from the Ministry of Electronics and Information Technology (MeitY) digital technology-driven agriculture has the potential to generate an additional value of $65 billion by 2025. With only 1.5 percent penetration, these interventions are revolutionizing the food value chain (from farm to fork) in various ways – ranging from production, processing, and distribution to creating innovative and memorable retail experiences for customers.

Major growth drivers at play enabling the transformation are:

  • Rising rural internet, smartphone penetration
  • Digital infrastructure support: UPI, ONDC, e-NAM portal, etc.
  • Policy support: Digital Agri Mission and National Agricultural Market (e-AM) scheme
  • Advancements in deep-tech
  • Increasing preference for quick commerce
  • Policy support: Digital Agri Mission and National Agricultural Market (e-AM) scheme
  • Rising disposable income and increasing demand for quality food

Transforming pre-harvest agriculture

In the dynamic world of agriculture where age-old practices intersect with cutting-edge technology, the launch of pre-harvest agri-tech has marked a significant era of innovation. This multifaceted revolution uses digital platforms, biotechnology, and IoT devices to empower farmers and revolutionize their approach to the critical pre-harvest stages of crop cultivation. In 2022, this category of agri-tech received an impressive ~55 percent of the total agri-tech funding. From market linkage platforms mechanization, and precision agriculture driven by IoT devices, pre-harvest agri-tech is propelling providing access to fairly-priced, high-quality inputs, to crop advisory services, online credit options, biotech solutions, farm agriculture into a new age of efficiency, sustainability, and prosperity.

Enhancing post-harvest processes

After the production, farmers grapple with various challenges, such as diminished earnings due to wastage and non-availability of the fair price during selling. Lack of storage infrastructure and quality quintessential within the supply chain further exacerbates losses and fuels price uncertainties.

After the harvest, agri-techs provide the much-needed solution to these issues by providing easy access to supply chain resources, such as micro cold storage facilities, spectral quality testing machines, and block chain solutions offering traceability for produce. Automated machine streamline the grading, sorting, and packaging of agricultural products, thereby enhancing efficiency and profitability for farmers. In 2022, this category of agri-techs received ~22 percent of the total agri-tech funding

Farm-to-fork journey: Market access tech and beyond

Market linkage agri-tech platforms dealing with farm output are connecting farmers directly with buyers, eliminating intermediaries, ensuring fair prices for their produce, and reducing wastage. These platforms provide real-time market information, enable online transactions, and streamline supply chain logistics, benefitting both farmers and consumers. In 2022, this category of agri-techs received ~22 percent of the total agri-tech funding.

Grocery retail tech: Revolutionizing e-commerce in the food value chain

In the ever-evolving landscape of India’s retail sector, technology is playing a pivotal role. India currently ranks amongst the top five retail markets globally and is projected to become the third largest consumer market by 2030, after China and the US.27 The online retail segment, valued at US$70 billion in 2022, is expected to skyrocket to US$325 billion by 2030.

This surge in growth is underpinned by a spectrum of transformative technological innovations that are helping retailers decode customer preferences, ensuring personalized shopping experiences. E-commerce platforms and mobile apps are upending traditional retail, offering convenience and accessibility. The integration of digital payments and contactless transactions is reshaping how consumers make purchases. Big data analytics is empowering retailers to gain insights into consumer behavior, optimize inventory management, and  enhance supply chain efficiency.

New e-commerce models, such as social commerce, D2C, quick commerce, and live commerce, have emerged in the past few years to address previously unmet consumer needs. These models currently account for about 16 percent of online retail sales in India.

Increase in the number of active internet users, greater e-commerce penetration, increased use of social media platforms, and favorable government initiatives have played a vital role in reshaping the world of Commerce.

ONDC platform allows offline retailers to compete with larger online retailers and empowers consumers to compare prices, take advantage of bulk buying opportunities, and benefit from data-driven insights. With over 470 cities having seller penetration, and over 75,000 sellers on the network.33 ONDC is expected to hit 1 lakh transactions per day, for retail and food delivery, by January next year.

Emergence of Indian hyperlocal grocery delivery brands and dark stores

Dark stores enhance operational efficiency, accelerate delivery, and cut down on logistics expenses. These facilities stock products to fulfil online orders, particularly for the final delivery stretch. These stores hold the potential to reduce logistics costs by a substantial margin, estimated at between 10 percent and 30 percent.

This quick commerce firm became the first unicorn in 2023 running more than 200 dark stores in 7 cities and delivering over 6,000 grocery products. An Indian conglomerate-owned quick-commerce platform has 300+ dark stores and plans to expand into 20-25 new tier II cities in FY24. Cloud kitchens are maximizing returns from online food aggregators through specialized brands.

The Indian cloud kitchen market was estimated at US$ 800 million in 2022.38 Cloud kitchens are aiming to gain an extra edge by standardizing the quality and taste, while minimizing time via kitchen automation tools led by AI and machine learning

Kirana tech aims to boost efficiency and profitability in small family-owned kirana stores, which dominate over 80 percent of the market share.39 A major e-commerce player has launched a “smart commerce” initiative to empower local stores to go digital. It established online storefronts benefitting 1.5 lakh kirana stores with digital technology.


India’s food industry is currently undergoing a profound metamorphosis, driven by the convergence of agri-tech and retail-tech solutions. The significant funding garnered by agri-food tech startups in 2022 underscores the industry’s growth potential. These groundbreaking advancements encompass every stage from pre-harvest agriculture to post-harvest processes, as well as market linkage platforms and innovations in grocery retail tech. This transformation not only enhances the efficiency and sustainability of the food value chain but also redefines how consumers interact with and access their food.

The rapid adoption of technology, the rise of e-commerce, and the emergence of innovative models like dark stores and cloud kitchens are poised to further revolutionize the sector, with a significant impact on both businesses and consumers. The future of India’s food industry looks promising, offering opportunities for growth, efficiency, and sustainability in a rapidly evolving landscape.

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