Shifting demographics, rapid technological advances, and changing consumer priorities have created remarkable opportunities in the health and wellness sector. While traditional food and beverage companies struggle with stagnant growth, emerging brands are gaining ground by tapping into consumers’ commitment to prioritizing health and cleaner eating.
During a recent ICR Conference Spotlight Series webinar, industry leaders shared insights into this transformation. The panel featured three executives — Steve Young, managing partner at Manna Tree Partners; Jesse Merrill, co-founder and CEO of Good Culture; and Mike Kirban, co-founder and executive chairman of Vita Coco — who have successfully navigated the evolving landscape of health-conscious consumerism.
Health and wellness — a $1.8 trillion market
The opportunity in health and wellness extends far beyond traditional food and beverage categories. “We are at the very beginning of what will be a transformational change in how the consumer interacts with health and wellness more broadly. It starts with how you eat and what you drink, but it goes way beyond that,” said Young, pointing to categories such as supplements and recovery.
According to Young, health and wellness represents a $1.8 trillion global economy — and consumer spending indicates that growth will continue. A recent NielsenIQ report revealed that 55% of consumers, regardless of generation, will spend up to $100 a month on health and wellness. For younger demographics, the commitment is even stronger. “Eighty-seven percent of Gen Z will say health and wellness is important,” said Young. “When you add up the amount of money that those consumers are willing to spend on broader health and wellness, it’s close to $8,000 a year.”
The protein revolution and functional foods
Protein consumption is a particularly powerful driver of category growth. “Time and again, you hear people talking about how they’re trying to eat their body weight in protein,” said Merrill. “No one was saying that a couple of years ago.”
The focus on protein reflects a broader change in health consciousness. “I think the driver of that acceleration is an obsession with health span, with longevity,” said Merrill. “Folks are more educated around gradual muscle loss as you age,” Merrill noted, referring to a condition known as sarcopenia. “People are highly educated on that now… and they want to optimize health span.”
This awareness also extends to beverages. “What’s growing is coconut water, protein, probiotic sodas, energy drinks,” added Kirban. “Things that are functional and typically things that are better for you.”
Retail evolution and category expansion
To accommodate this growing health and wellness demand, the retail landscape has undergone significant transformation. “It wasn’t too long ago… that the only places you’d find products like Vita Coco and Good Culture were places like Sprouts and Whole Foods,” said Young. In the last several years, however, mainstream grocery stores realized that to attract health-conscious consumers, they need to not only stock these new products, but spotlight them down the main aisle.
This shift has created opportunities for category leadership. “What’s happening is those retailers who would look to the larger, more established food companies for category advice are now saying, ‘Well, wait a minute. Your portfolios aren’t growing,’” explained Young. Instead, smaller companies now have the opportunity to educate retailers and expand within those stores. “If we can help retailers grow categories, that’s when the magic occurs.”
The challenge for Big Food
Traditional food companies have struggled to adapt to health-conscious consumer demands. “For example, coconut water comes from a tree thousands of miles away that has to be climbed, and that nut has to be cracked, and then it has to be drained, and then it has to be packed, and that has to be shipped across the world,” said Kirban.
This process differs greatly from traditional food companies’ typical manufacturing processes. “It’s different from putting sugar and water together and bottling it in the U.S. and shipping it a few hundred miles,” Kirban said. “These things cost money, and these businesses need to be run differently.”
Investment outlook and market dynamics
Beyond consumer trends, capital markets are also responding to this momentum, even in the face of broader economic headwinds. Recent performance data points to sustained growth, with additional anticipated deal-making on the horizon.
Young reported robust performance at Manna Tree. “Across our portfolio of health and wellness investments, we’ve seen net revenue growth on our portfolio of 32% over the last two years,” he said.
Based on the strength of M&A deals in 2024, investors expect to see continued deal-making in the years ahead — especially considering that the sector continued to grow during periods of economic uncertainty and high inflation.
“Folks are not compromising on health. They’re not compromising on the taste experience,” said Merrill. “If they believe these products are making their lives better, they’re going to continue to double down on those products.”
Looking forward
Given the shift in consumer behavior and priorities, the health and wellness sector is set to succeed well into the future. “We believe that the tailwinds that will exist for quite some time behind health- and wellness-focused products provide what we believe will be a fantastic return or opportunity for investors,” said Young.
Success in health and wellness requires a deep understanding of consumer needs, operational excellence, and the ability to educate and engage consumers about the functional benefits of products. Those who can execute on these fundamentals will be well-positioned to benefit from what appears to be the early stages of a transformational market shift.
To hear more of the panel discussion, listen to the full replay of the ICR Conference Spotlight Series: Investing in Wellness in 2025.
