Nutrition startups ride the wave of D2C wellbeing towards success

For the past two years, words like comorbidities, immune enhancers, And supplements they have become familiar terms. The COVID-19 pandemic has changed lives in many ways, and our focus on health is one of them.

The startup space has acknowledged the change and direct-to-consumer (D2C) nutritional startups, which cater to the needs of children and adults, have gained ground.

“Nutrition is understood differently today than it was yesterday. We are a nation that has generally believed in natural nutrition and supplemental nutrition has not been recognized as much. For example, the United States is a very supplement-enabled market. When nutrition comes in the format it is in today, people are ready because we are talking natural food that comes out of our diets. For this reason, the market is booming, “says Harish Bijoor, Brand Strategy Specialist, Harish Bijoor Consultants Your story.

The food supplement space has seen a change consumer behavior and demographics.

What used to be a fitness enthusiast market is now a health-conscious proactive market. More and more consumers are taking care of their body and have actively increased consumption in this category “, explains Rahul Chowdhri, Partner of Stellaris.

The nutraceutical market in India is expected to grow relative to an estimate $ 4 billion to $ 18 billion by the end of 2025. The dietary supplement segment makes up over 65% of the nutraceutical market and is growing at a rate of 17% and is likely to grow 22% annually, especially as preventative health has become everyone’s focus in the current pandemic. stated a 2020 report from International Trade Administration.

The Indian nutraceutical industry is expected to hold at least 3.5% of the global market share by 2023.

New brands and markets

Another important reason for the growth of nutraceutical startups in Indiasays Rahul, it’s the emergence of online brands in new categories and formats.

Existing brands didn’t have formats like powder, liquids, tablets, gummy candies, fondant strips, and so on. Likewise, brands are emerging that have natural, Ayurvedic and herbal product lines to meet the demand for such products.

This, however, isn’t a new concept as brands like Himalaya who also dabble in this space have been around for quite some time now. But nutrition and nutraceutical startups received significant investor attention in 2020 and 2021. While many of these companies were founded in 2015 and 2016, many have only recently secured funding.

According to data from Tracxnamong the top 50 startups in the segment, 20 received funding in 2020 and 2021.

“What we found really interesting about this market is that the protein shortage in India is incredibly high, huge and widespread. Something similar to 70 percent of the urban population, adults and children are deficient in protein and this type of protein deficiency, especially in a child’s development, has a huge subsequent impact on their growth on their physical, even mental growth, ”says Cathy Guo, Manager, Investments and Portfolio at Antler.

“This type of protein prevalent the deficiency in the Indian diet represents a huge opportunity”Adds Cathy.

Space is also seeing a due boom greater penetration of modern forms of retail including hypermarkets and supermarkets, D2C channels and e-commerce. There is also an increase in the number of non-grocery retailers, such as drugstores, mass retailers, and retail chains that are expanding their selections in

the supplement category.

Diversification

The D2C nutrition market, which includes products that are essential supplements for a person’s nutrient intake, has also supported the growth of two adjacent markets: natural food market and the beauty products segment.

The health food market has brands like Based in Mumbai Snackbased in Jaipur happybased in Mumbai The Green Snack Co, based in Delhi Health of habitbased in Lucknow Keeros foodsand based on Noida Poshtickamong others.

“The offer here is to introduce a product into your existing one traditional eating habits (breakfast-lunch-snack-dinner cycle). It’s a much bigger market but also busier, ”says Rahul of Stellaris.

Similarly, D2C nutrient startups like Oziva And Ginoveda they are diversifying to add beauty products to their offerings. The beauty products industry is already seeing trends in conscious shopping, vegan beauty, and sustainability.

“Looking better and eating better are both basic needs and brands want to diversify the problems they face,” says Cathy.

“This also means higher revenue per userbecause in the D2C space, if you can acquire a user digitally and then sell them products under the same brand or even in a brand house strategy, that obviously means better economy.

Historical brands

The nutraceutical market also sees the participation of legacy FMCG companies – Unilever, Dabur, Nestlé – who have launched ranges of foods and beverages that are healthy alternatives to their existing products.

However, Cathy argues that legacy companies are still behind and theirs the pace of innovation is different.

She says, “They are heavily offline. They don’t have the DNA or the understanding to suddenly operate as a D2C brand. We are riding the company’s digital transformation and marketing through digital channels where this consumer is around like YouTube, Instagram, Meta (formerly Facebook). , Tik-Tok.

The problem with large FMCG companies is also the long-term processes that must be followed to address issues in order to innovate.

Ankit Chona, co-founder and MD of Page, explains that the strength of a startup lies in the ability to quickly review a product since most of the time it is its main offering. However, for a legacy company, it may just be one of many in its catalog.

Looking forward

“The problem in space is lack of product differentiation; is that these are commodities and not brands. The raw materials that became early adopters of the D2C format will do very well in the early years and will do very well, but once these nutritional supplements are known, the market will revert to ideal competition, “says Harish.

“So the need of the moment is differentiation, branding and the whole process to ensure brand visibility. “

When we enter a post-pandemic world, we can see the The startup space of D2C nutrition becomes crowded. However, space entrepreneurs and investors agree that the demand for nutritional supplements and healthy food and drink is here to stay.

“Consumers will eliminate any brands they linger on preservatives, trans fats, or excessive levels of processed sugar. At the same time, as adults transition to a cleaner lifestyle, we can anticipate an increase in healthier, child-friendly snack options as well, ”says Phab’s Ankit.

Curated by Affirunisa Kankudti

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