Health Supplements to India

Trends and opportunities

The market

India is experiencing a spate of lifestyle changes and a corresponding rise in lifestyle diseases, including diabetes, high blood pressure, obesity and cardiovascular problems. This has increased the demand for nutritional supplements among upper and middle-class consumers. Nutraceutical intake is growing in popularity as consumers look for products to boost energy and health. The demand for dietary supplements such as tablets, capsules, powders, liquids, soft caps and soft gels is increasing.

India’s age-old history of ayurvedic medicine means consumers are familiar with taking supplements to address health issues. Growing awareness of and increasing health concerns have led to a rise in the use of modern health supplements, especially natural health products.

The Indian nutraceuticals market was worth around US$4 billion in 2017 [1] and is expected to grow at 21% CAGR to US$10 billion by 2022. This will be fuelled by a significant 25% per annum growth in the functional beverages market, accompanied by similar potential growth in other segments. Dietary supplements account for more than 60% of this market. [2]

india_nutra

Source: India Nutraceutical Industry Report, Assocham

A report by the Associated Chambers of Commerce and Industry of India (Assocham) found that vitamins and minerals account for about 40% of the Indian dietary supplements market. This is followed by herbal supplements (30%), probiotics (10%), omega-3 fatty acids (5%), and proteins, amino acids and other essential elements (15%).

The growing popularity of health supplements can be attributed to consumers’ increased inclination towards health and nutrition. Indian consumers, predominantly the upper middle class, perceive nutraceuticals as alternatives to prescription drugs. Consumers are also considering the functional health benefits of these supplements for preventing disease. Furthermore, products for boosting energy and improving physical endurance and mental alertness are in high demand.

The health and food supplements market was dominated by a handful of foreign players such as Optimum Nutrition and Ultimate Nutrition, and a few local brands until four to five years ago. However, there has been growing interest from international brands like Holland and Barret, Amway Herbalife and GNC. Domestic brands such as Himalaya, Dabur and ON are offering a broad range of products.

Countries exporting health supplements to India include the US, the UK and Australia. Products are mostly sold online through domestic or cross-border channels. Some of the popular categories include protein-based nutrition products, multivitamins, omega fatty acids, mass gainers, antioxidants and weight loss foods.

Opportunities

Australian products enjoy a strong reputation among Indian consumers as premium quality, clean, green and safe due to Australia’s well-regulated environment.

Some of the key drivers of the health supplements market in India include the following.

Rising affluence of Indian consumers

Health and nutrition-conscious consumers believe supplements can balance out their unhealthy and unbalanced diets and improve energy levels for work. This growing segment is increasingly wealthy and internet-savvy. Much of the growth of this sector has been through e-commerce channels such as Amazon, Healthkart and Flipkart.

Increase in sports-related consumption

India’s growing interest in sports, not only cricket but badminton, football, tennis, wrestling, kabaddi and swimming, has led to increased consumption of sports supplements and nutraceuticals, especially sports drinks.

Strong interest in wellness

Indian consumers are conscious of the need to get fit, which has led to a rise in slimming centres and gyms in India. There are opportunities to market supplements that enhance wellness to this segment.

Growing online spending

India is a digitally inclined nation where online purchases have grown exponentially over the last five years. The number of internet users is expected to increase from 493.96 million as of March 2018 to 829 million by 2021. In the past three years, the number of online shoppers has increased sevenfold to 80 million. Rising internet penetration and e-commerce adoption will see continued increases in the number of online shoppers.

E-commerce is a growing channel for buying health supplements. Multiple factors are behind the rising adoption of e-commerce channels. These include the strong value proposition offered by online merchants, proliferating payment platforms, strengthening delivery logistics, and significant financial investment in the sector.

Shifting family structures

The extended Indian joint family has given way to nuclear households, defined as a couple or a single person, with or without children. The proportion of nuclear households, which has been on the rise during the past two decades, has reached 70% and is projected to increase to 74% by 2025. This ongoing shift is significant because nuclear households spend 20% to 30% more per capita than joint families, and are more likely to seek alternate forms of treatment or lifestyles. [3]

Challenges

Complex regulatory environment

India’s regulatory environment is complicated. Products require pre-market approval by the Food Safety and Standards Authority of India (FSSAI). However, interpretation and enforcement of regulations by FSSAI and by local state governments can be inconsistent.

Competitive environment

Health supplements face strong competition from international companies that have invested heavily in marketing and promotion, and local companies that provide competitive price points. India, unlike China, remains an ayurvedic and herbal products-driven market, and Indians support and trust local manufacturing. While international players need to pay high import duties, domestic health supplement manufacturers such as Himalaya, Elder Pharmaceuticals, Dabur, Zandu and Baidyanath can offer a wide range of health food supplements at very competitive prices.

High import tariffs

Health supplements imported into India face tariffs of between 30% and 150% depending on the product. Austrade can provide exact tariffs for specific products.

Lack of retail pharmacy chains

Over 90% of pharmacies in India are fragmented and unorganised neighbourhood stores. These stores normally do not sell imported health supplements and prefer offering locally manufactured supplements for a greater reach.

Tariffs, regulations and customs

Information on import tariffs for Australian health supplements can be found on the Department of Commerce’s Indian Trade Portal.

Examples of tariffs include:

Description HS Code Import Tariff Rate
Food preparations, in capsule or tablet form 2106 30–150% (depending on the product’s sub-HS code)
Other products containing vitamins or other products 3004 30%

Regulations

The FSSAI has developed Food Safety and Standards Regulations for importing nutritional supplements into India. Austrade has listed below some of the key rules that Australian food and nutrition companies need to know. The notifications cover the following broad categories of foods and carry detailed requirements about their composition, claims and labels.

These foods are:

  1. Health supplements
    The rules state health supplements may be used to supplement the diet of a person over the age of five and must not contain any food product covered elsewhere in the regulations. Each package must prominently display the words ‘Health supplement’ and ‘Not for medicinal use’.
  2. Nutraceuticals
    Nutraceuticals must provide a physiological benefit and help maintain good health. All product packaging must contain the word ‘nutraceutical’ and a quantity declaration of the ingredients. The packaging must also contain the warnings stipulated for supplements.
  3. Foods for special dietary use
    This does not include infant nutrition products, and instead refers to products that can satisfy dietary requirements in relation to low weight, obesity, pregnancy, high blood pressure and coeliac disease. No less than 25% and not more than 50% of the energy can come from protein, and no more than 30% from fat.
  4. Food for special medicinal purposes
    This includes food prepared for weight reduction and intended as a total replacement of a normal diet. It must be a formula food for a very low energy diet of between 450-800kcal and contain not less than 50g of protein. The full regulations can be found here.

Marketing your products and services

Market entry

Registering and exporting health supplements to India can be a difficult and time-consuming process. Australian exporters should work with an Indian agent or distributor to handle import procedures and registration. E-commerce is a rapidly growing channel as companies like Amazon and Walmart-owned Flipkart add more health supplements to their product portfolio. Many established importers would prefer Australian brands to commit resources in India by way of market promotion costs and listing fees with large pharmacy retailers and supermarket chains.

Ingredient sourcing from Australia

To avoid high tariff rates ranging between 30% and 150% for imported health supplements in capsule or tablet form, some Indian companies import Australian ingredients for further processing in India. There is a demand for high-quality and unique ingredients from Australia such as tea tree oil, fish oil, manuka honey and whey protein concentrate. The finished product is usually marketed to high-end consumers.

Distribution channels

Below are some distribution channels for health supplements.

distribution_channels

There are a number of ways to sell health supplements to consumers in India:

1. Direct selling

  • Direct selling accounts for 37.5% of the market as of 2017. [4]
  • Brands include Amway India and Herbalife India. [5]
  • The total market share of this channel has been significant because of the lack of organised retailers and doctors prescribing supplements for their patients

2. Pharmacies

  • Major pharmacy chains include Apollo Pharmacy, Med Plus, Fortis Healthworld and other branded para-pharmacy chain stores.
  • Major online pharmacy chains include NetMeds, Practo and 1Mg, which follow inventory-based models and have expressed interest in importing directly.

3. Internet retailing

  • Besides online pharmacies, Australian brands can target major e-commerce portals like Amazon, Flipkart and Healthkart.

4. Other retail channels

  • Specialty health and organic food stores
  • Supermarket chains
  • Exporters should consider developing an omni-channel strategy that is appropriate for the category.

Links and industry contacts

Government, trade and business

For more information on the health supplements market in India, exporting health supplements and locating distributors and partners , email Austrade India.

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[1]Assocham, India Nutraceutical Industry Report
[2]Assocham, India Nutraceutical Industry Report
[3] BCG, The New Indian: The Many Facets of a Changing Consumer
[4] Assocham, Indian Nutraceuticals Industry report , July 2018
[5] Assocham, Indian Nutraceuticals Industry report , July 2018


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