India

New spending spree along India’s highways

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New Delhi: Improved highways are driving growth in the consumer goods and food industry as they open up untapped markets and enable increased work-related or leisure travel by expanding connectivity to previously inaccessible areas and increasing car ownership.

New Delhi: Improved highways are driving growth in the consumer goods and food industry as they open up untapped markets and enable increased work-related or leisure travel by expanding connectivity to previously inaccessible areas and increasing car ownership.

In addition to improving connectivity, the end of the pandemic has spurred a wave of domestic travel, with family and friends opting for short road trips, often to nearby hill stations.

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In addition to improving connectivity, the end of the pandemic has spurred a wave of domestic travel, with family and friends opting for short road trips, often to nearby hill stations.

This trend has spurred a surge in demand for roadside snacks and beverages.

In a recent interview, Nestle India boss Suresh Narayanan said the quality of retail real estate along the country’s highways has improved, allowing big companies to open stores.

“Two things are happening as the freeway is improving. One is that distribution and access is becoming more seamless, so the brand’s purchase rates are more robust. Second, the whole freeway thing is becoming a big deal. I’m amazed Discover the Lucknow-Varanasi section now takes just four hours. There are hotels and restaurants on both sides; these are decent, not old ramshackle shacks, they have Maggi, Nescafe and KitKat because consumers want them …we have about 750 odd (Nescafé) stalls across the country – some of them quite large. Consumers there are happy to buy the Nescafe brand. So, whether it’s tourist spots, or highways, there’s been a significant improvement,” Nestle India Chairman and Managing Director Suresh Narayanan said.

Better connectivity also helps the company’s “urban” strategy, which focuses on deeper distribution in the country’s smaller towns, Narayanan said. “The urban strategy and the distribution expansion strategy could go on for a few years because what’s happening is that the infrastructure is improving; better highways, better connectivity, better cooling, all of that is bringing more Good consumer experience,” he added.

Meanwhile, others say the pandemic has spurred demand for leisure travel to new domestic destinations. “We’ve clearly reached a tipping point in India’s highways; travel times are faster, cities are becoming more connected, car ownership is increasing, people are now willing to drive, and I think there’s a sea change happening,” Vinay Nair, General Manager, India and Emerging Markets, Costa Coffee said.

Nair said more and more families are traveling together for leisure — consumers who often stop for a bite to eat and refreshments. “When people look at coffee activity in India right now, a lot of it is actually driven by travel and breaks in travel. We’ve seen coffee explosions in airports. We’re starting to see it in metro stations in India. Although Still limited, but it’s starting to grow. The highway phenomenon is very exciting,” he said.

That has prompted the coffee chain’s local franchise partner, Devyani International, to consider opening more highway outlets. “Over the next 3-6 months, you’ll see a lot more development happening on the highway,” he said.

According to an August report by Bank of America India Securities, the country will build more national roads and rail lines in the decade ending in 2025 than it built cumulatively between 1950 and 2015. The length of the road is expected to exceed 180,000 kilometers registered, a 133 percent increase by 2025, it said.

“A well-developed transport infrastructure can play a key role in enabling businesses to provide timely and efficient deliveries, thereby increasing customer satisfaction. The government’s focus on strengthening the country’s infrastructure ecosystem continues to have a positive impact on the operations of companies as it facilitates the delivery of goods smooth flow of products, access to remote areas, expand consumer base and open up new markets,” said a PepsiCo India spokesperson.

The local branch of coffee chain Starbucks operates multiple locations along the busy highway. However, the coffee chain continues to search for suitable real estate along the highway. “It’s something we’ve been looking for because one of the things is also getting real estate that fits the brand. While the highways are developing, it’s going to take some time for real estate and real estate development. But yeah, that’s something we’re watching closely thing. We have a lot of highway stores now,” said Tata Starbucks chief executive Sushant Dash.

In a Strategy Day presentation last December, Westlife Foodworld, McDonald’s local franchise partner for restaurants in western and southern India, said it was looking to open more drive-thru stores on highways. By 2027, an estimated 30-35% of new stores will be drive-thru locations, the company said.

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