What comes to your mind when we say Dymatize Elite? Or Sci-MX and Muscle Freak? No, they are not a line-up of punk rock bands slated to perform in India next. These are a bunch of bodybuilding supplements and muscle fitness products that line the reception area shelves at your friendly neighbourhood gym or have started popping up on the shelves of your local pharmacy. As Indians become conscious about their health and how they look and feel, the market for dietary supplements, sports nutrition products, and weight loss products that are broadly clubbed under nutraceuticals is beginning to pick up speed.
Pegged at Rs 6,500 crore during 2010-11 (according to Cygnus Business Consulting and Research), the nutraceutical market has been growing at a compound annual growth rate of 20 per cent for the last three years. This is just about 2 per cent of the global market for nutraceuticals. The opportunity is apparent. The US and Europe are the largest markets for such products accounting to 36 per cent and 25 per cent respectively. Says Naveen Anand, senior vice-president, marketing, Amway, “This category was virtually non-existent before the year 2000. Continuous education of customers by various players has helped build trust and fast acceptance of such products in recent years.”
The vast untapped opportunity has urged a range of companies to throw their hats into the ring. The trend towards preventive healthcare has seen pharma companies — such as Novartis, GlaxoSmithKline, Cadila Healthcare, to name a few — to diversify into the production of nutraceuticals. Then there are fast moving consumer goods companies like Cadbury India and Dabur that have had a presence in the market with a slew of supplements and additives. On the other end of the spectrum are companies that specialise in ayurvedic/herbal health care products, like The Himalaya Drug Company, that have upped the ante looking at ways to make their products more relevant and consumers aware. The rising incidence of certain diet-related health problems, including obesity, chronic indigestion and cardiac problems, have also given this segment a quick leg up. (Click here for graphic)
Nutraceuticals, however, are different from lifestyle drugs. As Philipe Haydon, CEO, pharmaceuticals, The Himalaya Drug Company, puts it, “Conditions like premature baldness, wrinkles, acne, sexual health problems that are not life-threatening are also termed as lifestyle disorders and treated by lifestyle drugs. Then there are several serious health conditions that may arise out of certain lifestyle behaviour. These include obesity, stress, hypertension, cholesterol, all of which can lead to life-threatening conditions.”
These conditions are driven by a range of lifestyle factors like physical inactivity, a salt-rich diet rich in fatty foods and smoking. The growing incidence of diet-related health problems, including obesity, cardiac problems and chronic indigestion also have resulted in a great demand for vitamins and dietary supplements in recent years.
Big opportunity
The nutraceutical market broadly consists of two major segments — food supplements and vitamins and mineral supplements, the former constituting over 60 per cent of the market and the rest 40 per cent comes from the latter. Interestingly, unlike most developed countries, there is still no water-tight demarcation as far as retailing of nutraceuticals, lifestyle drugs and regular drugs are concerned in India. Among nutraceuticals, vitamins and mineral supplements have continued to be marketed and distributed like prescription drugs in India, as the general awareness levels are still low. Food supplements, on the other hand, are marketed and distributed more like FMCGs, a reason why they are also clubbed as fast moving healthcare goods by the various players.
Explains ORS Rao, director, Cygnus Business Consulting and Research, “For nutraceuticals, marketers follow end-user demographic market segmentation (like infants, children, youngsters, women, senior citizens etc) and the products are positioned for each of these segments, and the marketing messages revolve around benefits to the end users (like boosting energy, body health — bones, joints, weight management). This category of products has opened up new markets for companies like GSK Consumer Healthcare, which has successfully extended brand Horlicks into food categories such as biscuits, noodles, cereal bars and oats.”
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While many of the players in this segment have been around for years now, what has changed is the way they are marketed and communicated to end users. The promotion of brands such as Revital and Nutrigo through the mass media has contributed to increasing overall consumer awareness regarding these well-being supplements and the trickle-down effect has benefited brands that have not been proactive in their promotions and marketing.
A leading player in the nutraceutical market, Amway attributes its success in India to its business model and vast network. Being a direct selling company, it has to rely on one-to-one interaction with potential consumers and has used this as an opportunity for consumer education as well. Amway’s network of over 100 offices and warehouses across the country provide support to distributors in more than 3,000 towns. Television advertising supported by print, however, remains a critical pillar of the company’s marketing strategy. Says Anand, “We have studied the evolving consumer needs and have introduced products that cater to different lifestyles and life-stages. Personalised selling has helped us build trust among customers.”
For Abbott Nutrition, range has been a key pillar of growth. Abbott Nutrition offers a range of nutritional products for children, infants, adults, people with diabetes, pregnant and breast-feeding mothers. The products are marketed by its team of sales and medical representatives who leave samples with doctors and try to generate demand through prescriptions only.
Rehan Khan, managing director, Abbott Nutrition, says, “Abbott has been developing and marketing science-based nutritional products to support growth, health and wellness of people of all age groups. The products are available through the retailers across the country. Our representatives also reach out to doctors and physicians as well as hospitals. We also have customer outreach programmes such as nutrition camps and awareness programmes like the Abbott SureMoms programme.”
Physician referral is also the preferred route for The Himalaya Drug Company. Says Haydon, “We do not advertise our medicinal range of products directly to consumers. All our therapeutic products, including our range of drugs for lifestyle-related health problems, are ethically promoted. This means, they are promoted exclusively to doctors. Patients suffering from lifestyle disorders first consult their doctors instead of self-medication, since these disorders can develop into serious health conditions. We discourage the pill popping culture and want patients to make an informed choice with the help of their physician.”
Advertising takes a backstage with the Baidyanath Group as well. Says Vikrum Baidyanath, CEO and president, Baidyanath Group, “We have an established market and people are aware of Baidyanath products. We don’t believe in a great amount of multimedia advertising.”
Silver lining
While consumer awareness of nutraceuticals remains low, analysts say things are changing for the better. Atul Ahuja, vice-president, retail, Apollo Pharmacy, says, “What pharma and nutraceutical companies need to focus on now is product innovation. Remember that Indians have great faith in doctors — if they say something we go for it. Things will begin to change when we make these a part of our daily regime. For that players have to work for making them fashionable also. And that is beginning to happen now.” He says because the base is still very small, retailers enjoy a slightly higher profit margins in the segment, thanks to companies looking for a bit of retail push.
Even though nutraceutical products contribute only around 5 per cent of the sales of Religare Wellness, this organised retail player’s lifestyle supplements span a whole range of products from imported lines of global brands to home-grown brands and prescribed labels that have a strong over-the-counter franchise. “Many of the domestic brands that were traditionally prescribed by doctors have crossed over and these companies are building consumer equity with above-the-line activities. Brands like Revital and Supractiv are very active not only out-of-store but also in engaging customers in-store through product placement and shelf management. We also have several imported lines like Vitamin Shoppe, Viridian, Ascenta that provide a complete assortment for the well-travelled Indian consumer,” says Rahul Chadha, CEO, Religare Wellness.
Lifestyle drugs and nutraceuticals contribute around 38 per cent of the sales of pharmacy chain Guardian Lifecare that imports a substantial chunk of the products on offer. Guardian is the India master franchisee for GNC, one of the largest selling brands of vitamins and dietary supplements in the US. “In the year 2006-07, the average sales of GNC in India was about Rs 4 lakh in a year. In the last five years, the sales of GNC has increased exponentially, and for the year 2010-11 it was more than Rs 1 crore on an average every month,” says Ashutosh Garg, chairman and managing director, Guardian Lifecare.
On their part, online healthcare companies are also gearing up to grab a share of the growing pie. Some online health stores are also addressing the needs of consumers with assistance through interactions with expert nutritionists, with better information and through quick distribution. Prashant Tandon and Sameer Maheshwari, co-founders of HealthKart.com, say that internet penetration and consumer awareness are both important to drive the growth of online healthcare retail in India. “Healthcare is one industry where we see a huge knowledge gap among consumers,” says Tandon. Adds Maheshwari, “There is a need for consumer education to allow them to make the right choices. The internet, as a medium of information, will play a major role in driving consumer awareness.” Pointing at a brighter future, they say that 45 per cent of the company’s sales come from cities other than the top 10 cities of India.