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India market entry: Challenges and opportunities

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Ahead of Vitafoods Asia Digital Week, Dr R. B. Smarta shares an overview of key market entry considerations for brands looking to retail in India.

Known for its global spice exportation, India is once again experiencing spices come into focus thanks to their value in nutrition. From very early beginnings, spices have been central to Indian cuisine and culinary art. However, in light of recent practice and the influence of modernisation as well as globalisation, the focus has shifted.

India on the map

There are many factors leading to the growth of nutraceutical industry in India. One of those is heritage from herbals and Ayurveda. India has a rich heritage of herbal, Ayurvedic medicines and spices that position the country’s nutraceutical industry for expansion and progress. The herbal segment is likely to contribute 30% to the dietary supplements market in India, expected to grow at 20% CAGR from 2015 to 2023.

Another factor is a rich biodiversity, robust agricultural research infrastructure, and abundant availability of nutraceutical ingredients. India is a leading caterer of the world’s ingredient needs, providing highly bioavailable curcumin, ashwagandha, fibres like fenugreek, natural astaxanthin and black garlic—to name a few.

Additionally, India is also a global pharma powerhouse due to its ability to produce high-quality and low-cost generic drugs. Nutraceutical manufacturing uses many of the same technologies as the pharma industry, and low cost, high quality manufacturing supports India as a global leader in the finished nutraceutical product space as well.

Data shows that India has 108 large contract manufacturers in nutraceuticals which has opened up a vast opportunity for new FDI (Foreign Direct Investment) entrants, however, this potential needs to be leveraged properly for growth of the industry. 

India is the second most populated country in the world with a population of around 1.3 billion. Currently, only the urban population has seen traction of nutraceutical products, but there are considerable opportunities beyond the urban segment, as populations in rural parts of the country represent a huge untapped potential for nutraceutical sales.

Market opportunities

There are as many as 11 opportunities in India for those who want to enter. Those are as follows:

  1. Lifestyle diseases
  2. Growing disposable income
  3. Rising patient awareness
  4. Inferior food quality
  5. Body image concerns
  6. E-tailers
  7. Changing treatment protocols
  8. Government focus on improving nutritional status
  9. Evolving competitive landscape 
  10. The intervention of AI technology 
  11. Creating nutraceutical brands 

Expanding on some, growing disposable income coupled with lifestyle disease awareness is making the Indian population take more proactive steps toward protection and prevention. In addition to that, lowering food quality has become an accelerating trend for creating real time opportunity in India.

Besides being self-conscious, social media is also increasing health awareness of medical consumers. As a result, individuals and healthcare providers are changing their treatment protocols to promote health.

All this is happening very quickly due to government focus on AYUSH (The Ministry of Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy) and integrated medicine platforms whereby nutrition, nutraceuticals, Ayurveda and other alternative medicines have chances to flourish.

India being an IT hub and having an excellent intervention of artificial intelligence and machine learning is creating space for start-ups to disrupt the industry, and as a result, the competitive landscape is evolving very differently.

Market challenges

While there are opportunities, challenges also create barriers to entry. Among these are:

  1. Changing regulatory climate: Several amendments are happening due to the growing nature of the nutraceutical industry right from product definitions and approvals, to health claims and manufacturing standards.
  2. The legal and regulatory framework: In the case of legal frame work, corporate law and necessary steps to create an entity in India has been elaborated in FSSA (Food Safety and Standards Act of India) Section 22, whereby compliance to operate in India is mandatory.  
  3. Lookalike products: The Indian nutraceutical market has a high threat of lookalike, fraudulent products which confuses the consumer and dents trust in natural products.
  4. Cost-effective pricing: Although the demand for nutraceuticals is expected to rise considerably, high prices limit their adoption in the Indian market. Additionally, for India market entry, import tariffs need to be considered when determining final pricing of products.
  5. Negligible government health security: In India, government funded healthcare is very limited and there is major expenditure on individuals. Hence, the scope of insurance is huge.
  6. Tailoring products to domestic tastes and preferences: The Indian population's preferences include vegetarianism, Halal or Hindu dietary practices and traditional remedies reflecting social and cultural diversity. It's important for brands to be mindful that the demand for a product may vary according to dietary preference or religion.

A nutra-hub in the making?

India being an emerging market, players from U.S., Japan and European countries are venturing here and are ready to leverage the potential by launching their products and expanding their portfolio according to the needs of Indian consumers.

New entrants must leverage India’s chemistry and pharma expertise and natural base with e-commerce expertise which will lead them to be a sizable player in India.  

India being on the path of Aatmanirbhar (self-reliance), opportunities to develop this concept and forming an eco-system to boost this industry will be an additional benefit for those looking to enter.

Dr Smarta will be presenting an overview of 'Market opportuntities and challenges in India' as part of Vitafoods Asia Digital Week. Register now to acess this live presentation and discover other expert sessions for the nutraceutical industry. 

References:

  1. What are the key drivers of growth in India’s nutraceuticals industry?. https://yourstory.com/2020/02/india-health-nutraceuticals-industry-pharmaceuticalAccessed on 15.01.2021
  2. Six reasons why India is poised to be a global leader in nutraceuticals https://www.expresspharma.in/market-pharma/six-reasons-why-india-is-poised-to-be-a-global-leader-in-nutraceuticals/ Accessed on 15.01.2021
  3. Nutraceuticals market in India – challenges and trends https://www.biovoicenews.com/nutraceuticals-market-in-india-challenges-and-trends/ Accessed on 15.01.2021
  4. Nutraceuticals in India: A Challenging Opportunity https://www.reutersevents.com/pharma/column/nutraceuticals-india-challenging-opportunity Accessed on 15.01.2021
  5. Indian Nutra Sector: An Exploration of Opportunities & Challenges for the Expansion of the Sector in India http://bwhealthcareworld.businessworld.in/article/Indian-Nutra-Sector-An-Exploration-of-Opportunities-Challenges-for-the-Expansion-of-the-Sector-in-India/09-11-2020-340896/ Accessed on 15.01.2021

 

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