The trend of urban consumers swapping indulgent snacks like biscuits and noodles for healthier alternatives has spurred a “smart snacking” revolution across Indian cities. According to a recent report by market researcher NielsenIQ, the “smart snacking” sector is expanding 1.2 times faster than traditional snack categories, reflecting changing consumer values and preferences. This data contrasts with recent reports from packaged food giants like Britannia Industries, Nestle, and Dabur, who attribute slow consumption growth in metropolitan areas to high food inflation, rental expenses, and income pressures.
This urban shift towards health-conscious snacking comes at a time when consumption growth in rural areas has outpaced that of urban regions for the last nine months. Metro cities, which constitute nearly one-third of India’s FMCG sales, have experienced a slowdown in growth rates, according to Varun Berry, Executive Vice Chairman and Managing Director of Britannia Industries. Echoing this, companies like Nestle India, ITC, Dabur, Tata Consumer Products, and Hindustan Unilever have raised concerns over a shrinking urban consumer base, with Nestle further indicating a contraction in the middle class.
One out of five snacks now has a healthy connotation.
Sonika Gupta, Executive Director of Customer Success
Amid these challenges, however, the market for smart snacks is flourishing. Sonika Gupta, Executive Director of Customer Success at NIQ India, highlighted that health-focused snacks now represent a significant share of metro markets, driven by consumers’ demand for options that support bone and heart health, immunity, and digestive well-being. These “smart snacks” often contain multigrains, dried fruits, nuts, and other nutritious ingredients rich in antioxidants, vitamins, minerals, and fiber.
Gupta noted that “one out of five snacks now has a healthy connotation,” with oats, Greek yogurt, and similar products spearheading this trend. “Smaller, emerging brands are challenging established players by offering competitively priced single-serve packs, which are growing 60% faster in the smart snacking market compared to traditional small packs,” Gupta explained. Recent NielsenIQ data shows that 63% of consumers are now actively seeking innovative and health-oriented snacking options, with half of these consumers reading ingredient labels to better understand nutritional values.
This health-conscious movement is opening doors for brands to experiment with new products and capitalize on these shifting preferences. Tata Consumer’s Managing Director, Sunil D’Souza, echoed this sentiment in regard to their newly acquired Organic India brand. He admitted initial skepticism towards the organic food segment but noted rising demand for organic products like jaggery, ghee, and rock salt, which has pushed the company to ensure stable supply chains.
These trends reveal a broad and deliberate shift towards healthier snacks, challenging the notion that the FMCG sector’s struggles stem purely from economic pressures. In fact, urban consumers are actively steering away from ingredients like palm oil, hydrogenated fats, and excessive sugar and salt, which have been marketed to them as “tasty” and “healthy” in the past.
We're chasing our tails trying to ensure supply chains for organic products.
Sunil D'Souza, Tata Consumer’s Managing Director
Demand for indulgent items like biscuits, noodles, chocolates, and ice cream has slowed in cities, yet core kitchen essentials such as edible oils, rice, and flour are maintaining steady urban demand. Angshu Mallick, CEO and Managing Director of Adani Wilmar, noted that their urban demand remains robust, anticipating strong third-quarter performance driven by the upcoming wedding season.
Some companies remain cautious, however, in their predictions for immediate consumption growth. Britannia, India’s top biscuit manufacturer by value, expects potential short-term volume impacts due to weaker urban demand. Even the festive season, typically a peak sales period, failed to deliver the anticipated boost in consumer spending, according to a senior executive in the packaged food industry.
Despite this, the demand for smart snacking has been resilient, with companies expanding their healthy product lines. Britannia, for example, recently introduced the protein bar “Be You” through e-commerce channels as a trial, with plans to broaden distribution before fully committing to a larger rollout. In July, ITC launched the health-focused “Right Shift” brand, targeting consumers aged 40 and above, underscoring the appeal of healthy yet flavorful snack options.
According to Gupta, brands that can cater to the increasing health-consciousness of consumers, while balancing flavor and convenience, are well-positioned for growth in the smart snacking segment.
(Input from various sources)
(Rehash/Yash Kamble)
