
Nutraceuticals, dietary supplements and functional foods market is on a superfast growth orbit. With increasing health awareness among people to maintain good health and take preventive measure for diseases, the market is being fuelled with high growth potential. The contemporary lifestyle categorised by growing stress levels, poor eating habits and lack of exercise has increased the level of health disorders around the world. Problems like obesity, blood sugar, digestive disorders and heart ailments have become very common among the people today.
Nutraceuticals, functional food & drinks and dietary supplements are catergorised as modern day ingredients. People are becoming aware of these issues and are trying various means like nutraceuticals, functional food & drinks and dietary supplements to fight health problems. The market for these products is strongly accelerating around the world in recent years and India is one country that is bagging on it in lump some. Today the market is flooded with them and are fast moving from the shelves. The irony here is that most of the consumers, including the educated class, are quite unaware of what they exactly are called. Most of them might be consuming a protein drink and running to gym on daily basis with the sole knowledge that they are good for keeping the body in shape. Little do most of them know that they are consuming a functional beverage.
A vital point to be noted here is that the terms nutraceutical, dietary supplement and functional food & beverages are being commonly used in marketing but there is no regulatory definition. The regulatory bodies are yet to define nutraceuticals, functional foods and dietary supplements. The defining of the same has proved to be a herculean task earlier due to the interchangeable functions of the three and has resulted in several controversies and instigated debates.
Nutraceuticals
Nutraceutical, a term combining the words “nutrition” and “pharmaceutical”, is a food or food product that provides health and medical benefits, including the prevention and treatment of disease.
Well, when the appellate authorities in the country are struggling to know what a nutraceutical actually is, the struggle of the respondents to explain it theoretically was anticipated.
The term nutraceutical was coined in the 1990s by Dr Stephen DeFelice. For him, “A nutraceutical is any substance that is a food or a part of a food and provides medical or health benefits, including the prevention and treatment of disease.”

Traditionally the nutraceutical was contained in a medicinal format such as a capsule, tablet or powder in a prescribed dose. Nutraceuticals can be broadly categorised as products which are extracted from natural sources (nature-like) or manufactured synthetically (man-made), which supplement the diet to provide nutrition over and above regular food and help prevent nutrition related disorders.
With more than 40 per cent deaths in developing countries attributable to risk factors linked to nutrition, nutraceutical is gaining momentum. Nutraceuticals is today one of the booming markets in India. This promising term reflects lucrative market opportunities for domestic as well as international pharmaceutical and nutraceutical companies. Nutraceutical has a spectacular annual growth rate of 25 % in Indian healthcare market.
In the global nutraceuticals market of $117 billion (Rs 547 billion), India's share is less than one per cent and is estimated to be around Rs 44 billion in size. US bags the largest share with 36 per cent share in consumption. China remains the largest producer of nutraceuticals.
However, India's growth rate for consumption of nutraceuticals is surprisingly at the rate of 18% for the last three years, functional foods and beverages being the driving forces. The global industry though grew at 7% CAGR. China, Japan, Korea and Taiwan were the leading Asian countries where the awareness and consumption of nutraceuticals were high. The potential Indian market for nutraceuticals is estimated to be at least two to four times than the current market size ( between Rs 89 billion and Rs 172 billion).
Companies leading the way in this Indian market include Sami Labs, British Biologicals, Plethico Pharmaceuticals, Parry’s India, Elder Pharma, Ranbaxy, Raptakos, Paras, Ce Chem and Tablets India, although several global pharmaceutical companies also dabble in India’s nutraceutical market. Companies competing in this market are finding a competitive edge in the areas of branding, pricing, promotional activities and channel partners.
Nutrients, herbals and dietary supplements are major constituents of nutraceuticals which make them instrumental in maintaining health, act against various disease conditions and thus promote the quality of life. They are convenient for today's lifestyle and are natural and bioactive chemical compounds that contain health promoting and disease preventing properties.
Functional food & beverage
According to the wikipedia, functional foods are designed to allow consumers to eat enriched foods close to their natural state, rather than by taking dietary supplements manufactured in liquid or capsule form. Functional foods have been either enriched or fortified, a process called nutrification. This practice restores the nutrient content in a food back to similar levels from before the food was processed. Sometimes, additional complementary nutrients are added, such as vitamin D to milk.
The category of functional drinks include sports drinks, energy drinks, fortified beverages which cover health and wellness drinks, nutraceutical drinks and enriched drinks, in addition to herbal drinks.
Fortified beverages are drinks that have vitamins and minerals. There are also a range of sports drinks, energy drinks and nutraceuticals which are targeted at specific medical or health benefits. The development of these products are now becoming the focus of many companies.
Functional food & drinks are known to help digestion, calm nerves and detox. There are several medicinal drinks which have been popularised over the years. These are appetite enhancers, digestive aids and sleep restorers. With the importance of the good health practices, pharma and dedicated nutraceutical companies are promoting drinks which are viewed as functional and convenient to the consumers.
The leading functional drinks in the country are health drinks like Horlicks, Bournvita, drinking chocolate, herbal teas and herbal preparations which are known to provide the required nourishment.
Despite a small base, the functional food & beverages market is poised for exponential growth in the forthcoming years as mentioned before, disease prevention and health & wellness are the focus areas for market participants and consumers in India and worldwide. According to a report by Frost & Sullivan, the malted health beverages market is currently worth Rs 2000 crore with strong double digit growth rates. This segment is poised for wide expansion in terms of both product and infrastructure. The FMCG giants have now started to develop functional foods, which are not of conventional origin: for instance, beverages that are sugar-free, low in cholesterol, foods such as granola bars.
The domestic malted health beverage and overall functional foods market is expected to witness exponential growth in the next 4-5 years with increasing products available off-the shelf, new entrants in the form of FMCG multinationals and domestic business groups venturing into the market and also an increasing consumer base. There is a distinct change in the regulatory space as well with organizations such as Foods Safety and Standards Act (FSSAI) framing set rules for governing production, labeling, packaging and marketing of such new age products. Increasing consumer awareness coupled with market development efforts from manufacturers and government agencies is likely to pave way for better growth in this space. Sports drinks also come under the category of functional drinks.
Dietary SupplementsA dietary supplement, also known as food supplement or nutritional supplement, is a preparation intended to supplement the diet and provide nutrients, such as vitamins, minerals, fiber, fatty acids, or amino acids, that may be missing or may not be consumed in sufficient quantity in a person's diet.
Dietary supplements can also be extracts or concentrates, and may be found in many forms such as tablets, capsules, softgels, gelcaps, liquids, or powders.”
Dietary supplements do not have to be approved by the US Food and Drug Administration (FDA) before marketing. Although supplements claim to provide health benefits, products usually include a label that says: “These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.”
Many companies like Amway, Herbalife, Modicare, etc. manufacture and sell dietary supplements. Many hardcore pharmaceutical companies are also into the business of manufacturing and sale of food supplements.
The companies claim that normal food intake of every individual does not fulfill the body needs and make a complete diet. According to a dealer of Herbalife, who does not wish to be named, states, “with the fast moving world and increase in stress level, people hold a very poor diet. These dietary supplements which are easy to make, is equal to a complete diet. We have the temptation to eat more even after finishing a meal is due to the reason that the body hasn't received necessary nutrition. People just get into a fast food joint and pick up a burger or a packet of wafers to fill the hunger. But the craving doesn't stop, this is due to the deficiency of nutrients in the body. The only solution to this is eating a complete diet full of nutrition and the easy way is taking food supplements.”
The Indian market for nutraceuticals, dietary supplements and functional food & beverages is dominated primarily by pharmaceutical and FMCG companies with very few pure play nutraceutical companies. Pharmaceutical and FMCG players active in the nutraceuticals space have diversified by introducing product extensions and developing variants under existing brand names. Many new players have announced aggressive investment plans.
Functional foods constitute 23.9%, functional beverages 6% and dietary supplements 14%, presently.
Considerable amount of raw materials that run into making these products is contributed by India. A number of eminent research institutions in India are marching forward to add new ranges of products into this industry. This promising term reflects lucrative market opportunities for domestic as well as international pharmaceutical and nutraceutical companies.
Such products may range from isolated nutrients, dietary supplements and specific diets to genetically engineered foods, herbal products, and processed foods such as cereals, soups, and beverages.
With recent breakthroughs in cellular-level nutraceuticals agents, researchers, and medical practitioners are developing templates for integrating assessing and assessing information from clinical studies on complementary and alternative therapies into responsible medical practice.
Competition in the industry is driven by several factors such as price, safety, efficacy, packaging and brand loyalty, among others. With growing similarity among products and formulations, maintaining consumer brand loyalty is emerging as a critical yet complex issue. Global nutraceuticals market is characterised by intense competitive conditions, as a result of which consolidation activity has gathered momentum. Consequently, large pharmaceutical companies are taking over smaller and regional players to boost their position in the intensely competitive market.
Affordability, awareness and accessibilty are the major factors that depend on consumption of nutraceuticals in any country. With India's major chunk of population striving to win even their daily bread, it can be predicted that a number of years will have to pass before nutraceuticals become a household name in the country.
Challenges:In the global market, there are significant product quality issues. The products from the international market may claim to use organic or exotic ingredients, yet the lack of regulation may compromise the safety and effectiveness of products. Companies looking to create a wide profit margin may create unregulated products overseas with low-quality or ineffective ingredients.
The challenges before the sector is the lack of regulations and clear-cut guidelines for development of these sectors. There is a need to provide adequate, reliable clinical data for the health benefits to enable the formulators to have a label claim. In addition, there is a serious need to create an awareness about the health benefits of the ingredients.
Opportunities:In order to tap a huge latent potential market and to pave the way for nutraceuticals to supplement India's quality healthcare agenda, the government should lay down rules to govern quality and claims of nutraceutical products. To ensure implementation of these rules, the government should ensure availability of resources. Encouraging R&D in the field of nutrition and deploying PPP models to serve needs of the undernourished segment of population will further boost sector growth.
The private sector as well has a significant role to play. Companies should focus on developing customer focused products addressing specific needs of different consumer segments. It is important for players to create product differentiation by credibility building and/ or lowering prices of products. Product promotion to increase awareness of the benefits of nutraceuticals through advertising and physician.