Food Tech Industry Update - Grab A Bite: ICICI Securities

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ICICI Securities Report

We have a constructive view on food tech industry. Key competitive advantages of Zomato / Swiggy are-

1. network effect,

2. customer behaviour data,

3. brand,

4. reach and

5. last-mile delivery.

These lofty entry barriers limit the threat of new entrants (e.g. Amazon) despite their deep pockets.

Convenience, choice addiction will be a key industry driver.

Outside the urban core (Next-500), we estimate adoption (16% versus 33% in top-20 cities) to be encouraging despite limited network effect and operational history so far.

As these strengthen, Next-500 markets likely provide incremental opportunities given lower density / ambience quality of dine-in options (e.g. Uber Eats / Meituan).

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