Healthcare costs and food sales are increasing thanks to reverse migration

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

The demand for healthier foods is being met by a robust e-commerce network emerging in India. And because of the pandemic, consumers have adopted healthier eating habits.

Mayank Kumar, Head of Marketing at Dabur India, told TOI, “When people moved from big cities like Bengaluru to smaller towns, they got 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 metropolises found the right consumers who had tried such products and were now ordering online. This helped consumers in smaller cities maintain the habit of consuming functional and healthy foods.”

In a recent report, Ina Dawer, senior research manager at market data provider Euromonitor International, said: “Indian cities are the new demand hotspots for packaged food brand owners. Increased interest in self-sufficiency and more home cooking has brought significant attention to food, while consumer re-migration to Tier 2 and Tier 3 cities has impacted and urbanized diet trends in smaller towns and communities. Therefore, it has become imperative for companies to reconsider and reformulate their product and distribution strategies in order to stay competitive.”

A report by ICICI Securities quotes Ram Raghavan, MD of Colgate-Palmolive India as saying: “We are seeing greater environmental mixing in terms of aspirations, behaviors, practices, products, categories, etc. between urban and rural areas. Rural areas have experienced a growth spurt over the past year with Covid-related remigration, with these consumers taking their urban consumption habits to rural areas, leading to further mix-up of behaviour.”

However, Raghavan added that rural consumers face income and liquidity problems in the near term, which would impact consumption.

“While Tier 1 cities remain strategic and priority markets, food companies must explore growing opportunities in Tier 2 cities as acceptance of various packaged food categories increases,” said Dawer. She added that the urbanization of food trends in Tier 2 and 3 cities and consumers’ willingness to pay more for foods with health claims will create new growth niches for newer brands. In addition, multinational companies will also be able to expand distribution of their high quality and healthier packaged food product portfolios beyond Tier 1 cities.


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