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Functional Foods & Beverages India_2012
The document provides an overview of the functional foods and beverages market in India. It notes that the market has doubled in size over the past 6 years to INR 132 billion in 2011. Key growth segments include energy drinks, dairy products, and confectionery. The outlook expects continued strong growth of around 10% annually to INR 192 billion by 2015. Emerging categories that could drive future growth are discussed as anti-aging foods, Ayurceuticals (Ayurvedic nutraceuticals), and novel foods. Convergence between the pharmaceutical and food industries is also highlighted through the emergence of "Pharma Foods."
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Functional Foods & Beverages India_2012
- 1. Functional Foods and BeveragesIndia 2012 Maximizing the opportunity
- 2. Agenda Page 1 Overview 1 2 Emerging categories of focus 6 3 Outlook 12
- 3. Section 1 Overview Functional Foodsand Beverages • Maximizing the opportunity PwC 1
- 4. Section 1 –Overview Draft Increasing “self care” needs of consumers has created huge opportunities across several food and beverage segments Evolution of wellness foods: Naturally healthy Better for you Functional foods: Nutraceuticals: Pharma foods (INR 25 - 28 bn*) (INR 5 - 7 bn*) (INR 85 - 90 bn*) (INR 40 - 45 bn*) Convergence of food & Food products with no Food products with Food products fortified Food supplements pharma addressing chemicals, additives lower levels of “bad with ingredients or containing long term disease or artificial ingredients/nutrients. produced / suitably nutritional/ medicinal specific needs substances, but have For e.g. reduced fat/ modified to provide a ingredients sold in natural health benefits reduced sugar foods distinct health benefit medicinal form Traditional with Driven by increasing Usually encapsulated wide-spread First wave of Emergence of a new penetration in (pills & capsules) or consumer commercially industry driven by existing categories in the form of acceptance– popular “self-care” needs of and emergence of nutritional powders recently being “wellness” food consumers new categories and liquids commercialized * Numbers in brackets indicate market sizes in FY11 Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 2
- 5. Section 1 –Overview Draft The Indian market for functional foods, beverages and nutraceuticals has doubled during the last 6 years Functional foods Functional foods, beverages and nutraceuticals (INR bn) 140 2% 24 132 2011 51% 4% 23% 19% 120 19 100 0% 20% 40% 60% 80% 100% 25 80 Bread, biscuits & cereals Confectionery 64 Dairy products Vegetable and seed oil 60 Others 40 Functional beverages 20 - 2005 2011 Functional foods Functional beverages Nutraceuticals 2011 86% 8% 6% 0% 20% 40% 60% 80% 100% Health food drinks Soft drink concentrates Energy, sports drinks & others Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 3
- 6. Section 1 –Overview Draft There are several growth levers for these categories in India Pre 1990 Current Increased penetration across Water existing categories Milk Health drink Drink Biscuits concentrates Atta powders Emergence of new categories Drink Rice Chewing gum Health drink concentrates Eggs powders Confectionery Cereals Penetration across basic food Tea Energy drinks Biscuits Bread products Soups Fruit juices Cereals Vegetable oil Nutrition bars Yogurt Micro segmentation Sports drinks Noodles Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 4
- 7. Section 1 –Overview Draft ...each targeting specific/combination of functional benefits to meet consumer needs Driven by an increasing Driven by increasingly active need to look good and feel lifestyle among the young good working population Mature category – driven by Targeted at women and the new products targeted at elderly –high growth category niche consumer segments globally, there exist huge untapped opportunities in India High growth segment driven by a young Driven by increasing population – consumer awareness levels Changing lifestyles and High incidence of cardiac increasing incidence of dining ailments even among out resulting in higher emphasis younger consumers on digestive health Key ingredients include fibre rich foods, probiotics, phyt0 – chemicals, soy based ingredients, omega-3 acids, vitamins, minerals, etc. Understanding consumer need gaps and identifying key segments to focus on is critical Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 5
- 8. Section 2 Emerging categoriesof focus Functional Foods and Beverages • Maximizing the opportunity PwC 6
- 9. Section 2 –Emerging categories of focus Draft Anti-ageing food is still a niche segment in India; As today’s highly aware middle aged population start ageing this category presents huge potential Indian population over 40 years of age 50% 43% Indian population 40% The per capita spend on anti-aging products of 40+ Indians is 30% 29% in India is less than USD 1 compared to a expected to global per capita spend of over USD 25 20% increase from 340 10% mn to 675 mn in 0% 2041 2011 2041 Current population of 40+ Indians is higher than the US population Opportunities for nutri- Key categories for anti-aging Key ingredients for anti-aging cosmetics (nutraceuticals could include mental/cognitive could include targeted at looking young) and health, heart health, skin antioxidants, carotenes, cosmoceuticals (use of health, etc. flavonoids, resveratrol, etc. biologically active ingredients in cosmetics) Customization for Indian markets is critical – local taste & preferences, vegetarianism, preference for natural products etc Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 7
- 10. Section 2 –Emerging categories of focus Draft Indian nutraceutical market is expected to be driven by growth in segments such as Ayurceuticals Indian nutraceutical market: • Major segments could include body building, weight control, diabetes • Indian nutraceutical industry is expected to grow from control, sports nutrition, meal INR 44 bn in FY11 to INR 56 bn in FY15 replacement, etc • Currently dominated by domestic pharmaceutical and international supplements players • Naturally derived substances, amino • Growth is being driven by dietary acids, soy-based and protein & peptide supplements, primarily vitamin and mineral supplements could drive growth supplements Key trends: • Nutraceuticals sold as OTC products require • Indian consumers place a high amount of trust in heavy investments in product promotion and traditional products which could drive growth of point of purchase visibility Ayurceuticals – ayurvedic ingredients delivered in packaged nutraceutical forms • Educating stakeholders across the value • Increasing usage of encapsulation and nanoceuticals chain from physicians to retailers is similar to prevailing global trends challenging • Pricing is a barrier Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 8
- 11. Section 2 –Emerging categories of focus Draft Novel foods are a new segment of growth globally. There is a need for defining and regulating novel foods segment in India 1 Novel foods : Do not have a significant history of consumption or are produced by a method that has not previously been used for food 2 Globally, countries such as the European Union, Australia, China, Canada, etc. have introduced regulations pertaining to marketing and sales of novel foods 3 Some foods defined as novel in other countries are traditional to India while there are other new foods being introduced in India which need to be identified as novel 4 Under the purview of the Food Safety and Standards Authority of India. Currently defined as “an article of food for which standards have not been specified but is not unsafe” 5 Detailed definitions, identification of novel food categories and approval/ labeling norms specific to India are critical Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 9
- 12. Section 2 –Emerging categories of focus Draft Entry of new domestic and international players has provided growth impetus to the Indian market Increasing focus on “Good Domestic companies trying for You” to maximize the opportunity • Increasingly larger number of food • Companies already operating in manufacturers are positioning on the these segments are leveraging on “good for you” platform their existing brand strength to ─ Studies have shown that globally expand into new categories companies with “good for you” • New entrants in the wellness space positioning report stronger sales are trying to unlock opportunities growth and higher profits Key trends International players Growing the market by looking to India for growth educating customers • JVs with Indian companies, Licensing ─ Tying up with physicians and retailers and repackaging agreements, Marketing for educating customers partnerships, Sales & distribution ─ Providing free samples to customers agreements, Technical collaborations ─ Clinical trials to demonstrate quantifiable benefits Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 10
- 13. Section 2 –Emerging categories of focus Draft Convergence of pharma and packaged foods has pioneered “Pharma Foods” Both Pharma and FMCG companies bring distinct competencies that complement each other Pharma FMCG • Demonstrated R&D expertise • Existing packaging systems and • Leverage on existing scientific advances distribution channels Pharma which have applications in other domains • High retail reach and consumer connect Food • Experience with meeting health related • Strong consumer brands and marketing regulatory criteria strength • Trust factor • Need to enter new wellness product segments while minimizing R&D costs Examples: • Nestle has set up Nestlé Health Science S.A. and the Nestlé Institute of Health Sciences to focus on personalized health science nutrition • Merck KGaA has entered into a cooperative agreement with food company Clover Corporation to globally market and distribute products with Merck’s omega-3 ingredient HiDHA • DuPont Protein Technologies has joined with General Mills (GM) to develop and market new products with DuPont’s soy product—Solae phenyl isothiocyanate protein using GM’s production facilities Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 11
- 14. Section 3 Outlook Functional Foodsand Beverages • Maximizing the opportunity PwC 12
- 15. Section 3 –Outlook Draft The FFB and nutraceuticals market is expected to grow at c. 10% to reach c. INR 192 bn. The Indian market is expected to outperform growth in global market Indian market is expected to grow at c. 10% Growth is expected to be driven by categories such as compared to growth of c. 6 – 7% in the global market energy & sports drinks, confectionery, etc. Functional foods, beverages & nutraceuticals Market outlook* (INR bn) 250 40% CAGR 2011-2015 200 12 192 35% Energy & Sports 24 drinks 24 30% 150 132 25% 100 Confectionery 20% Hot 50 Vegetable drinks Dairy products 15% oils - Others Nutraceuticals Functional foods 2011 2015 Nutraceuticals Functional beverages 10% 5% Concentrates Bread, biscuits & cereals 0% 0% 10% 20% 30% 40% Current relative * Bubble size indicates current market size in INR bn (2011) market share (2011) Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 13
- 16. Section 3 –Outlook Draft There are several key points to consider while strategizing future growth in this segment How is Indian consumer What are the big bets for this behaviour expected to evolve? industry in India? Which How do Indian consumers segments should you focus differ from their global your resources on? counterparts? How will this 1 impact the evolution of the industry? 2 How can you effectively How can you overcome partner with various players challenges that exist in the in the eco-system to maximize Indian market? opportunities? 3 4 Functional Foods and Beverages • Maximizing the opportunity 26 July 2012 PwC 14
- 17. Thank you Rashmi Upadhya Associate Director - Strategy E-Mail: p.rashmi.upadhya@in.pwc.com Phone: 080-40797059 © 2012 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers,” a registered trademark, refers to PricewaterhouseCoopers Private Limited (a limited company in India) or, as the context requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.