Companies add spice to functional food business
NESTLE is upping its ante in the functional food segment, just ahead of its arch rival Danone’s entry into this segment in India. Internationally, a market worth $80 billion, the functional food market is gathering heat here too with smaller players like Amul, Avesta Good Earth and Mother Dairy also catching on. Having launched its probiotic curd, Nesvita, the Swiss behemoth plans to extend the probiotic portfolio into yoghurt products and drinks, which is also core to Danone. The company expects Nesvita to contribute 30-40% of the revenues from the curd segment in the next two years. “We plan to introduce milk products for lactose intolerant people and people suffering from diabetes. We will extend this functional food range in the next few months,” said Mayank Trivedi, GM, dairy division, Nestle India. The company plans to spend around Rs 4-5 crore in product promotions in first year itself. French foods giant Groupe Danone, with a much feted portfolio of functional foods, is likely to enter the market early next year after sorting out shareholder issues with its current India partner, Wadia Group. The products would be launched across all price ranges and industry observers believe the French giant would unleash an array of functional foods across fresh dairy business, including probiotic yoghurt snacks and health drinks. India tops in per capita consumption of milk even though exact numbers are not available. With obesity and lifestyle diseases like diabetes growing at an alarming rate on the back of increasing prosperity, global leaders in functional foods like Danone and Nestle believe there exists a huge market potential here. Danone, which divested its biscuit business recently, has been building a robust health foods business, centering around fresh dairy and beverages. In context, it may be mentioned that Danone had picked up a small minority stake in Bangalore-based bio-nutritional company Avesthagen to bolster R&D behind its global organic food play under Stonyfield brand. Similarly, Nestle is also seen working with Avesthagen for developing products targeted at the diabetic population. Internationally, the probiotic market is valued at $15 billion. Amul is already in the game having recently launched its probiotic ice cream. Mother Dairy, a wholly-owned subsidiary of National Dairy Development Board, also launched its probiotic curd recently. Among the smaller players in the fray is Avesta Good Earth, which is incidentally the functional foods division of Avesthagen.