Assortment & visibility are the growth levers for new D2C playersThe biggest challenge for every mother is putting a “healthy” snack on the table for her child. That’s also the food marketer’s biggest test yet.
Now look at the opportunity: India is the fastest-growing health food market expanding at 20% CAGR, according to a report by Avendus Capital, the investment banking arm of Avendus Group. There will be a 2x increase in per capita spending on healthy foods by 2026. The segment will assume a market size of $30 billion in the next five years, it said. Meanwhile, the number of health-conscious consumers is expected to rise to 176 million in 2026 from 108 million in 2020.
So you know why brands like Happilo, True Elements, Slurrp Farm, The Whole Truth, and Soulful (now owned by Tata) are going all out to ride the healthy snack foods wave. D2C startups Happilo and True Elements claim to have registered a 4x and 3x growth in revenue respectively post-pandemic.
Rajat Tuli, partner, Kearney, says while this market is growing fast it still is a tiny part — roughly 2% —of the overall `40,900-crore snack food segment. One reason for consumer hesitation is the higher price point. The five- and ten-rupee packs are still amongst the top selling SKUs in the category and healthier variants are slightly more expensive. That apart, players in the category focus largely on metros and use modern distribution; hence, their presence and visibility are lower compared to other snack foods.
Aware of these challenges, brands in the category aren’t hesitant to experiment. Just before the pandemic, ITC entered the segment by launching a range of baked chips made of healthy ingredients under the Bingo umbrella. Bingo! Starters retails at the `10 entry price point and the company hopes to expand the repertoire soon.
In a bid to penetrate tier 2 and 3 markets, newbie Happilo has launched lower unit packs to induce trials (
20 for 20 gm and99 for 110 gm). Available at more than 50 e-commerce marketplaces, and over 10,000 general and modern trade stores in more than 20 cities in India, it is aiming to make these products accessible and affordable for every customer. It expects to garner around 40% of its yearly revenue this festive season. “We plan to be present at all possible touch points, both online and offline. Our products were available primarily in metro and tier 1 cities. Now we are exploring distribution and market penetration in tier 2 and 3 cities as well, and we hope to launch 100 stores at high-footfall malls, high streets, and key airports across India by 2023,” Vikas Nahar, founder and CEO, Happilo, says.
A large distribution spread entail big investments, and hence Tuli suggests a more focused approach. In a dynamic industry with multiple players, innovation will be key to staying ahead in the game.
Palette of flavours
Wipro Consumer Care is seriously looking at the snacking category as an entry point into foods. Anil Chugh, president, foods business, Wipro Consumer Care, says the company will be able to offer an authentic selection that is customised to the Indian palate and taste, packed under extremely hygienic conditions. The company is looking at leveraging its FMCG distribution network to expand this business.
The challenge will be to get the taste right as the Indian consumer is very particular about it, especially with traditional snacks that have memories attached. This is a challenge that any national brand will face as regional preferences change every 200 km, say experts. Tuli of Kearney highlights that taste is the top driver for convenience snacks and keeping the buzz alive with new flavours requires continuous innovation on the part of the brand.
At the beginning of this year, Dabur too announced the expansion of its Réal portfolio with the launch of healthy snacks under the Superfoods Seeds category. The range includes ‘Real Health Chia Seeds’ and ‘Real Health Pumpkin Seeds’, which are priced at
300 and380 (for 250 gm packs) respectively. The product is available at leading e-commerce platforms and will be rolled out in other sales channels soon.