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Fi & Hi India is the biggest B2B event in the Indian sub-continent for the food and health ingredients, processing and packaging industry.
Euromonitor International showcased trends within the packaged food industry of India through “Healthy living and authenticity: The novel concepts of food in India” session, highlighting the three pillars of packaged food: abundant product variety, growing retail channels and dominance of local players witnessing a changeover to meet the needs of consumers. The presentation concluded with success strategies need to be adopted within the health and wellness packaged food by addressing common market challenges.
Traditional food in Indian culture is abundant with nutrition and tastes. Consumers shifting towards packaged food from unpackaged unbranded products, rise in premiumization, competition among bigger brands and performance of smaller categories drives the growth of packaged foods. In addition to this there is rise in consumption of global food products in India with demand supported by consumers looking to experience new cuisines. Furthermore, the standard variants of packaged foods are fast evolving to offer health and wellness benefits with a focus on future market opportunities.
Though traditional food has a large consumer base, global products are quite intriguing in India. Irrespective of the vast cultural and religion differences, consumers still prefer a three-course meal which includes their favourite traditional food. Such eating habits will continue to prevail in the future, however due to a shifting focus towards packaged versions of food, consumers are looking for more health and wellness food in packaged formats.
In the last 10 – 12 years, Indian consumers have welcomed the entrance of global food varieties, currently this trend is fast transforming as consumers look for health benefits associated with the food they consume which is expected to continue for the next 10 – 15 years.
Traditional packaged food products will see increase in usage of natural ingredients, claims such as organic, herbal and ayurvedic food will become popular. Going back to the basics is going to be mantra influencing manufacturers to offer products with reduced usage of preservatives and artificial taste enhancers. In contrast, global food will focus on fortification, reduction in salt, sugar and fat, free from gluten and lactose in the coming years.
Independent small grocers are adopting different strategies to reach urban and rural markets. Infrastructure development in India is a major contribution for people to set up small grocery stores in the remotest regions to offer consumers mostly with a variety of standard products. In urban markets, these stores are expanding their selling space to accommodate more standard products and cater niche consumers looking for health and wellness food.
With the onset of accessibility to the internet across the country, online grocery retail has also witnessed tremendous growth in the last couple of years with average growth in retail value sales by 55 – 65% year on year across different packaged food categories. With the growing success of these online grocery retailers, many such players have diversified to position themselves as the only health and wellness retailers in major cities across India. Supermarkets and hypermarkets are now penetrating to tier II and tier III cities to offer consumers an opportunity to shop for both standard and health and wellness products.
Interestingly, many beauty and health specialist retailers have been booming in urban regions who specialise in offering health and wellness food. These stores are unique in that they have omni-presence retail channels, source food not only from various domestic regions but also globally and offer products with high quality and strict adherence to hygiene. Hence the products sold in such stores are quite premium over their respective standard packaged foods.
Local food companies dominate most of the packaged food categories in India. Decades of experience in making products, strong distribution networks, growing penetration across India, constant promotion activities and having an established brand image has contributed to the success of these companies in India. Such factor poses challenges for new entrants in the market as start-ups face competition from these large manufacturers.
Domestic food companies with strong knowledge in packaged food have constantly innovated and launched new products in the market. This has been a challenging task for many large international conglomerates who have struggled to compete against the domestic companies either by trying to enter a new health and wellness category or by extending their existing standard portfolio of products in the last few years.
Apart from the experience, manufacturers are constantly tracking the changing consumers landscape to launch new products that offer convenience. Factors such as higher migration rates, hectic lifestyles and diminishing gender differentiation are challenging manufacturers to rethink product offerings. Existing offerings are being tweaked to offer health and wellness benefits to suit the needs of consumers.
Like standard packaged food products, health and wellness categories are pervious to challenges since they are still quite niche in India. Premium pricing, competition from substitutes and other soft drivers are hindering the growth of health and wellness food products in India. Since these products carry health benefits over the standard products, they are priced in the premium range which is quite inaccessible to a majority of Indian consumers. The abundance of products available within packaged food and from other categories such as beverages, consumer health products and consumer foodservice has been offering stringent competition to the growth of several health and wellness food categories. Finally, the lack of awareness, availability across different regions, government regulation on sales of certain products and other soft drivers challenges the growth.
All stakeholders in the packaged food and health and wellness industries need to work around these challenges, keeping in mind the changing consumer needs to attain successful growth. Innovation in packaged food can be from the existing categories, however should fill the gap in either nutrition deficiency or unavailability of the product in the market.