The Indian Premier League (IPL) 2023 witnessed a significant shift in the growth trajectory of Swiggy and Zomato’s food delivery business, with a modest 7% increase compared to the pre-pandemic growth rates. A recent report by consulting firm Redseer sheds light on the factors contributing to this change, highlighting reduced marketing spending and altered advertising strategies as key influencers.
Changing Advertising Landscape:
During previous IPL seasons, Swiggy and Zomato were known for their attention-grabbing advertisements, often dominating prime-time television. These efforts led to substantial growth rates, including a remarkable 52% surge in IPL 2020. However, IPL 2023 saw a departure from this approach, as both companies opted for muted campaigns, focusing on cost-efficiency rather than extravagant ad spends.
Implications of Marketing Cuts:
The Redseer report indicates that the restrained advertising approach impacted Swiggy and Zomato’s food delivery growth during IPL 2023. The companies experienced a mere 7% increase, far below their previous outstanding performances. This shift can be attributed to the reduced visibility and lower customer engagement resulting from the reduced marketing spends.
City-wise Growth Patterns:
The report further unveils intriguing growth patterns across different city tiers. While metro and Tier-I cities witnessed a modest 6% YoY growth, it was the Tier-II+ cities that stole the spotlight with an impressive 14% YoY growth during the cricketing extravaganza. This data suggests that the impact of marketing cuts on growth was felt more acutely in the urban centers compared to smaller cities.
Cuisine Breakdown and Historical Comparison:
Analyzing the growth from a culinary perspective, the report highlights the sales of biryani, desserts, north Indian food items, and snacks as the leading contributors to the overall growth during IPL 2023. However, it is crucial to note that the 7% growth achieved during this IPL season pales in comparison to the growth rates witnessed in the pre-pandemic years. Previous IPL seasons, such as 2019 and 2020, saw growth rates of 44% and 52%, respectively, showcasing the stark difference in performance.
Recovery and Tier-II+ Impact: In the aftermath of the pandemic, as markets reopened and Covid-19 restrictions eased, Zomato and Swiggy experienced a 6% volume growth during IPL 2022. Although IPL 2023 witnessed a slowdown in overall growth, the Tier-II+ markets emerged as a saving grace for both companies. These markets played a crucial role in generating additional volume growth during the event, indicating potential opportunities for expansion in the future.
Conclusion:
The Redseer report brings to light the challenges faced by Swiggy and Zomato during IPL 2023, primarily due to reduced marketing spending and revised advertising strategies. With a modest 7% growth in their food delivery business, these companies struggled to replicate their pre-pandemic success. However, the report also highlights the resilience of Tier-II+ markets, offering valuable insights for future growth strategies. As the landscape evolves, Swiggy and Zomato will need to adapt their marketing approaches to regain their growth momentum and capture emerging opportunities.
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