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India set to become $30 billion market opportunity for health food: Avendus Capital
Saturday, 05 March, 2022, 08 : 00 AM [IST]
Our Bureau, Mumbai
Avendus Capital, India’s premier Investment Banking franchise, launched a thought paper on India’s health food market today. Estimating a market size of $30 billion in the next 5 years, the study indicates that India is the fastest growing health food market expanding at 20% CAGR, which is 3x the global average and 1.5x India’s total packaged food and beverage market.

According to the Avendus study, India is experiencing a wave of health-conscious consumers influencing a structural shift in food preferences and purchase decisions towards healthy alternatives and better ingredients, especially among millennials and their families. It estimates that there will be a 2x increase in per capita spending in health food by 2026.

Launching the thought paper, Abha Agarwal, executive director and co-head, consumer, Financial Institutions Group and Business Services, Avendus Capital, said, “At Avendus, we are very bullish about the prospects and the value creation opportunity for the health food space in India. The last decade saw the emergence of many health food brands that raised PE/VC funding. With such brands reaching adequate scale and demonstrating brand strength, we expect to see increased transaction activity and consolidation over the next 10 years.”

Market expansion in India will be driven by multiple levers. Indian consumers, especially millennials, are on the lookout for functional and healthy ingredients, driving innovation into new food categories such as plant-based alternatives. With rising disposable income, health-oriented spending is taking up a larger wallet share. On the supply side, with rising e-commerce penetration, digital has become a means for product discovery and purchase, allowing many new health food brands to emerge. Large food and beverage companies are evaluating organic and inorganic growth strategies to capture this market.

Saloni Jain, vice president, consumer, Financial Institutions Group and Business Services, Avendus Capital and chief author of the thought paper, said, “Health food brands command a richer valuation than traditional players. The multiples are higher given the large potential addressable market as consumers lean towards mindful, healthier choices. The winning formula for an Indian health food brand comprises market leadership, purpose-driven positioning with clear communication, and an agile research and distribution DNA to build a scalable platform.” 
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