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Post-Covid World: Opportunities in kids’ food segment


The recent lockdown had millions of parents scrambling- not just to stock essential grocery items, also to stock up on snacks for their kids who would have an extended vacation at home. We suddenly had thousands of moms putting up recipes online or parenting groups talking about how to keep their kids engaged with the right snacking options. The reality is that even in a post corona world, there are ~ 12 crore children in urban India, at an aggregate level there are ~30 crore children who will be consuming food on a daily basis. In stronger socio-economic sections of the society, most kids consume food at least 4 times a day, of which at least 2 are snacks. This leads to an opportunity of at least US$ 15-20 billion for kids foods in India.

Post-Covid World: Opportunities in kids' food segment

In a pre-COVID 19 world the consumption patterns were relatively simple with a shifting preference towards healthier, good for you options and the emergence of interesting packaging formats. Brands-large and small are looking to engage moms and kids beyond the point of sale through initiatives such as nutrition counselling, recipe guidance and the use of toys to engage stronger with kids. While most of these key trends will stay, especially digital engagement and acquisition, the pandemic episode is likely to strongly reinforce some trends, while driving new ones.

Immunity Needed: Building immunity is a key concern for any parent; this need will get magnified in a post-COVID world. Parents will actively look out for options that build and strengthen immunity of their lil’ ones across all age groups. The best way to avoid doctor visits for any kind of fever is to build the natural immunity of our bodies’; food options that naturally or through fortification enhance immunity through relevant vitamins and minerals such as Vit. C, B-12, Iron, Calcium etc. are likely to see higher pick up in demand. These could include fruit & cereal based foods which naturally provide these nutrient inputs.

Clean labels will thrive: Studies have indicated that anywhere between 15-35 percent of the children in schools in India are obese. The National Family Health Survey-2015-16, further indicates that ~ 58 percent of children between 6-59 months of age have some degree of anaemia. The focus on better preventive health will lead to greater scrutiny of the nutrition that is going into the food preparations for kids. In some metro clusters, there is evidence to suggest a movement towards ‘healthier’ options, this trend is likely to get further accelerated. The Central Government through the FSSAI has indicated a clear shift towards promoting healthy eating habits through the FSSAI’s EatRight campaign in schools and the proposal for introducing more transparent labels for food products.

Shelf Life: The recent crisis also prompted people to stock foods in bulk. Shelf life was important since there was a great degree of uncertainty in the availability of non-essential food items. You had stores which were stocked out of ready to cook food options such as noodles and ready to eat snacks such as biscuits and chips. In the near future a relatively longer shelf life will be a need, balanced by the contrasting need to avoid shelf life enhancing preservatives. Foods that find the right balance between shelf life and minimal to zero preservatives will see higher demand, especially amongst new product launches. Established large brands will continue to carry the trust of consumers irrespective of the ingredients being used to prolong shelf life. As is well known, adequate shelf life also brings a degree of assurance amongst the sales and distribution channels.

Digital is here to thrive: The past 6 weeks have shown the importance of digital channels in ensuring supply chain continuity while helping maintain social distancing. In the new post COVID world where social distancing will be a new normal, digital platforms will gain even more prominence. The crisis also some wonderful collaborative efforts where digital and physical seamlessly blended to make essential food items available to all. Very often disruptions that happen during crises become the new normal. ‘Phygital’ is here to stay and thrive. It is likely to become even more hyperlocal, which will leverage the kiranas and medical stores to a greater degree. Startup brands will have to now compete on traditional strongholds of the FMCG firms- which will probably lead to innovations in store fronts and greater transparency in the backend distribution chains.

What should we expect the category of Kids Foods

In the kids food space, innovation in taste, texture and packaging becomes even more important given their need for change.

It is quite possible to visualise at least 3-4 Rs 100 crore brands emerging in this category in the next 4-5 years, which will use non-traditional channels to engage and create a loyal customer base. Digital channels provide instant yet effective feedback on food taste, texture and packaging, which used to lengthen the product development cycles. In the near term venture funding may be a challenge, but those who are funded will use the crisis to strengthen their execution as they identify the right product market fit and bring quick innovations to retail store fronts.

The clean label and fortification trend is here to stay for kids foods – natural, organic, zero preservatives, less added sugar and immunity boosters- millennial moms are intent on making changes to their kids habits at an early stage. This affords opportunities for disruptor brands in the toddler and early stage foods space, where mothers have the greatest control over what their little ones eat. This category currently dominated by the ready to cook powders, will see potential disruption with the emergence of healthy snacks.

2020 has started off as a huge challenge for all businesses; as the spread of subsides, one can expect to see a more diligent yet health conscious world. In this context, there is ample opportunity for the kids foods space in India to thrive, as parenting gets transformed and kids become more digitally savvy.