Online Exclusives

Poised for Growth

By Joanna Cosgrove, Online Editor | July 19, 2012

Driven by increasing obesity and diabetes rates, Frost & Sullivan identifies the Indian nutraceutical market as one to watch.

India holds an important place in the historical canons of natural medicine for being the birthplace of Ayurvedic medicine, a highly organized alternative and complementary approach to treating illnesses that originated some five thousand years ago. But as is often the case, time-honored cultural practices can sometimes be eclipsed by contemporary thinking and behaviors. A 2010 article in the Times of India proclaimed India to be in the grip of an obesity epidemic, with “almost 1 in 5 men and over 1 in 6 women” overweight. Plagued by health complications associated with obesity, India has become the diabetic capital of the world with 55 million diabetics in 2010. As the country works to implement measures to help get a handle on the crisis, research firm Frost & Sullivan proclaimed India to be a hotbed of nutraceutical consumerism with plenty of opportunity for growth.

According to Frost & Sullivan, the Indian nutraceutical market was valued at $1480 million in 2011 and is projected to grow to $2731 million by 2016, a CAGR of 13%. The firm said dietary supplements were the largest category accounting for 64% of the nutraceuticals market, driven primarily by the pharmaceutical sector in the form of vitamin and mineral supplements.

Though functional foods and functional beverages were termed “relatively nascent markets” in India primarily due to a burgeoning middle class largely reliant upon on traditional practices such as Ayurveda, the firm projected that functional foods would be the quickest growing category until 2015, followed by dietary supplements. However, they said 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.

Frost & Sullivan cited three primary factors that supported favorable growth of nutraceuticals in India. In addition to the aforementioned diabetes statistic, between 1998 and 2005, India's overweight rates increased by 20%. The national family health survey has found 13 percent of women and 9 percent of men in the 15-49 age groups to be overweight or obese. What’s more, of all deaths in the last decade, 40% were cardiovascular-related. The firm said that number is expected to cross the 50% mark by 2020.

Increasing food security concerns in India and need for additional nutrition, has resulted in government-funded vitamin fortification initiatives. Pharmaceutical and FMCG giants dominate the Indian Nutraceutical Market. While Dietary supplements such as vitamin and mineral supplements have been captured by pharmaceutical companies, FMCG companies are now bringing functional food and beverages to the market. However, certain segments like dietetic supplements are now being catered to by pure-play nutraceutical companies, apart from their pharmaceutical and FMCG counterparts.

“As middle class purchasing power increases, manufacturers need to focus on a traditional brand identity allowing consumers to connect with the brand on a cultural level,” advised Frost & Sullivan. “The industry needs to focus on the inclusion of natural extracts (with proven health benefits) for their products. Further, the marketing of products such 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.”

The firm said the latest trend for nutraceutical manufacturers is developing an understanding of cultural requirements and focusing on specific product formats. For instance omega-3 a traditionally non-vegetarian product, has been developed with vegetarian variants, thereby allowing it to gain traction with the large Indian vegetarian population.

“With increasing sophistication among nutraceuticals, consumer demand for products with specific health benefits has been on the rise,” they said. “Nutraceutical products have now been cordoned into various segments based on the health benefits. These sectors such as heart health, eye health allow manufacturers to position themselves better.”

The Global Nutraceutical market in 2011 was estimated to be $149.5 Billion, with US, Europe and Japan being the largest regional markets, accounting for nearly 93 percent of the global nutraceutical demand. These markets are nearing maturity, with exceedingly high per capita spends on nutraceutical products (Japan has a per capita spend of $51/person/year, while US and Europe have $40 and $35 each. The global average is only $21/person/year.) Frost & Sullivan said those figures should compel nutraceutical manufacturers to look at developing countries such as India and China, which have considerably lower per capita spends on these products, as key growth regions.
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