More takers for healthy, low-carb foods; Niche food industry to grow at 16%

With growing penchant for healthy and low-carb, natural foods, etc, the niche package food industry of India will grow at 16.5% to reach USD 59 Bn by 2022 from USD 37 Bn at present.

Accordng to a report from the Redseer Consulting, niche brands will also get a sizable pie from this growth story as there is an increased inclination for themes like healthy, Keto (low-carb), high protein, 100% natural, etc.

The brands are piggybacking on the consumers’ demand shift in favour of a health-conscious lifestyle and their willingness to pay a premium for such products. The consumer food market saw an initial surge in the entry of niche food start-ups between 2014 and 2017, it said.

Unlike traditional packaged food brands which are either expanded as family businesses or are an arm of large consumer goods MNCs, the Niche food start-ups have been receiving hefty funding from PE and VC funds. This helps them raise large sums of money in one go, which they then use in creating in-house production units to take control of the production of their unique products, the report said.

“As such, one common trend has been fast revenue growth within a few years of launch. Some brands have been seeing consistent revenue growth of over 100% and have outperformed the industry growth. Brands like Paperboat and Veeba have taken 5-6 years in reaching the INR 100 cr revenue mark. Similar performance can be expected from brands like Epigamia and RAW Pressery,” it said.

One uniqueness about the niche brands is their tilt towards digital marketing and the limited focus ATL activities. Unlike the traditional consumer food industry norm, they do not invest in traditional ATL activities such as TV advertising since the costs are high and the target audience is very specific.

A majority of the niche brands have products which either require cold storage while stocking or only attract the customers who go to modern trade (MT) channels like supermarkets. As such, the share of MT channels remains high.

However, brands such as PaperBoat are making a deliberate attempt to increase the share of general trade (GT) channels in order to penetrate the tier 2 and tier 3 markets.


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