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Nutraceutical Products India_2012

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Presentations from Nutraceuticals India, held in October 2012 and provided by conference organiser UBM India.

Nutraceutical Products India_2012

  1. 1. Sizing up the market for Nutraceutical Products in India and forecasting opportunities in the long term Nutraceuticals India 2012 October 2012 Presented by: V. Chaitra Narayan , Program Manager, Frost & Sullivan © 2012 Frost & Sullivan. All rights reserved. This document contains information that is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the prior written approval and consent of Frost & Sullivan
  2. 2. AGENDA• Megatrends Shaping the Nutraceutical Market• Global Market Overview• Indian Market Snapshot• Nutraceutical Value Chain• Opportunities for India• Way Forward
  3. 3. MEGATRENDS SHAPING THE NUTRACEUTICAL MARKETHealth, Wellness, and Well-Being: Booming Population:The health and wellness industry is poised for a Sustained population growth will result in a shift of focus from highradical change with information technology taking consumption regions such as the US and Europe to high-populationthe forefront in research and development, countries like India and China. It is expected by 2020, that 37 percentdiagnostics, and monitoring. In future, diagnostics of GenY (aged 15-34) will be centered in India and China, with Asia aswill become less invasive, preventative, and image- whole accounting for 61 percent of 2020s GenY populationbased. Medicines will be marketed as molecularand personalized drug cocktails. However, given World Population: Breakdown by Regioncurrent levels of Government spending on 2010 2 (Global), 2020 2020healthcare, it is expected that the consumer’s 1.8focus will shift from treatment-based remedies to 6.83 7.55preventive remedies. The evolving definition of Billion 1.6 Billion 1.2 0.47health, wellness, and well-being will become the 1.4 0.16 Population in Billionnew value proposition for companies across this 1.2 0.09 2.1 0.19sector and an important factor of differentiation. 0.07 1 0.47 0.57 0.33 0.8 0.63 0.22 The evolving definition of Health, 2.56 Wellness, and Well-being 0.6 0.37 0.12 0.44 0.23 0.21 0.51 0.4 0.07 0.26 Mind Body Soul 0.2 0.44 0.22 0.13 0.36 0.11 0.33 0.22 1.69 Mood 0.14 0.07 0.13 Sight/vision Personal values 0 Stress levels Africa Rest of Asia Latin America, Caribbean and North America Europe India China Touch and feel Personal Oceania Mental health fulfilment 65 Years and Above 35-64 15-34 0-14 Smell/breathing Sense of Self image/self optimism Sound Population in actualization Attitude Temperature Billion Security Wellness Source: U.S. Census Bureau, 2010, and Department of Economic and Social Affairs of the United Nations Safety3
  4. 4. GLOBAL NUTRACEUTICALS MARKET – CONSUMER-DRIVEN GROWTH Global Nutraceutical Market, 2011 Total Market Size: $149.5 Billion ROW The global nutraceuticals market in 2011 was estimated to be $149.5 16% Billion, with the US, Europe, and Japan being largest regional India markets accounting for nearly 93 percent of the global nutraceuticals 1% USA demand. These markets are nearing maturity, with exceedingly high 36% per capita spends on nutraceutical products, thus forcing Japan manufacturers to look at developing countries such as India and 22% China, which have considerably lower per capita spend on nutraceutical products, as key growth regions for their nutraceuticals portfolio Europe 25% Market Size at 5-year Forecast Global Market, 2011 Market Market End of Forecast Market Growth Stage Revenues Period Rate US, Europe, and Japan are the largest markets, while India, China, and Growth $149.5 B $210 B 7.0% Brazil are key growth geographies (2011) (2016) (CAGR)ROW= Rest of the world; CAGR = Compound annual growth rate 4
  5. 5. CUSTOMIZATION OF NUTRACEUTICALS WORLDWIDE With increasing concerns about side-effects resulting from chemicals and introduction of synthetic additives in Going Natural foods, consumer demand for natural alternatives has increased dramatically. The industry responded to such demand by focusing on customization of products to focus on natural alternatives for established variants. Cultural Nutraceuticals manufacturers understand that various cultures have specific requirements for products. The Differences latest trend is understanding such cultural requirements and focusing on these. For instance, in India, omega- 3, a traditionally non-vegetarian product, has been developed with vegetarian variants. Nutraceutical ingredients have typically been positioned as natural and healthy alternatives to traditional medicine. However, one of the primary challenges being faced by these products is the difficulty in formulating Formulation these products into traditional food and beverage products. For any food or supplement manufacturer looking Efficiency to add functional ingredients to their products, the key issue of stability must be addressed as soon as possible during the product development process. Such challenges have caused for innovative product presentation to ensure ingredient viability and stability. With increasing sophistication in nutraceuticals and demand for personalized medicine growing, consumer demand for products with specific health benefits has been skyrocketing. This is particularly apparent in Specific Health Europe, where nutraceutical products have now been split into various segments based on health benefits. Benefits These segments such as heart health, eye health, digestive health, joint health, and so on, are gaining immense popularity with manufacturers positioning themselves to specifically focus on certain health avenues.5
  6. 6. TOTAL INDIAN NUTRACEUTICALS MARKET = 1% OF THE GLOBAL MARKET Indian Nutraceutical Market, 2011 The Indian nutraceuticals market was valued at $1,480 Million in 2011. Dietary supplements was the largest category accounting Functional Foods for 64 percent of the market, driven primarily by the 24% Functional pharmaceutical sector in the form of vitamin and mineral Beverages 12% supplements. Market Size at 5-year Forecast Market Revenues End of Forecast Market Growth Period Rate Dietary$1,480 M $2,731 M 13.0% Supplements 64% (2011) (2016) (CAGR) Growth of dietary supplements will be spurred by growing demand for dietetic supplements from an increasingly urban, fitness-conscious, young population6
  7. 7. DIETARY SUPPLEMENTS MARKET Competitive Structure Dietetic Number of 21% Companies in the Over 500 Vitamin Market andChyawanpr $950 M Mineral ash Competitive Branding, Price, Key 48% 8% Factors Benefits Seniors (> 50 years) Herbal Adults (25-50 years) 23% Key End-user Young adults (15-25 Groups years) Sportsmen and athletes Pfizer, Ranbaxy, Elder Major Market Unit: USD Mn Pharmaceuticals, and Participants Dabur, etc. Sanofi-Aventis and Notable Universal Medicare; Acquisitions and Reckitt Benkiser and Mergers Paras Pharma 7
  8. 8. FUNCTIONAL FOODS MARKET Others Competitive Structure 13% Fortified Baked Number of Goods Companies in the 25-30 24% Market Fortified $350 MEdible Oils 26% Fortified Competitive Factors Perceived Value Malted Functional Health Dairy Drinks Children (5-15 years), 8% 29% Key End-user Groups Families and Seniors (>50 years) Major Market GlaxosmithKline, Participants Yakult-Danone Yakult Honsha and Unit: USD Mn Notable Acquisitions Danone Group formed and Mergers a JV to enter India8
  9. 9. FUNCTIONAL BEVERAGES MARKET Competitive Structure Energy Number of Companies 12-15 drinks in the Market 10% $180 M Functional Others Juices Competitive Factors Branding 3% 84% Sports Drinks Young Adults (15-25 3% years) Key End-user Groups Sportsmen and athletes Major Market Red Bull, PepsiCo, Parle Participants Agro PepsiCo and Tata Global Beverages have formed a Unit: USD Mn Notable Acquisitions JV to create Nourish Co, and Mergers which currently produces fortified water9
  10. 10. THE NUTRACEUTICALS VALUE CHAIN Basic raw material comprises roughly 50-75 percent of ingredient ex-factory cost Nutraceuticals Ingredient Basic Raw Material Supplier Manufacturer Nutraceutical ingredients account for nearly 60-80 Contract Manufacturerpercent of theex-factory cost for dietary Marketing and (Re)packaging costs + Marketer’s supplements margin form nearly 50 percent of the product MRP In functional foods, nutraceutical Dietary Supplement Co. Functional Food Co. ingredients usually account for 10- 25 percent of the ex-factory cost Depending on the channel, cumulative margins Distributor/Retailer of participants across the retail channel can vary from 12-25 percent of the MRP Consumer 10
  11. 11. OPPORTUNITY ASSESSMENT FOR INDIA: PRODUCT/BRAND DIFFERENTIATION AND HIGHER PENETRATION WILL BE CRUCIAL FOR SUCCESS• The market is expected to witness growth of 12-15% in the next 5 years. Over the forecast period, the market is expected to witness an increase in competition in the form of top rung global players making a foray into the Indian market. As the US and EU markets saturate, specifically for categories such as dietary supplements, India is being seen as the road to growth for most global health and wellness players. Vitamin and mineral supplements are expected to retain majority share in this segment.• In functional beverages, an increase in uptake of enhanced drinks and energy drinks is expected, primarily driven by a young, urban, working population. In functional foods, diabetic foods are expected to witness highest growth, as consumers tend to perceive a healthy lifestyle as an alternative to insulin. Market Penetration Product Identity •Penetration Efforts: Required especially in low-volume markets •Creating brand and such as Probiotics. For example, product equity. For Amul’s Probiotic ice cream calls for example, the entry of a certain specification causing lower Yakult has testified this threat from substitution Product-Line Differentiation factor due to its global recognition •Targeted marketing, advertising, •Establishment of line variants. For and sales promotion campaigns that example, Omega-3 oils into •Value-Added Focus: address specific needs of target vegetable oils to provide Technical and formulation consumers penetration into the commodity support and new possibilities for existing ingredients 11
  12. 12. WAY FORWARD: CUSTOMIZATION THE KEY REQUIREMENT TO TARGET A DIVERSE POPULATIONAs middle-class purchasing power increases, manufacturers The latest trend for nutraceuticals manufacturers isneed to focus on traditional brand identity allowing understanding such cultural requirements and focusing onconsumers to connect with the brand on a cultural level (for specific product formats. For instance, omega-3 developedexample, B Natural’s range of juices). The industry needs to with vegetarian variants has gained traction with the largefocus on inclusion of natural extracts (with proven health Indian vegetarian population.benefits) for their products. Traditional Cultural Wisdom Differences Formulation Specific Health Efficiency BenefitsFormulation remains one of the primary challenges being With increasing sophistication in nutraceuticals, consumerfaced by these products. For any food or supplement demand for products with specific health benefits has beenmanufacturer looking to add functional ingredients to their on the rise. Nutraceutical products have now been dividedproducts, the key issue of stability must be addressed as into various segments based on health benefits. Thesesoon as possible during the product development process. sectors such as heart health and eye health, allowInnovation product presentations have thus been used to manufacturers to position themselves better in India.ensure ingredient viability and stability. 12
  13. 13. 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’s South Asia, Middle East and 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 “We Accelerate Growth” competencies include custom strategic consulting, market intelligence, summits and conferences and management training.CHEMICALS, MATERIALS AND FOODS PRACTICEFrost & Sullivans Chemicals, Materials & Food practice provides global industry analysis, growth consulting, market research, market forecasts and insights intoemerging technologies. This enables our clients to address current trends and challenges, identify new technologies and take advantage of growth opportunities.Our Chemicals, Materials and Foods Growth Partnership Services subscription offers comprehensive coverage of key market sectors, namely: Food & Beverage Ingredients markets Food, Drugs & Cosmetics Specialty & Fine Chemicals Petrochemicals and derivatives Building Materials Packaging Paints & Coatings Adhesives, Sealants and Resins Plastics, Polymers and Downstream applicationsThis comprehensive coverage ensures that we are fully equipped to provide clients with a complete assessment of opportunities, both inside and outside theircurrent marketplaces. Our uniquely broad perspective allows us to quickly and effectively support clients in identifying and qualifying new growth opportunities.
  14. 14. 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.com Learn more at www.frost.com

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