Innovation, clean labels will drive snacks business | Mumbai news

We are just past the festive Diwali season when India goes into an overdrive in consumption of sweet and savoury snacks. A closer look at the gift hampers exchanged on the occasion, though, shows that Indians are increasingly making healthier food choices picking products like fox nuts roasted in olive oil, zero ‘maida’ cookies, jaggery-based ‘mithais’ and unsweetened functional beverages. This change in consumer behaviour is driving new-age companies to launch innovative, better-for-you products and forcing traditional food firms to launch nutritious variants or acquire health food start ups.

“The health trend is much wider in the metros. It is led by higher levels of education especially among women,” says V S Kannan Sitaram, co-founder and partner at venture capital firm Fireside Ventures which has launched a report on the category with Thinking Forks Consulting.

Besides taste, affordability and convenience, young urban Indians are driven by health and safety in their food choices, says the report for which Thinking Forks interviewed multinational food companies and start ups while Fireside Ventures surveyed consumers in the metros, tier 1 and tier 2 cities.

Decoding the shifting food habits of millennial and GenZ consumers, the report says health is no longer just about losing weight. It is about physical and mental well-being, nutritious food options and cleaner formulations. Not surprisingly, consumers value home-cooked meals the most with 81% metro consumers and 63% tier 1 and 2 consumers enjoying eating at home at least thrice a week.

That said, they want to spend less time in the kitchen and look for quick alternatives such as ready-to-cook options. Often strapped for time, 5% to 13% of the respondents said they were ordering food on delivery apps more than once a week. Eating out, meanwhile, is more experiential and reflects the expanding palate of young Indians who relish international cuisines like Korean or Japanese.

The biggest food trend is in the health and wellness space with innovations at multiple levels, says Rinka Banerjee, founder and director at product development consultancy Thinking Forks. It could be in staples like multigrain atta or bread. Or millets in cereals. In snacks, the focus is on zero ‘maida’. “In addition, there are functional foods like gummies for better sleep, or probiotics for digestive wellness,” she adds.

The report says that people living in tier 1 and 2 towns are no less health conscious than those living in the metros and crave equally for clean labels. Much like the metros, they are also seeing a growing appetite for western dessert. Surprisingly, the traditional mithai segment has spotted the opportunity in changing Indian palates and is tweaking its own sweets to suit the new tastes.

Mumbai’s Bombay Sweet Shop, for instance, offers fusion sweets like Kaju Katli made with 54% dark chocolate. Indian mithai with a western twist is just one part of the new playbook. “The other is the halo of natural goodness that branded sweet shops are using like dates, walnuts, jaggery and coconut sugar,” Banerjee says.

Sitaram says owing to health and safety concerns, the snacking category is moving from unorganized to organized. That prompted Fireside Ventures to invest in Chennai-based Sweet Karam Coffee a year ago that makes authentic south Indian snacks without palm oil, preservatives or ‘maida’. The company has grown 10 times between last Diwali and now, Sitaram says. When consumers spot an authentic product without unhealthy ingredients, they start converting even if there is a price premium, he adds.

But challenges remain for these new-age food firms. “They must hit the sweet spot with a great quality product at the right price. They must ensure a good shelf life without preservatives,” Banerjee says. Also, achieving scale is an uphill task as is finding suitable, high-quality manufacturing sites.

Increased health awareness has also pushed the traditional FMCG companies to change tack. They are buying into start ups in the category. ITC, which acquired Yoga Bar, has also launched snacks with oats, millets, jaggery, nuts and seeds under the Right Shift brand. Clearly, consumers’ desire for nutritious options is here to stay.