Why Is Plant-based Food Industry Snail-paced?

The current plant-based milk and meat markets in India are estimated to be $20 million and $30-40 million, respectively. Access to plant-based foods is growing regionally and beyond major cities.

Regionally, plant-based foods are already fairly well-established in Delhi, Telangana, Maharashtra, Haryana, and Karnataka. There is growing interest and availability in Andhra Pradesh, Punjab, Tamil Nadu, Uttar Pradesh, and West Bengal. This is because many plant-based products require cold chains, including some which require deep freeze temperatures, access is limited by supporting infrastructure. As cold chain infrastructure expands and the number of ambient-temperature plant-based foods on the market grows, consumer access will increase significantly.

“Hundreds of small and medium enterprises, and FMCGs have already entered the plant-based food market in India, including plant-based versions of meat, eggs, shellfish, dairy, and pet meals. The expansion of the plant-based foods business presents a significant potential for farmers to increase their income, and address food insecurity, climate change challenges, hunger, and public health hazards. Furthermore, given India’s varied high-value crop output, innovative food industry, research institutes, considerable R&D successes, and increasing venture capital sector, we have a big chance to assist consumers all over the world to consume sustainably”, says Sanjay Sethi, Executive Director, Plant Based Foods Industry Association (PBFIA).

Becoming a thriving plant-based food company is no easy task. With the presence of stiff competition, courtesy the presence of a plethora of market players, there is a heightened need to sustain growth by providing consistent financial incentives. This is where venture capital comes in, especially when it comes to funding fledgling businesses. Investors are becoming increasingly interested, given the potential of wide outreach of the plant-based food industry in India.

Thus, several startups have mushroomed in the plant based market such as GoodDot Enterprises, BlueTribe, Ahimsa Food, Vegeta Gold, Vezlay, Vegitein Vegan Eatery, EVO who are predominantly using the foodservice and ecommerce channels in India. Entry of large ingredient companies such as ADM, Kerry in the Indian plant based space is a welcoming signal of the rapid innovations expected in the ingredients front. However, sourcing, production and regulation of plant protein ingredients pose great challenges.

Move over insect protein 

While some ingredients are mainstream and mature in their applications such as soya and peas owing to their availability, digestibility and protein density and neutral taste profile, plant based brand owners are under pressure to increase diversity of their ingredients. Ingredient suppliers, on the other hand, are fast expanding their plant protein portfolio to include novel plant protein ingredients that include additional claims such as allergen-free, organic, non-GMO, high fibre, high protein among others. 

According to a report by Future Market Insights, soya, wheat and pea-based protein comprise 95 per cent of the overall plant protein market. Demand for fava, lentil, chia and corn is expected to rise even though they have a smaller market share today. Despite a rising interest in insect protein and cultured meat, the market will need more than a decade to grow into a fully commercialised one with multiple ingredients. Thus, plant-based proteins remain the most attractive with low production cost, high market penetration and strong innovation.

Given the unique mix of natural, social, and economic advantages, India has the potential to play a prominent role on a global stage by growing and processing plant-based ingredients and building a thriving export market. India is one of the top five producers of core plant proteins: chickpeas, lentils, millet, peas, rice, soybeans, and wheat. 

According to Abhishek Sinha, Co-Founder & Chief Executive Officer, GoodDot, “India can be a hub for plant based food products since there is an abundance of protein ingredient sources available. But the difficulty lies in extracting, isolating, purifying the proteins from crops like barley, wheat, millets, jowar, maize etc.”

Compared to the size of the manufacturing facilities for animal-based meat products, plant-based meat players’ facilities resemble boutiques. As a result, plant-based meat will remain a premium product until costs are reduced, and this will also hinder brands from achieving economies of scale.

Further, regulatory approval of novel ingredients and debates on labelling have been complicating factors for the sector’s growth. For instance, FSSAI says that Indian manufacturers are not allowed to use dairy words, whereas the European Court has lifted the restriction. So, how should the industry deal with such situations?

As a result, industry associations are seeking clarification from the government to streamline the policy measures for plant based food production- both for domestic growth and for exports.

Government’s got the Right Playbook 

According to the industry, the plant-based foods sector in India would significantly benefit from the creation of a task force with collaboration between the Ministry of Food Processing Industries (MoFPI), Agricultural and Processed Food Products Export Development Authority (APEDA), and the Plant Based Foods Industry Association (PBFIA).

The government should also invest in skill development programmes as an efficient and equitable means to ensure more participation of individuals in the plant-based foods sector.

Additionally, PBFIA is of the opinion that the Central Government should prioritise funding to support the critical work of FSSAI specifically related to plant-based foods. Efficiency in this regard will minimise time between R&D and return on investment, fostering more rapid and confident sector growth.

“By minimising compliance, we can quickly develop this industry. I am urging the need to develop the scientific parameters and supply chains that will allow us to showcase the Indian cuisine culture that has represented us for centuries”, says Prahlad Singh Patel, Minister of State for Food Processing Industries.

As per a recent analysis by Good Food Institute India and Deloitte, the export market for India’s plant-based sector is projected to be significant by 2030, though the plant-based meat market is expected to be larger than that of milk. The plant-based meat market is projected to range from $283 million to $880 million (Rs 2194 crore to Rs 6824 crore), whereas the plant-based milk market is projected to range from $59 million to $244 million (Rs 459 crore to Rs 1889 crore) and the plant-based egg market will range from $34 million to $81 million (Rs 266 crore to Rs 631 crore).

“Our modelling, carried out with Deloitte India, indicates that the export market for just plant-based meat, egg, and dairy finished products could be nearly Rs 9,000 crore by 2030, with additional major opportunities in value-added ingredients such as functional protein isolates, flours, and starches. Smart protein could therefore be the next great pillar of an emerging green economy in India, making us the protein producers for the world. But to make this vision a reality and compete with countries like Australia and Canada, major investment in R&D, talent development, entrepreneurship, infrastructure, and agri-integration is the order of the day”, says Varun Deshpande, Managing Director, Good Food Institute India.

Keeping pace with these market trends, companies are approaching APEDA to finalise standards and guidelines for promoting export of plant-based food products, country wise and in general.  

APEDA has in turn responded with a trade promotion strategy focusing on establishing technology banks for vegan products, compilation of data pertaining to international usage of vegan products, compilation of traditional and latest package of practices pertaining to veganism, trace net for ingredients supply chain, implementation of blockchain etc.

“Being a food surplus production country, India has a number of good quality protein raw materials such as chickpeas, soya, wheat, millets and many more which can serve as an excellent alternative to the animal products, allowing not only product diversification from former agricultural crops but will also contribute towards a sustainable environment. APEDA is pleased to be a part of this initiative which will enable India to make its sound position as a quality and reliable supplier in the global market”, says Dr M Angamuthu, Chairman, Agricultural and Processed Food Products Export Development Authority.

With the Government of India being an important and effective supporter of the food processing sector, positive results might be in the offing very soon. As it is rightly said, growth can be a difficult process and like any industry it is important to understand the hurdles and how to successfully overcome those for transformative growth.

Dr Manbeena Chawla

(manbeena.chawla@mmactiv.com)

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