The Changing Food Industry: Chances, Changes & Challenges

Chandrashekhar Basavanna, Founder & Director, OrgTree IndiaChandrashekhar is responsible for driving passionate engineers to create innovative Information Security products and offering value to customers.

The term snack usually brings about ideas of tasty, but greasy, decadent, sugary and completely unhealthy foods. The term healthy, invokes exactly the opposite. Today, there are a slew of startups focussed on helping people switch to healthier alternatives keeping the snacks tasty. The behaviour of the average consumer of snacks is changing from just relying on it for taste to using it as a quick meal supplement. It is this very change that has got in a growing number of players to the space. It is believed that urban India has a big demand for these ready-toeat snacks. However, the processed foods market is one of the most competitive and difficult to break into. It is heavily scale dependent and is fairly resource intensive. These companies not only have to compete with large corporations like Nestle, Unilever, and their likes, but also have to create a loyal following among consumers.

Initially the shift was only observed in the 28-50 year olds who wanted to lead healthier lives; but now all segments are slowly moving to more conscious eating choices, including what goes in the snacks that kids take to school, to what kind of food is consumed outside, all of urban India is slowly making healthier food choices. This brings up quite a few challenges for these startups, considering the conscious eater has gone from needing acceptable taste to wanting to eat both healthy and tasty foods. These companies are often smaller businesses and food start-ups who know what their customer needs and rarely find in the largely fried and sugary ready to eat snacks landscape. Often those companies are run by people who are passionate to create something unique and previously unexplored due to the scale of these larger companies. Their limited resources and scale makes them uniquely suitable to innovate quickly and disrupt an otherwise unhealthy vertical in the FMCG category.

To keep their products healthy and fresh, many of these startups have moved closer to their source of raw ingredients.
Be it next to the farmers providing them raw produce, or these companies themselves growing a part of their needs on their own premises, the distance raw ingredients travel from harvest to production facility has been getting shorter and shorter each year. More and more startups have realised the benefits of controlling and monitoring the entire supply chain. A large part of the focus of these companies, beyond the healthy and the taste aspects of their product is the environmental impact of its production. Each step of production, from procurement of grains/ produce, to final packaging, what materials to use, what kind of shelf life will they provide, what part of it can be recycled and what part of it cannot be, is optimised to use less and less energy and resources. What cannot be changed is looked at as a challenge for the future, looking at ways of making each step less resource intensive with each change.

These practices don’t just stop at the level of the product; they are also trying to make the lives of those involved in production better, enabling their vendors and producers to get better prices for their produce, giving their employees and contractors a shot at bettering their livelihood while being a part of something that doesn’t exploit their needs. These companies regularly run programs to enable producers to form collectives, so that it becomes easier for them to negotiate prices, procure implements to modernise farming, and share knowledge so as to get the best possible yields. They regularly conduct awareness programs in the cities to make consumers aware of the benefits of shifting to healthier alternatives and to disambiguate myths about certain types of foods.

The behaviour of the average consumer of snacks is changing from just relying on it for taste to using it as a quick meal supplement

The food industry, for decades has been driven by misinformation about certain ingredients and their benefits. A lot of mislabeling has been used by food companies to keep their ingredients, production techniques and health repercussions shrouded. Certain ingredients, when thought to be harmless turned out to be detrimental to health, and certain types of ingredients that were considered harmful have proven to be necessary. The smaller firms have to constantly navigate this landscape of misinformation and find ways of educating their customers on what is healthy and what isn’t.

Considering the amount of innovation happening in food production itself, these companies have to constantly update themselves and their consumers on the changes in the industry. Better design and cleaner communication systems of today help with this need immensely. The aware consumer is also looking to learn more about what they eat, and where it comes from. In many other instances, they like to engage with these producers to know more and make more informed choices. After all these changes to the product and the production and distribution process, one of the biggest hurdles in the growth of these companies is the distribution model most retailers are used to. These brands run on the economy of scale and a system of credit that smaller manufacturers cannot afford to extend. Though modern trade retailers are aware of these and try to collaborate with these startups and producers in any capacity, that they can to ensure their end customers get the healthiest and tastiest snack money can buy, we still have a long way to go before limited supply and smaller scale producers will be able to compete with global giants.