Hello, this is Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of “Inside India“ — your one-stop destination for stories and developments from the world’s fastest-growing large economy.
Rising incomes and a large population base make India a key market for global consumer-focused companies. But now, celebrity endorsements and wide distribution are not enough to reel in customers. Viral social media videos are influencing consumer choices — and brands are responding.
Read on!
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The big story
Social media influencers are ushering in a massive change in India’s packaged food and beverages space, as they urge consumers to read labels, pushing big brands to make healthier products or risk being replaced by new entrants.
One of the world’s largest packaged food and beverages companies, PepsiCo, is the latest to respond to changing customer preferences.
“Today, more than 50% of our beverage portfolio in India comprises low- to no-sugar offerings,” said Nitin Bhandari, vice president and general manager of beverages at PepsiCo India, adding that the company aims to “scale low- and no-sugar options to 90% of our beverage portfolio over time in India.”
PepsiCo gathers consumer insights through engagement forums, social media, as well as its WhatsApp-based engine PepGenie, Bhandari told CNBC in an email.
In the next five years, India’s income per capita is expected to grow at the highest rate among the top five emerging markets for consumer products, including China, Brazil, Mexico, and Russia, according to Bain & Company, making it a priority for global consumer product companies.
Global companies already dominate the world’s fastest-growing major consumer market across 20 product categories from soft drinks and spirits to savory snacks, detergents, and diapers, the report said.
Indian market opportunity, however, comes with the pressure to pivot strategy based on consumer preferences. And social media has emerged as a key platform for public advocacy over the past few years, raising awareness around food safety and mislabeling in India.
Customers browse soft drinks at a Big Bazaar hypermarket, operated by Future Retail Ltd., in Mumbai, India, on Sunday, April 16, 2017. Future Retail, India’s biggest department store chain, still has room to extend the rally that’s more than doubled its market value this year. A shortage of cash hit purchases of soaps to cars after Prime Minister Narendra Modi in November junked high-value currency bills, driving shoppers to large-format stores like Future Retail that accept credit cards. Photographer: Dhiraj Singh/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
Celebrity endorsement-driven brand trust has shifted to “community-verified trust,” because of social media influencers, said Shamik Kumar, a veteran food safety expert who has worked with multinational companies in India.
Social media influencer Revant Himatsingka, who goes by Food Pharmer on social media, has millions of subscribers, and has faced pushback from consumer companies, says his content makes people read labels and, as a result, companies are making better quality products.
Over the past few years, several brands, including Mondelez-owned Bournvita and Dabur’s Real fruit juice, have come under fire for higher sugar content, following viral videos on social media.
While Himatsingka had to take down his viral Bournvita clip, following a growing public backlash the company reduced sugar content in its offering, according to local media reports.
Dabur told CNBC it was already on a path to cut sugar in its juice offerings since 2018, and by 2023, it had reduced sugar by 21%.
“We are currently working on sugar reduction to the tune of an additional 20% in the Real core beverage range,” a spokesperson for the company said in an email. The company is also developing low-sugar and zero-sugar variants to cater to consumers who are conscious of their sugar intake.
Mondelez did not respond to CNBC’s request for comment.
The Indian food safety regulator has also issued notices barring malt-based beverages such as Bournvita from using the “health drinks” branding and food companies from claiming “100% fruit juice” for beverages with added sugar.
Just last month, multiple videos on social media pointed to sugar content in mango-based drinks, including Coca-Cola’s Mazaa, with the issue of high sugar content in beverages even reaching the Indian parliament.
For a country with around 100 million people living with diabetes and nearly a quarter classified as obese, the calls for healthier packaged food products resonate with a wide audience.
Social media-driven brands
The strength of traditional consumer companies in India lies in their offline distribution reach and high advertising budgets.
But as online marketplaces widen their delivery network across the country and social media marketing levels the playing field, direct-to-consumer, or D2C, brands are on the rise in India, according to experts.
As influencers raise awareness, people are reading the back of the pack to check for ingredients, efficacy, and effects, said Yash Dholakia, a partner at New Delhi‑based venture capital firm Sauce.vc, adding that consumers are growing increasingly conscious of what they are paying for. That is boosting D2C brands.
“This is a massive lever on which future personal care and food brands will be built,” he said, adding that traditional brands that don’t evolve will be replaced.
Capitalizing on the social media-amplified chorus for healthy food, Dholakia’s firm has also invested in a D2C startup focusing on healthy food, and “rebuilding trust” in food by promoting consumer awareness through social media platforms.
Himatsingka has also launched his own packaged food brand that he says comes with “clean label products.” These are products have a short, simple ingredient lists that are easy to understand for regular consumers and are free from additives.
Several other D2C brands have cropped up over the past few years, building on the demand for healthier food, leveraging social media to grow their footprint.
The viral social media content around food safety is not just creating awareness but also providing alternatives, and that’s something large consumer product companies will be closely watching.
Need to know
India, the world’s third-largest carbon dioxide emitter, is burning more coal
Energy supply disruptions due to the Iran war and a nationwide heatwave have boosted demand for the dirty fuel in India. Its coal-fired power generation in April increased to 164.9 average gigawatts, compared with 160.7 average gigawatts last year, according to data shared by S&P Global Energy.
India’s Modi tightens political grip with historic victory in state polls
Indian Prime Minister Narendra Modi’s Bharatiya Janata Party achieved a historic election win in West Bengal on Monday, strengthening its grip on power as the country grapples with economic challenges and a pressing need for reforms.
Digital lender OnEMI’s IPO gets subscribed 9.5 times
OnEMI Technology Solutions’ 9.2 billion rupee ($97 million) IPO issue was oversubscribed with strong interest from institutional investors. The company offers unsecured loans to customers, the majority of whom earn less than $1,000 a month. More than 98% of the loans disbursed are unsecured, as per the IPO filings.
Coming up
May 12: Consumer price index data for April.
May 14: Wholesale price index data for April.
