Low labour and input costs attract investments

Innovation is the key in Indian nutraceutical market and we can see a number of new products coming into the market every now and then. Which of them become success stories and which of them get back into obscurity is a matter of concern for many organizations as the expenses and investments involved in product innovation runs into crores of rupees and the Indian nutraceutical manufacturers need to budget for these investments and costs if they are to succeed in the market on a long-term basis.

In India, product innovation is happening in both public and private sector in the field of human and child nutrition on a regular basis and in animal nutrition on not so regular basis. Leading multinational companies are focusing on the development of nutrition products for maternal and child nutrition and diabetes care. Some product innovations are taking place in India in the field of high purity powders of Omega-3 fatty acids.

The Indian consumers’ preference is increasing for clean, safe, hygienic nutritious and properly packed, labeled and presentable food products including eggs. The demand for branded or specialty eggs is fast growing at an estimated rate of 40%-50% per annum. Branded or specialty eggs offer innovative products to the consumer. These range from eggs that are low in cholesterol, high in Folate content, to those fortified with vitamins, protein, iron and other every day essential nutrients.

Large multinational corporations like DSM and Abbott have invested in creating their own nutritional products manufacturing facilities in Gujarat during 2014 and this trend will continue with more investments coming in the Indian nutritional products market due to cheaper labour and input costs in Gujarat (hub of dairy products) in the vicinity. India can also look forward to becoming an R&D hub for MNC companies due to availability of cheaper technical manpower and availability of engineers and scientists as compared to Europe or America.

Research or product innovation is a time consuming process. Apart from investment in R&D infrastructure, the operating costs of research centre is phenomenally high as compared to the innovation output they yield between 5 to 10 years and hence it is a costly affair for most of the companies to afford.

There are some innovative Indian companies like Zeon Life Sciences which offers customised research and manufacturing facility for nutritional products at their facility in Paonta Sahib in Himachal Pradesh. Many leading companies are now outsourcing their nutritional products including research and packaging. This trend is more cost effective for large companies and gives faster returns on investments rather than investing in own research and manufacturing activity.

Another innovative company is Delhi-based Healthy Human Nutrition, which offers a range of healthcare products, which will positively contribute to health and wellness making better lifestyle and helping consumer to lead a healthier, fitter and more rewarding life. It provides serious, responsible healthcare products for growth, power, performance, endurance, weight management and well-being.

A host of home grown food brands are testing the mettle of larger, more established, players in the country by cutting costs through innovation and offering wider choice to consumers. Companies such as Hector Beverages, Prataap Snacks, Amalgam Speciality Foods and Balan Natural Food are taking on the brand and money power of some established players. These food and beverage consumer ventures have launched brands in categories like energy drinks, potato chips, seasoning and fruit juices. This shows that Indian food processing companies are also becoming more conscious about providing hygienic and nutritional products at lower costs to the consumer through product innovation and research matching the local palate.

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