Food ingredients always play a vital role in product acceptance in the marketplace. The food ingredient industry is getting innovative in line with the emerging trends of health-conscious consumers, they are working closely with industries to develop new products, observes Rajat K Baisya.
The food processing industry is one of the largest industries in India and ranks fifth in terms of production, consumption, and exports. The Indian food and grocery market is the world’s sixth-largest, with retail contributing 70 percent of the sales. The Indian food processing industry accounts for 32 percent of the country’s total food market, one of the largest industries in India. It contributes around 8.80 and 8.39 percent of Gross Value Added (GVA) in Manufacturing and Agriculture, respectively, 13 percent of India’s exports and six percent of total industrial investment.
Globally, the food ingredients business is estimated at USD 400 billion. However, India has a small share of the same, estimated at USD 700 million or only about 0.2 percent of the total global industry. India contributes to about 2.5 percent of international trade in agriculture and processed food, whereas when it comes to food ingredients India’s share is 0.2 % which is less than 10% of India’s food and agriculture products share in global trade in this category.
We can define a food ingredient as a substance usually added to any food during its preparation and processing to achieve the desired effect in terms of food’s appearance, texture, taste, mouthfeel, and overall acceptability of the foods.
Broadly, we can classify food ingredients as major ingredients, which are the bulk and primary ingredients of food. In that list, we will have sugar, water, wheat flour, rice, meat, fish, poultry, fruit, vegetables, cereals, milk, etc., depending on the type of foods that need to be processed and or to be prepared. For example, for protein food products, ingredients like soya protein isolate or peanut protein isolate, and milk casein will be the major food ingredients.
And then we have minor ingredients that constitute a very small part of the food but play a vital role in terms of overall taste and acceptability of the end product and, as such, are very important. That list would be very long and almost endless and will include color, flavor, preservatives, additives, emulsifiers, stabilizers, spices and condiments, etc. Food ingredients play a specific role and function in food processing, packaging, and storage. While major ingredients that constitute the bulk of the food will always be natural, but these minor food ingredients can be natural, natural-identical, or artificial.
Consumers are now becoming averse to anything artificial. Thus, food processors are increasingly shifting to natural ingredients, and they also make several kinds of claims to improve the prospect of sales and demand for their products in the market. Food ingredients as such play a vital role in the success of any processed food and trigger the growth of the industry category.
Sometimes, some food ingredients come under the lens and are declared banned or even restricted to use, putting the industry in a fix and forcing them to try out alternative ingredients that are generally recognized as safe and permitted by the authorities.
Sometimes, some food ingredients come under the lens and are declared banned or even restricted to use, putting the industry in a fix and forcing them to try out alternative ingredients that are generally recognized as safe (GRAS) and permitted by the regulatory authorities. We have seen how the industry has responded to such occasional threats when a particular food ingredient which has been in use for years has been declared ‘not permitted any more’ and overnight. Businesses have to find alternative materials and shift to new ingredients to remain in business.
Two examples can be cited here to drive the point in this connection. During the seventies and eighties, the carbonated soft beverages industry used ‘Brominated Vegetable Oil (BVO)’ as a cloudifying agent to give body to orange – like Gold Spot and Fanta and lemon-lime Limca kind of beverages. This BVO was under cloud, and the industry was expecting that BVO would be banned and was getting ready for an alternative. BVO was considered carcinogenic and was banned in many countries in those days, and one day, it was declared non-permitted in India as well. The industry changed to gum acacia-based emulsifiers to tide over the apparent difficulty and transited to safer and permitted ingredients.
I recollect in those days that we were conducting storage and shelf stability studies with gum Arabic-based flavor emulsions base. The concept of clear lemon-lime beverages like Sprite and Sprint came around that time which was the creation and innovation by the marketer, and that became a product category by itself. This product category was promoted and advertised as the youngsters’ trendy choice for their lifestyle.
All promotional messages and advertisement films were made to depict the product as a choice for the new generation. And it worked. Readers can easily correlate with the advertisements and TV commercials for Mountain Dew of Pepsi Cola. It is interesting to note that while for one category of products, technologists, and R&D scientists were trying to work with the substitute ingredient to replace BVO when marketers created yet another trendy category like clear beverages.
Yet another example is Monosodium Glutamate (MSG), a permitted ingredient as a flavor enhancer for meat flavor and was used in instant noodles. Later on, it was banned and then again entered into the list of permitted ingredients. Still, its use got restricted, and now it can be used giving declaration that the food is not suitable and safe for children under 12yrs, of age and pregnant women.
Readers will recollect the most publicized case of MSG in Nestle’s Maggi instant noodles. It happened with the world’s number one food company Nestle and they survived the impact on their image and also loss of sales. Had it been with any other corporations in India, that would have been wiped out their entire business. But Nestle came back with renewed energy and enthusiasm. Other players took advantage of delivering better growth when Maggi was temporarily withdrawn from the market. MSG was replaced by yeast extract, a natural food ingredient that is now used widely as a meat flavor enhancer.
Local investments in food ingredients manufacturing are low. Most of the food ingredients available and used in the food processing industry in India are imported from other countries. The food ingredient manufacturing companies from abroad operate through their representative in India. Some of them have smaller development and formulation centers established in India to work closely with the industry to help them develop products targeted to specific markets and consumers in a typical competitive set to operate and to create success. All large global flavor manufacturers like IFF are operating in India.
The food ingredient industry is also innovative, and in line with the emerging trends of health-conscious consumers, they are working closely with industries to develop new products. For example, yeast extract is now available for low sodium food. Some of the food ingredients can reduce the sugar content in food. In addition, many natural food ingredients are replacing artificial sweeteners, etc. Food ingredients manufacturers supply a mix to be directly baked into end products of various types in the bakery industry.
There are consultants in the market who support the small and medium-size bakery industry in their product development efforts. I know Yusuf Patanwala of Autobake in Mumbai, who has been doing very creditable work promoting and developing new products and business in the bakery industry. They represent leading bakery equipment manufacturers of Europe in India as well.
Food ingredients manufacturers play a vital role in making food widely accepted in the market. And to deliver the growth in the processed food industry, the food ingredient industry also must grow.
Author is the chairman of Strategic Consulting Group and served as Professor and Head of the Department of Management Studies, IIT Delhi.