Healthful foods today include a variety of categories, including “free-from,” natural and organic, functional, and those targeting specific dietary needs. This shift represents the new normal in our foodscape. Healthier alternatives are reshaping market dynamics, transitioning from niche offerings to mainstream consumption choices.
Producers, manufacturers, and retailers are aligning their efforts to meet this growing demand. As a result, healthful foods and beverages are becoming more integrated into our daily lives, reflecting a collective commitment to promoting wellness through dietary choices.
In the wake of the Covid-19 pandemic, a seismic shift has rippled through the food industry, reshaping consumer preferences and challenging traditional norms. A surge in demand for healthier food alternatives has emerged, catalyzing a profound evolution in the way we interact with food.
According to a study by the International Food Information Council, 85% of consumers made changes to their diets to boost their immune systems during the pandemic. “Consumer attitudes following the Covid-19 pandemic have shifted towards prioritizing healthier dietary choices,” notes Euromonitor International.
Today’s consumers are increasingly prioritizing health and wellness in their dietary choices. A discernible trend has emerged, with individuals gravitating towards locally sourced, nutrient-rich foods for nourishment and vitality.
“Against the backdrop of the COVID-19 pandemic, there has been a notable surge in the prioritization of health and wellness, consequently elevating the demand for health-related products. Within this paradigm, the Health and Wellness Foods category has emerged as a focal point of substantial demand and expansion, propelled by a heightened emphasis on healthier living practices. Concurrently, the health and wellness market continues to witness pronounced growth, a trend attributed to growing incidences of chronic ailments, higher levels of stress, and a burgeoning array of health-related concerns,” says Hari Goyal, Advisor, Crofarm Agriproducts Pvt. Ltd, which operates brand Otipy, a community group buying platform for fresh produce and daily essentials.
Defined by their focus on promoting overall health and vitality, Health and Wellness Foods have become synonymous with a lifestyle centered on well-being. These products are formulated to harness the power of beneficial nutrients and bioactive compounds, and they offer consumers a pathway to enhanced health beyond mere sustenance.
Fueling this paradigm shift are a myriad of factors, chief among them being a growing awareness of the interconnectedness between diet and well-being. “The concept of ‘food as medicine’ is a significant driver behind the continued growth in health and wellness sales,” says Karine Dussimon, Industry Manager at Euromonitor International.
As people aim to achieve a harmony between the calories they consume and what they burn, they are increasingly opting for healthier alternatives by shunning refined grains and excess salt/sugar in favor of nutrient-dense options. Thanks to mobile apps and wearable devices, it is possible to constantly monitor the heartbeat, quality of sleep, blood pressure and even the number of steps taken during the day. The entire idea of health has transformed from being curative to becoming preventive in nature. Although consumers are time constrained due to hectic work schedules, especially in urban areas, they are looking for avenues to build and maintain a healthy life style.
The timeless adage advocating prevention over cure finds resonance in contemporary dietary preferences. “Hippocrates’ aphorism from 400 BC: ‘Let food be thy medicine and medicine be thy food’ has become a guiding principle in modern times. Within the realm of the Health and Wellness Foods category, the paradigm of “Food as Medicine” has emerged as a powerful concept. Cultural nuances and dietary practices predispose individuals in India to weight-related challenges. Moreover, an increasing alignment with international standards of body image prompts consumers to scrutinize their health and wellness choices more discerningly.
Consequently, there is a prevailing consensus on the imperative need for concerted efforts toward fostering health and wellness,” opines Saibal Banerjee, Sr. Vice President – Merchandising, Wellness Forever Medicare Ltd.
In navigating the post-Covid era, the notion of health-conscious eating has transcended mere trendiness, and has become the guiding principle. of consumer behavior. In this era of health-conscious eating, we are ushering in a new age of nourishment, which is both wholesome and holistic.
Market Size
Marquee investing banking firm Avendus Capital’s study indicates that India’s H&W food is expected to become USD 30 billion market by 2026 growing at a CAGR of 20%.
The market was valued at USD 10 billion in FY20 when health-focused foods and beverages were 11% of the $88 billion packaged foods and beverages market in India. This share is expected to move up to 16% or $30 billion by FY2026.
Health and Wellness categories, though small, are growing faster than the overall market. The Avendus report states that India is the fastest growing health food market, and at 20% CAGR, the growth rate is 3x the global average and 1.5x India’s total packaged F&B market. According to the report, there exists a large headroom for growth given low health food penetration: 11% in India vs. 31% in USA.
The report points out that health-conscious consumers in India will increase from 108 million in CY20 to 176 million in CY26. At the same time, the H&W Food market in India is set to get a booster shot thanks to a 2x increase – from 9% in CY 20 to 18% by CY26 – in health F&B spending per capita by health-conscious consumers by CY26.
With rising disposable income, health-oriented spending is poised to take up a larger wallet share. Indian consumers, especially millennial, are on the lookout for functional and healthy ingredients, driving innovation into new food categories such as plant-based alternatives. As a result, significant growth will be witnessed across categories such as healthy snacking with options such as biscuits, fruit snacks, snack bars and trail mixes leading market expansion, followed by healthy dairy products.
Product Basket
The rising popularity of H&W foods has heralded the emergence of a diverse array of product categories, each catering to distinct consumer preferences and dietary requirements:
Naturally Healthy & Organic: This category encompasses minimally processed food and beverages sourced from natural ingredients. Emphasizing organic cultivation methods, these products are free from synthetic additives and chemicals, appealing to consumers seeking wholesome, untainted nutritional options.
Functional Food and Better-for-You: Characterized by their nutritional fortification and enrichment, functional foods offer targeted health benefits beyond basic sustenance. Low in sugar, salt, and other undesirable components, these products are rich in essential nutrients, catering to health-conscious consumers keen on optimizing their dietary intake. Furthermore, they are often formulated to be allergen-free, addressing common dietary restrictions such as lactose and gluten intolerance.
Plant-Based: Reflecting the growing trend towards plant-centric diets, this category encompasses a diverse range of dairy, meat, and other food products derived exclusively from plant sources or cultured plant cells. Offering a sustainable and ethical alternative to traditional animal derived products, plant-based foods appeal to environmentally conscious consumers while providing comparable nutritional value and flavor profiles.
The emergence of these distinct product categories underscores the evolving landscape of H&W foods, catering to the multifaceted dietary preferences and wellness aspirations of modern consumers.
Digital & In-Store Initiatives
On the supply side, the digital realm has emerged as a pivotal platform for product discovery and procurement within the H&W foods sector. In response to the growing demand for convenience, an array of new-age brands has emerged in the direct-to-consumer (D2C) and omnichannel space.
The increasing emphasis on seamless access to health-conscious options has driven the adoption of digital distribution channels and facilitated the distribution of the H&W products.
Based on findings from an industry study, retailers have a significant opportunity to enrich their health-and-wellness offerings by extending their initiatives to online platforms. “Online platforms are helping retailers to elevate the visibility of their health and wellness offerings, thereby bolstering sales, margins, and customer engagement metrics. Recognizing their role as both a destination and ally in customers’ health-and-wellness endeavors, grocers are increasingly investing in a diverse array of health-and-wellness programming,” says Cannivady.
Expert analysis underscores the vast spectrum of initiatives offered by retailers, particularly focusing on activities aimed at enhancing shopper experiences and diversifying product assortments. Notably, the D2C model has effectively dismantled traditional entry barriers, leveraging digital channels as primary conduits for both discovering and acquiring H&W products.
Leveraging digital platforms, Millennials and Gen Z are readily adopting dietary trends and innovations shared through social media. At the same time, global health and wellness trends strongly influence their dietary preferences, driving demand for this category.
Apart from the digital initiatives, in-store programs are also building this category. Food retailers are embracing health and wellness by spearheading various initiatives in this direction. Leading retailers are implementing in-store dietitian programs to assist shoppers in making well-informed choices.
In addition to introducing their own “good-for-you products” or featuring offerings from renowned national brands, retailers are enriching the shopping experience by providing valuable content such as healthy recipes and product samples.
Furthermore, they are enhancing transparency by incorporating health information into menu labels, thereby empowering consumers to make healthier choices.
“The aspiration levels of customers are going through an upward evolution. More and more customers are becoming aware of themselves, of what they consume and impact of the products they buy on their health and the world. And this is changing the way they look at their lives and what they consume,” opines Pearlraj Cannivadi, SeniorVice President, Marketing & & Ecommerce, SPAR Hypermarket.
Road Ahead
In the years ahead, a substantial increase in the availability of food products falling within the health category is anticipated, driven by fortification and enhanced personalization. As consumption patterns evolve, health-conscious individuals will seek convenience and customization in their dietary choices.
The demand for fresh and nutritious options will be met by the introduction of healthy meal kits, a concept already thriving in Western markets. These kits contain pre-portioned, healthy, and often organic ingredients, accompanied by detailed cooking instructions, facilitating easy preparation.
In India, there is a gradual trend toward fortifying food products. This trend is expected to expand across various product categories in the coming years. As the industry navigates global resource constraints amidst a growing population, innovative approaches will emerge to meet the escalating demand for highly nutritious food. Advanced technologies will play a crucial role in driving product innovations in the health food segment.
New market entrants have a significant opportunity to capitalize on growing consumer awareness and trust in these innovative food options. However, successful penetration into the market will depend on offering the right product with effective packaging that clearly communicates the associated benefits to consumers.
The recent success of companies like Organic India and 24 Mantra underscores consumers’ willingness to invest in premium, healthier alternatives. Organized retailers are expected to continue dedicating additional shelf space to healthier options. While health foods currently contribute approximately 10-20% of total sales across various retailers, their share is anticipated to grow steadily. Furthermore, certain categories within health and wellness foods are poised for rapid growth, outpacing the overall market, as consumers increasingly seek alternatives to traditional food options associated with adverse health effects.
