Notwithstanding the current economic slowdown, the Indian wellness services market is expected to remain buoyant and has the potential to sustain a compounded annual growth rate (CAGR) of approximately 30-35 per cent for the next five years, says a latest study by FICCI and professional services firm, Ernst & Young (E&Y).
The wellness services market is currently estimated at Rs 110 billion.
The FICCI-E&Y report, titled Wellness- Exploring the Untapped Potential, highlights that the growth is expected on the back of favorable market demographics, consumerism, globalisation, changing lifestyles, increasing availability across categories and regions and rising awareness among people. “Given the favourable demand and supply dynamics, wellness industry presents strong business potential,” said Farokh Balsara, partner, advisory services, E&Y.
The report has classified the wellness industry into seven core segments within different products & services, such as allopathy, alternative therapies, beauty, counseling, fitness/slimming, nutrition and rejuvenation. Of these, rejuvenation services such as spas, alternative therapies, ayurveda treatments and beauty services are expected to show growth rates as high as 30 per cent. At the same time, fitness comprising gyms and slimming centers are expected to grow by more than 25 per cent.
Nutrition products, including dietary supplements, health food and drinks have shown a growth rate of 8-10 per cent, whereas allopathy as a segment was not classified due to its traditional linkage to healthcare.
According to the report, the increasing level of activity is arising from the entry of several providers such as organised Indian and international players; expansion by existing companies to new product categories and regions; strategic alliances across the value chain, interest by private equity investors and also players in allied industries like hotels and real estate entering the wellness segments.
The report also points to a trend of players moving towards offering a ‘one-stop-solution’ for all wellness based needs by adding more products and services across various segments in wellness.
In terms of payback and gestation periods, products such as health foods & drinks, dietary supplements and alternative medicines require greater investments, normally exceeding Rs25 crore or more, says the report, with paybacks ranging from 3-6 years. At the same time, services such as ayurveda treatment, alternative treatment centers, salons etc require much lower investment and also have lower paybacks of upto three years.
When it comes to regions, south India is much ahead in terms of indicative concentration for the organised wellness-based centres per household (34.4 centres per lakh households), as compared to 13.6 for north India, 12 for west India and 10.1 in east India. The report attributes south’s lead to the presence of more alternative therapies based centres. There are also clear customer preferences in each region with regard to each segment. While alternate therapies are the most popular choice of people in southern India, customers in north are inclined towards beauty, while the maximum number of fitness/ slimming centres is in the west.
Meanwhile the report also reveals that across segments, on an average more than 50 per cent of the market is unorganised and highly segmented with several small and regional players. While ayurveda and alternative treatments are predominantly unorganised; health foods and drinks and dietary supplements are more organised.The larger service providers face a challenge from the presence of the unorganised sector as it puts tremendous pressure on pricing and therefore margins.
— IndiaRetailing Bureau