A new report by investment banking services firm Avendus Capital said India is the world’s fastest growing health food market and is forecasted to become a $30 billion sector by 2026.
The number of health-conscious consumers in India would increase from 108 million in calendar year 2020 to 176 million in 2026, the report said, adding that there was massive headroom for growth in the space given low health food penetration as a percentage of total packaged foods and beverages, which stood at 11% in India compared to 31% in the US.
India is experiencing a wave of health-conscious consumers, leading to a structural shift in food preferences and purchase decisions, and significant growth is expected across categories, with healthy snacking leading market expansion.
The last decade saw the emergence of many health food brands that raised private equity funding. With such brands reaching adequate scale, an increase in transaction activity and consolidation over the next 10 years is expected.
According to the report, per capita spending on healthy foods will more than double by 2026.It added that market expansion will be driven by a combination of factors such as millennials opting for functional and healthy ingredients, rising disposable incomes, and higher e-commerce penetration leading to better last-mile deliveries.
The report pointed out that the US health food market has witnessed an inflection point in mergers and acquisitions since 2015, and said a similar trend could follow in India with significant consolidation in the sector in the coming decade. The report added that global health and wellness could be a US $1.1 trillion market by 2026, fuelled by the emergence of organic, natural, functional, and plant-based foods.
Gujarat Cooperative Milk Marketing Federation (GCMMF) MD R S Sodhi has expressed concern over the increasing income gap between urban and rural India, and said the cooperative business model should be reinforced for the development of small farmers, workers, retailers, and consumers.
GCMMF markets its milk and other dairy products under the Amul brand. It is the leading dairy player in the country. At a conference organised by CII, the Institute of Rural Management Anand (IRMA) and the International Labour Organization (ILO), Sodhi said India can only develop through a cooperative way of doing business because that model only takes care of small people.
Sodhi emphasized that the Prime Minister has given a slogan of “Sahakar se Samriddhi”, which means prosperity through co-operatives, and has also created a separate Cooperation Ministry under the helm of the Union Home Ministry.
He said that the government’s commitment to the idea of affluence through cooperatives. India’s economy is expanding, as is per capita income. But rural India is not growing. “Incomes are increasing, but income is going more to the people who are already rich. People with wealth are growing, while people at the lower end are losing wealth, and he pointed out that income disparity is increasing, especially between urban and rural India or between India and Bharat.
The Amul MD said the Indian economy is based on three “S”—which are small farmers, small traders and small workers; small retailers and small middlemen; and small consumers. If India has to develop, we have to see that all three “S” are involved in the development process. They share the wealth and prosperity of India.
Sodhi said, “Now people have realised that the only business model which is successful in taking care of these ‘three S’ is the cooperative way of doing business.”
He described cooperatives, which are owned by the masses and democratically run, as a business model with a development angle, while corporates are for the growing wealth of a few shareholders who own the company.
For rural India to grow, we don’t need more corporates, but we need more cooperatives in all the fields, “Sodhi said, adding the cooperative business model can be replicated anywhere and not just in the farm sector.
Speaking about Indian dairy cooperatives, the Amul MD said the reason for their success is that they own 100 percent of the supply chain, unlike other countries. In India farmers are getting 75-80 per cent of sales realisation. “The Indian way of dairy cooperatives is much ahead and meets the purpose of why cooperatives have been formed,” he said.
As a result, Sodhi said India has become the world’s largest milk producer because of the success of dairy cooperatives. He noted that the dairy cooperatives have provided employment for 365 days in rural India, guaranteed a market for perishable items like milk, as well as assured farmers of cash flow throughout the year. This has led to women’s empowerment and food security, he noted. If India had not been self-sufficient in milk, then the import bill for dairy would have been a whopping Rs. 5-6 lakh crores, much more than that of cooking oils, Sodhi said.
He said there are huge benefits of aggregation under a cooperative business model in getting resources like technology and finance as well as marketing. Sodhi also stressed the role of selfless, dedicated leadership for the success of cooperatives. On challenges in the cooperative sector, the GCMMF MD said the first ones are how to change the mindset from regulation to development, how to make cooperatives more modern and contemporary, and how to replicate the business model in urban India. For the formation of new cooperatives, there are challenges in the provision of easy access to capital, digital technology, and marketing support. He said the purpose of forming a separate Ministry of Cooperation is to promote the development of this sector, not regulate it. Sodhi stressed that states should also focus on promoting the cooperative sector.