Last week Frost and Sullivan held a conference on fortified foods and supplements in Mumbai, focusing on how Indian players can leverage opportunities in the sector and discussing strategic issues affecting the sector.
Anand Rangachary, director of Frost and Sullivan, opened the summit. "If you look at the global market place, consumers are making more informed choices and paying greater attention to preventative healthcare. Naturally this has created a boom in the market for fortified foods and nutritional supplements," he said.
"While the Indian market itself is coming of age, companies in India cannot afford to miss out on the global boom. This the time to act, if we want a slice of the growing pie." The Indian food processing sector was worth US$65.5bn (c €51.2bn) in 2005, $20.6bn (€16bn) of which was value-added products. It is expected to grow by around 9 per cent per annum over the next five years.
The Indian government has introduced some incentives to help stimulate the market, such as exempting or reducing excise duties on products like ice-crease, meat and fish preparations, pectins, yeast and food mixes.
"These measures are expected to further boost the growth of the sector and provide opportunities for small and medium scale enterprises, which can provide nutritional ingredients for the food and beverage sector," wrote Aparna Singh, program manager of Frost's Indian chemical, material and food practice in a recent paper giving an overview of the Indian food industry.
Despite these incentives, it seems a number of challenges to the full development of the fortified foods and supplements sector exist.
In particular, nutritional supplements have yet to be embraced by consumers, since many do not see the need for them. Supplements are seen as a "grey area", said Singh, as they sit somewhere between foods and pharmaceuticals but without their own regulatory framework.
"Such a nebulous situation has also prevailed in other Asian markets," she said, "where it has created confusion for both marketers and consumers as to what ingredients and claims could be marketed or trusted."
In some parts of the continent efforts have been made to remedy this - for instance, the Health Supplements Industry Association of Singapore has introduced a code of ethics for members, and last week organisations in South East Asian nations (ASEAN) announced the formation of an umbrella body aimed at providing industry input into regional regulations that have been slated to be drawn up before 2010.
When it comes to food fortification, consumer brands must compete not only with each other but with traditional Indian snacks and breakfast foods, which are generally considered to be more nutritious.
This factor led Singh to say: "While nutritional ingredients and health foods are an attractive means to bring consumers to the processed foods area, products that complement rather than seek to substitute the diet stand a better chance of survival."
By the same vein, it is a tricky undertaking to transpose some of the ingredients popular in the West to an Indian context, such as essential fatty acids and probiotics, since dairy and yoghurts already form an important part of the Indian diet, and shop-bought yoghurts are still quite new on the scene.
Another key consideration is taste, as companies need to be aware of Indian preferences and adjust their products accordingly.
So where do the opportunities lie?
Singh pinpointed branded atta or wheat flour as one area that has attracted fortification in order to justify the price hike when compared with wheat bought from local mills; and edible oil is being used as a vehicle for added vitamins A and D in a bid to address deficiencies.
Protein fortification also has the "potential to grow", she said - particularly soya.
"Disease prevention is… a segment that is poised to grow in the Indian market, given the changes in lifestyle and the increasing occurrence of heart disease, diabetes, stress and obesity, especially among urban middle and upper class consumers."This is an area into which edible oils, especially those enriched with essential fatty acids and cholesterol-reducing nutrients, have already started to make inroads - as have herbal supplements, leveraging against cholesterol concerns and diabetes.