Supermarket category surges 300x in deal value driven by Reliance Retail in 2023: Report

The Qatar Investment Authority (QIA) contributed $1 billion, while the Abu Dhabi Investment Authority (ADIA) and KKR collectively added $847 million, constituting 70 percent of the total investments in the consumer sector.

The supermarket category in the retail and consumer products sector witnessed a 300x jump in deal value in 2023 compared to the year-ago period, majorly driven by the investment of $1.8 billion in Reliance Retail Ventures Limited, according to the IVCA–EY: PE/VC agenda: India Trend Book 2024 report. The report was launched at the IVCA Conclave 2024 in Mumbai.

The Qatar Investment Authority (QIA) contributed $1 billion, while the Abu Dhabi Investment Authority (ADIA) and KKR collectively added $847 million, constituting 70 percent of the total investments in the consumer sector. Notably, traditional retail and modern trade formats received the highest investment, with the personal and home care segment experiencing 18 percent year-on-year (YoY) growth, attracting investments worth $485 million, the report added.

The report said that after experiencing its highest-ever private equity/venture capital (PE/VC) investment of $6.6 billion in 2020, the consumer sector faced a downturn in 2021 and 2022. However, a renewed interest emerged in 2023, with investments soaring to $2.6 billion, compared to $1.2 billion in 2022, a substantial growth of 117 percent.

Several factors are driving this resurgence in PE/VC investments in the retail and consumer products sector in India. Urbanisation has led to shifts in consumption patterns and lifestyle changes, driving increased discretionary spending. Additionally, the convenience of online shopping has further stimulated consumer spending, along with rising per capita income and the ease of digital transactions.

Looking ahead, the outlook for the retail and consumer product sector in India appears promising. A report by BMI projects India's consumer market to become the world's third-largest by 2027, driven by the rise in middle- to high-income households. India's household spending is estimated to exceed $3 trillion as disposable income rises, with a projected six-fold growth in per capita income by 2047.

The IVCA-EY report highlighted that by 2030, approximately 33 percent of the country's population is expected to be between 20 and 33 years old, making India the largest "young consumer market" globally, with 357 million young consumers below 30 years of age. This demographic shift is accompanied by a noticeable trend towards credit-driven consumption, evident in doubled disbursements of personal loans and tripled credit card debt, supported by a robust digital infrastructure and enabling a digital payments ecosystem.

The growing potential in India's consumer market is attracting action from large consumer brands and global investors. Brands like Apple and Samsung are opening retail stores and premium experience stores in major cities, while global investors like Blackstone Group and APG Asset Management are investing more in India's shopping mall business to capitalise on the growth in consumer spending.