- EY FCI global survey, 94% of Indians are worried about health
- 82% of respondents see “healthy” as important buying factor
- 40% are willing to pay a premium
COVID-19 has created the biggest seismic shift taking health and immunity to the centre stage. Approximately 94% of Indians are worried about their family’s health against 82% globally, as per EY India’s report titled, The Sunrise Consumer Health and Nutrition Sector. Indian consumers have opened their wallets towards fitness classes and activities, consuming natural foods, health supplements, and following specialized diets. 52% of respondents think changes in their approach to mental wellbeing will persist beyond COVID-19, globally it is just 39%.
Angshuman Bhattacharya, National Leader – Consumer Product & Retail Sector, EY India, “While some see this as a short-term phenomenon, we expect this phase to catalyze a larger acceleration in the propensity towards personal health, hygiene, fitness and holistic nutrition. European and Asian nations have adopted functional foods and supplements, the Indian consumer is still predominantly showing a preference for “better for you” foods and home remedies. Ayurveda and herbal are increasingly becoming “back to roots” answers to modern problems.”
Most large food players have adopted functionalization in their product portfolio to differentiate and drive value for consumers. 40% of Indian respondents stated that they will pay a premium for products promoting health and wellness, which is higher than their global counterparts (29%). This is also indicated through 14% CAGR of the health food and beverages segment, during FY18-21, to reach INR700b in FY21. Similarly, the dietary supplements market in India grew at a CAGR of ~15% to reach INR331b in FY21. This segment, always considered to be high potential given the growing lifestyle diseases, has witnessed an accelerated adoption curve, post COVID-19. Over the last year, the demand for herbal supplements and vitamins and minerals have witnessed a growth of over 25%.
The EY report states that there is growing interest in natural and ayurvedic products has encouraged companies, already active in this segment, to assert their credentials more strongly, while it has also attracted the attention of players from pharmaceuticals. Consumer companies are keen to build their medical credentials and capabilities, with the aspiration to eventually achieve higher margins characteristic of these products. Angshuman added, “In the next five years, we expect consumer product companies to invest in demand creation and increasing consumer education using virtual equivalents of multilevel marketing (MLM), medical representative models, social media-based influencing and direct-to-consumer (D2C) approaches. We expect this segment to grow at over 35% for digitally integrated omni channel players, and 20-25% for offline brands.”
Further, the wellness and vitality segment has seen increasing fund-raising in the past few quarters both in the venture and early growth stage. There has also been a strong strategic interest in the segment. As per the EY report, the market should see a spate of M&A transactions led by both global and local majors, as early-stage investments mature.
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*The survey numbers are based on EY Future Consumer Index (November 2021); No. of respondents – Global: 16,000; India: 1,002