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India is a vast market but not necessarily ready for health drinks: F&S
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Monday, 11 April, 2011, 08 : 00 AM [IST]
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 India although a vast market is not necessarily ready for health ingredients, says Natasha D'Costa, senior research analyst, South Asia and Middle-East, chemicals, materials and food practice, Frost & Sullivan. Natasha also feels that creating low-cost product variants in helping the FMCG firms target the rural population could be an ideal way in reaching the bottom of the pyramid.
In an interview with FnB News she discloses her ideas on the health ingredient segment which is on a slow but steady growth trajectory. Excerpts:
How is the health ingredient market in India looking like?
The Indian health ingredients market is a nascent sector primarily catering to the urban market. Rapid urbanisation, unhealthy eating habits, increased participation of women in the workforce, and a trend towards nuclear families is causing a change in the consumption pattern. The major end-use application for health ingredients is the malted health beverage segment. The milk and milk products segment is slowly evolving into a more organised sector. In addition, the strong tradition of consuming dairy products in India should be a growth engine for the entire health ingredients market.
Which are the companies experimenting with ingredients? Can you name a few products / brands?
Market participants in the health ingredients market comprise large multinationals with long-standing agreements with the key end-users. These include Martek Biosciences, Lonza Group, Chr-Hansen, and Danisco A/S. Key products using wellness ingredients are the malted health beverage segment such as Horlicks by the GSK and Bournvita variants by Cadbury. Slice of Health (Ocean Nutrition, Canada) has recently rolled out DHA-fortified bread in Bengaluru.
Will health ingredients fall in the speciality ingredients bracket?
Yes, health ingredients fall in the speciality ingredients bracket. Health ingredients have been majorly promoted by functional / sports / health drink manufacturers.
Which are the other product applications that seek health ingredients?
Cereals are a huge end-use sector currently witnessing much interest, also fortified biscuits and cookies.
Do you think the vast tradition / herbal resources of India can make it the health ingredient factory for the world? Why?
India is already a sourcing hub for natural extracts and antioxidants. Many health ingredients such as omega-3 are also derived from algae. India, due to its climatic conditions, is one of the world’s top algal producers and therefore stands to gain from such biodiversity.
What is the growth rate of this industry?
The health ingredients market is growing at 6 -7 per cent per year. The market in India is vast but not necessarily ready for health ingredients.
How do you see the market growing in the next 10 years?
Food and beverage manufacturers are risk-averse towards putting new fortified products on the shelf. This has led to a slower than expected growth in the demand for health ingredients. Besides malted health beverage sector, there has been limited activity in terms of introducing new functional food. Market growth is expected to be conservative over the forecast period unless consumer awareness causes a demand pull.
What are the innovations in the health ingredient sector?
An average Indian consumer is highly value-for-money-driven. Natural ingredients used for food fortification are expensive, and consumers’ price sensitivity makes food and beverage manufacturers apprehensive about passing on the premium price to customers. This is hampering the product innovation. New regulations are likely to promote consumer education and assist labelling and functional food claims. This is expected to spur a global growth partnership company
innovation. The vitamins and minerals market are comparatively mature compared to health ingredients such as Omega 3 fatty acid, probiotics and prebiotics. These segments are poised for expansion into new end-product applications. Mineral fortification of products such as juices is already underway.
New potential end-product segments are Baked goods, packaged water, drink premixes, and ready-to-eat food.
In the global market, which is the most potential buyer of health ingredients?
It would be Japan, USA and Europe.
How would you suggest taking the idea of health ingredients to the bottom of the pyramid in India?
Customised products keeping in mind consumer sub-segments of the Indian market like those based on region and age groups in addition to the economic segmentation.
For example, Amul has observed better sales of probiotic dahi in Gujarat due to an existing culture of consuming dairy products. Low-cost product variants in enabling the FMCG firms target the rural population can also be looked at. A lower priced Omega 3 fatty acid variant has the potential for a huge growth due to identified cognitive health benefits.
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