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Salty snacks market shifts: Rise of palm oil-free products
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Tuesday, 26 November, 2024, 08 : 00 AM [IST]
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Dr Anamika Banerji
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As Indian consumers become increasingly health-conscious, the salty snacks market is undergoing a significant transformation. The traditional reliance on palm oil as a key ingredient in snacks is being questioned. According to a recent report on Salty Snacks in India, 39% of consumers agree that snacks made with palm oil are unhealthy. This sentiment is particularly strong among metro dwellers, who drive the demand for palm oil-free alternatives.
Leading brands like PepsiCo are responding by trialling sunflower oil and palmolein as replacements for palm oil in their popular Lay’s chips. This move addresses health concerns and reflects a growing trend where consumers seek transparency in product ingredients. It is essential for brands to communicate these changes effectively, as latest research shows that 50% of metro-dwelling consumers consider snacks made with palm oil unhealthy, and 39% of palm oil-free claim seekers are willing to pay more for such products. This clearly indicates that the palm oil-free claim will likely gain more traction in the future.
Social media influencers are playing a pivotal role in this shift by inspiring consumers to scrutinise product labels and reduce their intake of unhealthy fats. Influencers like Revant Himatsingka, known as Food Pharmer, highlight the ubiquity of palm oil in packaged foods and urge consumers to cut down on its usage for health and environmental reasons.
Global New Products Database (GNPD) highlights that this trend is further evidenced by the increase in launch activity for palm oil-free snacks, which has grown from a near non-existent 0.1% of launches five years ago to 2.4% of total launches in the last 12 months. Smaller brands are currently leading the way in leveraging this claim to differentiate themselves as providers of healthy snacks.
Looking ahead, the palm oil-free claim is expected to become more prevalent in the Indian snacks market. As the focus on preventive healthcare grows, and with the prevalence of non-communicable diseases on the rise, consumers are taking steps towards healthier eating habits. Recent Global Consumer research reveals that over half (57%) of Indian consumers are interested in and would pay more for food and drink products containing healthy fats. This could trigger interest in re-evaluating palm oil as an ingredient. Minus claims related to palm oil can address evolving consumer preferences for healthy snacking and create market differentiation.
In terms of alternatives, rice bran and groundnut oils have emerged as the popular replacements for palm oil in the Indian snack space, based on launch activity from February 2022 to January 2024 according to GNPD. Rice bran oil accounted for 41% of launches, while groundnut oil made up 37%. Additionally, brands can tap into the popularity of ghee as a 'healthy fat,' given that 42% of Indian consumers express interest in traditional snacks made with desi ghee.
Other oils like mustard, sunflower, and coconut oil are also perceived as healthier options by consumers. Interestingly, the difference in familiarity and usage of cooking oils within regions is likely to be reflected in consumers' choice of palm oil alternatives. For instance, 77% of Indian consumers from North who seek palm oil-free traditional Indian snacks are interested in mustard oil as an alternative. In contrast, 26% of South Indian consumers prefer refined oil, suggesting lower awareness of healthier alternatives to palm oil. It's important to note that any oil, including palm oil, can be refined (and refined oil is not a specific type of oil), underscoring the need for consumer education on healthier oil choices.
Some brands are seen responding by calling out the type of oil used on the front of the pack, which not only reinforces their palm oil-free claim but also helps build consumer awareness about healthier alternatives. For example, WellbeMurukku is described as a ‘healthy snacking alternative’ made with red rice flour and cold-pressed sunflower oil, highlighting the potential for using healthier oils and cold press method to enhance product appeal.
In conclusion, the palm oil-free movement in India’s snacks market is gaining momentum, driven by health-conscious consumers and influencer advocacy. As awareness increases and more brands enter the space, we foresee this trend becoming a pivotal factor in consumer purchasing decisions. This shift is set to elevate a variety of healthier oil alternatives to the forefront of product formulations, catering to a growing demand for transparency and sustainability in food choices. The momentum behind the palm oil-free movement underscores a broader shift towards conscious consumption, reshaping the snacks market towards more health-oriented and eco-friendly offerings.
Five strategies for brands to capitalise on these trends:
Highlight Healthier Oil Alternatives: Brands like Let’s Try and WellBe have successfully used groundnut and rice bran oils, respectively, and have communicated this on their packaging. This not only strengthens the palm oil-free claim but also educates consumers about healthy oil options.
Target metro dwellers: Metro city dwellers are more concerned about the health impact of palm oil and are driving the demand for palm oil-free salty snacks. Brands should focus on this demographic, as 50% of metro consumers believe snacks made with palm oil are unhealthy, and 39% are willing to pay more for palm oil-free products.
Explore Regional Preferences: Different regions in India have varying familiarity with cooking oils, which can influence consumer choice for palm oil alternatives. Understanding these preferences can help brands tailor their products to regional tastes.
Address Pricing Concerns: While there is a willingness to pay more for healthier options, the majority remains undecided. Brands need to find a balance between health benefits and cost-effectiveness to convert interest into purchase. As per GNPD, the average price of a palm-oil-free potato- or grain-based snack is higher than regular ones.
Educate Consumers: There is a lack of clarity among consumers regarding healthier oil alternatives. Brands have an opportunity to build trust by educating consumers on the types and benefits of healthier oils used in place of palm oil.
(The author is food and drink analyst at Mintel Reports India)
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