How Profitable is the Frozen Food Business in India?

. 7 min read
How Profitable is the Frozen Food Business in India?

How to Start this Business?

Opening a food business in India will always be a profitable one. And if you are planning to start a frozen food business, you have made a good choice, especially if you are operating in a city.

More recent years have seen a drastic rise in the demand for frozen foods, which has given rise to several retail stores and supermarkets dealing in these readymade frozen food items.

By 2024, the frozen foods market in India is expected to hit INR 192.96 billion. The number was INR 85.27 billion in 2019. Hence, the industry is expanding at a CAGR (compound annual growth rate) of ~17.74% for this period.

Needless to say, we are going to see a rapid rise in frozen food demand and supply in the upcoming years.

Why is Frozen Food Business More Profitable in Cities?

Our target audience is the city dwellers because the inhabitants of rural areas and villages already have access to fresh, green and raw foods. In fact, a significant percentage of them are local farmers who produce their own food, from harvest to dairy and livestock. So, targeting your frozen food products in the rural market is not a good idea.

Starting a frozen food business in a city like Bangalore, Mumbai, Delhi, Hyderabad, Ahmadabad, Chennai, etc. is more profitable. The demand for such food items would be more in urban areas because of the hectic fast paced lifestyle and time constraints. The city dwelling professionals hardly get enough time to cook, or to go to the market regularly to buy fresh supplies. They need more instant food options, and frozen food items are one of them.

Frozen foods are easy and fast to cook, they are quite tasty, and some of them are healthy too. Besides, one doesn’t have to bother buying large amounts of raw foods, which have to be cooked on time before spoiling.

But this is not so with frozen foods. You can always pick up the quantity you like and cook as per your requirements. And you can store these frozen snacks for months. Hence, there is reduced food wastage with frozen items.

A growing number of the country’s population is finding frozen foods more convenient and time-saving. One can easily get these food items at their nearest grocery store or online stores, like Grofers, BigBasket, etc. Apart from frozen meat, other commonly bought items include frozen vegetables, frozen fruits, and frozen snacks.

These convenience foods are pushing retailers and online grocery stores to increase their frozen food supplies. The most popular target group for frozen foods includes working women, gen-Z consumers, and millennials.

How Do I Start a Frozen Food Business?

So, if you are wondering how to start frozen food business, here are a few essential steps and tips for you:

1. Do Proper Market Research and Choose Your Target Market

This step is essential before starting any business. While doing your market research, you need to learn about your customer demands, ideal target group, locality and the markets you will be serving.

For example, college students, working women, bachelors, families, grocery stores, food chains, and canteens are the best target groups for your frozen food products. The market research also includes learning about your competitors’ activities and their marketing strategies.

Gaining all these vital data will help you plan the right marketing strategies to serve your audience better. Besides, it will also help you understand where to invest your money and which markets to target. For example, there’s no point in investing your principal capital in an already overcrowded area because you won’t gain much exposure or reception there.

2. Find a Proper Location

To succeed in the frozen food sector, you need to choose a good location. It would help if you started your store in a place with good traffic and heavy footfalls instead of somewhere obscure. In short, select a location that enables your target audience to pick up their desired frozen foods on their way home from the office.

Such locations would be a bit costlier, but it will be worth it in the long run. Some good locations would be a marketplace, the major bus stops of the city, estates, etc. You can even start a frozen food business from home if you want to turn your passion into a profitable business with minimum investment.

The best thing about a homemade frozen food business is the guarantee of quality, hygiene, and exceptional taste. It is also quite cost-effective, and you can choose to sell your products online on Amazon, Flipkart, or your own website.

3. Find Suitable Suppliers

Finding reliable suppliers for your frozen food startup is the key to success and increasing your brand loyalty. Further, trustworthy suppliers would provide fresh and high-quality food items with no complaints about taste or shelf life.

Besides, your customers would need these frozen food products almost daily, and hence, you need to keep your stock full. So, choose a supplier who will be able to fulfil your immediate demands and never let you go out of stock.

A shortage in supply will always be the major reason your customers will turn to your competitor’s store and never come back if they find better services there. Food items are among our daily essentials; so, if a customer doesn’t find them at your store, s/he will do so at another store and won’t bother to wait, even if you have built a good relationship with them.

Also, try to look for a supplier who can offer you discounted rates, which can help you enhance your profitability. With this extra money saved, you can also pass this on to your consumers by offering them some discounts or bonuses on their purchases.

4. Obtain the Necessary Permits

Before starting a frozen food business, you need to get the necessary food permits, otherwise, your business would become vulnerable and illegal. In such cases, the government authorities would have the right to shut down your shop until you get the necessary permits.

There will be no major harm for other businesses if a shop is shut down for a while. But for a frozen food business, a closed shop means spoiling or rotting of your stocks, thus putting all your hard-earned money at stake.

5. Buy the Required Equipment

To run a frozen food startup, you would need to install several equipment or appliances, including freezers, weighing scales, generators, delivery vans, and other essentials. The most important one is a freezer, without which you cannot store your frozen items. If you don’t have enough money to buy a new one, you can go for a used one, as long as it serves the purpose.

6. Marketing

One of the most important answers to the question, ‘How to make frozen food business a success?’ is marketing and promotion. However, to plan your marketing strategies, both offline and online, you need to make a SWOT analysis. In a SWOT analysis, one needs to study the various strengths, weaknesses, opportunities, and business threats. This allows you to learn and evaluate your position in the market.

Also Read:

1) How to Start a Small Restro-Cafe?
2) How to Become a Wholesale Distributor of Jewellery?
3) How to Sell a Product in a Highly Competitive Market?
4) OkCredit: All you need to know about OkCredit & how it works.

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FAQs

Q. Can I sell frozen food products online?

Ans. Yes, you can! Not only will it be easier to promote your products online, but running an online business would also be cost-effective since you don’t have to pay rents and other overhead expenses.

Q. How to start a frozen food business from home?

Ans. It’s easy to sell homemade frozen food items in India either online or at a physical store. However, we would advise you to go for the low-risk food items if you are selling from home. Also, you need to get the required permits for selling frozen foods.

Q. What are the permits required to start a frozen food business in India?

Ans. All frozen food business owners would mandatorily need an FSSAI license to sell frozen food items and run such a business anywhere within the country. Further, food businesses with a turnover between INR 12 lakh to INR 20 crore may apply for a state license.

Q. How to pack frozen foods?

Ans. Freezing is the best method to store ready to eat food. However, while you are transporting these frozen food products, you will need to pack them in a cooler containing enough ice cubes or blocks. Or you can wrap the food in a tightly sealed plastic bag with ice blocks. You may even place your products within additional thick towels if the destination is far.