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Ajay Chandran

Ajay Chandran is Senior Director and Head of South Asia region at PureCircle, world’s largest and fast growing stevia sweetener and flavor Company.

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Changes afoot in Indian Food and Beverage Industry

Consumers globally and in India are demanding that they imbibe products that have ingredients which they can understand.

The food and beverage industry is undergoing change not seen in decades. Confluence of mega trends is leading to disruption and innovation that is set to change the industry and consumer choices for a long time to come.  The Food Service sector globally and in India is also adapting to these trends. I have had the opportunity to observe the global and Indian industry from a unique vantage point.

My general assessment is the industry is being impacted by the following trends that are expected to last a long time. Those brands that can understand and navigate these trends will reap the benefit in the highly attractive and fast growing Indian marketin the longer run:

Demand for natural, clean label ingredients: Consumers globally and in India are demanding that they imbibe products that have ingredients which they can understand. They are skeptical of ingredients that sound like they are manufactured in a plant with no basis of natural origin. In India, consumers are increasingly looking at ingredient panels to make informed choices.

Ingredients with positive functional benefit are more desired: Consumers are selecting products that have functional benefit. This is amply demonstrated by the rise of value added dairy, protein mixes, cold pressed juices and products with perceived holistic ingredients like Aloe Vera, Turmeric, Ashwagandha and severalAyurvedic ingredients. In short consumers are looking for higher protein, low fat, low calorie and benefits like antioxidants, vitamins etc. The trend is certainly more prevalent in SEC A and B but expectation is that this will percolate down to all sectors eventually.

Good manufacturing practices, safety,traceability and sustainability are now brass tacks: There have now been several major safety scares, perceived and real. Globally, examples like food scare at Chipotle that arose because of poor food handling, melamine content in milk scare in China and lately in India the challenges posed to product safety of a few MNC brands show that managing the supply chain with the highest quality and traceability down to farm and documenting it to meet regulatory demands is important. This is not possible unless the suppliers and buyers are working in tandem. Sustainability is another aspect that is important and has the power to add to the marketing communication while positively impacting society.

Upstart entrants and new innovationsare poised to disrupt the Industry: The millennials have an increasingly different outlook on consumption than previous generations. This is leading to a host of ways companies are catering to their demand. Many large companies especially in developed regions that have not adapted are suffering. These trends have presented enormous opportunities and leading beverage & food companies have faced tremendous innovation challenge set forth by up starts. Plant based meat alternatives,like those introduced by companies such as Impossible Foods,are set to revolutionize the fast food industry. Plant based protein like Pea, Lentilsand further Cricket flours (yes) are addressing the demand for clean label, health impactful foods. Interestingly large companies have decided to have bolt-on acquisitions or equity stakes to access not only the success but also the entrepreneurial culture of innovative and niche companies.

Adherence to regulatory norms is key: Nowhere is regulatory understanding more important than in the Indian subcontinent. Governments are still tweaking rules and laws to bring the industry at par with developed regimes in this diverse region with varying food practices. In this scenario it is important that companies perform their due diligence and work with partners across the supply chain who invests the resources in understanding the regulatory regime. The current regime at FSSAI is also listening to various stake holders- consumers, industry, medical practitioners- while framing laws but it is important to also look ahead as to what may come down the wire based on global trends. Sugar, fat, salt are all under scrutiny across the globe. The regimes globally have adopted various practices from on pack detailed communication traffic light system or adding punitive cess or taxeson entire categories and/or sugar content. It is happening in developing and developed countries alike.

To close, India is highly attractive emerging market in the throes of major changes. Brands that are willing to adapt and react to changes by partnering with suppliers and customers who invest in sustainability, regulator and consumer listening are well positioned to exploit the world’s soon to be third largest food and beverage market.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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