Assessment of the

confectionery and
café market in India
August 2023

Consulting
Contents
1 Overview of the Indian food services industry ....................................................................................................................... 4
1.1 Overview of the food services industry ..............................................................................................................4
1.2 Overview of business models in the Indian food services industry .......................................................................5
1.3 Estimated size of the Indian food services industry .............................................................................................6
1.4 Growth drivers of the food services industry ......................................................................................................6
1.5 Challenges facing the food services industry ......................................................................................................7
1.6 Overview of India’s consumption spend ............................................................................................................8
2 Indian bakery market ............................................................................................................................................................... 9
2.1 Overview of biscuits segment .........................................................................................................................10
2.2 Overview of chocolates and confectionery segment ..........................................................................................11
2.3 Key growth drivers for the bakery industry in India ..........................................................................................13
2.4 Key market trends observed in the bakery industry in India ...............................................................................14
2.5 Key challenges faced by the bakery industry in India ........................................................................................14
3 Market assessment and outlook for the café market in India ............................................................................................. 15
3.1 Overview of the café market ...........................................................................................................................15
3.2 Key growth drivers for the industry .................................................................................................................16
4 Competitive assessment .......................................................................................................................................................... 17

Consulting 2
List of figures

Figure 1: Growth set to spurt significantly for restaurants ...................................................................................................................... 6

Figure 2: Trend in PFCE .................................................................................................................................................................... 8
Figure 3: Spending by activity (fiscal 2018 vs fiscal 2022) .................................................................................................................... 8
Figure 4: Trend in bakery market growth, fiscals 2018 to 2028............................................................................................................... 9
Figure 5: Trend in biscuits segment growth, fiscals 2018 to 2028 ......................................................................................................... 10
Figure 6: Organised vs unorganised biscuit players ............................................................................................................................. 11
Figure 7: Trend in chocolate-based confectionery market, fiscals 2018 to 2028 ...................................................................................... 11
Figure 8: Organised players hold a major share in chocolate-based confectionery market........................................................................ 12
Figure 9: Estimated break-up of domestic and international brands in the Indian café chain industry (fiscal 2023) ..................................... 15
Figure 10: Market size of Indian café chain industry ........................................................................................................................... 16

Consulting 3
1 Overview of the Indian food services industry
1.1 Overview of the food services industry

Source: CRISIL MI&A Research

The Indian food services industry, which has been dominated by unorganised entities such as local restaurants and roadside
eateries, has witnessed growth in the organized food sectors in the recent years. A key reason to the growth of this segment has
been its offering of quality and service consistency assurance across outlets as well as quality food produce with more control
over the food supply chain.
Unorganised entities such as local restaurants and roadside eateries, which include street stalls, hawkers, trolleys and
standalone sweet shops have dominated the Indian food services industry and continue to hold a major share in the total food
and beverage (F&B) service industry.

On the other hand, organised outlets offer quality and service consistency assurance across outlets as well as quality food
produced with more control over the food supply chain. The organised format includes quick service restaurants (QSRs), café
chains, bars/lounges and dining outlets. The organised food services industry in India comprises independent/standalone as
well as chain formats of restaurants, bars, and cafes. On the basis of food service formats, the industry can be categorised as
follows:

• QSRs: offer processed fast foods such as burgers and pizzas at low prices, typically with self-service or minimal service,
and also provide home delivery and takeaway services; usually located in public places such as malls and entertainment
zones
• Cafes: offer coffee and other beverages, along with quick bite foods such as sandwiches in a casual atmosphere with
minimal services
• Bars/lounges: primarily offer alcohol-based beverages, along with snacks and full-fledged meals, in an ambience varying
from loud music for party gatherings to a social and cordial environment
• Casual dining restaurants: offer food at moderate prices in a casual atmosphere with services provided by semi-trained
staff, and also provide home delivery and takeaway services for food items
• Fine dining restaurants: offer fine quality food, typically of a particular cuisine, at high prices in an elegant ambience with
services provided by highly trained staff, and usually located in premium hotels and prime locations in major cities

Consulting 4
1.2 Overview of business models in the Indian food services industry

Source: CRISIL MI&A Research

The food services industry broadly operates through two business models – dine-in and delivery – based on the point of food
consumption.

Dine-in restaurants
In case of dine-in restaurants, the patrons consume the food served by the restaurant on the premises of the restaurant itself.
Food is prepared on-premises in the kitchen, which is typically attached to the dining area. Based on operational control, this
business model can be further sub-divided into two categories:

• Company-owned outlets: In this case, the company that holds the rights to the restaurant brand owns the outlet and
completely manages the operations, which not only gives it complete control over pricing but also entails higher financial
and operational risk
• Franchisee-owned outlets: Such model includes licensing a restaurant’s brand to a third party who operates the business,
adheres to standards, and shares revenues, allowing the licensor to earn fixed revenue without bearing financial or
operational risks.

Food delivery
In case of food delivery, food is delivered to consumers at a place of their choice for consumption. The food is prepared in the
on-premises kitchen or a standalone kitchen, depending on whether the restaurant has a dine-in facility. This business model
can be further sub-divided into three categories:

• Restaurant delivery fleet: In this case, restaurants use their own workforce to deliver food to customers, who place their
orders directly with the restaurants. The restaurant pockets the entire order transaction value, while bearing the delivery
cost, which may be passed on to customers
• Delivery aggregators: In this case, a restaurant lists itself on restaurant aggregator platforms, where customers can find
the restaurants and place their orders. The aggregator handles technology integration, delivery & logistics, and marketing
for a fixed fee aligned with a portion of the transaction value
• Cloud kitchens: In this model, a restaurant operates without a dining area, with choice of managing its marketing and
delivery on its own or through delivery aggregators. Such restaurants save rental costs but see a dip in transaction value
due to the absence of premium ambience
Most dine-in restaurants also provide food delivery to consumers in their vicinity through their own fleet and food delivery
platforms.

Consulting 5
1.3 Estimated size of the Indian food services industry
Domestic restaurant services industry estimated to grow at 10-12% CAGR till fiscal 2028
The Indian food services industry was valued at an estimated Rs 4.6 trillion in fiscal 2020, growing at a CAGR of around 10%
from FY18 to 20. Growth was driven by India’s rising disposable income and an uptick in discretionary spending on eating
out. Increasing availability of restaurants offering a variety of cuisines, along with the proliferation of food-ordering platforms,
has also aided growth of the food services industry. But the industry saw a heavy dip in fiscal 2021 due to the Covid-19
pandemic which led to nationwide lockdowns, limited mobility of people, work-from-home and a general fear of traveling
outside.

In fiscal 2023, the industry is estimated to have grown 25-30% (YoY) to about Rs 4.1 to 4.3 trillion backed by increased
mobility and higher discretionary spending.

Figure 1: Growth set to spurt significantly for restaurants

(Rs trillion)
8.0
6.5-7.5
7.0

6.0

5.0 4.6
4.2 4.1-4.3
3.8
4.0
3.3
3.0 2.5

2.0

1.0

-
FY18 FY19 FY20 FY21 FY22 FY23E FY28P
E-Estimated, P-Projected
Source: CRISIL MI&A Research

Going forward the trend of higher consumption is expected to continue, especially among millennials who like to try new
restaurants and cafes to enhance their social presence. Also, the rise in disposable income, entry of new brands, an increase in
presence of QSRs in tier 2+ cities, and lack of time to cook among working professionals is also expected to support the
growth of the Indian food services market. Food aggregators also had a significant effect on the market, especially during the
pandemic in fiscal 2021 and 2022. With an increase in smartphone penetration, the rise of cloud kitchens in new category
restaurants, the food aggregators would further enable growth in the Indian food services market. As a result, the industry’s
revenue is expected to grow at a 10-12% CAGR to ~Rs 6.5-7.5 trillion by fiscal 2028 from fiscal 2023.

1.4 Growth drivers of the food services industry

Gains of a growing economy and rising income levels trickle down to food services
The Indian economy grew at a 5.7% CAGR between fiscals 2012 and 2023, which resulted in a strong consumption sentiment.
Rising income levels due to the growing economy have improved the spending power of India’s population, especially in
urban areas, encouraging consumers to spend more on food services.

Demographic dividend to boost discretionary spending on food services

As per World Bank data, the share of people in the age group of 15-64 in India’s population, largely touted as the country’s
demographic dividend led by young students and the working population, increased from 60.9% in 2000 to 67.5% in 2021. The
share is expected to increase further in the next few years, along with an uptick in the earning and spending ability of this set of

Consulting 6
consumers. The preference of youngsters for eating out, awareness about global cuisines, and an increase in dependency on
food ordering due to a busy lifestyle is expected to drive consumption-driven growth.

More families ordering and eating out due to the growing presence of women in working population
Economic growth in India has led to increased participation of women in formal jobs. The worker population ratio, defined as
the percentage of employed persons in the population, for women aged 15 & above increased from 22% in 2017-18 to ~32% in
2021-22.

Figure 2: Worker population ratio: women in the age group of 15 and above (in %)

40.0 (%)
31.4 31.7
28.7
30.0 23.3
22.0
20.0

10.0

-
2017-18 2018-19 2019-20 2020-21 2021-22

Source: PLFS annual report 2021-22

Aggregators have eased discovery of restaurants and cuisines

Aggregators provide listings of restaurants in any desired location, and also enable customers to search specific eateries
serving cuisines of their choice. Apart from providing essential details and peer reviews of restaurants, aggregators allow users
to reserve tables at select restaurants. Food delivery aggregators help users order food online from select restaurants and
provide seamless delivery through their fleet.

Aggregators also run loyalty programmes and offer discounts to incentivise higher dine-in footfall and food delivery order
volume. These programmes encourage higher spending on food services.

1.5 Challenges facing the food services industry

Raw material costs are subject to weather and economic conditions

Food material prices, influenced by factors like monsoon, supply chain inefficiencies, and inflation, contribute to a significant
portion of a restaurant's operating costs, impacting their margins in a competitive market.
Lease rental cost for a restaurant depends on its format and location. It could be high if the outlet is situated at a prime location
or in a mall. Rentals are significant fixed costs, and they increase with expansion. Increase in rental costs could impact the
profitability of the business.

Constantly evolving customer preferences keep R&D costs high

To stay relevant with customers who have exposure to social media, food blogs, and aggregator platforms, restaurants must
stay updated with industry trends and innovate their offerings.

Stringent regulatory environment increases compliance costs

Starting a restaurant in India requires obtaining multiple licences, including a food safety licence, health or trade licence, eating
house licence, no objection certificate (NOC) from the fire department, and shop and establishment act licence. These need to
be secured from various authorities and require substantial time and paperwork. The lack of single window licencing and the
complexity of the system may increase the time and effort spent on securing requisite licences, resulting in high compliance
costs.

Consulting 7
1.6 Overview of India’s consumption spend
The country’s PFCE, an indicator of consumer spending, clocked a 6% CAGR, to reach ~Rs 93.4 trillion by the end of fiscal
2023. In fiscal 2021, PFCE declined 5.2% due to strict lockdowns, limited discretionary spending and disruptions in demand-
supply dynamics.

Figure 3: Trend in PFCE

(Rs trillion)
100 14.0%
11.3%
90 12.0%
80 8.0% 8.2% 10.0%
7.3% 7.1% 7.4%
70 6.3% 6.2% 8.0%
5.5% 5.1%
6.0%
60
4.0%
50
2.0%
40
0.0%
30 -2.0%
20 -5.2% -4.0%
10 -6.0%
49 52 56 59 64 69 73 79 83 78 87 93
0 -8.0%
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21RE FY22RE FY23P

PFCE at Constant prices in Rs Trillion YoY growth(%)

Source: MoSPI, CRISIL MI&A Research

RE: revised estimates, P: projected

Figure 2: Spending by activity (fiscal 2018 vs fiscal 2022)

Food and non-alcoholic beverages

16% Transport
1% Housing, Water, Eletricity & other fuel
16% 29%
2% 27% Clothing & Footwear
3% 1%
2% Health
3%
2% 2%
Education
3% 3%
4% Furnishing, household equipment and routine household
4% maintenance
4%
17% Restaurants & hotels
5% 6%
14% Communication
17%
6%
Alcoholic beverages, tobacoo and narcotics
13%
Recreation and Culture

Note: Inner circle – FY18; Outer circle – FY22

Source: MoSPI, CRISIL MI&A Research

The share of Food and non-alcoholic beverages in the PFCE, increased from 27% in fiscal 2018 to 29% in fiscal 2022.

Consulting 8
2 Indian bakery market

[Note: For this report, CRISIL MI&A Research has included biscuits, chocolates, and cakes & pastries, and excluded breads, in the
confectionery market.]

The Indian bakery market is estimated to have reached ~Rs 919 billion in fiscal 2022 from ~Rs 603 billion in fiscal 2018,
clocking a CAGR of 11%. Some of the factors that have contributed to the industry’s growth are rising disposable income,
increased penetration in rural areas, gradual premiumisation, change in lifestyle and new product launches. The industry’s
revenue is expected to grow at 11-12% CAGR to reach Rs 1,800 – 1,850 billion by fiscal 2028 from 1,050 – 1,070 billion in
fiscal 2023.

Figure 4: Trend in bakery market growth, fiscals 2018 to 2028

(Rs billion)
2,000 1,800-1,850
1,800
1,600
1,400
1,200 1,050-1,070
1,000 919
800 603
600
400
200
-
FY18 FY22 FY23E FY28P
Note: E — estimated; P — projected
Source: CRISIL MI&A Research

Bakery market by segment, fiscal 2023

11%

14%
Biscuits
Chocolates
Sugar Based Confectionery
55%
Cakes and Pastries

20%

Source: CRISIL MI&A Research

Consulting 9
The biscuits segment dominates the bakery market with an estimated 55% share in fiscal 2023, followed by chocolates (20%)
and sugar-based confectionery (14%). The penetration of organised players is estimated to have reached around 74% by the
end of fiscal 2023. The chocolates segment is highly organised, with penetration of 86-88% as of fiscal 2023.

Chocolates and confectionery items are expected to witness an uptick in fiscal 2024. Improved penetration of the organised
snacks sector, led by the pandemic, and new product offerings in regional flavours are expected to drive industry growth this
fiscal.

2.1 Overview of biscuits segment

Biscuits dominates the confectionery market in India
The biscuits segment dominates the domestic confectionery market, backed by high distribution reach, come in a wide variety
of options, and are cheaper than other bakery products.

Biscuits are considered a mass consumption product usually consumed as a snack between meals. Though biscuits are widely
consumed in urban as well as rural areas, the country's per capita consumption remains significantly low at 2-2.5 kg per
annum, as against 10 kg in the US and 4.5-5 kg in Southeast Asia, due to the availability of several other traditional snacking
options. In recent years, rising urbanisation and the expanding variety of biscuits and cookies have driven the demand for these
products.

Figure 5: Trend in biscuits segment growth, fiscals 2018 to 2028

1,000 890-920
900
800 580-600
700
600 505
500
400 321
300
200
100
-
FY18 FY22 FY23E FY28P
Note: E — estimated; P — projected
Source: CRISIL MI&A Research

Between fiscals 2018 and 2023, the domestic biscuits segment is estimated to have clocked a healthy 12-14% CAGR in value
terms, driven by increased consumption amid moderate price hikes by manufacturers. Steadily rising population and disposable
income, increased penetration of manufacturers into rural areas, and new product launches, especially for the health-conscious,
also contribute to the growth of this segment.

Biscuit segment to continue its growth trajectory

CRISIL expects the biscuit segment to clock 8-10% CAGR between fiscals 2023 and 2028. Last fiscal, the segment is
estimated to have grown around 16% on-year, owing to price hikes by players to counter rising input costs. Demand in this
segment is expected to grow backed by the changing lifestyle, rising trend of any-time snacking, preference for product
consistency, rising premiumisation, and growing demand for on-the-go snacks especially among the urban workforce.

Moreover, supply-side factors such as focus on expanding the distribution network, innovative packaging, and launch of a
wide range of products (including healthier options) by key manufacturers and new D2C biscuit brands will continue to propel
the market.

Organised players hold a majority share

The biscuit segment is dominated by organised players, with estimated ~80% market share in fiscal 2022. Biscuits are
generally manufactured in large scale and have minimal scope for customisation, unlike cakes and pastries. Also, given their
small ticket size compared with cakes and pastries, the segment thrives on volume sales.

Consulting 10
Figure 6: Organised vs unorganised biscuit players
100%
77% 80%
80%

60%

40%
23% 20%
20%

0%
FY18 FY23E
Organised Unorganised
Note: E — estimated
Source: CRISIL MI&A Research

In terms of CAGR, the organised segment outpaced the unorganised segment between fiscals 2018 and 2023, driven by an
increase in company investments, an improved distribution network, higher penetration in rural areas, launch of innovative
products and their easy availability, and increasing branding and promotional activities.

2.2 Overview of chocolates and confectionery segment

The domestic confectionery (chocolate) segment is a part of the bakery market and is sub-divided into chocolate-based
confectionery and sugar-based confectionary.

Chocolate-based confectionery, which includes bars and candies, commands a larger market share by value because of
premium pricing over sugar-based candies. However, in terms of volume, sugar-based confectionery dominates the market
because of easy storage and more variety. Sugar-based confectionery is further broken up into segments. Based on value, the
hard-boiled candies segment holds the largest share, followed by gums and eclairs.

Figure 7: Trend in chocolate-based confectionery market, fiscals 2018 to 2028

450
380-400
400
350
300
250 210-220
190
200
150 121
100
50
0
FY18 FY22 FY23E FY28P
Note: E — estimated, P — projected
Source: CRISIL MI&A Research

In the last four years, the chocolate-based confectionery market grew ~12% to an estimated Rs 190 billion in fiscal 2022. The
growth was led by a gradual rise in the country’s per capita consumption, which was estimated at ~150 gm in fiscal 2012, as
against just 40 gm in fiscal 2005.

The rise in consumption of chocolates was driven by improvement in cold-chain storages, which has helped players store
chocolates at warehouses near rural areas. Furthermore, at the retail level, a decline in power cuts has helped retailers use
refrigerators regularly, especially in rural areas. An increase in product offerings and push-marketing strategies adopted by
most players have also helped.

Consulting 11
In metro cities, increasing disposable income, premiumisation, rising health consciousness, and shifting preference from
traditional sweets are increasing demand for premium chocolates.

Outlook for chocolate-based confectionery market good

The chocolate-based confectionery market is expected to log a CAGR of 12-14% between fiscals 2023 and 2028, driven by the
expected rise in premiumisation, increasing trend of gifting chocolates on special occasions, improving infrastructure (such as
uninterrupted power supply), better storage facilities (refrigerator provided by manufacturers), and availability of sugar-free
chocolates.

Figure 8: Organised players hold a major share in chocolate-based confectionery market

10-12%
13%
15%

Organised
Unorganised

85%
87%
87-90%

Note: Inner circle — fiscal 2018; middle circle — fiscal 2023E; outer circle — fiscal 2028P
Source: CRISIL MI&A Research

Organised players dominate the segment with ~87% share, primarily owing to high entry barriers in terms of production
expertise for manufacturing high-quality, premium-priced chocolate bars. The recipes used to make chocolates are difficult to
reproduce, and the technological requirements for manufacturing require heavy investment.

Within the cakes and pastries market (including bakery snacks), the organised segment (bakery chains) is estimated to have
accounted for 29% share in fiscal 22, as against ~27% share in fiscal 2018. Between fiscals 2018 and 2023, the premium
segment logged 17-19% CAGR, outpacing the 9-10% CAGR of the overall cakes and pastries market.

The premium segment is estimated to have accounted for 13% of the overall cakes and pastries market last fiscal, up from
~10% estimated in fiscal 2018.

The higher trajectory of the organised market (bakery chains) was on account of increased consumer preference for quality, the
ability of the segment to provide standard offerings across locations, a wider distribution network, affordable pricing, etc.

Table 1: City Wise - Key bakery chains in major cities

City Premium bakery chains/ brands No of outlets
Ahmedabad TGB Cafe n Bakery 33
Smoor 27
Slurpy Shakes 25
Bengaluru Oven Fresh 26
WarmOven Cake & Desserts 26
Sweet Chariot Café 17
Chandigarh Nik Baker's 5
The Old Madras Baking Company 4
Cake Park 12
Chennai
Cake Waves 22
The Cake World 37

Consulting 12
City Premium bakery chains/ brands No of outlets
FB Cake House & Sweets 67
L'Opera 16
Honey & Dough 9
Theobroma 39
Delhi-NCR Breadz 3
Choko La 17
Crust N Cakes 3
Flury’s 1
Euphoria 12
Hyderabad
BrownBear 13
Kochi KR Bakes 12
Flury's 54
Kolkata Paris Café 2
Krazy For Chocolates 10
Baker Street 11
Flury's 8
Mumbai Theobroma 43
LSD - Love Sugar & Dough 4
The Pastel Works Co 2
Note: The outlet count is as of Aug 08, 2023, via secondary research. This may not be exhaustive.
Source: Industry, Company websites, CRISIL MI&A Research; Flury’s data basis outlet count provided by client including café, tea room and
kiosks outlets

Going forward, the growth will be supported by the growing influence of western bakery products, willingness of the young
population to explore healthy snack options, and moderate premiumisation in tier II and III cities. The premium bakery
segment is expected to account for 14-16% of the overall cakes and pastries market by fiscal 2028.

2.3 Key growth drivers for the bakery industry in India

Biscuits
Gradually rising disposable income
• The consumption of bakery and confectionary products is linked to disposable income, which is rising steadily in India.
The demand for this segment will increase with economic recovery and rising consumer spending.

Increased focus on healthy products

• The pandemic led to consumer awareness regarding healthier food choices, resulting in a rise in demand for nutritious
bakery products.

Low per-capita consumption

• Per-capita consumption of biscuits is only ~2.5 per kg per annum in India, whereas it is 10-12 kg in the US, the UK, and
other developed nations due to the availability of traditional snacks options.

Cakes, pastries, and chocolates

Innovation and affordability
• Demand for pastries and cakes is driven by innovations in flavour, design, and affordability, Increased focus on innovation
is expected to benefit the sector.

Consulting 13
Increasing trend of gifting
• The trend of gifting cakes and pastries during festivities is expected to positively impact the industry.

Cafés
• Cafés that offer a variety of beverages and bakery products, including cakes and pastries, are gaining popularity. The
rising trend of socialising, especially among the youth, will continue to drive the demand for such cafes.

2.4 Key market trends observed in the bakery industry in India

Going organic
• Increasing consumption of organic products is leading to bakery owners taking the organic route, especially in key urban
cities. These products use organic ingredients and do not have added preservatives. Organic ingredients used in baking
include organic butter, flour, and sugar or natural sweeteners.

Sugar-free bakery products

• Owing to increasing awareness regarding the adverse health impacts of sugar, young people are trying to stay off sugar.
Hence, bakers have started offering sugar-free bakery products, which are witnessing growing demand, especially in key
urban cities.

Growing online presence

• With a rapidly developing e-commerce landscape, online ordering of cakes and flowers is on the rise. The growing
number of bakery chains and robust growth in the overall industry have led to bakeries selling their bakery products,
especially cakes and pastries, on online portals. Online cake ordering, though largely restricted to major cities in India, is
steadily increasing.
• Unorganised bakery players, who do not have their own website or delivery system for online ordering, are benefitting
from the rise of food aggregators.

Presence across all formats

Bakery chains, especially premium ones, have been opening outlets across all formats—in-store, kiosks (at airports), and
restaurants (in order to tap into customers of all types and across all demographics.

2.5 Key challenges faced by the bakery industry in India

Rapidly changing consumer needs
• There has been a rapid change in the demand for bakery products, with consumer preference shifting to organic, natural,
and sugar-free products. The bakery segment needs to have adequate capacity to meet the new-age demand.

Low entry barriers

• The bakery industry is highly unorganised, largely on account of low capital investments (at least for standalone and home
bakers) and limited technical expertise required.

Consulting 14
3 Market assessment and outlook for the café market in India
3.1 Overview of the café market
Cafés sell light meals and non-alcoholic drinks, such as tea, coffee, and other beverages. Light meals include savoury snacks,
such as sandwiches, open toasts, continental starters, and breakfast, along with bakery items such as muffins, cakes, and
pastries. They offer a casual meeting place for customers to engage with their friends, colleagues, and family members.

Cafés have value proposition as centres of social interaction. Some cafés also offer reading spaces and books or corners to
conduct ones’ regular business activities. Amid increasing ubiquity of internet usage, cafés also offer Wi-Fi services for its
patrons to connect to the internet via their devices, encouraging them to use the coffee table as a desk and spend more time at
the establishment.

Indian brands dominate café chains

Domestic Indian brands, such as CCD, Café Mocha, Chai Point, and Chaayos, dominate the café chain industry in India with a
share of 52-57% in fiscal 2023, while the rest is covered by international brands such as Starbucks and Costa Coffee. The share
of Indian brands was even higher in fiscal 2020, at 72-77%. The dip in the market share of domestic cafe players can be
attributed to the decline in the market share of CCD, which was the market leader in fiscal 2020, and rise of international café
chains, such as Starbucks and McCafé, which saw positive growth from fiscals 2020 to 2022 despite the impact of the
pandemic.

Figure 9: Estimated break-up of domestic and international brands in the Indian café chain industry (fiscal 2023)

52-56% Player-wise 44-48%

Indian Brands segmentation International Brands

Source: CRISIL MI&A Research

Indian café chain space to grow at healthy pace up to fiscal 2028

The Indian café market recovered to pre-Covid-19 levels in fiscal 2023 following subsiding of infections and consumers once
again eating out, and several corporates restarting offices, among other tailwinds. Between fiscals 2023 and 2028, the Indian
café market is expected to grow at 19-21% CAGR, reaching Rs 78-82 billion on continued healthy demand owing to increase
in disposable incomes, favourable demographics, rising aspirations of the middle class, penetration into newer markets by
organised players, increasing focus on health and wellness, and technological advancements offering convenience.

Consulting 15
Figure10: Market size of Indian café chain industry
90 78-82
80
70
60
47-49
50
37
40
27
30
20
10
-
FY18 FY22 FY23E FY28P
E: Estimated, P: Projected
Source: CRISIL MI&A Research

3.2 Key growth drivers for the industry

Growing café culture among Indian youth
Coffee shops have grown in appeal among the young people as these offer high-quality coffee with a social environment and
provide services such as wi-fi. Within the space, products such as cold brew coffee and chocolate-based beverages are seeing
high demand from the younger population.

Tea cafés are gaining a foothold by introducing traditional drink in modern formats
In India, tea has typically been prepared at home or consumed at roadside tea stalls or in cafeterias / canteens. However, lately,
tea cafés and outlets have grown in presence. The modern outlets are offering tea in a café environment with light snacks,
targeting the working class.

Increased discretionary consumption supporting café industry

Rising per capita income and discretionary spending are supporting the growth in café industry in India. Several coffee and tea
shops in urban India are being opened, with the added value proposition of offering food and beverages and a place for social
interaction.

Public spaces have led to demand of new service formats such as kiosks
Previously, kiosks of organised F&B players were only restricted to malls or shopping streets. However, with growing
urbanisation and development of public infrastructure, the options have increase to metro stations, transportation hubs and
highways. Kiosks are a relatively new format, entering the retail spaces, such as shopping malls and metro stations.

3.3 Key industry trends and recent developments

Riding on the success of domestic and international café outlets and enthused by demand from consumers, the Indian market
has also seen the emergence of domestic brands.

Table 2: Key Investment deals in the café industry

Date Player Investors Funding
January 2023 Blue Tokai A91 Partners and others $30 million
June 2022 Chaayos Alpha Wave Ventures and others $53 million
December 2021 Third Wave Coffee Sujeet Kumar, Arpan Sheth, and others $6 million
Source: News articles, CRISIL MI&A Research

Consulting 16
4 Competitive assessment
Flurys Profile

Flury’s Swiss Confectionery Pvt Ltd was incorporated in May 1946, with first Flury’s store started at 18, Park Street, Kolkata
by Mr and Mrs J Flury in 1927. It was acquired by the Apeejay Surrendra Group in 1965. Flury’s operates tea-room outlets
that also serve confectionery, bakery, and breakfast. Flurys Swiss Confectionery Pvt Ltd, has, vide a Business Transfer
Agreement dated 19 December 2019, transferred business of the brand “Flurys” to Apeejay Surrendra Park Hotels Limited
with effect from 1st October 2019.

Key offerings
Bakery Food Chocolates Beverages
Cakes, cookies, cheesecakes, Breakfast, croissants, Gourmet chocolates Freshly brewed coffee, hot
pastries, brownies, muffins, sandwiches, French toast, coffee, cold coffee, iced tea,
bread patties, pancakes, quiches, on flavour-infused tea, sundae,
toast, bagel juices, milkshakes
Source: Company website, CRISIL MI&A Research

Geographical presence

As of 31st March,23, Flury’s operates 68 outlets across Kolkata, New Delhi, and Mumbai in café, restaurant and kiosk formats.
Please note - Flurys store data is basis count provided by client

Competitive assessment of key players

Revenue

Revenue (Operating + non-Operating income in YoY Growth YoY Growth

CAGR %
Players Rs million) % (FY21- % (FY22-
(FY21-FY23)
FY21 FY22 FY23 FY22) FY23)
Flury’s Swiss
Confectionery Pvt Ltd 178 246 382 38% 55% 47%
(Flury’s) #
Bliss Chocolates India
490 836 NA 71% NA NA
Pvt Ltd (Smoor)*
French Bakery Pvt Ltd
130 230 NA 76% NA NA
(L’Opera) *
Theobroma Foods Pvt Ltd
1224 2560 NA 109% NA NA
(Theobroma)*
Barista Coffee Company
377 540 NA 43% NA NA
Ltd (Barista) #
Coffee Day Enterprises
9753 6519 10331 (33%) 58% 2%
Ltd (Café Coffee Day) #
Tata Starbucks Pvt Ltd
4174 6703 NA 61% NA NA
(Starbucks) #

Source: CRISIL MI&A, company website, company filings

Flurys data based on unaudited financials provided by client
Note:
* - reported financials as per Indian GAAP (Generally Accepted Accounting Principles applicable in India)
# - reported financials as per Ind AS (Indian Accounting Standards)

Consulting 17
EBITDA
EBITDA (in Rs million) YoY YoY
Growth % Growth % CAGR %
Players
FY21 FY22 FY23 (FY21- (FY22- (FY21- FY23)
FY22) FY23)
Flury’s Swiss
Confectionery Pvt Ltd 30.9 60.9 65.7 97% 8% 46%
(Flury’s) #
Bliss Chocolates India
4.0 (14.3) NA NM NA NA
Pvt Ltd (Smoor)*
French Bakery Pvt Ltd
(56.3) (34.2) NA (39%) NA NA
(L’Opera) *
Theobroma Foods Pvt
131.4 76.0 NA (42%) NA NA
Ltd (Theobroma)*
Barista Coffee Company
58.5 87 NA 49% NA NA
Ltd (Barista) #
Coffee Day Enterprises
(36.3) 700.2 (1373.1) NM NM NM
Ltd (Café Coffee Day) #
Tata Starbucks Pvt Ltd
503.8 1229.9 NA 144% NA NA
(Starbucks) #
Source: CRISIL MI&A, company website, company filings
Flurys data based on unaudited financials provided by client
EBITDA- Earnings before interest, tax, depreciation & amortization
Note:
* - reported financials as per Indian GAAP (Generally Accepted Accounting Principles applicable in India)
# - reported financials as per Ind AS (Indian Accounting Standards)

EBITDA Margins (in %)

EBITDA Margins (in %)
Players
FY21 FY22 FY23
Flury’s Swiss Confectionery Pvt Ltd (Flury’s) # 17.41 24.75 17.18
Bliss Chocolates India Pvt Ltd (Smoor)* 0.82 (1.71) NA
French Bakery Pvt Ltd (L’Opera) * (43.20) (14.89) NA
Theobroma Foods Pvt Ltd (Theobroma)* 10.74 2.97 NA
Barista Coffee Company Ltd (Barista) # 15.54 16.10 NA
# (0.37) 10.74 (13.29)
Coffee Day Enterprises Ltd (Café Coffee Day)
Tata Starbucks Pvt Ltd (Starbucks) # 12.07 18.35 NA

Source: CRISIL MI&A, company website, company filings

Flurys data based on unaudited financials provided by client
EBITDA- Earnings before interest, tax, depreciation & amortization
Note:
* - reported financials as per Indian GAAP (Generally Accepted Accounting Principles applicable in India)
# - reported financials as per Ind AS (Indian Accounting Standards)

In fiscal 2022, among the players considered above which reported financials as per IND AS (Indian Accounting Standards),
Flury’s had the highest EBITDA margin of 24.75 %, followed by Tata Starbucks at 18.35 %.

Consulting 18
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