Image: Neha Mithbawkar for Forbes India
The outbreak of the Covid-19 pandemic last year sparked renewed interest in traditional ways to boost immunity and respiratory health, even the Ayush ministry recommending products such as herbal teas, milk turmeric and Chyawanprash. This not only brought to light the ancient Indian traditions of Ayurveda, which emphasize preventive rather than curative healthcare, but also gave new impetus to companies in the sector.
“Indian consumers are willing to spend more on health care, which includes traditional immunity boosters like Chyawanprash and other herbal health supplements. Healthier lifestyles are now becoming a priority and the consumption of vitamins and mineral supplements is skewed towards holistic and preventive health, ”says Nidhi Sinha, Content Manager, Mintel Reports India, a global market research company. “Consumers are looking for additional help to strengthen their immune system,” she adds.
While the impetus and push provided by the Ayush Ministry has encouraged several startups to enter the Ayurveda segment, the pandemic has given new impetus to demand for their products. Additionally, although these companies are based in the subways, they find an expanding consumer base in Tier 2 and 3 cities. This is due to factors such as reverse migration, whereby people who lived and worked in the subways have returned to their hometowns, taking with them their brand awareness and e-commerce in major cities, and also due to the increased penetration and use of the Internet among smaller cities.
Ankush Passi with his father Jogesh Passi, director at Add Veda
Therefore, for companies like Add Veda and Aadar, a digital-focused, direct-to-consumer sales strategy has paid off. Add Veda was founded in Ludhiana in 2016 by Ankush Passi and has investors such as Shooting Star Sports LLP, the company of Olympic gold medalist Abhinav Bindra, and Franchise India, an integrated franchise solutions company. Add Veda had sales of ₹ 20 lakh per month in 2018-19, and “in 2020-21 our gross income increased by 300%. If consumer interest persists, we hope to continue to grow in the same way, ”says Passi.
And although 60% of Add Veda’s customer base is in subways, Passi says internet penetration is slowly improving its business visibility in Tier 2 and 3 cities. “A lot of our orders have started to grow. come from Kashmir and parts of the South, ”he said.
Passi is now in talks with Sequoia India and other investors, and believes the company has the potential to grow because “people’s overall perception is [opting] for healthy and natural things is really true. People want to stay healthy and be in a preventive rather than curative mindset, ”says Passi.
Mumbai-based start-up Aadar, which focuses on Tier 2 and Tier 3 cities, grew 400-500% in 2020-2021, compared to the previous year, with its digital-first, direct model to the consumer, and operates at an annual run rate of $ 500,000. Founded in 2016 by Aadil Shah, it raised $ 250,000 during a funding round in 2019 with Sprout Venture Partners, LetsVenture and JITO Angel Network.
“We are seeing demand from small towns increasing because people have come back from the subways to their hometowns and carried the exposure they got, and also inform their friends and relatives,” Shah said.
Oziva, a herbal nutrition brand that combines Ayurveda, is also riding the Internet wave in Tier 2 and 3 cities. According to co-founder Aarti Gill, “There is a growing awareness, as well as increasing income and increasing stress levels. So while we have always focused on women in Tier 2 and 3 cities, we are seeing an increase in demand for clean, herbal products across the country. In 2020, Oziva’s annualized revenue was between cro180 crore and ₹ 200 crore, having increased threefold from June 2020, and it is targeting ₹ 500 crore over the next three years.
Co-founders of Oziva, Mihir Gadani and Aarti Gill
Oziva has raised $ 12 million in a Series B funding round led by Eight Roads Ventures, Matrix Partners India and F-Prime Capital, and aims to add products in the vitamins and minerals category.
Kapiva, founded by Ameve Sharma, the third-generation entrepreneur at 103-year-old Ayurvedic company Baidyanath, not only relies on a digital sales strategy, but also relies on its strong distribution network throughout the world. old of 6,000 points of sale in 12 cities. , with co-founder Shrey Badhani. The company had seen its monthly revenue increase 3 times between March 2019 and March 2020, and had achieved a revenue rate of 80 crore per year by April 2021. “While we are seeing greater demand for subways, we are seeing demand increase from level 2 and 3 cities too. The pandemic has helped us gain access to new customers, ”says Sharma. “The company is expected to cross 300 crore in revenue over the next five years. Kapiva is also aiming for profitability within two years.
The company completed a Series B fundraiser in January, with a total of 80 crore in equity, led by Vertex Ventures and 3One4 Capital, along with its previous investors Fireside Ventures, Sharrp Ventures and Jetty Ventures.
For a venture capitalist like Devang Mehta, partner of Anthill Ventures, and angel investor Abhilash K Ramesh, executive director of Kairali Ayurvedic Group, these Ayurvedic startups couldn’t have arrived at a better time.
“Ayurvedic startups are at the intersection of next generation technology and traditional Indian wellness. Globally, holistic wellness using traditional Indian science is increasingly recognized, creating very large markets. It’s a very attractive market for investors, ”says Mehta, who has invested in Ayurythm, an Ayurvedic diagnostic app. “Startups focused on breathing, immunity, spiritual awareness, and lifestyle optimization will drive the growth of this industry. They will replace industries which look at health from a single point of view, unlike Ayurveda which looks at holistic development.
Ashish Venkataramani, Director, Eight Roads Ventures, one of Oziva’s investors, adds: “In the long term, the sector is promising as consumer health is significantly under-penetrated and will continue to grow given the speed at which Internet reaches people. “
Ramesh, of the Kairali Ayurvedic Group, claims that in the FMCG category, Ayurveda and related products fall in the $ 5 billion to $ 10 billion category. However, he adds, the industry was lagging behind for two reasons. First, in order to enter a market and carry out testing, a new company must make a substantial investment of time and money, and it is only in recent years, thanks to the impetus of the Ayush ministry, that the products Ayurvedic are experiencing a slight increase. . “A lot of lobbying is needed to authorize and recognize Ayurveda as a science,” says Ramesh. Second, the lack of standardization and the absence of a single set of international licensing standards make acceptance and overseas sales very complex.
“In order to serve global markets, we will need to follow global standards for clinical validation and testing,” says Sharma of Kapiva. “The average cost of an overseas clinical validation process would be in the order of $ 500 million or more. Ayush should set the right standards and support organizations to implement them. ”
Regardless of the hiccups, Olympian Abhinav Bindra, who invested in Add Veda, is optimistic about the international potential of Ayurvedic products: “I think the preventive care industry will experience tremendous growth in the years to come. The Indian Ayurveda industry has a lot of opportunities to grow both nationally and internationally, and has enormous potential for global scalability.
Ameve Sharma, co-founder, Kapiva
In 2017, the global Ayurvedic market was valued at $ 4.57 billion and is expected to reach $ 14.62 billion by 2026, with a CAGR of 16.14%, according to Invest India, a nonprofit reporting of the Ministry of Industry Promotion and the internal. Commerce, Ministry of Commerce and Industry. The report adds that the total export value of Ayurvedic and herbal products was $ 446 million in FY19. “This upward trend puts India in the spotlight as l ‘one of the largest producers of raw materials for Ayurvedic products,’ he says.
While there are larger export markets, such as China, the United States, and Germany for Indian Ayurvedic products, even smaller markets are now heating up with the idea of holistic healing. For example, KoreaShop24, a B2B company that facilitates trade with the Korean market, has seen a growing interest in herbal drinks. In May 2021, he made a deal to import amla powder worth 85 lakh from India. “Due to the pandemic, we have noticed an increase in the consumption of healthy and immunity-boosting superfoods. In addition, there is a growing awareness of the health benefits of amla, with its high concentration of vitamin C and antioxidants, which make it an essential ingredient for boosting immunity, ”said Seo Youngdoo. , spokesperson for KoreaShop 24.
Words of caution
Despite the popularity that Ayurveda has managed to gain due to the pandemic, the lack of scientific validation and evidence-based research are some of the reasons consumers should do their homework before purchasing any products. “Ayurvedic,” warns Ramesh. “A simple, quality website shouldn’t be the main reason to buy the products. Equally important are their certifications, recognitions, notices, licenses and manufacturers, ”he says.
The perception of Ayurveda also takes a hit when its practitioners pay unfavorable attention to it. Baba Ramdev’s recent case calling allopathy a “stupid, bankrupt science” and accusing drugs such as FabiFlu and Remdesivir of being the cause of Covid-19 deaths, rather than oxygen scarcity, is hurting industry, says Dr Kamal Kishore, an Ayurvedic practitioner in Bangalore. “That, with the launch of Coronil, claiming to cure Covid-19, without any scientific evidence, is more harmful than the disease itself because we are a country with a population still largely uneducated and reluctant to get vaccinated. Influential people like Ramdev who reject science will do this industry no good. ”
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(This story appears in the June 18, 2021 issue of Forbes India. You can purchase our tablet version at Magzter.com. To visit our archives, click here.)