Mumbai: Rasna, the maker of the famous 1980s orange drink concentrate, has launched a new snack in the healthy snack category. However, it faces an uphill task, given that India’s health snack category has seen several unsuccessful ventures in the past.

Last week, chairman and managing director of Rasna Pvt. Ltd Piruz Khambatta unveiled the company’s latest portfolio expansion—a sweet snack for children called Vitos. “This is the first baked, sweet snack in India, aimed at children," Khambatta said. “We’ve focused on making it healthy for kids as Vitos is made of ragi and wheat and has 14 nutrients in it."

Vitos is a baked sweet snack that currently comes with chocolate and strawberry flavoured cream inside them. Khambatta announced that Vitos will focus on children, especially those coming back from school and looking for a snack. However, from its packaging, Vito appears to double up as a morning snack to be had with milk, potentially competing with sweet breakfast cereals.

Rasna has invested Rs100 crore in manufacturing and marketing Vitos. “In 2016, we did some shelf life study and marketing trials for (the product)," a Rasna spokesperson said in an email statement. “Right now, Vitos is manufactured in Hosur (plant owned by Rasna) and no new facilities are planned for it."

This is Rasna’s first product foray outside of the beverages business. The company makes a majority of its revenue from the sales of it iconic orange drink concentrate powder. “Rasna is a market leader with 85% share in the powdered drink segment," the company said in a press release. For this vertical, Khambatta also announced a new manufacturing facility on the same day located in Chittoor, Andhra Pradesh. Rasna has already invested Rs30 crore in it.

Khambatta justified the focus on children, pointing out that Rasna owed its runaway marketing success in the 1980s and the 1990s to its focus on children in advertisements. “For Rasna, the kids were the way to reach to the whole family," he said at the press conference.

However, Rasna may be facing an uphill task in the healthy snacks segment, where companies like PepsiCo, Marico and Parle have previously failed to get traction for their products.

“I don’t think there is a market, ‘healthy’ and ‘snacks’ are counterintuitive," Arvind Singhal, chairman and managing director of retail advisory firm Technopak, said in a telephone interview. “Indians are definitely more health conscious, but they focus more on exercise, and perhaps on eating less sugar, primarily on incremental changes. Also, this is a largely metro-centric phenomenon."

Besides, said Singhal, salted snacks make a much bigger share of the Indian snack market than sweet snacks. “Even in the salted (snacks’) market, the fastest growing companies will be Haldiram’s and Balaji Wafers," he said. These companies sell largely deep fried traditional Indian snacks and namkeens with a limited range of “healthy" snacks in their portfolio.

“Healthy snacks is still a very niche segment and is less than 1% (about 0.6-0.8%) of the total organized snacks market," Suman Dabas at Technopak said. Dabas is a principal consultant in the food services and agriculture vertical at the advisory firm. She added that the Indian snacks market is worth Rs20,000 crore, and is expected to increase to Rs45,000-50,000 crore by 2021, dominated by traditional Indian salty snacks.

“Indians are making healthier choices, but not in what they snack on," Dabas said. “In terms of share of plate, snacks have only 2-10% share."

“The healthy snack category, or even snacks, will not pick up in a big way until Indians take to packaged foods," said Harminder Sahni, founder of retail consultancy firm Wazir Advisors. “The biggest problem is that India’s largest companies like HUL, Marico, Parle and others do not put in a consistent effort to bring in their healthy snacking products. As a result, there is no wave of packaged snacks, and consumers are unable to see the big picture and relent to this trend."

Sahni also pointed out that snacking is considered an unhealthy habit in India, making it difficult to create consumer habits around a new snack.

So where does this leave Rasna?

In the early 2010s, PepsiCo, Marico and Parle successively forayed into the healthy snacks segment with their products Aliva, Monaco SmartChips and SaffollaZest, respectively. None of them were a success.

However, Indians may be warming up to the idea of a healthy snack in their daily diet. Activity in this space has picked up, and urban consumer focused start-ups like Snackexperts, The Green Snack Co. and Valencia Nutrition are building business models on producing and selling healthy snacks.

What remains to be seen is if Rasna can create a healthy snack with a mass appeal, potentially growing the market for it, especially since it is focusing Vitos on kids . “Kids make up a very small part (of snack consumers) in the market," Singhal said. Rasna, on the other hand, says it is entering a Rs5,000 crore snack market of which it expects to capture 5% share, worth Rs250 crore, in the next three years.

The market looks difficult and Rasna needs a robust business expansion plan. In fiscal year 2015, Rasna made Rs19.7 crore in profit after tax on revenues of Rs157 crore. With a debt-equity ratio of just 0.15, the company is rather underleveraged and small. This can be its big expansion moment.