Indian startups turn up the heat on the ‘clean snacking’ trend

India’s health and wellness food market has doubled to $8 billion in the last five years. Here are four winning strategies startups are using to tackle the unique challenges in India’s fragmented market and steal the incumbents lunch.

Team Sequoia India & SEA

Published November 18, 2019

Interest in ‘clean eating’, organic food and healthier diets has captured the imagination of young consumers all over the world, and India is no exception. Millennials today care more about fitness than any generation before and want convenient, tasty food that fits their healthy lifestyle while moms are constantly in search for ways to make snacking nutritious and guilt-free for their kids.

India’s health and wellness food market has doubled to $8B in the last five years, according to Euromonitor. India has over 800 million Google search results for ‘healthy snacks’, and there are 3,000 people searching for this term online every day, indicating the sheer level of consumer interest in this space. Nimble startups are answering that call by innovating across products like breakfast bars and cereal, flavoured yoghurt, sauces and beverages.

While the clean-eating trend is global, health-food companies face unique challenges in India. Building distribution reach in India’s fragmented retail market is no mean feat and that, historically, has one of been the strongest moats sheltering the large multi-nationals. Reaching this fragmented consumer base has required massive advertising spend as well.

And then there’s the Indian palette: we like our food with flavour, and snacks are no exception.

Here’s some winning strategies that start-ups are using to surmount the challenges and steal the incumbents’ lunch.

1. Step up product innovation to find the (less) sweet spot

In India, taste trumps diet. We are willing to give up some sugar and fat but not at the cost of taste. It’s a line that Indian consumers won’t cross, even in the health-food aisle. At Raw Pressery, for example, some of their best-selling SKUs are orange and sugarcane juice, which are naturally sweeter than their kale blend, which is among the healthiest.

Putting the ‘good’ into ‘good-for-you’ is a continual journey that requires an exceptionally strong commitment to consumer insight and product innovation. Companies that can iterate quickly and launch new products to cater to changing taste are at an advantage.

Wingreens, whose range spans fresh dips to spicy organic peanut butter and baked chips, tests every one of their new products across their key modern trade stores to drive product iteration. Wingreens launched their hummus range with an Olive hummus and a Rosemary hummus, but customers came back saying they wanted something with more spice and zing. Based on that input they launched their Peri-peri hummus, which was is now their most popular variant.

“Indian consumers want to snack on utterly delicious but guilt free food. Brands that are able to deliver on both points in a credible way have created a special place in consumers’ minds,”says Anju Srivastava, co-founder and CEO of Wingreens Farms.

2. Leverage modern trade and new distribution avenues

A large part of the growth in natural and healthy products is coming from modern trade. While naturally healthy products account for roughly 45% of the overall $8B health and wellness market, that proportion ticks up to 60% of health & wellness sales in modern retail outlets.

E-retailers like Amazon, Bigbasket and Grofers have become exciting new channels to reach customers. Sproutlife Foods’ Yogabar, for example, is defining the narrative in the breakfast bars category online and has seen leverage through Amazon launchpad, which features emerging brands and startups. Yogabar, which is now the most highly reviewed brand on Amazon in their category, also has a strong offline presence in stores across urban metros as well as Tier 2 towns. Access to Kirana stores is also being democratized by companies like Udaan so we expect offline distribution will be further simplified in the long term and expand the addressable market for new health brands.

3. Engage your consumer, directly

The growth of modern trade stores and digital channels offers new avenues to talk to consumers. Wingreens talks to over 1,000 people daily across stores, like Fab India, through their product promoters and leverage that direct feedback. “Wingreens Farms has fans, not consumers,” in large part because of that ongoing dialogue, says Anju.

Facebook and Instagram help brands get off the ground faster and communicate an ethos to build real intimacy through real conversations with their customers. Epigamia has a highly engaged base of 34,000 consumers on Instagram by sharing creative and appealing food pairings and recipes for their yoghurts.

Some startup brands are leveraging online channels further through partnerships with influencers. Rakyan Beverages, which owns the Raw Pressery juice brand, brought in Bollywood celebrity and fitness advocate Jacqueline Fernandes on as an investor in 2017. Raw Pressery does multiple activation events around Yoga and Fitness each month, many of which Jacqueline shows up for and talks about on Instagram. She also drives new product launch campaigns online to her 34 million followers. Through that collaboration, Raw Pressery today has an Instagram following of over 100K, among the highest of any of the new-age food brands in the country.

4. Manage your capital carefully

For all the excitement and pull from the end-consumer, managing capital as a young company is critical to success. There is a fine balance between category creation wiith your consumers and over-spending on marketing. While modern trade is a great channel for product visibility, ensuring timely collections is equally important. And finally, if you have to stay nimble on product launches, invest judiciously in production lines that can adapt with your consumers’ needs.

India is on the cusp of a food revolution. It feels like it’s about time that the new kids on the block take the fight to the big boys.

This column was originally published on LinkedIn.