Inputs are provided by Mr. Sushil Khaitan, CEO & Director, Purenutrition.me
No one could foresee the rapid growth of India’s nutraceutical market at the outset, but Indian consumers took to the trend fairly quickly. The Indian nutraceutical industry may still be in its infancy, accounting for just 2% of the global market share, but in light of current trends, we can anticipate even greater growth prospects in the near future. With our vast markets opening up, reports predict a doubling of India’s nutraceutical industry within the next 3 years, to reach 26,764 crore (Drug Marketing and Manufacturing Association (DMMA), Feb 2017). Dietary supplements occupy a small share of the nutraceutical market, but are expected to touch a value of USD 2.1 billion by 2022. The growth of functional foods and beverages has helped widen the appeal of nutraceuticals and this segment of the market alone is anticipated to hit a value of USD 3.2 billion within 5 years (The Associated Chambers of Commerce and Industry of India (Assocham) and RNCOS, April 2017). But, what is really propelling this growth?
Rising Awareness
Despite the fact that nutrition is a relatively new segment within health care, growth has begun to accelerate in recent years primarily due to higher levels of awareness among consumers about the impact of lifestyle and diet on health. As a result, consumers have become more appreciative of the importance of nutrition in both the prevention and treatment of diseases. In addition, health publications and fitness icons have helped increase the understanding and appeal of natural health focused products.
Increase In Disposable Income
Until fairly recently, nutraceutical products, including supplements and functional foods, were mainly purchased by those in higher income groups, a pattern that we are seeing a drastic change in because of rising disposable income and greater purchasing power. Higher spending power has also prompted Indians to pay more attention to health, with a focus on nutrition as preventive.
Medical Community Co-prescribing Nutraceuticals
Nutraceuticals were long regarded as purely optional by most doctors, which worked as a barrier to the nutraceutical market’s growth. With increased research into food science and nutrition in recent years, there has been a remarkable change in perceptions within the medical community. Most doctors now acknowledge the role of nutrition in quality medical care, with a focus not just on cures, but also on prevention. Aside from dietitians and nutritionists, general physicians and other specialists also frequently prescribe nutraceutical products and supplements, where they are seen to be beneficial.
Challenges Faced By The Indian Nutraceutical Market
Poor Regulation
The lack of clarity in regulations has been a major impediment to our industry, compounded by loopholes that result in costly delays of product approvals. Moreover, policy implementers themselves often have poor awareness of our products. Fixing this system is a serious challenge for us, as the nutraceutical market is dominated by an amalgamation of big and small companies. To bring all of these organizations into one fold, under a regulated and standardized system is quite a task, especially in light of the rapid growth of this segment.
Unrealistic Claims
The problem with deceptive marketing is not just ethical, but it also hurts the nutraceutical business. I have come across advertisements from reputed brands that make tall claims about products that actually have little basis in scientific fact. This creates an atmosphere of distrust among consumers, increasing skepticism about nutraceutical products, whether diet supplements or functional foods. Building consumer trust is essential and this will require initiative from all involved in the marketing of supplements and nutraceutical foods. As a part of this industry, we have a responsibility to ensure the factual validity and scientific support for any claim.
Future Trends In The Nutraceutical Segment
With new players entering the market and rapid innovation within the nutraceutical industry, this is actually one of the most exciting times to be part of the industry. Many of the emerging trends in India will also help resolve the challenges that we have faced in the past, further promoting growth of the sector.
An Overhauled Regulatory Framework
The revelation that up to 70% of the dietary supplements in India’s nutraceutical market or fake or illegal came as a huge shock to consumers and it is also a cause for alarm within the industry (The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and RNCOS, April 2017). This has a significant impact on the market, as it eats into revenue and also shakes consumer confidence in nutraceuticals. Fortunately, the FSSAI’s introduction of new regulations should get to the root of this problem, which is the lack of consistent regulation and standardization of nutraceutical products. These new regulations will come into effect in 2018, allowing us to manufacture, distribute, sell, and import products within a clear framework. The new framework will prescribe clear standards and well-defined product categories eliminating the current ambiguity. These regulations will also give manufacturers much more clarity in terms of permissible ingredients in nutraceutical products and labeling.
Market Expansion (Tier II & III Cities & E-commerce Growth)
In the past urban India, or more precisely the metros, were the only markets for nutracetutical sales, but consumption patterns have shown a dramatic shift, with a steady increase in demand from Tier II and Tier III cities. This does give us cause for optimism, as we believe that this trend will only gather momentum, especially because of the large-scale digitization of India. With greater internet penetration across the country, awareness about lifestyle diseases and nutritional deficiencies has been increasing not just in the metros, but throughout India. Digitization has also improved access to nutraceutical products, with consumers in Tier III cities having the same wide range of choice as do urbanites in metros. Purchasing products from reputed online retailers or directly from manufacturers also increases consumer confidence in product quality, while cost benefits to sellers are also passed on to consumers. E-commerce growth is in fact a game changer for the nutraceutical industry, as the health care segment has already seen remarkable growth at a CAGR of 87.4 (Ken Research, Apr 2017). With Indian e-commerce sales expected to hit USD 120 billion by 2020, the nutraceutical industry stands to make big gains.
