The share of health and wellness foods in the packaged food segment is growing fast – from 17 percent in 2002 to 21 percent in 2008. To tap into this growing segment, the packaged food market has introduced several products on the health and wellness (H&W) platform. The key to successful product development and launch, though, would be an understanding of the consumer’s perception of the product category.
The change in environment and lifestyle patterns has taken a toll on the physical and mental health of people globally. However, this change has also made people incorporate a healthy diet and avoid unhealthy foods, in addition to providing a thrust to the growth of health and wellness (H&W) food Products.
Defined as foods that provide “a distinct health benefit over their base category” or “have been specifically created to provide a distinct health or functional benefit”, health and wellness products are gradually becoming an important part of thepackaged food market. In fact, the global H&W foods market, estimated at $460 billion in FY’08, has grown at 7-8 percent per annum between 2002 and 2008.
A research conducted by Tata Strategic Management Group on products of the 20 largest global food companies indicates that the top benefits of H&W products are weight management, general health and fitness, digestive health, vitality (energy), heart health, blood pressure management and bone health. Ingredients such as vitamins E, zinc, fibre, stanols/sterols, prebiotics and probiotics are most commonly usedin H&W products. Others like beta-glucan, lycopene, beta-carotene are likely to gain popularity in the near future. While these ingredients have penetrated many food categories, several white spaces exist for food players to address, subject to technological advances and product Development.
H&W Market in India
In India, urbanisation, pollution, “junk” food culture and sedentary lifestyles are posing serious health concerns in the form of lifestyle diseases. According to the World Health Organization (WHO), India lost $8.7 billion due to coronary heart disease (CHD), stroke and diabetes in 2005. Going ahead, CHD and diabetes cases are projected to reach 66 mn and 46 mn, respectively, by 2015.
A survey conducted by Tata Strategic indicates that diabetes, heart problems and blood pressure are the top health concerns of consumers in urban India. The top three lifestyle habits considered harmful to health are lack of exercise, diet imbalance and work-related stress.
Acknowledging these concerns, Indian consumers are demonstrating higher consciousness towards food safety, hygiene, general well-being and usage of food as a nutritive and curative agent. As a result, the market for H&W foods is expanding at a exponential rate.
The H&W market in India was estimated at Rs 10,150 crore in FY’09, accounting for 11 percent of the packaged food and beverage market. Penetration of H&W products in foods is at 9 percent, compared to 15 percent for beverages. However, the large part of this market currently is contributed either by established categories like milk (low fat), edible oils and salt (iodised) or purely functional categories like milk based drinks.
The Growth Drivers
Currently in India, general health, weight control, child growth, heart health, digestion and energy are the dominant H&W product benefit platforms on which several companies have launched products to address consumer needs and garner market share. While industry players, across packaged food categories, are considering introductions in this space, not all of these products are likely to be successful. The key to successful product development and launch would be an understanding of the consumer’s perception of the product category.
Our analysis indicates that for the “not-so-healthy” categories, “better for you” variants, which reduce the harmful effects of the base category, are likely to be more successful. The degree of success would depend on the seriousness of the health concern and the avoidability or substitutability of the category. For products perceived as healthy, fortifications would be successful, depending on the potential of the category as a carrier for various ingredients as well as affordability.
As observed in the U.S. and the EU, there was a rampant misuse of the H&W platform with spurious claims. Subsequently, both these markets strengthened their regulatory framework to ensure that claims were backed by appropriate scientific evidence. In India, too, the Food Safety and Standards Act would need to be strengthened to introduce the requisite checks and balances to protect consumer interests as well as interests of players genuinely investing in R&D.
The Future Outlook
Though at a nascent stage, the H&W food market in India is poised for exponential growth. Our research indicates that the market is likely to grow at 23 percent per annum to reach Rs 35,700 crore in FY’15, driven by increased penetration of existing products and newer variants. While H&W foods are likely to grow at 24 percent annually, to reach Rs. 18,350 crore by FY’15 from Rs.5,050 crore in FY’09, H&W beverages are likely to grow at 22 percent annually to reach Rs.17,350 crore by FY’15 from Rs.5,150 crore in FY’09.
This market could achieve even higher growth at a much rapid pace with advances in technology, product development and government mandated fortifications of food products. The future would witness development of H&W as a megatrend that could be leveraged by Indian food and beverage companies to create large brands in India.