The demand for Basmati rice is rising both domestically and internatiorially, benefiting India’s agricultural and FMCG retail sectors. With significant growth projected, retail traders are positioned to capitalize on this trend, leading to increased production, streamlined supply chains, and greater revenue opportunities

Anshul Garg.

The demand for Basmati rice in the domestic and international markets have witnessed a steady growth.

As one of India’s premium agricultural products, Basmati exports have identified this demand growth, promptly aligning with this shift to ensure a robust supply chain. As demands for the aromatic variant have amplified, it has created an ideal situation for retail traders across key markets.

To begin with, Basmati is becoming an integral part of retail chains specializing in groceries, leading to enhanced visibility for India’s agricultural excellence. Furthermore, as this demand growth keeps amplifying, retail traders are receiving the prospects of maximizing revenue and uniquely positioning retailers to capitalize on and spearheading the growth of the global Basmati rice market.

A report by Market Research Future reveals the global Basmati rice market will grow from $14.7 billion in 2024 to $26.89 billion by 2032, with an annualised growth of 9 per cent during this period. This growth figure extends beyond consumer preference, directly corresponding with retailers’ preference to sell this particular type over other variants.

Furthermore, this preference by retailers and consumers alike offers to boost several sectors related to the Basmati trade, directly impacting the agriculture, export, logistics and milling sectors in India as the largest producer of this aromatic rice.

Rising demand

As the largest and one of only two producers of Basmati in the world, India exported 4.6 million tonnes of the commodity in FY 20-21, as per a report by logistics conglomerate LM. Baxi Group. Since then, the country has witnessed a significant rise in production, as the Indian agricultural sector produced 5.08 million tonnes and 11 million tonnes of this premium variant rice in the next two fiscal years. In the ongoing financial year, Indian Basmati exports have increased by 15 per cent as compared to FY 23-24. This indicates a comprehensive demand hike in key international markets such as Europe, the Middle East, the United States and elsewhere.

The demand growth is positioning the FMCG retail sector in a unique way, driving the industry growth. As India looks to strengthen its position as the largest producer of this aromatic rice, the FMCG retail sector stands to gain significantly. Retailers are positioning themselves to cater to consumers’ preference for premium rice, leading to rising income. Furthermore, as consumers become more exposed and inclined to try global rice-based cuisine, it is directly translating towards a growing demand for elongated and aromatic Basmati rice, opening up new horizons for retail traders.

Opportunity for retailers

Since rice acts as a staple food for a major part of the global population, the rise of Basmati demands offers a unique opportunity. In strategic markets like the Middle East where it is already preferred over non-Basmati variants, retailing this rice is proving to be more lucrative than ever. Furthermore, this growing preference is opening up new retailing channels, which is now becoming a core part of the FMCG retail industry. Digital marketplaces and Quick Commerce are further channeling this preference to empower consumers to purchase Basmati in a hassle-free manner.

In other strategic geographies where departmental stores or Bodegas dominate FMCG retail, Basmati is quickly becoming a mainstay on the shelves. As a result, retail traders are being rewarded financially, and the subsequent impact is transforming food retail. Since the retail of Basmati yields higher financial bonuses than non-Basmati rice, retailers are pushing more of this premium variant than before to the open market, leading to enhanced production and streamlined supply chains.

Future Outlook

Driven by its culinary and health-driven popularity, Basmati rice is proving to have a transformative impact on FMCG retail all over the globe. While quick commerce and digital marketplaces are streamlining Basmati retail strategies, distributorship models still dominate the retail outlook in India. However, as new retail channels like quick commerce and e-commerce comprehensively shift the market outlook, consumers’ preferential aspects like quality must be prioritized.

Furthermore, retail traders can also leverage the growing demand for Basmati to introduce a greater variety to strategic markets, helping consumers with different choices to choose from. This has the potential to become the catalyst for the growth of Basmati retail, as traders will move towards bulk trading, reducing the scope for shortages. However, trade regulations and a consumer-friendly outlook will be equally important and must be prioritized to establish a seamless retail experience.

Published Date: February 6, 2025