India set for health and wellness boom

04 September 2012

NEW DELHI: Brand owners in India could benefit from targeting the health and wellness sector, where revenues will almost double by 2014, according to a new study.

FICCI, the trade body, and PricewaterhouseCoopers, the advisory group, reported that this market expanded by 20% in 2011 to Rs590bn ($10.6bn), with products securing between 55% and 60% of returns. In 2014, it should be worth an estimated Rs950bn

"Consumers today want to take control of how they look and feel, and this is driving purchase decisions across categories such as food, beverages, personal care products and services," the study claimed.

The beauty care sector grew in size by more than a quarter last year, hitting Rs230bn–Rs245bn. Haircare, skincare and cosmetics took over 60% of sales, while demand for premium brands rose by at least 1.5 times the industry average.

Nutrition-based food, drinks and supplements yielded Rs145n–Rs150bn in 2011. Fortified food and beverages accrued 50% of revenues, with supplements on 25%, "naturally healthy" lines on roughly 15%, and "better for you" snacks and similar items on around 5%.

As a sign of intensifying competition, the major players in this segment have boosted their advertising and promotional spending since 2006, with Dabur up 21% here, and Nestlé logging a 19% lift. Talwalkar raised its outlay by 46%, and VLCC posted a 24% increase.

Elsewhere, the alternative therapies market was worth Rs125bn to 140bn last year. Fitness and slimming products generated Rs50bn, and "rejuvenation" activities like spa days delivered approximately Rs6bn.

When discussing the current audience, some 150m shoppers are "beginners", who are influenced by mass media, word of mouth and celebrity endorsements, and typically want to improve their appearance.

Over 40% of TV ads for health and wellness lines that first aired in the last six months featured celebrities, the analysis added, suggesting manufacturers have made a concerted effort to reach this cohort.

There are also 15m–25m "active" buyers, who generally live in cities and exhibit strong brand loyalty. They usually prefer natural or organic goods, and will pay a premium for their favourite products.

The most involved customers are the 1m–2m people described as "believers". These early adopters seek out offerings with "distinct functional benefits", and are mainly young professionals who follow global trends.

Looking ahead, second tier cities, home to 70m people, and their third tier equivalents, with 30m residents, are set to be among the core growth drivers, alongside many of the 90m shoppers in first tier urban centres.

Taking an even longer term view, targeting consumers over the age of 40 years old could prove profitable, as this group is due to expand from 340m people in 2011 to 676m, or 43% of the population, by 2041.

Data sourced from PricewaterhouseCoopers; additional content by Warc staff