Innovations in ingredients business to fuel good growth in India

The exceptionally good growth in the Indian economy, coupled with a strong desire among the Indian consumers to maintain a healthy lifestyle, and the growing awareness of functional ingredients such as herbs, minerals, vitamins, omega fatty acids and probiotics is driving the Indian functional foods and beverages market.

While the market is still in its infancy, the demand for sports and energy drinks will increase, since these drinks are considered a fashion statement and are a socially accepted alternative to alcoholic drinks. Functional foods are also likely to witness an expanding consumer base due to their specific health benefits.

New analysis from Frost &Sullivan, finds that the market earned revenues of over $185 million in 2007 and estimates this to reach $1,161 million in 2012.

There are very few commercialized functional products in the Indian market presently. Nonetheless, with the large number of existing as well as upcoming retail outlets, this situation is likely to change, since consumers are becoming increasingly aware of a number of imported new-age health and well-being products.

The highest growth is likely in sub categories such as energy drinks, enhanced shelf stable juices, probiotics, and omega fortified food and beverages.

"However, it is difficult to convince Indian fast moving consumer goods (FMCG) companies to fortify their products with innovative ingredients," says Frost & Sullivan Research Analyst Aditi Paul.

"The vague regulatory and industry approval protocols for functional foods further dampen the speed of market growth."

Survival in the functional foods business requires cutting-edge R&D and high technical expertise, and most of the Indian companies do not invest enough in research.

Due to a lack of product differentiation in terms of ingredients, it becomes difficult to convince end users to fortify their products. However, this situation is likely to change in the near future.

"Even though much scientific evidence links various botanicals to health benefits, more research must be targeted to understand the mechanism. This will help manufacturers determine the efficacy of the product and the ingredients and come up with optimal dosage levels."

Eventually, this knowledge would help manufacturers develop tailor-designed products.

These foods and beverages, personalized to manage certain health conditions of specific people, are the future of the functional health foods market.

A competitive monitoring program can be set up to analyze and measure competitor activities across all strategic areas, which could reveal any new product development plans and technology evaluations.

Along with development work for individual consumers, companies must also focus innovation and research work on food industry trends, which include short-life products, pro-biotic/healthy/nutritional products, and anti-obesity products (low fat and others).