We are barely past the festive season of Diwali, when India consumes sweet and savory snacks. A closer look at the gifts exchanged on the occasion, however, shows that Indians are increasingly making healthier food choices, picking up products such as olive oil-roasted fox nuts, zero maida cakes, mithais based on jaggery and unsweetened functional drinks. This shift in consumer behavior is driving new-age companies to launch innovative, better-for-you products and forcing traditional food companies to launch nutritional options or acquire health food start-ups.

“The health trend is much broader in the metro. It is driven by higher levels of education, especially among women,” says VS Kannan Sitaram, co-founder and partner at venture capital firm Fireside Ventures, which released a report on the category with Thinking Forks Consulting.

Besides taste, affordability and convenience, young urban Indians are driven by health and safety in their food choices, says the report for which Thinking Forks interviewed multinational food companies and start-ups, while Fireside Ventures surveyed consumers from metro, tier 1 and 2 cities. .

Decoding the changing eating habits of millennial and GenZ consumers, the report says that health is no longer just about weight loss. It’s about physical and mental wellness, nutritious food options, and cleaner formulations. Unsurprisingly, consumers value home-cooked meals the most, with 81% of metro consumers and 63% of tier 1 and 2 consumers enjoying eating at home at least three times a week.

That said, they want to spend less time in the kitchen and look for quick alternatives like ready-to-cook options. Often pressed for time, 5% to 13% of respondents said they order food through delivery apps more than once a week. Food in the city, meanwhile, is more experiential and reflects the expanding palate of young Indians who enjoy international cuisines such as Korean or Japanese.

The biggest food trend is in the health and wellness space, with innovation on many levels, says Rinka Banerjee, founder and director of product development consultancy Thinking Forks. It could be in staples like multigrain atta or bread. Or millet in cereal. In the snacks, the emphasis is on zero “maida”. “In addition, there are functional foods like gummies for better sleep or probiotics for digestive health,” she adds.

The report says that people living in tier 1 and 2 cities are no less health conscious than those living in metros and equally yearn for clean labels. Like metros, they too are seeing a growing appetite for Western desserts. Surprisingly, the traditional mithai segment has found the opportunity to change Indian tastes and is tweaking its own sweets to suit the new tastes.

Bombay Sweet Shop in Mumbai, for example, offers fusion sweets like Kaju Katli, made with 54% dark chocolate. Indian mithai with a western twist is just one part of the new playbook. “The other is the halo of natural goodness that branded sweet shops use like dates, nuts, coconut sugar and coconut sugar,” says Banerjee.

Sitaram says that due to health and safety concerns, the snacks category is moving from unorganized to organized. This led Fireside Ventures to invest in Chennai-based Sweet Karam Coffee a year ago, which makes authentic South Indian snacks without palm oil, preservatives or ‘maida’. The company has grown 10-fold between last Diwali and now, says Sitaram. When consumers notice a genuine product without unhealthy ingredients, they start converting even if there is a price increase, he adds.

But challenges remain for these new-age food companies. “It has to hit the sweet spot with a great quality product at the right price. They have to ensure a good shelf life without preservatives,” says Banerjee. Achieving scale is also a difficult task, as is finding suitable, high-quality production sites.

Increased health awareness has also pushed traditional FMCG companies to change their tack. They buy start-ups in the category. ITC, which acquired Yoga Bar, also launched oat, millet, jaggery, nut and seed snacks under the Right Shift brand. Clearly, consumers’ desire for nutritious options is here to stay.