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The Indian Nutraceutical MarketDynamics of a Consumer Driven Market
A Frost & Sullivan whitepaper presented at the
India’s biggest Nutraceutical, Functional Foods, Dietary
Supplements and Ingredients Show15th – 17th March 2012, Lalit Ashok, Bangalore, India
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Agenda
Customer
Satisfaction
Table ofContents
1Understanding the India Story
1
1
Indian Nutraceuticals
2
1The Indian Consumer Perspective
3
1The Road Ahead
4
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Understanding the India Story
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India’s Growth Story: Robust economic growth slated for the
next five years at an average of 9 percent per annum
Economic 360 Perspective : Economic Growth Outlook (India), 1995-2015
Gross Domestic Product
• Investment climate will improve and trade policy initiatives likely to result in export market diversification.• Investments in Infrastructure, Healthcare & Education to drive the economy
• Special Economic Zones, Technology Parks and Exports Promotion Zones -High tech industries likely to emerge as
leading industry sectors
• With strong economic growth prospects, Indian economic growth likely to reach pre crisis growth of 9 percent
between 2012 and 2014 driven by domestic consumption and exports
Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan
7.3
4.4
9.5
8.79.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1995 2000 2005 2010 2015
Year
G D P G r o w t h R a t e s ( % )
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554693-90
Driven by FDI: The most favored destination after China
Economic 360 Perspective : Foreign Direct Investment Inflows(India), 2004-2011
• India considered to be the second most favored destination for FDI after China.
• Trigger - Reduced industrial licensing requirements by introducing effective industrial policy reforms
• Challenge - Poor infrastructure and slow pace of opening many sectors for foreign investment.
• Key Sectors that will attract a majority of FDI - infrastructure, energy, telecoms and IT
• SEZ’s established to assist export oriented sectors are to attract considerable amount of FDI by 2014
Foreign Direct Investment (FDI)
Note: Year refers to fiscal year. All figures are rounded; the base year is 2011;
Source : Frost & Sullivan
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
F D I I n f l o w
s ( $ B i l l i o n )
Year
Value tillOctober, 2011
Sectors
2000-2011
($ Billion)
Share
(%)
Power 6.9 4.6
Automobile 6.4 4.3
Petroleum and Natural Gas 3.3 2.2
Chemicals 3.1 2.1
Food Processing 2.7 1.8
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High
Upper Middle Class
Middle
Low
Economic 360 Perspective: Changing Income Structure (India), 2010
Source: Frost & Sullivan
2010 2020
India is likely to become the fifth
consumer market in the world by
2030 driven by increase in
population and rise in disposable
income
Economic 360 Perspective: Household Consumption (India), 2010
Source: IBEF and Frost & Sullivan
4.0%
14.0%
33.0%
49.0%
15.0%
32.0%
33.0%
20.0%
Food, Beverages,
Tobacco
34 %
Apparel
5 %Housing and
Utlilities
12 %
House Products
3 %
Personal Products
and Services
9 %
Transportation
19 %
Communications
3 %
Education and
recreation
6 %
Healthcare
9 %
• Food, Beverages and Tobacco collectively
accounted to 34 per cent of the Indian
Household’s “Share of wallet”.
• India is likely to witness a future shift from the
consumption of basic necessities to more luxury
items.
Growth Impact: Larger Disposable Incomes to DriveConsumption
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India’s pressing need for Nutraceuticals: The rise of lifestyle
diseases
Top Metros Diabetic Population (India), 2010Prevalence of Coronary Heart Diseases (India), 2010
• Between 1998 and 2005, India's overweightrates increased by 20 per cent. The nationalfamily health survey has found 13 per cent ofwomen and 9 per cent of men in the 15 – 49age group to be overweight or obese.
• India has become the diabetic capital of theworld with 55 million diabetics in 2010.
• 40 percent of all deaths in the last decade
have been Cardiovascular related. Thenumber is expected to cross the 50 percent
mark by 2020.
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India and Indian Nutraceuticals: From then to now
19951990 2000 2008 2011
• Comprehensiveeconomicreform
• Structuraladjustmentprogram
• Market orientedand liberaleconomy,macroeconomicstabilization
• The Indianeconomywitnessedliberalization in1991
• Financial
sector reformsandderegulation ofindustriallicensing.
• Move towardsa moreintegratedeconomicsystem.
• Increasedfocus oninstitutionalreforms.
• Increased FDIinvestments,infrastructuralrelated reformsand formationof SpecialEconomic
Zones (SEZs)
• Global financialcrises (2008) ledto a decline inannual GDP to6.7 percent in2008.
• Banking andfinancial systemremained stablewith domesticdemand in favor
of consumerdurables andautomobilesserving as maindrivers for growth
• India’s growth
potential is observedin a shift towards aknowledge- basedeconomy.
• Increasing per capitaincome, emergingmiddle classpopulation, presenceof intellectual capital,increasing presence
of multinationals andFDI inflow reflectsstrong growthprospects
Source: Frost & Sullivan
2014
• Globalcompaniesdevelopsourcing ties inIndia for rawmaterials,attracted byIndia’s
biodiversity
• R&D hubs set up
to procure andinnovate for theEU and USmarkets
• Supply to selectIndian customerswhose businessis also exportoriented
• Global MNC’s
foray into Indiato set upmanufacturingsites andestablish theirownprocurement.
• Government fundsvitamin fortificationinitiatives providing thefirst boost to the Indianindustry asmanufactures startlooking at the domesticmarket
• The imminent global
recession andincreasing affluence ofthe Indian populacecause globalmanufacturers tofocus on the IndianNutraceutical market
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Indian Nutraceuticals
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Indian Nutraceuticals: 1% of the Global Market
Indian Nutraceutical Market, 2011
Total Market Size: $1480 Million
The Indian Nutraceutical market was valued at $1480 Million in
2011. Dietary supplements was the largest category
accounting for 64 percent of the Nutraceuticals market, driven
primarily by the pharmaceutical sector in the form of Vitamin
and Mineral supplements.
Functional foods and Functional beverages are relatively
nascent markets in India, primarily due to the existence and
reliance on traditional wisdom and Ayurveda by a burgeoning
middle class, which accounts for a huge chunk of the
purchasing power in India. Further the marketing of productssuch as sports and energy drinks, is primarily targeted at niche
segments of the urban population, resulting in low penetration
for these products, even amongst the urban population.
Source for Natural Vitamins
Growth of the Dietary supplements will
be spurred forward by the growing
demand for dietetic supplements, due to
an urban, fitness conscious, young
population.
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Indian Nutraceuticals: Dietetic Supplements and FortifiedFoods gaining prominence
Indian Dietary Supplements Market: Split by product type, (India)2011
$950 M
Indian Functional Beverages Market: Split by product type, (India)2011
$180 M
Indian Functional Foods Market: Split by product type, (India)2011
$350 M
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Understanding the Dynamics: Awareness still the Indianhealth and wellness Industry’s biggest challenge
M a
r k e t D r i v e r s
M ar k e t
R e s t r ai n t s
Increased
awareness of
functional
benefits
Urbanization
of the mass
population
Increasing
disposable
income and
standards of
living
Aggressive
retail
marketing
Lack of
product
credibility
Unclear and
ambiguous
regulations
Over-crowded
product
market
Lack of
products
catering to
the Indian
customer
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FMCG and Pharma companies look to Nutraceuticals as apremium segment to existing brands
Type ofcompetitors
PharmaceuticalDominated
FMCGDominated
Number of Competitors
Low High
Vitamin andMineral
Supplements
Energy Drinks
Herbal Supplements
Dietetic Supplements
Sports Drinks
Chyawanprash
Supplements
Functional Juices
Fortified Foods
The Indian Nutraceutical Market is dominated by Pharmaceutical and FMCG giants. While Dietary supplements
such as Vitamin and Mineral Supplements have been captured by Pharmaceutical companies, functional food and
beverages are now being brought to the market by FMCG companies. However, certain segments like dietetic
supplements are now being catered to by pure-play nutraceutical companies, apart from their pharmaceutical and
FMCG counterparts.
The fragmentation in
each of the product
markets is reflective of
the type of companies
that cater to it.
Pharmaceutical
dominated segments
are highly fragmented,
while FMCG dominated
segments are largely
consolidated
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The Indian Consumer Perspective
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Lifestyles & Goals Vary by Age & Gender…
Children & Adolescents Males, 17 to 30 years Males, 30+ years
L i f e s
t y l e s
G o a l s
Female
• Good academicperformance
• Adequate growth &development
• Greater Immunity
• Quick career growth
• Overall fitness
• Disease prevention(to some extent)
• Greater Immunity
• Career growth
• Diseaseprevention &
• Diseasemanagement
• Greater Immunity
• Weight Management
• Prevention of ageing concerns andillness
• Greater immunity against commonillnesses & disease management
Lower parentalsupervision on foodhabits
Busy dailyschedule,including school / college, tuitions,travel etc.
Extended WorkHours
Lower Physical Activity
Increased mental& physical load toaccelerate career
DiseaseManagementor preventioninitiatives
Increased intake of fast food & junk food (Youngerfemales as well)
Limited intake of fast / junk food
Irregular food habits including skipped meals, flexible meal t imings
Time constraints &managing multipleschedules & Diseasemanagement / preventioninitiatives (older females)
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Correspondingly…the Role of Supplements and Functional
FoodsChildren & adolescents
1. As a meal replacement when… • Child is selective of the food
he/she consumes• Child skips a meal
2. When Nutritional intake isinadequate (small servings)
3. Quality of nutritional intake is low
(junk food, fruits, & vegetables arenot of ‘good’ quality) • Nutritional intake is
inadequate for normalgrowth needs(height/weight) or with theaim of consuming ‘brain
foods’ • Greater nutritional intake is
needed for gym or physicalworkouts
1. As a meal replacement when ameal, typically breakfast, hasbeen skipped
2. Replacement of an afternoon/ evening snack/refreshment(reduce unhealthy food options)
3. To build satiety, so irregular meal
timings do not result indiscomfort
4. To prevent & manage obesity,cholesterol, BP, etc.
5. As a supplement when foodintake is inadequate (smallservings), quality of nutritional
intake is low, nutritional intake isinadequate for daily functioning,for gym or physical workouts
6. To address concerns on calciumdeficiency & other problemsspecific to women
1. Replacement of an afternoon/ evening snack/refreshment(reduce unhealthy foodoptions)
2. To build immunity, strength tofight & prevent illness
3. To prevent & manage lifestyle
diseases like obesity,cholesterol, BP, etc.
4. As a supplement, when foodintake is inadequate (smallservings) or when quality ofnutritional intake is low
5. To address concerns on iron /
calcium deficiency & otherproblems specific to women
Adults, 17 to 30 years Adults, 30+ years
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Selecting a Healthy Product : Goal Satisfaction and Taste areprimary attributes
GoalSatisfaction
Brand name
Taste & Flavour
Importance
Low High
Low High
Low High
Veracity ofsource
Low High
Convenience offormat
Low High
Gender
GoalSatisfaction
Brand name
Taste & Flavour
Importance
Low High
Low High
Low High
Veracity ofsource
Low High
Convenience offormat
Low High
Age
Males
Females
17 years to 30 years
30+ years
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Complan/Horlicks/Bournvita are perceived as Basic-level nutrition brands while Pediasure /Nutrilite/Protinex are consumed for greater nutritional needs
Medicinal Health FoodsSupplements
Horlicks, Boost, Complan,Pediasure, Ensure, Nutrilite
Horlicks Nutribar, YakultProbiotic Drink, Real &Tropicana 100% Juices, Saffola
Heart Oil etc.
Calcium Sandoz, Calcimax,Ferronine, (primarily Tablets
and Tonics)
Remain Active & energetic through theday.
All round development (Cognitive andPhysical)
Greater immunity againstcommon illnesses as a result ofbalanced nutrition
Disease prevention and
management.
Consumers perceive various brands differently, based on the brand format and where they purchase it from. These can be classified into
three categories:
Medicinal – purchased from a pharmacy, and is usually in the form of tablets or tonics. They are consumed primarily on a doctor’s
recommendation.
Supplements – Purchased from supermarket/pharmacy, and is usually in the form of powders to be mixed with milk or water. They are
consumed on a doctor’s/dietician’s/trainer’s/peer’srecommendation.
Health Foods – purchased from the supermarket, and are functional variants of foods that form a part of the consumers regular diet (like
fortified biscuits). They are consumed based on peer recommendations and based on awareness through advertisements
Consumer Brand Perception: Defined by who and where
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The Road Ahead
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Indian Nutraceuticals: Dietary Supplements lead the way
The Indian Nutraceutical market is estimated to grow to $2731 Million in 2016 at a CAGR of 13.0 percent.Functional foods will be the quickest growing category till 2015 followed by Dietary Supplements. However,dietary supplements, specifically herbal and dietetic supplements will form the greatest opportunity areas for
Nutraceutical manufacturers , driven by growing demand from an evolving consumer base.
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Dietary
Supplements
FunctionalBeverages
FunctionalFoods
Indian Nutraceutical Market
Key ingredients
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Overcoming Common Challenges
Absence of Product Validation &CredibilityHerbal Supplements Industry self-regulation, through
research backed claims
Challenges Way Forward
Multivitamin Packages Lack of Product DifferentiationCreating brand identity- focus on
specific ailments/ingredients
Isoflavone Supplements Low Awareness Focus on brand building activities
Energy Drinks Premium PricingDilution of present Oligopolistic
Market
Key Formats
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What Indians want : Meeting Consumer Expectations
Prevalence of Traditional Wisdom The Indian consumer, especially the middle class
relies heavily on traditional wisdom, to achievecomplete nutrition. Consumers preferred to use
natural extracts of medicinal plants and herbs
such as Amla and Ajwain for their health and
nutrition, as opposed products readily available in
the Indian market. This trend stems from both the
affordability of such remedies (when compared to
Nutraceuticals) and a deep-rooted belief in age-old therapies.
2
3
1
Customization in the Indian household
Indian consumers customize the
Nutraceutical products that are readily
available to suit their needs, be it in the
form of dosage, or the addition of an extra
ingredients to bolster the current product.
For instance, there is a preference for
adding jaggery to supplements such as
Pediasure to increase iron intake in the
diet. In other cases, consumers go over
the recommended amounts of malted
health drinks per serving to both boost
energy and improve taste. While the
benefits and risks of this are yet unknown,
it highlights a certain gap between what
consumers want and what they receive.
Preference for instant mixes and fortified foods
Consumers have shown a greater preference for
instant mixes and fortified foods, over tablets and
tonics, which are closely linked in the consumer’s
mind to sickness and disease. Further, the ease and
speed of preparation of instant mixes make them the
format of choice for most consumers.
Key Trends:
Nutraceutical
Market
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About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, has been partnering with clients to support the development
of innovative strategies for more than 50 years. With 40 global offices and more than 1800 industry consultants
and analysts across North America, South America, Europe and Asia Pacific, the company offers strategic
information and advice in almost all countries in the world.
Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and
the investment community by providing comprehensive industry coverage that reflects a unique global
perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.
Frost & Sullivan South Asia, Middle East & North Africa team works across the entire industrial and
technological spectrum with leaders and challengers, as a strategic business partner. Its vast portfolio of
services and advisory competencies include custom strategic consulting, market intelligence, summits and
conferences and management training.
CHEMICALS, MATERIALS AND FOODS PRACTICE
Frost & Sullivan's Chemicals, Materials & Food practice provides global industry analysis, growth consulting, market research, market forecasts andinsights into emerging technologies. This enables our clients to address current trends and challenges, identify new technologies and take advantageof growth opportunities. Our Chemicals, Materials and Foods Growth Partnership Services subscription offers comprehensive coverage of key marketsectors, namely:
Food & Beverage Ingredients marketsFood, Drugs & CosmeticsSpecialty & Fine Chemicals
Petrochemicals and derivativesBuilding MaterialsPackagingPaints & CoatingsAdhesives, Sealants and ResinsPlastics, Polymers and Downstream applications
This comprehensive coverage ensures that we are fully equipped to provide clients with a complete assessment of opportunities, both inside andoutside their current marketplaces. Our uniquely broad perspective allows us to quickly and effectively support clients in identifying and qualifyingnew growth opportunities.
“We Accelerate Growth”
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About Nutra India Summit
Nutra India Summit is India’s most authoritative congregation of Nutraceuticals, Functional Foods,
Dietary Supplements Industry. This Summit has always been an Interface between Academia, R&D
institutions and Industry and has taken all efforts to ensure that the critical issues for the rapid growth of
this industry sector are adequately addressed.
7th Nutra India Summit is organized by the Council of Scientific & Industrial Research (CSIR),
International Union of Food Science and Technology (IUFoST) along with MM Activ Sci-TechCommunications and supported by the leading Industry Associations.
MM Activ the Sci-Tech Communication Company is engaged in creating, planning, development and
implementation of the fully integrated national & international trade shows, focusing on frontier
technologies.
MM Activ creates and nurtures a platform for effective interaction amongst industry, scientific fraternity,
policy makers, opinion leaders and academia in the events. These events facilitate networking,
technology transfers, collaborations, business development and joint ventures. Moreover, they provide
excellent platform for scientific knowledge dissemination and make all stakeholders future ready.
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Contact Details
For More Information Contact:
Hema Thakur,Chemicals, Materials & Foods Practice,South Asia,Tel: +91 (0) 22 6160 6666;Fax: +91 (0) 22 2832 4713;E-mail: hthakur@frost.comLearn more at www.frost.com