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The biggest challenge in the nutraceutical industry is the product claim about wellness & nutrition
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Tuesday, 01 March, 2011, 08 : 00 AM [IST]
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Nandita Vijay, Bangalore
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India’s Nutrition & Wellness industry is valued at Rs 5,000 crore. The nutritional major Amway India has posted a turnover of Rs 1,790 crore for fiscal year 2010 registering a 27% growth over the previous fiscal. This is the third successive year that Amway India has registered growth upwards of 25%. Amway India Enterprises Pvt. Ltd is eying a turnover of Rs 2,500 crore in the year 2011. The company’s Nutrilite, has emerged as the top selling brand of Nutritional Supplements. The product’s success is attributed to the scientific research and strict quality control. Amway being a direct selling FMCG company has realised the importance of advertising & marketing to further strengthen their foothold in the Indian market. Apart from the main mother brand advertising, Amway also ventured into category advertising by launching the “Nutrilite” advertisement. Amway currently has 13 Brand Experience Centres and plans to add another 20-25 more over the next two years. We will also be expanding our infrastructure from the current 135 Amway Touch Points to about 250 in the next 2-3 years. In India, it currently offers over 115 products in five categories of Personal Care, Home Care, Nutrition & Wellness, Cosmetics and Gift catalogue. The company has recently invested Rs 55 crore at its contract manufacturing plant at Baddi for expanding production to fuel growth. At present, it has 123 products under its portfolio excluding seasonal offerings. In an interaction, William S Pinckney, MD & CEO, Amway India, said that Nutrition & Wellness and Cosmetics contributed over 60% to its revenues, While Nutrition & Wellness is the largest category contributing Rs 903 crore to the total revenues. In 2010, in addition to the brand advertisement, the company launched the Nutrilite advertisements, thus facilitating Amway Business Owners to sell more effectively. This year, the company had earmarked Rs 30 crore towards advertising. Excerpts:
How would you describe the current scene for nutraceuticals in the country? What according to you are the visible trends?
The Vitamins and Dietary supplements, generally known as nutraceuticals, is a Rs 29 billion market growing 11% in 2009, according to a recently published report by Euromonitor.
With urban consumers increasingly eating quick meals on-the-go, as a result of the stressful lifestyles of men, women and children, due to pressures at work and school, coupled with changing lifestyle, the advent of the unhealthy, junk / fast foods, the food consumption pattern is slowly moving from being healthy to being tasty and it is a well-known fact that food that is tasty is not necessarily nutritious. To supplement the nutritional gap arising out of this lifestyle changes, there is an increasing trend amongst the Indians that consumers regularly consume vitamin supplements, particularly multivitamins.
What are the key issues that need to be addressed in the area of nutraceutical and wellness products?
Nutraceutical, also known as a food supplement, is a growing industry. The profusion of products and companies launching nutritional supplements bears testimony to this, but this growth has also brought with it its own challenges as well. One of the biggest challenges is with respect to product claims. Companies offer products with tall claims which never work on the end consumer.
Some tall claims have also had adverse effects on the consumers. Companies selling nutritional supplements MUST and SHOULD position and sell the product not as a curative product, but in all earnest and truthfulness. Amway sells its range of nutritional supplements purely as a "supplement" along with the regular nutritious diet.
Coming to the initiatives by Amway what are the growth drivers for fiscal 2011?
Amway India closed fiscal year 2010 with a turnover of Rs 1,790 crore, up from Rs 1,407 crore in 2009. Going forward, Amway has identified four strategic pillars to drive growth: Business Excellence, Distributor Experience, Consumer Experience and Products & Brands.
Is the company looking to invest in India to set up a production plant or research centre?
Currently, barring the range of our super premium range of skin care products like ‘Artistry’, all products are manufactured within the country through seven third party contract manufacturing facilities , the biggest being at Baddi, Himachal Pradesh. This facility witnessed an infusion of Rs 55 crore, thereby tripling its production capacity. We have a strong R&D team in the US, our global headquarters. We leverage the collective, vast and rich experience of a team of 500 scientists who continuously work with the product development team in India to develop products for the Indian market. An example of this is our ‘Attitude’ range of cosmetics which is an indigenous brand developed by India exclusively for this market.
How many products do you have under the Nutrilite brands and does this include the entire range of Nutrition & Wellness portfolio?
Globally, Amway India has 450 products in five categories - Nutrition & Wellness, Cosmetics, Personal Care, Home Care and Home Tech. In India, we currently have 123 products in four categories - Nutrition & Wellness, Cosmetics, Personal Care, Home Care. Our Nutrition & Wellness category, sold under the brand name of Nutrilite, is the largest contributing category. This category contributes about 50% to the total turnover. We currently have 25 products in the Nutrition &Wellness category.Which are the fastest growing products under the Nutrilite brand?
Our largest contributing category is Nutrition & Wellness. Within this category, two products -- Nutrilite Protein Powder and Nutrilite Daily contribute the maximum. Nutrilite Protein Powder is over Rs 230 crore and Nutrilite Daily contributes over Rs 130 crore.
Which are the specific regions accounting for growth?
The Amway business is fairly evenly spread across the country, though the South contributes a few percentage points more compared to the other regions.
There are several players in the fray in the segment of Nutraceutical and Wellness products… British Biologicals, Herbal Life, Herbz, Nestle Nutrition, and what according to you sets Amway apart and gives it the distinction.
Amway is known for its world class products, Quality and Amway have become synonymous with each other. This is our greatest strength coupled with the unique business opportunity is what sets us apart.
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