The dramatic rivalry between Patanjali - the face of the ‘Swadeshi rebellion of 2016-18’- and Colgate was lost on no one. The impudence of the former’s campaigns had the advertising watchdogs at their wits’ end as they sought to reinforce and remind the belligerents of the long-standing advertising guidelines with repeat notices. Misleading, unsubstantiated, and unethical were the buzzwords. Five years later, when Prabha Narasimhan, MD and CEO of Colgate-Palmolive India said that the growth of the naturals segment has plateaued and even started to decline, the statement brought back memories of the past. Narasimhan was, however, referring to the pandemic-induced spike for Colgate-Palmolive India alone.
Nevertheless, her statement does give rise to a genuine, more generic and larger question around the post-pandemic relevance of the accentuated trends that boosted the overall segment in a significant manner during the COVID period. Today, homegrown natural brands are all over our feed on social media, in stylised packaging, offering ‘centuries-old remedies,’ priced higher than regular off-the-shelf products. They have become style statements today, finding a permanent place on the shelves of higher income group consumers, and ‘saved’ inside online shopping bags of the aspiring masses.
The past couple of years have definitely proved catalytic for these businesses that were on an upward trajectory even before the pandemic struck. Taking up this conversation with brands that operate in the naturals and organics space across categories, including beauty and personal care, health and wellness, food and beverages, and fruits and vegetables, reveals that while the momentum has decreased, the growth story continues for them. The challenges discussed ahead, they say, are to be seen as evidence of this growth.
CONSCIOUS BEAUTY - NOT A CAKEWALK
An October 2022 report by Research and Markets pegged the organic personal care market in India at INR 50.67 Bn in FY 2021. Led by trends such as sustainability, clean or chemical-free beauty, and natural appearance, it is estimated to reach INR 159.67 Bn by FY 2027, expanding at a compound annual growth rate (CAGR) of 22 % during the FY 2022 - FY 2027 period. According to the report, brands are innovating in accordance with radical changes in customer values and expectations due to the pandemic. The report stated, “Owing to customers’ preference towards personal care products with natural ingredients, major players such as Dabur and Forest Essentials have generated substantially high net revenues. Start-ups such as Plum, mCaffeine, Kama Ayurveda, and SkinKraft have also shown noteworthy performance.”
According to Pritesh Asher, CEO and Co-founder, Juicy Chemistry, a certified organic beauty and personal care brand founded in 2014 - the pandemic actually accelerated the growing requirement for holistic personal and healthcare solutions. “Not only did people begin to understand the long-term effects of chemicals in everyday skincare and personal care products, but more relevantly, they consciously started reading and understanding labels, and also looking for and connecting with brands that had natural ingredients. On the back of that, we grew 4X in one year.” Post that, the brand took necessary steps to not just grow the business online, but also to expand its offline footprint to seven flagship stores and over 200 others through the in-store model. The numbers are expected to reach 8 and 500 respectively by the end of this year, as the offline presence expands to about 20 cities.
Sharing some pertinent observations on how consumer behaviour fluctuated through these years, Asher notes, “The expected timeline of 4-5 years for the COVID-driven D2C boom was cut short quite dramatically, with consumers feeling confident to come back to the offline market within a year’s time. Once that happened, it became clear that going forward, an omnichannel approach would be crucial for ensuring business viability. Also, in the premium/luxury skincare space, it is extremely important to create an all-round sensory engagement for consumers, which was the whole idea behind our experiential stores. What we observed is that while the consumer gives us a few seconds to interact with them online, we were able to get an average of 8-12 minutes with them at our offline stores. The average order value was also twice that of online, as we were able to upsell and cross-sell more efficiently.”
Despite having a soft launch in 2019, Sadhev - the luxury ayurveda brand from the makers of Medimix, Cholayil - hit the market only in the second half of 2020 as a result of COVID-19. Lasakan Cholayil, Co-founder, Sadhev tells us that during the pandemic, the brand catered to regions across the country, however, the bulk of sales came from metros.
Commenting on the stark differences between then and now, he adds, “The only thing that has dramatically changed for us is the cost of acquiring a new customer during COVID vs. now. With so many people glued to their screens then, it was a lot cheaper for us to acquire new customers, however, in the current scenario, it is nowhere close to what it was then. That being said, our repeat rate has been very healthy and is going on an upward trend. We witness a 97% Consumer Happiness Index and our customer retention rate since inception has been 31%. The pandemic years resulted in a spike in online shopping. Though it didn’t sustain the intensity, we do see an increased adoption compared to the pre-pandemic levels. It has certainly increased the relevance of safe/natural products. With a repeat purchase rate of over 45%, we’re seeing that the consumers’ stickiness to our products hasn’t waned.”
Vedika Sharma, Founder and Director, Mantra Herbal - an Ayurveda-based restorative skincare brand from the house of Baidyanath says, “The switch to natural and organic products is not merely a trend, but a lifestyle shift towards holistic well-being, which started nearly a decade ago as consumer awareness began to grow.” Instead of defining it as a metro consumers’ market, she prefers to call them ‘early adopters,’ with those in tier 2 and 3 fast catching up.
Sharma acknowledges the pandemic for increasing awareness about the efficacy and safety of Ayurvedic products that pushed the brand to grow its online presence. “Uncertain about what the future holds for the offline market, we decided to focus on e-commerce. In recent years, our online footprint has grown substantially, and we are now present on most e-commerce platforms suited for our brands such as Nykaa, Tira, Amazon, Flipkart, and Myntra in addition to our official website. Offline channels remained strong, particularly in Northern India. We’ve cultivated a robust presence in markets such as Punjab and Haryana. In line with our growth strategy, we’ve embarked on an expansion journey into Gujarat, Rajasthan and Maharashtra, extending our offline retail network. We are also planning to establish our first stand-alone retail store and hopefully add to the segment in the near future.”
Despite the encouraging trends and forecasts, brands in the natural and organics space are faced with unique challenges, such as marrying profitability and sustainability, sourcing raw materials, consumer unwillingness to pay a premium, creation of value through personalised experiences to justify high costs for luxury/premium offerings, and overcoming negative consumer perceptions forged by misinformation as well as the lack of clear and correct information.
“There is a cost involved in being sustainable, but that’s a choice that brands have to make,” states Juicy Chemistry’s Asher. “If you price the products above a certain point, it discourages consumers from upgrading to organic, and the larger goal of bringing millions of consumers to the organic journey ceases to exist. And so, we had to tweak our supply chain and implement strong cost-cutting measures to maintain the affordable luxury proposition that would motivate people to switch from commercial to organic offerings.” Other than that, the brand also had to work hard on getting consumers to understand the difference between natural, herbal, ayurvedic, organic and ‘certified organic’. This was achieved with the help of social media and Digital marketing, which it relies heavily on for all its marketing needs.
Mantra Herbal has two luxury offerings - Anantam and Mantra X Gur. Designed to address the specific skincare needs of those seeking anti-ageing solutions, Anantam combines cutting-edge Green Apple Stem Cell Technology from Mibelle Biochemistry (also known as Phyto CellTec) with Ayurveda to create products that deliver exceptional results. Anantam products are made with unique Ayurvedic ingredients such as Swarna Bhasma (Gold Dust), Rajat Bhasma (Silver Dust) and Saffron. On the other hand, Mantra X Gur was a collaboration with fashion influencer and designer Pernia Qureshi, as part of which the brand curated three exclusive products: Seher Lip Oil, Rooh Face Oil, and Gul Cuticle Oil. The products suited for today’s fast-paced lifestyle were thoughtfully designed for consumers to carry them easily, and include in a travel kit.
“While these products provide a luxurious experience, they are very well priced, reflecting our commitment to accessible indulgence,” says Vedika Sharma. “In the premium/luxury space, we focus on building customer loyalty by offering exceptional product quality, personalised customer service, and a commitment to sustainability. We create exclusive experiences through different pop-ups where we do dosha consultations with our vaidyas, and also hair and skin analysis. We offer these services telephonically and try to engage with customers through Digital platforms, ensuring that every interaction with our brand exudes authenticity. Our partnerships, like the one with Pernia Qureshi, enable us to tap into niche markets and expand our luxury offerings while maintaining the core values of Mantra.” The brand’s communication strategy relies heavily on Digital, Influencer, and Print advertising.
THE HEALTH AND WELLNESS CHALLENGE - FORMULATIONS & FORMATS GALORE
The latest report by IMARC Group, titled ‘India Health and Wellness Market: Industry Trends, Share, Size, Growth, Opportunity, and Forecast 2023-2028”, finds that the Indian health and wellness market is expected to grow at a CAGR of 5.55% during 2023-2028. Moreover, the Indian nutraceutical market, which is a subset of it, is expected to grow at a CAGR of more than 22%, according to Research and Markets’ ‘India Nutraceutical Market Overview 2027’. Categorised into product type, dietary supplement type, functional beverage type, and functional food type, currently it accounts for a meagre 2% of the global nutraceutical market.
For the modern Ayurvedic D2C brand Kapiva, the biggest challenge while starting out was to get the fence-sitting millennial consumers into the fray. The brand achieved this through a combination of extensive R&D, clinical trials, as well as innovative product formats and packaging. “Millennials are looking for science-backed solutions, so while Ayurveda is at the core, we design our products backed by science. For an Ashwagandha capsule, for instance, we are looking at its ‘withanolide’ percentage (a group of steroids) and other bioactives that contribute to product efficacy. Another example is that of 60% fulvic acid in Shilajit,” says Ameve Sharma, Co-founder, Kapiva.
Kapiva stands out for its innovative formats for Ayurvedic products like gummies, fizz, slim shakes, skin care supplements, and a variety of juices. All its products have clinically validated ingredients and the formulations also undergo clinical trials. For instance, the Dia Free Juice has been clinically proven to reduce blood sugar by 30%, while the Get Slim Juice has been effective in weight reduction. “Consumer is at the core of the product decision of which format is a part. Some consumer needs require them to get the ingredients in their purest form for which we offer a resin, whereas there are others driven by convenience where a gummy or a capsule is preferred. Our packaging also plays a role in signalling that we are at a juncture between science-backed and natural ingredients in a consumer-friendly manner. The goal is to make the packaging resonate with the aspirations and expectations of millennial consumers,” he adds.
Ameve Sharma shares that in the market for natural and efficacious products, where Kapiva operates, consumers are ready to pay a premium for problem-solving products such as Dia Free Juice, Get Slim Juice, and BP Care Juice. This willingness can be attributed not just to clinical trials and consumer testimonials, but also to the growing need for sustainable and long-term management. However, he firmly believes that overseas markets can be more lucrative for Ayurvedic brands. “Ayurveda has a rich history and a holistic approach to wellness, which makes it quite appealing to the global audience who are willing to invest in Ayurvedic products at a premium price, recognising them as unique and of superior quality. This presents a significant opportunity for enhanced profitability, to capitalise on which we recognise the necessity of tailoring our marketing strategies to meet the distinct needs and preferences of each market. We have taken proactive steps, including establishing a wholly-owned subsidiary in the United States and assembling a local leadership team. This team will play a pivotal role in building our brand’s presence in the US and ensuring that our products resonate with American consumers.”
Starting out on its mission to empower over 100 million individuals to lead healthier lives, when OZiva - a clean nutrition brand - delved into the world of nutrition products, a glaring gap emerged. Mihir Gadani, Co-founder & COO, OZiva shares, “We recognised the absence of truly clean products—those devoid of harmful chemicals, additives, or preservatives. So, during our formative years, we grappled with the challenge of crafting the right business model to realise our vision. One of our most significant hurdles was educating consumers about the significance of clean nutrition. However, through persistent efforts in delivering related content and effective marketing strategies over the years, we have successfully disseminated awareness about this critical aspect.”
Another significant and ongoing challenge for the brand is the development of formulations that deliver effective and high-quality nutrition without resorting to artificial sweeteners or harmful ingredients. “For example, it would be easy to boost protein content per serving by incorporating soy-derived protein. Yet, we understand that soy can potentially disrupt hormonal balance, and if an ingredient does not contribute to holistic health, it has no place in our products. This is an ongoing challenge, one that we thoroughly enjoy overcoming every single time.”
The contemporary market presents its own set of difficulties including fierce competition from both local and international players, stringent regulatory requirements for food products in India, high cost of raw materials, and limited availability of certain key ingredients. “OZiva has been able to address these challenges by rigorously adhering to regulations and subjecting our products to tests conducted by third-party accredited laboratories such as GMP. Our products are closely regulated by authorities like FSSAI or Ayush. Each batch undergoes a comprehensive testing process at various stages, encompassing raw materials, in-process quality control, and finished product testing to ensure the highest quality standards and consistent efficacy. We also closely monitor contaminants like pesticides, heavy metals, and microbial counts, ensuring that they remain within safe and permissible limits as dictated by regulations. This approach ensures that our products not only meet but exceed the expectations of our consumers in terms of authenticity, safety, and quality,” states Gadani.
THE ORGANIC CONUNDRUM AND EXTRACTING A PREMIUM
The India organic food market size reached US$ 1,278 Million in 2022, as per IMARC Group’s ‘India Organic Food Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2023-2028’. It is expected to reach US$ 4,602 Million by 2028, exhibiting a growth rate (CAGR) of 23.8% during 2023-2028. This growth will be fuelled by growing awareness regarding the health benefits of organic food products and the health hazards associated with chemical pesticides and fertilisers, as well as increasing investments by Indian corporate firms in agritech, agribusinesses and organic farming.
Yet, as much as there’s growing awareness about the pernicious effects of toxic chemicals in food, and as much as consumers want to avoid them, Organic snacks brand Nourish Organics’ Founder and Certified Health Coach Seema Jindal points out that “availability of organic ingredients can be a challenge, and it may impact the target audience due to higher costs. However, we have proactively been addressing these challenges by establishing robust supply chain networks, collaborating with vendors, and investing in sustainable sourcing practices to ensure a steady supply of organic ingredients.”
Additionally, the brand’s commitment to quality and transparency has helped them justify the premium associated with organic products, making them more accessible to a wider range of consumers who prioritise their health and the environment. “Nourish Organics’ best-performing markets today are a testament to the growing demand for organic snacks. While specifics may vary, the next significant opportunity lies not only in expanding geographically but also in enhancing the value offered to existing customers. This could involve diversifying the product range, focusing on innovation, and building stronger customer relationships through personalised experiences,” adds Jindal.
Digital lifestyle-oriented fresh fruits & vegetables brand, Pluckk has been witnessing consistent growth in the demand for organics. According to Pratik Gupta, CEO & Co-founder of Pluckk it’s a “good double-digit growth per quarter”. However, he adds that “while we have a growing base of consumers who prefer organic, there’s also a lot of misinformation around what’s really organic and how authentically organic a brand is. And so, we have ensured that the farmers from whom we source the organic produce are certified by government-approved certification agencies. We also make sure that the products are not exorbitantly priced so as to encourage our consumers to try organic and understand what the benefits are.”
Pluckk was founded on the philosophy of catering to consumers who were facing a gap in the quality and formats of fresh fruits and vegetables that could address their lifestyle. Commenting on how the brand worked on creating value for the customers, Gupta states, “Consumer surveys showed that quality for them means freshness, hygiene, the amount of chemical usage, or the knowledge of what and how the product has been treated before it comes to their doorstep. We addressed this issue by establishing a farmer base and a traceable supply chain, which allows the end customer to scan the QR code on the product and see where it is coming from, where and when it was harvested, and what is the freshness level. Because it is sourced from a verified farmer, the customer also knows the amount of chemicals and the type of seeds used in growing the product. Another important innovation that we’ve done is the ‘Ozone Wash,’ which is certified and lab tested, and cleans 99 per cent germs.”
There was a time when brands would misuse the term organic or natural to lure uninitiated buyers. Growing consumer awareness and purchasing power, business opportunities, and government interventions are now ensuring that the naturals and organics segment emerges as a formalized and formidable sector that prides in its homegrown credentials.
CHALLENGING CONSUMER PERCEPTIONS - THE MEDIMIX WAY
Latest Mintel research highlights that even as interest in Ayurvedic beauty surges, the perception of Ayurvedic products as ‘old-fashioned’ (18%), and the slow pace of visible results (18%), continue to act as barriers. Consumers also seek proof of credibility and efficacy for Ayurvedic beauty products.
Relevant in this context is Medimix’s ‘Get #SkinFit with Fast-acting Ayurveda’ campaign, launched at an opportune time - just prior to the pandemic in 2019 - as part of a brand revamp to appeal to the younger audiences. The new proposition took these two challenges head-on. Anupam Katheriya, Chief Executive Officer, Cholayil Private Limited says, “Our research validated high consumer satisfaction with the benefits of Medimix, especially how it helped improve their skin. Rather than highlighting individual benefits to consumers, we encapsulated product performance with a single term ‘Skinfit’ capturing overall benefits. That is how we arrived at the insight - ‘get #SkinFit with Fast-acting Ayurveda’.”
The brand roped in Katrina Kaif as the face of a 360-degree campaign to communicate the superiority of the product vs. other options available in the market. The campaign emphasised the uniqueness of 18 herbs in Medimix in addressing skin conditions, thus empowering consumers to go all out with the thought of ‘#SkinFit Raho, Manmarziyaan Karo with Medimix’.
Commenting on the impact, Katheriya shares that the brand has conducted multiple consumer connects to ascertain it. “In conclusion, the brand imagery has been lifted and Ayurvedic credentials have strengthened. Medimix scored very high on consumer trust and has been rated the most trusted Ayurvedic personal care brand in India by TRA’s Brand Trust Report 2023. We’ve seen a significant jump in ‘new to brand’ consumers which has resulted in an increase in household penetration. Consumers have loved our product and we continue to see high repeat rates proving the same. Medimix has been one of the fastest-growing brands in terms of household growth and this is visible across channels and markets.”
