As Indian consumers express their growing awareness of healthier foods and a willingness to consume them, food brand majors and minors are boosting their products and portfolios to take advantage of a promising opportunity. The packaged foods and beverages category is growing at around 15-20 per cent annually, according to market estimates, and health & wellness proposition foods are expected to grow even faster, at 30-35 per cent annually.
According to a report released by the Tata Strategic Management Group, the market for health & wellness (H&W) foods in India, which currently stands at Rs 10,050 crore, is set to post a compounded annual growth rate (CAGR) of 30-35 per cent for the next five years, to touch Rs 55,000 crore by 2015.
The consulting firm believes that investments from players with deep pockets as well as start-ups will fuel the growth. Pankaj Gupta, practice head, consumer and retail, Tata Strategic Management Group (TSMG), said: “H&W will be one of the mega trends driving the transformation of the packaged foods market in India. While start-ups will also enter the industry in niche areas, the main thrust will be from large players as they have the necessary distribution channel and brand development capabilities.” He adds that for categories perceived as less healthy, ‘better-for-you’ variants will succeed, while for the perceived neutral or healthy categories, functional variants will succeed.
The report estimates that curd/yoghurt, flour, savoury snacks and edible oils will be the fastest growing food categories, reaching eight times their aggregated current size by financial year 2015. Emerging categories such as savoury snacks, yoghurt and yoghurt drinks are expected to grow fastest, by around 35- 37 per cent per annum.
Companies, large and small, are responding to the H&W opportunity. Globally, the penetration of packaged H&W products is 20 per cent; in India, where it is a relatively new segment, it is about 10 per cent.
PepsiCo India and Tata Tea have just announced their intention to set up a joint venture company for non-carbonated, ready-to-drink beverages, focused on health and enhanced wellness, focused on the Indian market.
Danone too, has stepped up its activity, investing in manufacturing, greenfield and brownfield projects, and logistics. Besides Yakult — the probiotic drink it launched in a joint venture with the Japanese firm Yakult — it has now gone solo with yoghurt in multiple flavors for India.
A Danone spokesperson said, “We are committed to bringing health through foods to the largest number of people. Under the dairy business unit in India, we have launched three products —Chocolate Smoothie in Hyderabad, and a range of yoghurts — plain Danone dahi and flavoured yoghurt in strawberry, mango and vanilla — in Pune and other parts of Maharashtra. Our future plans will depend on consumer response.”
ITC has been expanding its Sunfeast Marie Light portfolio. Recently, it launched an oats variant. A company spokesperson said, “The Sunfeast Marie Light brand has been well appreciated by the consumer and continues on an upward trend. The existing variants —original and orange —have done well and the portfolio has grown by 27 per cent since.” ITC has been marketing other healthy snacks, including biscuits under Sunfeast.
For Parle Products too, the digestive Marie segment has worked well. Shalin Desai, the company’s senior brand manager, said, “We have a pretty strong focus in this segment. As an add-on segment, it works for Parle.” The H&W proposition is exciting enough for Parle to consider re-launching Parle Lite BonBons, which failed to take off when launched.
Nestle India does not consider H&W as a category, but believes it is fundamental to a good life. Therefore, it spends about US$ 1.9 billion globally on R&D every year, focused strongly on nutrition, health and wellness. In January, the company acquired healthcare nutrition brands Resource, Optifast and Spert. Resource is formulated for the management of malnutrition and other medical conditions, while Spert is a protein supplement for the family.
Hindustan Unilever too, launched Kissan Amaze sometime back for children. While its inclusion of the word ‘brainfoods’ ran into problems, the significant fact is that the H&W opportunity looked good to the company, which has its international version of the brand in Amaze Brainfoods.
Where established large companies venture, retail cannot be far behind. FabIndia has seen success with its organic foods business. A company spokesperson said, “People are more aware of not only health issues but also where and how the products they consume are sourced from or produced. Conscious consumption is a trend and the market potential is big.”
Future Group’s private label has launched cornflakes and cereals, and will soon launch multi-grain products. Devendra Chawla, head - private brands, Future Group, said, “In the past, a lot of companies followed the herd assuming this is the future, but that didn’t necessarily work. Small players will now enter this segment and grow it.”
His prediction is borne out in the launch of Cocoberry, a startup retailing frozen yoghurts, which launched its first store in February 2009 in Delhi. Cocoberry has earmarked an investment of Rs 120 crore for expansion in the next two years, to open 100-150 outlets across India over the next three years.
ADF Foods (India) now offers even healthy pickles, made in virgin olive oil, under its brand name, Soul. The range, available in Mumbai, will soon be available across India. “We will initially focus on metros, mini metros and tier 1 cities. Over the next three years, we will invest around Rs 30 crore on advertising and promotions and expect a sales turnover of around Rs 80 crore by then,” said Bimal Thakkar, MD, ADF Foods (India).
Even as the promise is attractive, the H&W foods segment in India, being nascent, expects see a lot of experimenting with new ideas.