Health cos and food sales up, thanks to reverse migration

Even as the consumers battle rising prices, the demand for health and functional foods is growing, with the COVID-19 pandemic playing a huge part in this. When the pandemic hit, many migrant workers returned to their hometowns and brought home with them, their urban preferences.

The demand for healthier food choices is being fulfilled by a robust e-commerce network building up in India. And owing to the pandemic, consumers have picked up healthier eating habits.

Dabur India marketing head Mayank Kumar told TOI, “When people migrated from big cities like Bengaluru to smaller towns, they carried the habit of consuming healthy and functional foods. However, what has helped people in these places adapt such consumption habits is the reach of e-commerce. The penetration of e-commerce beyond the metros found the right consumers who had sampled such products and were now ordering it online. This helped consumers in smaller towns to sustain the habit of consuming functional and healthy foods.”

In a recent report, market data provider Euromonitor International’s senior research manager Ina Dawer said, “Indian cities are the new demand hotspots for packaged food brand owners. The heightened interest in self-care and increased home cooking has brought significant attention to food, while consumers’ reverse migration to tier-2 and -3 cities has influenced and urbanised food trends in smaller cities and towns. It has therefore become essential for companies to reassess and reformulate their product and channel strategies to remain competitive.”

An ICICI Securities report quotes Colgate-Palmolive India MD Ram Raghavan as saying, “We are witnessing more blending of environment in terms of aspirations, behaviour, practices, product, categories, etc, between urban and rural areas. Rural saw a spurt of growth last year with reverse migration due to Covid, in which these consumers took their urban consumption habits to rural areas, driving further blending of behaviour.”

However, Raghavan added that in the short term, rural consumers are facing income and liquidity challenges which would impact consumption.

“While tier-1 cities continue to remain strategically important and priority markets, food companies must explore growing opportunities in the tier-2 cities as adoption of different packaged food categories increases,” Dawer said. She added that the urbanisation of food trends in tier-2 & -3 cities, and consumers’ willingness to pay more for foods with health claims will create fresh growth pockets for newer brands. Additionally, multinationals will also be able to extend the distribution of their premium and healthier packaged food product portfolios beyond tier-1 cities.