Even as consumers shift their focus on healthy munching while indulging in snacking in the country, investment in the healthy snack industry has witnessed a year-on-year (y-o-y) dip.
According to data sourced by businessline from Tracxn, a market intelligence and analytics platform, the healthy snacks brands in India received the lowest investment of $4 million in five years in 2024 so far, compared with the $11.3 million investments received in 2023.
The overall round of funding deals in the industry also reduced y-o-y with 13 in 2023 and only 4 in 2024 so far, during the same period.
“2021-2022 witnessed a surge in funding post the Coronavirus outbreak. During that time, investments were coming to India. However by the end of 2022, in 2023 and 2024, there has been a dip in funding wherein the start-up ecosystem has declined. Unlike earlier, the investments now are solely focused on profitability. The funding winter is expected to continue this year. In the snacking category, while people have become more conscious, it is not an open field when it comes to start-ups. The established players in the industry have forayed into the healthy product segment and offer a wider portfolio,” said Lloyd Mathias, Business Strategist and Independent Director to businessline.
“While more than 170 companies have been founded in the healthy snack segment sector to date, more than 40 per cent of the companies were founded in the past five years. The decline in funding in this segment can be attributed to the overall slowdown in demand on a global scale, geo-political issues and rising interest rates that have changed investor behaviour to focus on profitability rather than expanding their portfolio and burn cash,” said Neha Singh, Tracxn CEO and Co-Founder.
Consumer preference
This comes even as consumers are shifting towards healthy munching in the country. According to the India findings from Mondelez International state of snacking report, 86 per cent of Indian consumers consume snacks to meet a variety of health needs, including aligning with their fitness goals while 89 per cent of consumers consume snacks during a special time of the day.
As per a survey conducted by Farmley of over 6,000 respondents on healthy snacking, nine out of 10 people want to switch to healthier snacking choices while 58 per cent of people stated that high costs are the biggest obstacle to adopting healthier snack options.
“Our recent consumer survey highlighted that 73 per cent of respondents expressed a desire to be fully informed about the ingredients in packaged foods before consumption. This shift towards mindfulness reflects a broader trend where consumers are increasingly seeking out wholesome snacks that align with their health goals, while still fitting seamlessly into various eating occasions throughout the day,” said Akash Sharma, Co-Founder and CEO of Farmley to businessline.
Further, quick commerce has also aided in increasing the consumption of healthy snacks in the country. “We’ve witnessed consistent and encouraging growth in our quick commerce segment, which has emerged as a crucial channel for us. This growth is fuelled by the rapid expansion of the quick commerce platforms and the increasing share of the conscious snacking category within it. The convenience and speed offered by quick commerce align perfectly with the evolving preferences of today’s consumers, making it a key driver of our overall sales growth,” added Akash.