- Yashvanthraa Mohanraj, Founder & CEO, Progo Foods
- Amod Ashok Salgaonkar, Co-founder & COO, A2S2 Enterprises
The Indian subcontinent is currently experiencing the emergence of a novel plant-based food industry inclusive of plant-based dairy and its yogurt category. This is considered the new wave of a green revolution that is currently taking place around the globe and in India. These plant-based dairy and yogurt brands in India have identified gaps in the market that the animal-derived dairy incumbents have not addressed. The plant-based yogurt category has a handful of local players addressing the needs of their consumers. Increased investments can help scale up the production and distribution of the products and significantly empower brands to reach consumers across India, driving the market growth rate higher.
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India is the topmost producer and consumer of animal-derived dairy equating to 20 per cent of the world’s supply, estimated to be worth $144.5 billion, and it produced 188 million metric tonnes of milk in 2020, according to Invest India.
On the other hand, the Indian plant-based dairy sector is in its nascent stage, estimated to be around $21 million, projected to grow at a Compound Annual Growth Rate (CAGR) of 20.7 per cent, 1.4x the growth of the Indian animal-based dairy market, and reach $63.9 million by 2024. Moreover, the Good Food Institute’s “Smart Protein Market Size and Export Potential in India by 2030” report, estimates the Indian plant-based dairy industry in 2030 to range between a low growth scenario of $611 million to a high growth scenario of $1.3 billion.
The yogurt market is a subcategory of the curd market and is further segmented into conventional, set, stirred, Greek, frozen & drinkable yogurt among others. A report by the International Market Analysis Research and Consulting Group (IMARC) finds that the animal-based curd market in India reached Rs 1,184.3 billion ($15 million) in 2021 & is expected to grow at a CAGR of 15.24 per cent between 2022 and 2027 to reach Rs 2,782.9 billion ($35 million) by 2027. According to Prof. Mini Sheth, from the Department of Food and Nutrition, at The Maharaja Sayajirao University of Baroda, India’s animal-based yogurt market volume is currently estimated to be around 4 million litres and from IMARC’s report it is known that the flavoured and frozen yogurt market is expected to grow at a CAGR of 16.87 per cent between 2022 and 2027 to reach 75 million litres by 2027. The global plant-based yogurt market, inclusive of the Indian region, grew at a CAGR of 7.2 per cent between 2017 and 2021. It is estimated to reach $2.2 billion in 2022 and is expected to grow at a CAGR of 8.7 per cent during 2022 to 2032 to reach $5.1 billion in 2032, as per Future Market Insights.
The Raising Demand and Brand Launches of Plant-Based Dairy in India
Although India is the largest consumer of animal-based dairy that is commonly attributed to being a great source of dietary calcium, 1 in 2 people in India have Osteopenia, the weakening of bones due to a loss in Bone Mineral Density, and 1 in 5 suffer from Osteoporosis when bones become brittle and are prone to fractures, as per research published in the International Journal of Research in Orthopaedics. Interestingly, this industry has grown despite over 60 per cent of the population in India being lactose intolerant, according to recent research studies.
As consumers become increasingly conscious of how food impacts their life and their surroundings, the novel food industry, including the plant-based alternative sector in India, has continued to evolve. The Rakuten Insight survey on “Reasons why Indian consumers are choosing plant-based dairy alternatives” reveals that for 48 per cent of respondents there’s a growing concern about animal welfare, 44 per cent prefer a vegetarian or vegan diet, 42 per cent have beliefs that plant-based products are healthier, and for 29 per cent there’s a growing concern of the environmental impact of livestock farming. With this increased consumer awareness, more and more brands are entering the market to cater to this unrealised market demand.
Gaining consumer loyalty with their animal-derived Greek Yogurt, Epigamia in 2020, launched its line of Dairy-Free Coconut Yogurts in Unsweetened, Sweetened with Jaggery, and Mango flavours. Their key value proposition is the preservative-free and probiotic-rich nature of their products. One Good, a plant-based dairy brand, offers Peanut Curd along with other alternatives such as Cashew-Oat milk, Cheeses, and Butters. One Good has been instrumental in reaching the masses as 70 per cent of its sales come from first-time buyers of plant-based products. The key value proposition of One Good’s Peanut Curd is affordability and accessibility. Using large-scale distributors, Chetran Foods offers Mango Soy Yogurt across India at economical rates.
Moreover, other startups are local to their city of operations. 1ness ships their Cashew and Coconut yogurts only across Mumbai city. Another Mumbai-based brand, Palette Plant Based Foods, offers Cashew yogurts in flavours such as Original, Mango, and Banana that use real fruit pulp. Health on Plants, available in Bangalore city offers organic Peanut and Soy curds. Mupaal-Wegun, available in Chennai city, offers Cashew, Peanut, and Soy Curd varieties. Axia Foods based out of Pune offers high protein vegan yogurts in eco-friendly packaging. The protein content in their yogurt ranges between 8g and 27g in a single serving size of 150g. However, their pricing is extremely premium which may inhibit their growth, as consumers in India prioritise affordability immensely if a large population is taken into consideration. On the other hand, winners in the market are successfully able to drive down their prices as they benefit from economies of scale as done by One Good.
It is also worth noting that none of India’s larger animal-based dairy producers have forayed into plant-based dairy yet. Amul is an animal-derived dairy cooperative that is not just India’s, but the world’s largest producer of milk. If Amul and other heavy-weights of the Indian dairy industry, such as Mother Dairy and Milky Mist enter the plant-based yogurt market, cost-based competition would increase immensely. Economies of scale will help keep costs low for these companies and their extensive distribution network would allow their products to reach the entire Indian subcontinent. Yet, there is currently no indication that these companies are expanding to the plant-based dairy industry.
Plant-based yogurt ingredients & challenges faced by brands
Nuts & legumes such as coconuts, cashews, soybeans and peanuts are the most common hero ingredients of plant-based yogurt bases, as their milk provides healthy fats and their thick viscosity emulates the creamy mouth-feel, that is familiar to consumers of animal-derived dairy curd and yogurts. After extracting milk from the nuts and legumes, the plant-milk is then heat treated/pasteurised. Some brands add starches as thickeners, fruit extracts to add flavours, and live cultures and probiotics to ferment. Yogurts are also fortified with calcium along with vitamins and minerals, so consumers receive nutritional benefits that are on par with or more than when they consume animal-derived yogurts.
As plant-based yogurts are fermented using live cultures and probiotics, their short shelf-life challenges the brands to scale up and reach their consumers far from their manufacturing location. The average shelf-life of preservative-free plant-based yogurts in India, ranges between 21 and 30 days under refrigeration. Packaging of the products is also vital as the sturdier the packaging is, the less likelihood of leakage and damage to the products, when they reach the brand’s retail partners and consumers.
Investments in Indian Plant-based yogurt Industry
From the Good Food Institute’s global State of the Industry Report (2022), it is known that the Asia Pacific region inclusive of India, accounted for 25 deals in 2021, amounting to investments worth $220 million.
Currently, the plant-based industry in India has seen a boom in investments in plant-based meat brands. Nevertheless, the plant-based dairy inclusive of milk, chilled dessert, and yogurt categories have a comparatively higher growth projection and valuation than the plant-based meat categories, according to Future Market Insights. So, are we expecting a trend of increased investments into the alterative dairy market in India soon?
(Image source: PBFIA’s report on The Plant Based Revolution, Growth Opportunities and Winning Strategies in the Global and Indian Plant based market)
Plant-based dairy brands in India that have yogurt in their portfolio of products that have received funding are Epigamia and One Good. Drums Food International, the parent company of Epigamia, an animal-derived dairy brand that foraged into the plant-based dairy to offer consumers a range of coconut yogurts, has raised, according to Crunchbase, a total of $56.3 million in funding by investors such as Danone Manifesto Venture, Mousse Partners, Verlinvest, DSG Consumer Partners, and Bollywood celebrity Deepika Padukone to name a few. Their last funding was raised in a Series C round.
One Good, known for their star product Peanut Curd in India, has raised around $1.4 million in funding over two rounds, according to Crunchbase, to expand their alternative dairy product line from investors such as Sustainable Food Ventures (SFV), VegInvest Trust, and several other Indian Angel investors, as well as an AngelList syndicate Ice Breaker.
Regulatory framework
The Food Safety and Standards Authority of India (FSSAI) released a final regulation for vegan food this June 2022. FSSAI has made it compulsory for manufacturers of vegan products to display the specified Vegan logo by the authority after approval. This promotes easier recognition of the products and warrants traceability of the products up to their manufacturers. It is also mentioned that vegan food products cannot involve animal testing for any purpose unless regulated otherwise by the authority. Additionally, the packaging material used for the products needs to comply with the provisions of packaging regulations. The Food Business Operator (FBO) should safeguard the vegan products from any non-vegan substances and take necessary precautions encouraged by the Good Manufacturing Practices (GMP) during the production, processing, and distribution of vegan products. Thorough cleaning and comparable measures stated under the GMP need to be followed when the same production line of vegan products is shared with non-vegan products. The sellers of vegan products should ensure they store and display the products separately from non-vegan foods. Moreover, the regulations mention import and export rules wherein no vegan product should be imported without obtaining requisite regulatory certifications from the exporting countries. Furthermore, the regulation mentions that the FBO should comply with any other specifications put in place over time, to ensure the integrity of vegan food and ingredients.
Conclusion
The plant-based dairy industry is emerging and, on its way, to become India’s economic driver in the future. Market players are continuously entering the plant-based dairy industry to potentially benefit as early entrants in a market that has unmet wants and needs. Changing market trends and consumers gaining more awareness about how food affects one’s health, the environment, and animals, are the main drivers for this industry. Investments in this category can be seen predominantly from mission-aligned VC firms and investors who believe in the brand and the industry’s potential to yield high returns over time. Several industry-specific reports have indicated that the plant-based dairy and its yogurt category is projected to grow manifold in the coming years.