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Consumer profile – India

June 2019

Executive summary

India is the second-most populous country in the world with 1.3 billion people. India is situated within the central northern coast of the Indian Ocean, with Pakistan located to its west, Bhutan and Nepal to its northern borders, while Myanmar and Bangladesh occupy the eastern borders.

The capital of India is the city of New Delhi, an urban district of Delhi, with 11.5 million people in 2018. In 2018, there were 871.4 million people or 66% of the population living in rural areas, and is expected to represent 884.7 million people or 64% by 2023.

In 2018, India had an unemployment rate of 4.9%. A significant gender gap of 47.1 percentage points existed in male and female employment rates that year, as the Indian patriarchal society prizes traditional female roles such as childrearing and homemaking.

In 2018, total consumer expenditure per capita was US$1,235.6, out of which 29.0% was spent on food and 1.0% was spent on both alcoholic drinks and non-alcoholic beverages. Total retail sales of packaged food in 2018 were US$76.3 billion, and registered a compound annual growth rate (CAGR) of 18% from total retail sales of US$39.2 billion reported in 2014.

Traditional retailers known as 'kiranas' continue to provide consumers with convenience and variety in local produce given their proximity within urban and rural neighbourhoods. Modern supermarkets/hypermarkets and the recent emergence of online retailers like Amazon India, BigBasket and Flipkart, offer consumers convenience, variety in products and labels with competitive pricing and effective promotions and enable the online/super/hypermarket ability to meet and provide for the increasing demand for health and wellness (H&W) foods.

Key demographic indicators

India's total population in 2018 was 1.3 billion people. According to Euromonitor, there were 449.7 million people, representing 34% of the population living in urban areas in 2018 and this is expected to represent 36% of the population at 505.7 million people by 2023. Conversely, in 2018, there were 871.4 million people or 66% of the population living in rural areas and is expected to represent 884.7 million people or 64% of the rural population by 2023. Similarly within Asia PacificFootnote 1 countries (Euromonitor International) in 2018, there are 2.2 billion inhabitants or 52% living in rural areas in comparison to 1.9 billion or 48% of the population living in urban areas. This historic ruralization inherent to Asia Pacific countries is expected to reverse in the forecasted period. By 2023, there are expected to be 2.2 billion inhabitants or 51% living in urban areas and 2.1 billion or 49% of the population living in rural areas.

India's urban versus rural population ('000), historic/forecast
2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Total population 1,262,301.8 1,321,026.2 1.0 1,335,353.7 1,390,398.5 1.0
Urban population 408,884.8 449,650.9 3.0 460,431.4 505,712.7 3.0
Rural population 853,417.0 871,375.3 1.0 874,922.2 884,685.9 1.0
Urban population 32% 34% 2.0 34% 36% 1.0
Rural population 68% 66% −1.0 66% 64% −1.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Mumbai, Delhi and Bangalore were the only three cities in 2018 to have over 10 million inhabitants. Mumbai (12.7 million) had over 3 times the population of Pune (3.4 million) in 2018 and is expected to remain the largest populated city with 13.1 million inhabitants forecasted in 2023, followed by Delhi and Bangalore with 11.9 million and 11.1 million inhabitants respectively. All of the major Indian cities have grown from 2014 to 2018 and are expected to continue to grow within the forecasted period.

Population in major Indian cities ('000), historic/forecast
City 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Mumbai 12,524.4 12,735.9 0.0 12,809.2 13,143.8 1.0
Delhi 11,240.8 11,523.7 1.0 11,604.4 11,946.9 1.0
Kolkata 4,477.7 4,512.6 0.0 4,531.5 4,629.0 1.0
Bangalore 9,366.5 10,251.6 2.0 10,443.5 11,118.7 2.0
Chennai 4,722.8 4,839.4 1.0 4,873.7 5,020.2 1.0
Ahmedabad 6,121.9 6,646.7 2.0 6,759.1 7,154.7 1.0
Hyderabad 7,426.7 7,912.9 2.0 8,025.7 8,441.2 1.0
Pune 3,272.3 3,432.9 1.0 3,471.2 3,616.8 1.0
Jaipur 3,269.1 3,509.9 2.0 3,564.6 3,764.5 1.0
Surat 4,986.3 5,479.4 2.0 5,585.9 5,958.7 2.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

The median age in India was 27.6 in 2018 and is expected to increase to 29.2 by 2023. The median age in India is forecasted to increase more slowly than the average median age throughout Asia Pacific countries (31.5) in 2018, which is expected to increase to 33.2 by 2023.

From 2014 to 2018 and the forecasted period of 2019-2023, the amount of people in the 15-64 and 65+ age brackets increased, while the population in the 0-14 age bracket decreased. The median age of the population is expected to grow from 27.6 in 2018 to 29.2 in 2023.

India's population by age group ('000), historic/forecast
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Population aged 0-14 367,442.0 361,771.5 0.0 360,274.8 353,565.2 0.0
Population aged 15-64 825,415.7 877,899.9 2.0 890,234.5 937,897.8 1.0
Population aged 65+ 69,444.0 81,354.9 4.0 84,844.5 98,935.5 4.0
Median age of population 26.3 27.6 1.0 27.9 29.2 1.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

India's vital statistics

The fertility rate in India was 2.3 per female and 18.6 per thousand people were born in 2018. These rates were higher than the regional averages in the Asia Pacific countries, which had a fertility rate of 2.2 per female and 16.2 births per thousand people. India's fertility rates are forecasted to decline through to 2023 (while Asia Pacific's fertility rate will remain unchanged in 2023) with 17.4 births per thousand people equivalent to a fertility rate per female of 2.2 in India and 15.0 per thousand people and a 2.2 per female within Asia Pacific, respectively. The death rate in India is also expected to increase slightly from 2018 to 2023, going from 7.4 deaths per thousand people to 7.5. The forecasted death rate in the Asia Pacific countries is expected to increase to 7.5 deaths per thousand people from 7.2 deaths per thousand people registered in India in 2018.

India's demographic trends, historic/forecast
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Birth rates per '000 19.6 18.6 −1.0 18.3 17.4 −1.0
Fertility rates per female 2.4 2.3 −1.0 2.3 2.2 −1.0
Live births ('000) 24,707.0 24,516.9 0.0 24,479.9 24,159.6 0.0
Average age of women at childbirth 26.4 26.3 0.0 26.2 26.3 0.0
Death rates per '000 7.3 7.4 0.0 7.4 7.5 0.0
Natural change ('000) 15,477.1 14,802.1 −1.0 14,618.1 13,667.6 −2.0
Rate of natural change per '000 12.3 11.2 −2.0 10.9 9.8 −3.0
Net migration ('000) −614.5 −391.9 −11.0 −405.3 −389.1 −1.0
Net migration rate per '000 −0.5 −0.3 −12.0 −0.3 −0.3 0.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Household structure, educational attainment and income levels

As the population increases in India, it is forecasted between 2019 and 2023, that there will be a larger number of households amongst couples without children (29.3 million) over single-parent families (28.2 million) by 2023. Couples with children will remain the largest group, followed by more common other blended or mixed marriages of couples with children and extended families. Then the family household dynamic will reverse away from the traditional household, to have more couples without children, over the single-parent family household. Lastly, the single person household will continue to grow at the lowest rate with a CAGR of 2% over the five-year period.

Number of households by type in India from 2014-2023 ('000), historic/forecast
Type 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Couple with children 166,874.8 176,962.6 1.0 179,431.1 188,988.0 1.0
Other[1] 38,351.4 41,435.8 2.0 42,138.8 44,589.2 1.0
Single-parent family 24,140.6 26,226.1 2.0 26,673.0 28,187.0 1.0
Couple without children 22,387.9 25,710.5 4.0 26,475.8 29,311.5 3.0
Single person 11,300.2 12,708.4 3.0 13,007.7 14,033.5 2.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

1: Couples with children and extended families

In 2018, the average gross income of the population from age 15 to 65+ within India was US$2,216 equivalent to the Indian Rupee of INR$151,590. In 2018, 959.3 million people throughout India over the age of fifteen have attained either no education, or an education level equivalent to either primary, secondary and/or have attained a higher level of education. 6.4% of the population have attained a higher education over the secondary or high school level while 25.5% of the population have received no education.

Average gross income and educational attainment levels in India, historic/forecastfixed current prices in US$, 2014-2023 ('000)
Type of statistic 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Average gross income of population (ages 15-65+) currency in US$ 1,630.1 2,216.1 8.0 2,446.1 3,651.6 11.0
Population aged 15+ by educational attainment 894,859.7 959,254.7 2.0 975,078.8 1,036,833.3 2.0
Population aged 15+ by educational attainment [primary] 279,694.2 308,647.6 2.0 316,412.2 345,146.3 2.0
Population aged 15+ by educational attainment [secondary] 323,007.1 344,488.0 2.0 349,346.4 369,312.2 1.0
Population aged 15+ by educational attainment [higher] 54,749.2 61,081.4 3.0 62,680.4 69,197.9 3.0
Population aged 15+ by educational attainment [no education] 237,409.2 245,037.7 1.0 246,639.8 253,176.9 1.0
Percent of population aged 15+ with primary education 31.3% 32.2% 1.0 32.4% 33.3% 1.0
Percent of population aged 15+ with secondary education 36.1% 35.9% 0.0 35.8% 35.6% 0.0
Percent of population aged 15+ with higher education 6.1% 6.4% 1.0 6.4% 6.7% 1.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Business environment and economical indicators

In 2018, India had an unemployment rate of 4.9%. One factor contributing to India's unemployment rate is the amount of female participation within the workforce. A significant gender gap of 47.1 percentage points existed in male and female employment rates that year, as the Indian patriarchal society prizes traditional female roles such as childrearing and homemaking. In the Budget of 2018, the government has focused on job growth through provision of funds for sectors like textiles and leather. It also aims to raise female labour force participation by reducing the contributing rate for women to the Employees Provident Fund (EPF), [Euromonitor International, 2018].

India has been one of the fastest-growing economies globally in recent years with steady gains in consumption, an increase in foreign direct investment and keeping the cost of oil prices relatively low, have contributed to India's improved economic performance. The manufacturing industry ranks amongst India's top major sectors and the government has been implementing major reforms to boost the sector's economic contribution, targeting 25% of GDP by 2025 from 16.2% in 2017 (Euromonitor International, 2018). In 2017, the Indian government announced its plans to invest in infrastructure by spending US$108 billion on 83,677 kilometres (km) of infrastructure in order to boost investment in the private sector, along with the nation's overall competitiveness.

India's economic figures in US$, historic/forecast
Type 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
GDP in millions 1,822,711.9 2,734,875.7 11.0 3,054,625.4. 4,861,454.7 12.0
GDP per capita 1,444.0 2,073.0 9.0 2,287.5 3,496.4 11.0
Unemployment % of economically active population 5.1 4.9 −1.0 5.0 5.3 1.0
Population % living below poverty line 17.0 12.7 −7.0

Source: Euromonitor International 2018

*CAGR: Compound Annual Growth Rate

Food and beverage expenditures and preferences

In 2018, total consumer expenditure per capita was US$1,235.6, out of which 29% was spent on food and 1% was spent on both alcoholic drinks and non-alcoholic beverages. Retail sales value of packaged food continued to grow strongly in India representing approximately US$76.3 billion in 2018. This strong growth is partly attributed to retail sales within the health and wellness (H&W) segment, but is also due to the increasing number of products available via traditional and modern distribution channels. Traditional retailers like mom-and-pop grocers known as 'kiranas' continue to provide consumers with convenience and variety in local produce due to their prime and convenient locations within urban and rural neighbourhoods. Modern supermarkets/hypermarkets and the recent emergence of online retailers like Amazon India, BigBasket and Flipkart, offer consumers convenience, variety in products and labels with competitive pricing and effective promotions enable the online/super/hypermarket's ability to meet and provide for the increasing demand for health and wellness foods.

The packaged food category is continuing to show signs of growth and is forecasted to reach US$164.2 billion by 2023, representing a CAGR of 16% throughout the 2019-2023 period. Edible oils and dairy products experienced the greatest growth within the packaged food category. In 2018, Adani Group acquired Ruchi Soya, the leader in edible oils and dairy witnessed a multi-million investment from Britannia Industries and private equity firms such as KKR & Co and Cargill Ventures, to improve both operational and production capabilities establishing new manufacturing and processing plants by smaller players in India (Euromonitor International, 2018). In addition, larger companies like Nestlé, ConAgra Food and Mars India launched new packaged food categories in India, while smaller companies, including FirmRoots, Wholsum Food and many others, extended their ranges of packaged food for Indian consumers in 2018. Independent small grocers remained the largest and most preferred channel of distribution in 2018, especially for products with short shelf lives, such as fresh milk. E-commerce and super/hypermarkets are, however, gaining in popularity due to their larger product inventory and promotional campaigns.

Multi-cuisine restaurants offering a large variety of consumer tastes such as Mexican, Mediterranean, Lebanese and Arabian flavours and ingredients are gaining significant traction among consumers. However, most urban millennials tend to prefer Indian dishes served at domestic standalone outlets and chains. A growing number of fast food outlets with Western influence have been increasing throughout the region. Demand for burgers, pizza and pasta outlets such as KFC, McDonald's, Pizza Hut have begun to present alternatives for consumption. In addition, Cafés that offer milk and milk-based products as key ingredients have increased their presence in India. Companies like Café Coffee Day and Starbucks offer non-alcoholic beverages such as smoothies and shakes, which are increasingly popular among consumers. Takeaway outlets or takeaways such as Keventers, offer premium varieties of milkshakes, which also contribute to consumer demand.

Annual per capita expenditure on food and beverages in India, historic and forecasted fixed current prices in US$, 2014-2023
Consumer expenditure 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Food 256.8 362.3 9.0 401.5 601.4 11.0
Bread and cereals 59.5 80.5 8.0 89.2 134.5 11.0
Meat 8.0 11.9 10.0 13.2 20.0 11.0
Fish and seafood 15.0 11.9 10.0 13.2 20.0 11.0
Milk, cheese and eggs 58.5 87.4 11.0 97.1 145.1 11.0
Oils and fats 12.6 14.0 3.0 15.1 21.5 9.0
Fruit 40.3 56.1 9.0 62.3 93.6 11.0
Vegetables 34.3 46.3 9.0 51.4 77.4 11.0
Sugar and confectionery 10.7 11.9 3.0 12.9 18.1 9.0
Other food 17.9 30.8 15.0 34.3 51.3 11.0
Non-alcoholic beverages 4.4 5.6 6.0 6.1 9.2 11.0
Coffee, tea and cocoa 1.9 2.7 9.0 3.0 4.5 11.0
Mineral waters, soft drinks, fruit & vegetable juices 2.5 2.8 3.0 3.1 4.6 10.0
Alcoholic drinks 6.1 7.7 6.0 8.5 12.7 11.0
Spirits 5.0 6.2 6.0 6.8 10.2 11.0
Wine 0.0 0.1 0.1 0.1 0.0
Beer 1.2 1.5 6.0 1.6 2.5 12.0
Total consumer expenditure 843.3 1,235.6 10.0 1,371.5 2,080.4 11.0

Source: Euromonitor International 2018

*CAGR: Compound Annual Growth Rate

Health and wellness

Health and wellness products overall had steady growth with a CAGR of 15% from 2014 to 2018 and within the forecasted period of 2019-2023, the growth rate is expected to remain high at 14%. The exception is the Better for you (BFY) category whose products are expected to attain a forecasted CAGR of 22%. All of the other health and wellness categories are anticipated to continue their strong growth, although at a reduced rate. In 2018, Fortified/functional (FF) had the largest retail sales value of US$3.9 billion, however, Naturally healthy (NH) is expected to have the highest retail sales value of US$8.4 billion by 2023.

Growth within the affluent middle class youth, in addition to the continued popularity and belief in the traditional Ayurveda holistic health system (whereby one's health and wellness depends on the balance between an individual's mind, body and spirit), have helped expand the health and wellness sector in India. Retail channels, such as hypermarkets and supermarkets, and the traditional, small mom-and-pop grocers known as 'kiranas', have and continue to expose the population to health and wellness products. Government campaigns have focused on various health issues, such as diabetes and obesity, while also promoting increased consumption of local products which have NH benefits.

India's health and wellness market - historical and forecasted retail value - US$ millions
Categories 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Health and wellness by type 4,752.3 8,361.8 15.0 9,578.5 15,905.9 14.0
Fortified/functional (FF) 2,593.8 3,869.9 11.0 4,243.0 5,664.5 7.0
Naturally healthy (NH) 1,830.3 3,784.6 20.0 4,490.2 8,434.7 17.0
Better for you (BFY) 280.9 614.3 22.0 736.6 1,621.4 22.0
Organic 32.8 66.2 19.0 78.0 135.6 15.0
Free From 14.5 26.7 16.0 30.6 49.7 13.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Fortified/functional food and beverage market

Within the health and wellness sector, FF packaged food and beverages products was the largest category with a 46% market share and retail sales of US$3.9 billion in 2018.

Within the FF beverage categories, hot drinks had the highest retail sales at US$994.5 million in 2018 while sport drinks had the strongest performance in 2018 with a CAGR of 25% between 2014 and 2018 and an expected CAGR of 18% between 2019 and 2023. The popularity of sports drinks is expected to continue, as both obesity and diabetes rates increase, encouraging more consumers (especially young consumers) to participate in physical activity. The growing interest and participation in physical activity is also promoted by the government, as well as, charities and celebrities.

Within the FF packaged food category, vegetable and seed oil had the highest retail sales of US$711.8 million in 2018 and a GAGR of 12% between 2014-2018 and is expected to continue into the forecast period of 2019-2023 with a CAGR of 8% and retail sales value of US$1.1 billion in 2023. Functional fortification of packaged food within India has been addressed as a solution to malnutrition and dietary deficiencies. In 2016, the Food Safety and Standards Authority announced new guidelines concerning the manufacturing and distribution of FF foods in an effort to help combat malnutrition in the country. Fortification provides nutritional benefits such as the 25-30% of the daily recommended amount of vitamin A and D found in FF vegetable and seed oil. As such, mature categories like edible oils, sweet biscuits, baby food and dairy will continue to increase in the forecasted period due to the support from both the government and packaged food manufacturers as consumers continue to purchase products to address their health issues.

India's fortified/functional market - historical and forecasted retail value - US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Fortified/Functional (FF) beverages 903.5 1,258.2 9.0 1,359.2 1,656.7 5.0
FF Hot drinks 720.5 994.5 8.0 1,069.6 1,258.5 4.0
FF Soft drinks 183.0 263.7 10.0 289.6 398.3 8.0
FF Concentrates 86.7 120.2 9.0 129.5 169.7 7.0
FF Energy drinks 77.3 97.2 6.0 103.0 117.2 5.0
FF Sport drinks 19.0 46.3 25.0 57.0 111.4 18.0
FF packaged food 1,690.3 2,611.7 11.0 2,883.8 4,007.8 9.0
FF Baby food 259.8 426.4 13.0 477.2 666.3 9.0
FF Breakfast cereals 134.4 207.4 11.0 231.3 317.7 8.0
FF Bread 120.7 196.2 13.0 219.1 306.4 9.0
FF Confectionery 139.3 225.5 13.0 250.6 354.3 9.0
FF Dairy 266.0 441.5 14.0 506.0 820.8 13.0
FF Sweet biscuits 315.4 402.8 6.0 427.9 487.9 3.0
FF Vegetable and seed oil 454.7 711.8 12.0 771.7 1,054.4 8.0
Fortified/Functional: 2,593.8 3,869.9 11.0 4,243.0 5,664.5 7.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Naturally healthy food and beverage market

Within the health and wellness sector, NH food and beverage products were the second largest category representing a 45% market share with retail value sales of US$3.8 billion and a CAGR of 20% between 2014- 2018. The NH trend is forecast to become the largest category within the health and wellness market from 2019-2023 with expected retail value sales of US$8.4 billion in 2023, surpassing FF food and beverages. Into the 2019 to 2023 forecast period, BFY is expected to capture the highest GAGR of 22%.

The highest growth in retail sales value for NH beverages was for NH other hot drinks, representing a 42% share within the NH beverages category and retail sales worth US$289.8 million in 2018 and a CAGR of 15.0% from 2014-2018. The high growth rate of NH beverages such as tea and other hot drinks stems from not only India's growing rates of diabetes and obesity and nutritional deficiencies, but also from the busier and more stressful lives that consumers are leading, which have also contributed to the increased interest and demand for these products. Consumers are looking for convenience and are wary of packaged food ingredients and as such, are willing to pay a premium for these beverages.

Within the NH packaged food category, fruit snacks accounted for the highest share of retail sales value in 2018 worth US$752.3 million. High fibre food, dairy, olive oil and nuts, seeds and trail mixes also maintained strong retail sales within 2018 as they also contained more natural ingredients, fewer preservatives and are less processed than other products. Cereal bars and olive oil are expected to attain the highest CAGR in 2019-2023, with rates of 20% and 25% respectively. Cereal bars are convenient and a popular meal replacement, while olive oil is becoming more popular as it is viewed as a healthier alternative to other oils due to its low fat content and enriched omega fatty acids. Packaged food in general, is increasing in popularity due to its wider consumer accessibility, strong branding, ethical and nutritional labelling and increasing mistrust in the handling and preparation of unpackaged products due to hygiene and ingredient concerns.

India's naturally healthy market - historical and forecasted retail value - US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Naturally healthy (NH) beverages 349.5 689.7 19.0 814.2 1,634.7 19.0
NH tea 118.6 286.1 25.0 349.0 722.5 20.0
NH other hot drinks 167.1 289.8 15.0 331.2 687.0 20.0
NH bottled water 3.5 7.2 20.0 8.6 17.6 20.0
NH fruit/vegetable juice 60.3 106.7 15.0 125.4 207.6 13.0
NH packaged food 1,480.8 3,094.9 20.0 3,676.0 6,800.0 17.0
NH cereal bars 2.8 7.0 26.0 8.6 18.0 20.0
NH dairy 312.0 605.0 18.0 705.4 1,153.8 13.0
NH fruit snacks 341.4 752.3 22.0 909.6 1,807.6 19.0
NH high fibre food 404.8 722.9 16.0 831.1 1,230.9 10.0
NH honey 77.3 183.0 24.0 218.6 413.2 17.0
NH olive oil 121.3 426.6 37.0 541.8 1,333.3 25.0
NH rice 9.1 23.1 26.0 28.6 51.6 16.0
NH nuts, seeds and trail mixes 212.1 375.0 15.0 432.3 791.6 16.0
Naturally Healthy: 1,830.3 3,784.6 20.0 4,490.2 8,434.7 17.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Better for you food and beverage market

BFY beverages which includes reduced sugar soft drinks is a relatively smaller market in comparison to both FF and NH beverages, with a moderate CAGR of 4% from 2014-2018 and retail value sales of US$6.7 million in 2018. The forecasted CAGR is expected to also reach 4% from 2019 to 2023, with retail value sales of US$8.1 million in 2023. According to Euromonitor, the main reason as to why BFY reduced sugar soft drinks, despite marketing efforts, attained lower retail sales and growth in both current and forecasted periods is due to consumers growing concerns of ingredients used (Stevia) within BFY beverages, thereby increasing consumer's demand for NH products. Ingredients such as Stevia, a natural plant based sweetener, were granted approval for its use in beverages in 2015 and products like 7UP were still launched in 2018, amidst concerns of consumers response to the bitter taste of Stevia.

In 2018, within the BFY reduced fat packaged food category, 'reduced fat milk' accounted for the majority of retail value sales of US$494.2 million. Within the BFY reduced salt food category, 'reduced salt' savoury snacks excluding nuts, seeds and trail mixes accounted for a portion of the highest CAGR in 2014-2018 at 27% and is expected to continue within the forecasted period of 2019-2023 to grow at a CAGR of 32%. BFY packaged food consumption is expected to continue as busy lifestyles prove difficult for consumers to maintain a healthy lifestyle. Products that offer reduced fat, sugar and salt content are expected to remain popular as social media and the entertainment industry continue to promote the healthy lifestyle offered by these products.

India's "Better For You" market - historical and forecasted retail value - US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Better for you (BFY) beverages 5.7 6.7 4.0 7.0 8.1 4.0
BFY reduced sugar soft drinks 5.7 6.7 4.0 7.0 8.1 4.0
BFY packaged food 275.2 607.6 22.0 729.6 1,613.3 22.0
BFY reduced fat packaged food 223.8 494.2 22.0 594.1 1,331.4 22.0
BFY reduced salt food 15.5 39.7 27.0 51.6 154.4 32.0
BFY reduced sugar packaged food 35.8 73.7 20.0 84.0 127.5 11.0
Better for you: 280.9 614.3 22.0 736.6 1,621.4 22.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Organic food and beverage market

The organic beverages market in India is considered to still be in its infancy stages. Organic tea had the highest retail sales value in 2018 with sales of US$44.4 million as Indian consumers are devoted tea drinkers, while organic fruit/vegetable juice had lower retail sales value of US$10.6 million in 2018, yet had a higher CAGR of 37% (compared with a CAGR of 17% for organic tea). Consumption of organic beverages is expected to continue despite limited distribution to supermarket and hypermarket distribution channels as the harmful effects of pesticides and insecticides in relation to ingredient sources remain a prevalent awareness amidst the educated mid-to-high income consumer. Consequently, as of July 1, 2018, all organic produce must be certified by either National Program for Organic Production (NPOP) or the Participatory Guarantee System for India (PGS-India), [Euromonitor 2018]. The recent implementation of this regulation should aid in increasing awareness of organic products, as well as, contribute to fostering consumer trust.

Organic packaged foods (organic sauces, dressings and condiments) are currently a small market, yet is the only measurable category in both retail sales value (US$11.2 million in 2018) and volume (CAGR of 18%) from 2014-2018 within India. This is due to limited product availability, and availability in certain areas, which is available in urban areas only at the moment. The existing popularity of sauces, dressings and condiments is related to their usage in dishes prepared on a daily basis. Other organic packaged foods which are increasing in popularity include bread, processed fruit & vegetables, processed meat & seafood, yoghurt and sour milk products.

India's organic market - historical and forecasted retail value - US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Organic beverages 27.1 55.0 19.0 64.9 113.0 15.0
Organic tea 24.1 44.4 17.0 51.2 85.6 14.0
Organic fruit/vegetable juice 3.0 10.6 37.0 13.8 27.4 19.0
Organic packaged food 5.7 11.2 18.0 13.1 22.6 15.0
Organic sauces, dressings and condiments 5.7 11.2 18.0 13.1 22.6 15.0
Organic: 32.8 66.2 19.0 78.0 135.6 15.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

"Free from" food and beverage market

The 'free from' category is the smallest market category within the health and wellness sector. According to Euromonitor, Asia Pacific accounts for just 4.0% of global food intolerance product sales. The size of this market (most highly populated geographic region) in combination with the knowledge that these consumers are no less affected by food intolerances than elsewhere in the world, serve to increase the Asia Pacific market potential for future growth. The category registered a CAGR of 17% between 2014 and 2018, representing retail sales values of US$26.8 million in 2018. Free from allergens products had retail sales values of US$8 million in 2018 and a CAGR of 14% between 2014 and 2018. Free from allergens is expected to slow to a CAGR of 10% in the forecast period with retail sales values of US$13.0 million forecast in 2023. Free from dairy products was the larger of the two sub-categories within the free from category in 2018 with retail sales values of US$18.8 million. Consumption of free from dairy products is expected to continue, albeit at a lower expected CAGR of 14% by 2023 as India has a lower population of those diagnosed with lactose intolerances, and retail sales values are forecasted at US$36.7 million in 2023.

India free from market - historical and forecasted retail value - US$ millions
Category 2014 2018 CAGR* % 2014-2018 2019 2023 CAGR* % 2019-2023
Free From 14.5 26.8 17.0 30.6 49.7 13.0
Free From Allergens 4.7 8.0 14.0 9.0 13.0 10.0
Free From Dairy 9.8 18.8 18.0 21.6 36.7 14.0

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Consumer trends / competitive landscape within the health and wellness sector

The FF beverage drink category, specifically sport drinks among other hot drinks, will continue to improve as rising rates of obesity and diabetes increase consumer's interest and participation in physical activity. Gatorade dominated the sports drink category as the brand registered the greatest growth in the 2014-18 period. PepsiCo India Holdings Pvt Ltd, another established company, attributes its success to advertising and marketing campaigns that promote its brand as an effective way to rehydrate and replenish electrolytes and boost the immune system. FF packaged foods are seen as an established category making vegetable and seed oil, sweet biscuits, baby food and dairy the most heavily consumed packaged foods. Consumers have traditionally looked to FF packaged food as a solution to malnutrition and dietary deficiencies. In 2016, the Food Safety and Standards Authority announced new guidelines concerning the manufacture and distribution of FF foods in an effort to help combat malnutrition in the country (Euromonitor International, 2018). Cargill India is the leading provider of vegetable and seed oil and attributes its strong positioning in the market to its strong consumer loyalty, its range in product sizing as well as its strong distribution network and promotional activities focusing on tradition, culture, relationships and health.

Tata Global Beverages Ltd and its Tetley brand of NH green tea has remained the strongest competitor within the NH beverage category in India. The company remains focused on the health benefits provided by the consumption of green tea and has generated awareness and interest for its initiative through a successful social media campaign. A competitor to the green tea beverage is the NH fruit/vegetable juice division whose manufacturers like Dabur India Ltd and their Réal brand of juices have created interest and variety to the category. The company has attained extensive distribution across India and benefits from widespread marketing and advertising. NH packaged food remains a varied category in India as the industry faces strong competition from unpackaged products, available in both rural and urban markets throughout India. ITC Foods Ltd., and PepsiCo India benefit from widespread distribution across the country, in addition to strong promotional activities throughout the year.

Coca-Cola India continued to dominate the BFY beverage category in 2017, with its recognizable Diet Coke beverage and brand. Despite growing concerns over the ingredients used in BFY beverages in addition to rising concerns of carbonates consumption, Coca-Cola India maintains a dominant position though its use of aggressive marketing and advertising and uniform branding. Within the BFY packaged food category, reduced fat milk products continue to account for the majority of value sales within 2017. Karnataka Cooperative Milk Producers Federation (a government cooperative) is the third largest dairy cooperative in India and its strength and position within the market has been attributed to consumer's trust in the quality of its products and location of its collection centres.

Organic tea accounts for the most sales within the relatively new organic beverage market, as consumers are already devoted tea drinkers. Organic fruit/vegetable juice was the most dynamic category within 2017. International competition is limited as companies have not shown a willingness to invest in this new, and smaller market, whereby for the most part, many mid-income consumers are unable to afford these products. Organic food sales can be attributed to sales in fresh foods as organic packaged food remains a relatively small category, however; organic packaged food demand (retail value and volume) within India is slowly increasing. Sauces, dressings and condiments were the only measurable packaged food category in terms of sales within 2018. Domestic companies like Stresta Natural Bioproducts, dominate the category as they benefitted from being among the first to launch organic products in India. Similarly, government initiatives in 2017 further support category growth by creating an 'Organic Integrity Database' to aid consumers verify the authenticity of organic food in response to the herbal and Ayurvedic movement started by Patanjali Foods in 2015-16 which served to challenge multinational and local companies for space in the limited market.

The 'free from' packaged food category remains the least explored in India as the majority of consumers are unaware of their food intolerances. Recently, lactose intolerance has been recognized as an issue as India is one of the largest consumers of dairy products in the world. Companies like Hershey India have responded by successfully producing Sofit, a "free from" soy milk rich in nutritional benefits and other soy-based products marketing promotional activities that target health-conscious consumers.

Leading companies and their brands within the health and wellness sector in India - historical % breakdown, based on fixed retail sales value in US$
Category Company name Top brand 2013 2014 2015 2016 2017
Fortified/functional (FF) GlaxoSmithKline Consumer Healthcare Ltd Horlicks 66.3 66.1 64.7 63.9 63.8
PepsiCo India Holdings Pvt Ltd Gatorade 1.7 2.0 2.3 2.8
Cargill India Pvt Ltd Gemini 13.0 12.1 14.4 15.1
Naturally healthy (NH) Haldiram Foods International Ltd Haldiram's 9.6 8.7 8.0 7.4 7.0
Gujarat Co-operative Milk Marketing federation Ltd Amul 4.4 5.0 5.4 6.1 6.2
ITC Ltd Sunfeast 5.1 4.7 4.4 4.0 3.4
Better for you (BFY) Coca-Cola India Pvt Ltd Diet Coke 52.3 60.6 61.7 62.4
PepsiCo India Holdings Pvt Ltd Diet Pepsi 30.6 28.4 36.8 35.1N
Karnataka Cooperative Milk Producers Federation Ltd Nandini Toned Milk 11.6 11.5 11.7 11.7 11.8
Organic Stresta Natural Bioproducts Pvt Ltd 24 Letter Mantra 25.8 25.7 25.7 26.2 24.7
Organic India Pvt Ltd Organic India Tulsi Teas 20.5 20.2 19.7 19.5 18.2
Chamong Tea Exports (P) Ltd Chamong Organic Darjeeling Tea 11.5 10.7 10.2 9.4
Free From The Hershey India Pvt Ltd Sofit 18.8 21.8 21.1 18.9 16.7
ProSoya Foods (India) Pvt Ltd Straeta 9.6 11.0 10.8 10.1 9.3
Others Others 71.7 67.2 68.2 71.0 74.0
Source: Euromonitor International, 2019

For more information

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Resources

Consumer profile – India
Global Analysis Report

Prepared by: Laurie Bernardi, International Market Research Analyst

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