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Presentations from Nutraceuticals India, held in October 2012 and provided by conference organiser UBM India.
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Sizing up the market for Nutraceutical Products in India and forSizing up the market for Nutraceutical Products in India and forecasting opportunities in the ecasting opportunities in the
long termlong term
Nutraceuticals India 2012Nutraceuticals India 2012
October 2012October 2012
Presented by: V. Chaitra Narayan , Program Manager, Frost & SullPresented by: V. Chaitra Narayan , Program Manager, Frost & Sullivanivan
© 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
AGENDA
• Megatrends Shaping the Nutraceutical Market
• Global Market Overview
• Indian Market Snapshot
• Nutraceutical Value Chain
• Opportunities for India
• Way Forward
3
Booming Population:
Sustained population growth will result in a shift of focus from high
consumption regions such as the US and Europe to high-population
countries like India and China. It is expected by 2020, that 37 percent
of GenY (aged 15-34) will be centered in India and China, with Asia as
whole accounting for 61 percent of 2020s GenY population
MEGATRENDS SHAPING THE NUTRACEUTICAL MARKET
0.360.44
0.14 0.07 0.13
0.330.22
0.37
0.63
0.22 0.13 0.26
0.44
0.51
0.33
0.19
0.21
0.11
0.23
0.47 0.57
0.07
0.47
0.12
0.07
0.22
0.09
0.16
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Africa Rest of Asia Latin America,
Caribbean andOceania
North America Europe India China
Po
pu
lati
on
in
Billio
n
65 Years and Above 35-64 15-34 0-14
1.69
2.56
2.1
1.2
Source: U.S. Census Bureau, 2010, and Department of Economic and Social Affairs of the United Nations
2010 2020World Population: Breakdown by Region
(Global), 2020
6.83
Billion
7.55
Billion
Population in
Billion
Health, Wellness, and Well-Being:The health and wellness industry is poised for a
radical change with information technology taking
the forefront in research and development,
diagnostics, and monitoring. In future, diagnostics
will become less invasive, preventative, and image-
based. Medicines will be marketed as molecular
and personalized drug cocktails. However, given
current levels of Government spending on
healthcare, it is expected that the consumer’s
focus will shift from treatment-based remedies to
preventive remedies. The evolving definition of
health, wellness, and well-being will become the
new value proposition for companies across this
sector and an important factor of differentiation.
The evolving definition of Health, Wellness, and Well-being
Mind Body Soul
Mood
Stress levels
Mental health
Sense of
optimism
Attitude
Security
Safety
Sight/vision
Touch and feel
Smell/breathing
Sound
Temperature
Wellness
Personal values
Personal
fulfilment
Self image/self
actualization
4
GLOBAL NUTRACEUTICALS MARKET – CONSUMER-DRIVEN
GROWTH
Market
Stage
Market
Stage
GrowthGrowth
Market
Revenues
Market
Revenues
$149.5 B$149.5 B
(2011)
Market Size at
End of Forecast
Period
Market Size at
End of Forecast
Period
$210 B$210 B
(2016)
5-year Forecast
Market Growth
Rate
5-year Forecast
Market Growth
Rate
7.0%7.0%
(CAGR)
US, Europe, and Japan
are the largest markets,
while India, China, and
Brazil are key growth
geographies
Global Market, 2011
USA
36%
Europe
25%
Japan
22%
India
1%
ROW
16%
Global Nutraceutical Market, 2011
Total Market Size: $149.5 Billion The global nutraceuticals market in 2011 was estimated to be $149.5
Billion, with the US, Europe, and Japan being largest regional
markets accounting for nearly 93 percent of the global nutraceuticals
demand. These markets are nearing maturity, with exceedingly high
per capita spends on nutraceutical products, thus forcing
manufacturers to look at developing countries such as India and
China, which have considerably lower per capita spend on
nutraceutical products, as key growth regions for their nutraceuticals
portfolio
ROW= Rest of the world; CAGR = Compound annual growth rate
5
CUSTOMIZATION OF NUTRACEUTICALS WORLDWIDE
Going Natural
Cultural
Differences
With increasing concerns about side-effects resulting from chemicals and introduction of synthetic additives in
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.
Nutraceuticals manufacturers understand that various cultures have specific requirements for products. The
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.
Formulation
Efficiency
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
these products into traditional food and beverage products. For any food or supplement manufacturer looking
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
Europe, where nutraceutical products have now been split into various segments based on health 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.
Specific Health
Benefits
6
Functional Foods24%
Functional Beverages
12%
Dietary Supplements
64%
Indian Nutraceutical Market, 2011
The Indian nutraceuticals market was valued at $1,480 Million in
2011. Dietary supplements was the largest category accounting
for 64 percent of the market, driven primarily by the
pharmaceutical sector in the form of vitamin and mineral
supplements.
Growth of dietary supplements will be
spurred by growing demand for dietetic
supplements from an increasingly urban,
fitness-conscious, young population
TOTAL INDIAN NUTRACEUTICALS MARKET = 1% OF THE GLOBAL MARKET
Market RevenuesMarket Revenues
$1,480 M$1,480 M
(2011)
Market Size at
End of Forecast
Period
Market Size at
End of Forecast
Period
$2,731 M$2,731 M
(2016)
5-year Forecast
Market Growth
Rate
5-year Forecast
Market Growth
Rate
13.0%13.0%
(CAGR)
7
DIETARY SUPPLEMENTS MARKET
Vitamin and
Mineral 48%
Herbal 23%
Chyawanprash 8%
Dietetic 21%
$950 M
Competitive Structure
Number of
Companies in the
Market
Over 500
Competitive
Factors
Branding, Price, Key
Benefits
Key End-user
Groups
Seniors (> 50 years)
Adults (25-50 years)
Young adults (15-25
years)
Sportsmen and athletes
Major Market
Participants
Pfizer, Ranbaxy, Elder
Pharmaceuticals, and
Dabur, etc.
Notable
Acquisitions and
Mergers
Sanofi-Aventis and
Universal Medicare;
Reckitt Benkiser and
Paras Pharma
Unit: USD Mn
8
FUNCTIONAL FOODS MARKET
Fortified Baked Goods 24%
Fortified Malted Health Drinks29%
Functional Dairy8%
Fortified Edible Oils
26%
Others13%
$350 M
Competitive Structure
Number of
Companies in the
Market
25-30
Competitive Factors Perceived Value
Key End-user Groups
Children (5-15 years),
Families and Seniors
(>50 years)
Major Market
Participants
GlaxosmithKline,
Yakult-Danone
Notable Acquisitions
and Mergers
Yakult Honsha and
Danone Group formed
a JV to enter India
Unit: USD Mn
9
FUNCTIONAL BEVERAGES MARKET
Energy drinks10%
Functional Juices84%
Sports Drinks
3%
Others3%
$180 M
Competitive Structure
Number of Companies
in the Market12-15
Competitive Factors Branding
Key End-user Groups
Young Adults (15-25
years)
Sportsmen and athletes
Major Market
Participants
Red Bull, PepsiCo, Parle
Agro
Notable Acquisitions
and Mergers
PepsiCo and Tata Global
Beverages have formed a
JV to create Nourish Co,
which currently
produces fortified water
Unit: USD Mn
10
THE NUTRACEUTICALS VALUE CHAIN
Basic Raw Material SupplierNutraceuticals Ingredient
Manufacturer
Contract Manufacturer
Functional Food Co.Dietary Supplement Co.
Distributor/Retailer
Consumer
Basic raw material comprises
roughly 50-75 percent of ingredient
ex-factory cost
Nutraceutical
ingredients
account for
nearly 60-80
percent of the
ex-factory cost
for dietary
supplements
In functional foods, nutraceutical
ingredients usually account for 10-
25 percent of the ex-factory cost
Depending on the channel, cumulative margins
of participants across the retail channel can vary
from 12-25 percent of the MRP
Marketing and (Re)packaging costs + Marketer’s
margin form nearly 50 percent of the product
MRP
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.
Product-Line Differentiation
•Establishment of line variants. For
example, Omega-3 oils into
vegetable oils to provide
penetration into the commodity
Product Identity
•Creating brand and
product equity. For
example, the entry of
Yakult has testified this
factor due to its global
recognition
•Value-Added Focus:
Technical and formulation
support and new
possibilities for existing
ingredients
Market Penetration
•Penetration Efforts: Required
especially in low-volume markets
such as Probiotics. For example,
Amul’s Probiotic ice cream calls for
a certain specification causing lower
threat from substitution
•Targeted marketing, advertising,
and sales promotion campaigns that
address specific needs of target
consumers
12
WAY FORWARD: CUSTOMIZATION THE KEY REQUIREMENT TO
TARGET A DIVERSE POPULATION
Formulation
Efficiency
The latest trend for nutraceuticals manufacturers is
understanding such cultural requirements and focusing on
specific product formats. For instance, omega-3 developed
with vegetarian variants has gained traction with the large
Indian vegetarian population.
The latest trend for nutraceuticals manufacturers is
understanding such cultural requirements and focusing on
specific product formats. For instance, omega-3 developed
with vegetarian variants has gained traction with the large
Indian vegetarian population.
Formulation remains one of the primary challenges being
faced by these products. For any food or supplement
manufacturer looking to add functional ingredients to their
products, the key issue of stability must be addressed as
soon as possible during the product development process.
Innovation product presentations have thus been used to
ensure ingredient viability and stability.
Formulation remains one of the primary challenges being
faced by these products. For any food or supplement
manufacturer looking to add functional ingredients to their
products, the key issue of stability must be addressed as
soon as possible during the product development process.
Innovation product presentations have thus been used to
ensure ingredient viability and stability.
As middle-class purchasing power increases, manufacturers
need to focus on traditional brand identity allowing
consumers to connect with the brand on a cultural level (for
example, B Natural’s range of juices). The industry needs to
focus on inclusion of natural extracts (with proven health
benefits) for their products.
As middle-class purchasing power increases, manufacturers
need to focus on traditional brand identity allowing
consumers to connect with the brand on a cultural level (for
example, B Natural’s range of juices). The industry needs to
focus on inclusion of natural extracts (with proven health
benefits) for their products.
Traditional
Wisdom
Cultural
Differences
With increasing sophistication in nutraceuticals, consumer
demand for products with specific health benefits has been
on the rise. Nutraceutical products have now been divided
into various segments based on health benefits. These
sectors such as heart health and eye health, allow
manufacturers to position themselves better in India.
With increasing sophistication in nutraceuticals, consumer
demand for products with specific health benefits has been
on the rise. Nutraceutical products have now been divided
into various segments based on health benefits. These
sectors such as heart health and eye health, allow
manufacturers to position themselves better in India.
Specific Health
Benefits
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