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Health food market to hit $30 billion by 2026: Avendus Capital

Marquee investing banking firm Avendus Capital’s study indicates that India is the fastest growing health food market and is growing at 20% CAGR, which is 3x the global average and 1.5x India’s total packaged F&B market.

Health food market to hit $30 billion by 2026: Avendus Capital
It estimates that there will be a 2x increase in per capita spending on health foods by 2026. (Representative image)

Demand for health and wellness foods is expected to go through the roof, even after the ongoing pandemic ends. Growing at a CAGR of 20%, India is the fastest growing market for health foods and is estimated to be $30 billion in the next five years.

Marquee investing banking firm Avendus Capital’s study indicates that India is the fastest growing health food market and is growing at 20% CAGR, which is 3x the global average and 1.5x India’s total packaged F&B market.

According to a study done by Avendus Capital, India is experiencing a wave of health-conscious consumers influencing a structural shift in food preferences and purchase decisions towards healthy alternatives and better ingredients, especially among millennials and their families. It estimates that there will be a 2x increase in per capita spending on health foods by 2026.

Abha Agarwal, executive director and Co-head, Consumer, Financial Institutions Group (FIG) & Business Services, Avendus Capital says, “At Avendus, we are very bullish about the prospects and the value creation opportunity for the health food space in India. The last decade saw the emergence of many health food brands that raised PE/VC funding. With such brands reaching adequate scale and demonstrating brand strength, we expect to see increased transaction activity and consolidation over the next 10 years.”

Market expansion in India will be driven by multiple levers. Indian consumers, especially millennials, are on the lookout for functional and healthy ingredients, driving innovation into new food categories such as plant-based alternatives. With rising disposable income, health-oriented spending is taking up a larger wallet share. On the supply side, with rising e-commerce penetration, digital has become a means for product discovery and purchase, allowing many new health food brands to emerge. Large F&B companies are evaluating organic and inorganic growth strategies to capture this market.

Health food brands funded by private equity firms command high valuations when compared to traditional players. The multiples are higher given the large potential addressable market as consumers lean towards mindful, healthier choices.

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