Sports Nutrition Market in India

1. Introduction This chapter deals with overview, objectives, methodology, sampling plan and limitations of the guinea pig. 1. . Overview of the study lineage analysis of draw milk milk milk milk milk milk milk whey in India is non restricted to its well defined boundaries. Because of the nature of the return and its reliable status, it is tidy sumd globularly and really subtile measure is traded within the coun filter out. The study is intended to study the effect of planetary changes on trade. Similarly the emphasis is laid on the application of whey as a product for mass mart.The idea is to understand capabilities required for the same and see if any company underside hold back into that specification. 2. . Objective of the study The study has been undertaken to meet pursuit objectives 1) To understand the structure, Conduct and performance of whey headache in India. 2) To understand the evolution of milk whey business in next five grades. 3) To identify abori ginal opportunities for GCMMF in whey business. 4) To propose market entry strategy for GCMMF to disgrace into whey business 3. . methodology followedThe study has utilize personal visits to whey touch on plants and modern format computer memorys, questionnaire survey of lyceum visitors, amorphous interviews with trainers, dieticians, and unstructured interview on telephone with employees of these plants, use of checklist for retail merchants and distri exactlyors. Secondary data from internet and literature vex been apply. Sr. No Data required Data sources Tools employ 1. Turnover, Supply. grocery store sh ar, Main products, Production afoot(predicate) Internet, Unstructured interviews with the facilities- dexterity, engine room Pro suffers, Future estimates players, associated employees, Annual Report study, Indian of train , atomic chip 18a of operation, supplier exportation Agency-internet 2. Manufacturers, Prices, Volumes, go finished segment, Margins Pr oduct Internet, Unstructured interviews with the in diametric formats, transposes for different formats. formats, retailers, distributors, Annual Report study of Channel players 3. Distribution alleys, margins, mode of operation, Channel Internet, structured interviews. incentives 4. Institutional buyers, consumers-segment, consumer Consumers, Consumer survey, structured/unstructured preferences, acceptability, product and brand actualization Retailers interviews/focussed group surveys, Retailer survey ,benefits, value for property ,future market- batch/sales 1. 4. Sampling plan The consumer link up result is found on fifty consumers surveys conducted in nine cities namely Anand, Ahmedabad, Mumbai, Pune, Delhi, Karnal, Panchkula, Chandigarh and Gurgaon.The retailers, distributors and Modern Format Stores were approached at random without any restriction on numbers. The idea has been to sit qualitative and quantitative information two. 1. 5 Limitations of the study 1. The number of consumers surveyed is not sufficient to generalise the results. all the same the results be indicative in nature. 2. Time assign for the study is not sufficient. 3. Qualitative information has been use to understand different requirements of whey business in India. 4. Un approachability of authentic secondary sources for getting information related to lycees, medical stores, and whey employ in India etc. . Understanding Whey 2. 1. Whey Introduction Whey is a by-product of tall mallow, Paneer and Shrikhand. It is a common yellowish fluid. It house as well be called as the water of Paneer, Cheese, and Shrikhand . at that place ar two varieties of whey base on acidity sweet and acid whey. Similarly the programification of whey has been weare on the basis of its source e. g. casein or cheese. The developed world has actually high per capita economic employment of cheese with respect to developing or underdeveloped world then the whey product ion is in the main difficult in the developed countries only. 2. 2. Importance of wheyWhey contains very nutritive constituents the wants of Whey proteins -Immunoglobulin, amino-acids both essential and non-essential, lactoferin riboflavin, lactose etc which are very important for the body. Whey protein has very lavishly biological and Protein capability Ratio . Thus it is rated as the best protein. Because of technological advancement, these constituents can be obscure from the whey. The importance of whey at that placefore lies due to pursual reasons 1. Highly hurtd because of very sophisticated technology and high get for the separated constituents, these are highly priced. 2.Whey has very high Biological type O Demand and Chemical Oxygen Demand (40000), on that pointfore it poses serious panic to environment. The Government has do strict norms related to environmental pollution. ISO -14000 is basically meant for controlling the environmental pollution related to any manufacturing units. Above two reasons pose a argufy to the whey producing companies to efficiently utilise it. 2. 3. Properties and application of whey Because of the functionality of whey, it finds use in the manufacture of various palm and products. gameboard 1. Functionality and application of whey Functional Property Application Whipping/Foaming Egg brusque cakes, Dessert, Whipped conducepings Emulsification Sausages, C hitee whiteners, Soups, Cakes, Infant Formula, Biscuits Gelation Meats, Baked viandss, Cheeses, curd, yoghurt Viscosity Soups, Gravies, Salad Dressings Water Binding/Mineral Binding Cakes, Meats , Sausages, nutritionary nutriments Solubility Beverages Br delivering Breads, Biscuits, Confectionery, Sauces Flavour/Aroma Baked goods, Biscuits, Confections From above remand it is very much discernable that whey has very wide application in food and drug companyceutical perseverance. 3. globose Whey commerce It has already been mentione d that the whey is a by-product of cheese which is chiefly consumed in the developed world, particularly atomic number 63 and United States. Therefore its production is principally center ond in these countries. Global production of whey has been 177 mn MT in cc6 with a value of $ 9bn which is expect to grow yearlyly at 2-3 % for next 5 years. The major contribution in production i. e. approx. 94% is due to Cheese whey and emaining is due to casein whey. Salient features of Global Whey business About 70% is utilised for industrial purpose and remain is utilize for cattle feed, fertilisers and some quantity goes waste. Fifty six percent of the whey used for industrial purpose is utilised for manufacturing of Whey powders and lactose while nearly 35% is utilised for Whey protein concentrate and permeate and the remaining 9% is used for Dimineralised products and blends. Approximately 80% of whey products are traded as trade good while 20% is traded as value added products. In global trade, USA ranks early in merchandise of whey powders(19. 4% divide) and China leads in import with 15. % share. (See the annexure containing list of ten major trade-importing countries) Majority of trace global whey processing companies are located in US and European union. (see the figure 1 on next page) 3. 2 Lactose Lactose is a very important constituent of whey . The total global production was 870000 MT which is expected to grow at the rate of 5-6 % annually. This is in general used in pharmaceutical, bakery, confectionery patience and in the preparation of infant formula etc. The major global preparers of lactose commence been sh accept in the figure 2. look-a handle 1 Global Whey processing companies pic look-alike 2 Global lactose producers picThe production and application pattern of lactose is different across different part of the world . This is evident from following pie diagram Figure 3 Global Lactose Processors pic Figure 4 Application of Lacto se in EU and US pic As far its global trade is concerned, USA still is the leader. The realisation from lactose has cast upd from $ 670 mn in 2004 to $ 1930 mn in 2006 chiefly because of spurt in get hold of. submit 2 Global whey exporters and importers pic 3. 3 Global Price jump out Over the years there has been a steep purloin in the prices of whey products due to increase in entreat. Following table furnish explain the change in the global prices over beseem yearsTable 3 Global Prices (European Union) Year WP ($/lb) WPC($/lb) Lactose($/lb) 2004 0. 284 0. 588 0. 1875 2005 0. 316 0. 82 0. 1925 2006 0. 489 0. 69 0. 3075 2007(May) 0. 727 1. 35 0. 4 come USDA, NASS, dairy farm Market Report, 2007 As the whey from India is traded in the global market, so the price fluctuation decides the volume of business from India. Since the prices of WPC, WP and Lactose begin change magnitude substantially in last 2 years and more(prenominal) importantly in early 2007, there fore the profitability of the business has change magnitude. When we con stancer the price fluctuation of scamper draw Powder (SMP) and Whey powder with same protein then we find that there has been clear piece price appreciation in WP prices over SMP prices and the difference in the midst of per MT prices has in fact increased between these two commodities.Figure 5 Price of SMP and Whey proteins Source www. fas. usda. gov In 2007, the price rise has been very fast as evident from following graph showing the variation. Figure 6 Global Whey powder prices w. r. t SMP in 2007 Source USDA, NASS, Dairy Market Report, 2007 4. Indian Whey fabrication Whey business in India has been in existence for last 15 years when Cepham Ltd and Mahan Protein started operation in 1992-1994. This business over the years has expanded in name of volume and value and more Indian private companies shake off entered into this business. 4. 1 Structure of Whey business in India The structure of Whey pa tience in India can be explained below 4. 1. The nature of attention Whey is a part of food intentness. There are relatively small numbers of whey processing companies in India unlike milk processing companies. Also there are less number of flock domestic buyers of whey based commodities in India. The production is mainly export oriented. 4. 1. 2 Government regulation whey poses environmental threat because of very high B. O. D and C. O. D level. There are environmental regulations framed by the brass unlike SMP which has become prone to export eschew. Whey powders are not exposed to export ban till outright. 4. 1. 3 Type of producers The whey processing companies are mainly the private Indian players.none of the Multi National Companies and Co-operatives strike ventured into this field as they are operating in mass market and dont want to enter into good market . up to now many global producers are now eyeing India as a potential manufacturing location because of the increa sed demand of whey products in the global market. 4. 1. 4 Cost and production con nerverations The technology of whey processing is more sophisticated than that for traditional dairy products. globally three generation products are manufacture from whey. These are listed below. These require different signifier of technology. Processing technology and product details has been mentioned in the following table. Table 4 Product manufactured and technology used in whey Generation product Product name Technology used First generation Whey powder, WPC 35,Lactose Ultra filtration / Nano-filtration Second generation WPC-80,DWP,Sweeteners,Minerals Ion -Exchange Third generation Whey protein fractions, Lactose derivatives, Chromatography, fractionation technology WPH,WPI The cost of production mainly depends on the fixment price of raw material like milk and the availableness of milk finished out the year .Due to unavailability of milk throughout the year , the production in many p lants are stopped during the scat period i. e. April- July. 4. 1. 5 Major whey processing companies in India Whey business has not been a big intentness in terms of quantity of milk processed. When we consider the quantity of milk processed by all the Indian companies the quantity of milk diverted for whey production is less than 1%. ongoingly there are mainly eight whey processing companies in India. The daily milk handling capacities and production capacities of these plants have been mentioned in the following table 5. Table 5 Major whey processing companies in India call down Milk handling Casein WPC-WP Lactose Capacity (MT/Day) (MT/ solar day) (MT/Day) (hundred thousand lts /day) VRS Foods Ltd 15 40 20 25 Mahaan Proteins 6 15 10 18 Modern Dairies Ltd 10 25 15 18 Dynamix Dairies Ltd 5 8 5 8 Milk food Ltd 8 15 10 15 Cepham Ltd 6 14 8 12 Bhole Baba Dairy 10 24 14 15 Crown Milk Spl. Ltd. 5 10 6 0 summarise 65 151 88 111 Annual(2007 Estimate) 17793. 75 33069 19 272 24309 Source informal, ex-employees. Most of these companies are situate in the northern part of India and the main reason sighted was availability of milk in these areas.From the table it s very evident that VRS Foods, Sahibabad is the leader with 22% contribution in the total milk utilisation followed by Karnal based Modern Dairies with production submersion 16%. One of the key features of the whey industry in India has been its fast evolution. There were mainly 4 whey processing companies in India till 2005,which increased to 8 in 2007,most of which have started operation in late 2006. The reason of this expansion has been the increase in demand of the whey based products and rise in global prices of these products. The evolution and expansion of the whey industry in India will be clear from following graph. Figure 7 Expansion of whey industry in India Thus the expansion has been by 120% in last two years.Looking the wampumpeag in the industry more companies are thinking to enter into this business. some(a) the companies which are thinking to enter into the business are a) Anik ,Etah b) Hatsun Agro,Chennai c) Doiba Foods, Palwal d) Nectar,Pathankoth e) VRS Foods,SahibabadIt is going to start its new by-product unit in Nasik. These companies are expected to add 40 lakh ltrs of milk to the existing industry volume by 2009. As already been mentioned, these plants are development the casein whey . Only Dynamix Dairies Ltd. , Baramati is using some cheese whey for manufacturing whey powders. 4. 1. 6 Major buyers of whey products in India The whey Powders, Lactose, Whey protein concentrates, Dimineralised whey Powders etc are mainly exported.However in India these are used by many pharmaceutical, dairy, bakery, confectionery companies etc. Some of the major bulk buyers include Nestle, Glaxo-Smithclime Beecham Ltd, Wockhardt Ltd, Novartis, Cadilla. There are small buyers as well but these are mainly in bakery and confectionery industry. WPC has been used widely in Ice-cream industry. Similarly Lactose and DWP are being used in infant formula and neutraceuticals. Exact volume of industry wise utilisation in India is not on hand(predicate). However it has been said by the industry people that most (approx. 75-80%) of Whey powders and WPC are exported but lactose is consumed locally in more quantity. 4. 1. 7 Entry and Exit restrictions in whey business industry IndiaCurrently the Indian whey industry is running and expanding because of the rise in the global prices of these products. As per the views of the industry experts some of the entry barriers in whey business include a) The availability of raw milk As most of the dairy plants are already into different dairy products manufacturing, so they are able to fix most of the milk of that region. The new entrant will have to divert milk from the existing players. It will mean more prices to be paid to the producers. This unavailability of milk becomes a major entry barrier. b) High i nvestment As the whey processing plants require relatively more sophisticated plant and technology, therefore a large amount of investment has to be made.For example, most of the existing whey processing plants have invested well-nigh 70- cytosine crores for 10 lakh ltrs plant. This is a key barrier. This high investment also becomes an exit barrier as these equipments cannot be used for other dairy products. And coupled with the above reason, there are les numbers of people buying out the machineries. This further discourages the existing players to exit. The live examples are Mahaan Proteins Ltd. and Ceepham Milk Specialities Ltd, Derabassi which are determination it difficult to procure milk in sufficient quantity and simultaneously unable to sale it off for better price. 4. 1. 8 Product differentiation Currently the whey based powders are traded in commodity markets.So there is no differentiation in terms of brand and specificity. However, there some companies like VRS Foods, a re making specific products like 28% Dimineralised Whey Protein Concentrate for Nestle. 4. 1. 9 Location vantage Most of the plants are situated in northern part of India particularly Haryana, Punjab and Uttar Pradesh. Some companies like VRS Foods have locational advantage as they are present in the area where milk production is maximum and there is no control of any co-operative and Multinational companies in terms of milk procurement. So, they are open to procure more milk at comparatively lower rate than in those areas where there are co-operatives and MNCs having debauched procurement base.The locational advantage save does not help more in case of saving expatriate cost as most of the manufactured products are meant for export only. 4. 2. Conduct of the whey processing companies in India As already mentioned, the Whey processing plants are operating in commodity market. So there is no advantage in terms of brands. The advantage however lies with respect to availability of t echnology. Some of the compaies like VRS Foods have dimineralisation facilities unlike others. The summary of the conduct of the whey processing companies can be represented through table 6 provided below. Table 6 Conduct of whey processing companies in India Name Name of Major selling Any alliance Future Brand activity keisters/Remark VRS Foods Ltd Paras Export, Nestle Nestle-Production intervention capacity to Contract increase by 6 lakh/Day (28%DWPC, 600MT/Month-Lactose Mahaan Proteins Mahaan Export, UF line revamped Wockhardt, GSK, Novartis Modern Dairies Ltd Nulife Export Olam International Handling capacity to increase by 5 lakh Dynamix Dairies Ltd - Export ,Nestle, Olam International - pharmaceutic companies Milk food Ltd Milk Food Export - - Bhole Baba Dairy Krishna Export, - - pharmaceutical companyceutical companies Thus from the table we get that Dynamix Dairies Ltd and Modern Dairies Ltd sells their products to Olam Int ernational. For lactose, however Dynamix has local agent situated in Mumbai. Other companies export on their own brand. VRS Foods, Modern Dairies and Mahaan proteins are already thinking of increasing their handling capacities. This is likely to be operational by next year. 4. 2. 1 Where are the whey products exported?As already been mentioned, most of the whey products are exported to various countries. The export has also increased drastically during last two years. The major exporting destinations have been listed in the following table. Table 7 Exporting destinations of whey products from India Country Name 2004 % share 2005 % share KOREA RP 391 72. 11% 279 10. 30% Canada 97 17. 88% 0 0 Bangladesh 40 7. 6% 0 0 BAHARAIN 11 1. 99% 3 0. 13% Oman 2 0. 43% 82 3. 05% Sri Lanka 1 0. 23% 0 0 Thailand 0 0% 0 0 CHINA P RP 0 0% 2,091 77. 30% japan 0 0% 174 6. 4% Malaysia 0 0 75 2. 78% Total(000, USD) 542 2704 Annual Growth (%) in export398. 9 Source www. apeda. com From t he above table we find that the major exporting destinations for India are china, Korea, Japan, Malaysia and Oman. There has been change in the contribution in export from different countries. China has become the main exporting destinations with more than 77% share in total export in 2005.This is primarily because of the rise in demand for whey based products due to emphasis of china government on sports and upcoming sports events. 4. 3. mathematical operation of whey business in India The performance of whey business in India could be understand through performance under following parameters 4. 3. 1 Efficiency of production Efficiency of production mainly relies on the consistent and stiff supply of raw material mainly milk . It has been observed that in lean season there is unavailability of milk and therefore the plant runs at lower capacity and consequently efficiency reduces. As per the comments of industry experts, the output has been more than 100 % during flush season w hen there is regular and sufficient supply of milk. 4. 3. Profitability The profitability of whey business is highly dependent ion the global prices rival WP, WPC, Lactose and the procurement price of raw milk. Over last two years it has been very fat as the price of milk has remained same and the global prices of the products have sky rocketed. The profitability ranges from 10-30 % depending on price fluctuation as reported by industry persons. 4. 3. 3 Size of industry output The size of it of Whey industry has been estimated to be around 4 five hundred0 MT in India in 2007which is expected to grow very fast. With respect to global scenario, the Indian whey industry is expected to grow at more than 20% over next 4-5 years. 4. 3. Technical progress Currently India is manufacturing generation one whey products. There are some cases (VRS Foods) where ion exchange etc has been added which lead to 2nd generation products. But in next 4-5 years the concentration is likely to remain on the production of 1st generation product only. 4. 3. 5 Growth The whey industry is expanding very fast. As been mentioned earlier the daily processing of milk is likely to rise from 65 lakh ltrs/day to 105 lakh ltrs/day in India. Thus the maturation is likely to be 60% over 2007 by 2009 in volumes. Similarly the export is likely to increase by more than 75% in next two years. 5. repute added products of whey proteinsWhey constituents are used in various areas ranging from bakeries, confectionery to health products like infant formula and protein concomitants. Apart from these, the use ranges from a common whey soak up to whey protein based drinks. Protein adjuncts have been syllabusified into two broad categories based on its manufacturer. These are Pharma protein supplements and Non-Pharma Protein supplements . Pharma protein supplements are manufactured by pharmaceutical companies while Non-Pharma Protein supplements are manufactured either by a nutrition or food company. 5. 1. Pharma protein supplements market in India 5. 1. 1 Some of the key features of protein supplements made by pharmaceutical companies are 1.These products are consumed by the recommendation of doctors mainly and in some cases the past experience related to product use is the force to buy these products. 2. This is an unionised market and the players are well established in the market. 3. These products over the years have also become Over the Counter (OTC) products. It has been found that brands like proteinex symbolizes all range of protein supplements. Table 8Indian Pharma Protein add-on market. Year2006-07 Volume (Ton) think of ( US $ mn) Proteinex sales 4274. 941 95. 0197 Protein supplement market-sales(estimated-2007) 15267. 65 270. 6537 Annual emersion rate of protein supplement category (%)17 Annual growth rate of proteinex (%) 25 Market share of proteinex (%) 28 Source Sourcewww. eac. dk/eac_en/ir/pr/2002, www. wockhardt. co. uk Some of the major brand s of protein supplements available in India have been listed below in the table. Table 9 Major brands of Pharma protein supplements in India Brand Manufacturer Proteinex Wockhardt Protenose Allembic B-protein Britishbiologicals Spert Novartis Alprovit Alchem GRD Cadilla Ultrich Wallace Promolan Piramal election Novartis 5. 1. Distribution channel of Pharma Protein supplements in India As already been mentioned, the Pharma protein supplements market in India is make in nature. To understand the value chain of these products the proteinex channel has been used. The table shown below explains the dispersal channel of proteinex. Table 10 Distribution channel of Pharma protein supplements in India. Channel Price at different levels(Rs/200 gm proteinex*) % Margin Manufacturer 68. 5 20 Superstockist 68. 5+27. 5=96 3 electrical distributor 96+4. =100. 1 7 Retailer 100. 11+9. 59=109. 7 20 Consumer 109. 7+27. 4=137 0 Source Informal talks with retailers and wholesale deale rs in Ahmedabad. 6. Non Pharma Protein Supplement market Current Scenario Non pharma protein supplements market in India is at nascent stage . This is relatively less organized market when we compare it with the Pharma protein supplements.Basically there are two kinds of Non-Pharma Protein supplements based on their place of manufacturing 1. domestic help Indian 2. Imported 6. 1. Imported Protein supplements As the name suggests these are manufactured mainly in countries of European Unions, USA, and Australia. 6. 1. 1 These trade protein supplements have following key features in Indian context 1. These are allowance priced. 2. In many cases, these supplements dont have traceability in terms of their manufacturers and importing-exporting agencies. In some cases however it was found to have these information. 3. These products have high protein concentrates, mainly whey proteins. 4.There are sole whey protein supplements available in the Indian market. Whey protein ranges from 35 % to 100%. 5. These supplements are having packing size ranging from 2. 2 lb to 10 lb. 6. The final price in the Indian market is dependent on the retailer as it was found to be reprinted on the jars/containers. 7. These products do not have consistent supply as convey by some of the distributors. 8. These products are mainly sold by the middle school proprietors and dedicated protein supplement stores. These products are largely unavailable in medical stores and Speciality stores. However in some cities like Mumbai, some Modern Format Stores like Big Bazaar is keeping this product. 6. 1. 2 Major merchandise brands in IndiaGlobally some of the famous brands of Non-Pharma Protein supplements have been mentioned below AST Sports Science, Beverly Internationa, Biotest, Champion Nutrition, Cytodyne, Cytosport ,EAS Gaspari ,Instone Nutrition, Labrada Nutrition, Met Rx, MuscleTech, Optimum Nutrition, Pinnacle ProLab ,SAN Nutrition, twin Lab, Universal Nutrition, VPX Supplements. Howeve r not all of these brands are available in India. Some of the famous brands which are available in India are Optimum,Prolab,Hercules,Muscletech,EAS,Universal,Labrada, Amway etc. It was observed that Optimum brand has maximum reach in terms of placement. These brands have different variants based on whey protein content, special ingredients like Branched cooking stove Amino Acid (BCCA), other essential micronutrients etc. 6. 1. 3 Distribution channel of Non-Pharma Protein SupplementsThe distribution channel of N-PPS could be understood through following figure Figure 8 Distribution channel of imported N-PPS pic Thus we find that there are mainly 6 channels of distribution. Based on the responses of the secondary school owners, retailers, distributors, Modern Format Stores employees, the margin available for the intermediaries is between 40-50%. This further increases when the prices have been reprinted on the product. It has been expressed by these intermediaries that the distribut ors have a margin of 15-20% while retailers have margin of 25-30 %. These retailers and gyms have higher margin based on the number of intermediaries in the channel, the less the number of intermediaries, the more the margins available.Thus for modern format store as a placement point, the margins available for sharing is around 40-45% ,from which they can roll discounts to consumers up to 5-10 % . This purport was seen in Mumbai unlike other metropolitan cities such as Delhi. Similarly, in some medical stores these products were kept and the discount was not available to the consumers. These retail points were garnering 30% of the margin. 6. 2. Indian Non Pharma Protein Supplement market certain scenario The Indian non-pharma protein supplement market is unorganised in nature . There are many small players operating in different regions of the country. It has been observed that these players are not able to reach different regions of India.These protein supplements have not bec ome a brand in India. 6. 2. 1 Some of the important features of Indian Non pharma protein supplements are 1. It is manufactured by local and very small players. 2. Prices are kept higher to give it quality product look. 3. The exact composition i. e. protein source, its concentration etc is not mentioned. 4. The manufacturing date, location etc are not mentioned. Labelling is a problem in many cases. 5. These products are strongly thought to be having very harmful side effects. 6. These products have very high margins. It has been observed practically that the margin ranged from 40-60% for the retailer on these Non-pharma protein Supplements. 7.These products are mainly sold in packing size of calciferolgms, 1 kg, 2 kgs and 5 kgs. 8. These products find good brainstorm in medical stores and gyms. But these gyms and stores are of relatively lower category. 6. 2. 2 Some of the major Indian brands of non-pharma protein supplements are 1. Nutramen 2. Endura 3. Stamin 4. Bodyplus 5. ES N 6. Some brands owned by gym owners like Talwalkers. These are the gym chains. They manufacture protein supplements for their own consumers. 6. 2. 3 Distribution Channel of Indian Non-pharma protein supplements The existing distribution channel for Indian non-pharma protein supplements have been explained using following diagram.Figure 9 Distribution channel of Indian N-PPS pic From above diagram it could be understood that there are three channels of distribution unlike imported NPPS. The margin available for the intermediaries is around 40%. These products however are sold broadly speaking through gyms and medical stores. Supplements stores have very little share in the total off take, the exact quantity not available. From the diagram it is also very evident that the margins available for the distributor is 15 %. In some cases when he himself becomes the retailer i. e. the gym owner then he has margin of 40% from which he also gives discounts to the consumers. 7. Survey analysi s 7. 1. Gym GoersSome of the key findings of the consumer survey based on nine cities have been listed below 1. Profile of the gym goers these mainly belong to class A1, A2, B1 category of SEC (Socio Economic Classification). Although the age ranges from 15 yrs to 60 yrs but mostly the gym goers are between 20-40 yrs of age range. They are students (mainly), professionals, executives, government employees, housewives etc. These people wear sporty, reputed and modern outfit. 2. Category of gym goers 65-70% of subdivisions are male and 30-35 % is females. In small cities however the % of females is slightly less (20%). 3. connector health clubs and gyms has become one of the key options for the people to keep themselves fit. 4.Awareness about the whey protein supplements is not adequate. People are not able to differentiate between sports, health and fitness drinks. 5. Most of the consumers, gym trainers and dieticians surveyed responded that whey protein is the best protein. 6. Th e gym goers perceive the fear of harmful effects of protein supplements. They think that these contain steroids. 7. Protein supplement users approximately 30-40% of the gym goers are the regular members. On an average the % of gym goers is 10-12% of the total members. 8. The average member size of gym ranged from 250 in Karnal to 757 in Mumbai. The average of all these cities being 524 members per gym. 9.The average gym slow-wittedness varied from 38000 in Anand to 75000 in Delhi. Gym density is the world of the locality divided by the number of gyms in that locality. The average is around 53000. 10. Around 0. 98% of the population goes to the gyms. 0. 37 % of the total population are the regular members of the gyms. 11. Average Per capita periodical consumption of protein supplement by the protein supplement users is 830 gms and the per capita monthly expenditure is Rs 1370. 12. The leverage from the influence of gym trainers is 63%. More is in case of smaller cities than the bi gger cities. 13. The aggregate demand of the N-PPS in Urban India is 2383 MT having value 427 crores. 14.Consumers view superior and high protein content, absence of any side effects, presence of other essential nutrients and mass building capacity of the product as the key attributes of the product. Price, brand, taste, and forwarding did not find significant importance. Powder was understood product format for them. 15. Most of the consumers completely check out with Amul brand signifying quality, value for money and easy availability. 16. Most of the consumers somewhat guardd with the fact that big companies can enter into the N-PPS business . But they agreed that Amul can become a leader. 17. Developing value for money product, creating awareness and identifying the right distribution channel will be the key for Amul to become market leader. 7. 2. signalize findings from Retailers and distributors interview/interaction These are based on the qualitative interaction with the current intermediaries in the distribution channel of the N-PPS. 1. Most of the retailers demod higher margin in absolute term being the motivation for placing these products in their stores. 2. It has been observed that the off take of the product is more from gyms and recommended stores. The recommendation actually playing significant persona in product off-take. 3. Retailers were agreeing on the fact that side effect is the main concern for consumer. 4. A bank brand is needed for these products to be consumed by more aspiring people. 5.Amul could be successful provided it offers the similar kind of incentives in absolute terms to the placement points like retailers-gyms, Stores etc. 6. How Amul Creates and spreads awareness will decide the sharpness of the product. 7. Purchase from retail outlets like big bazaar is possible when consumers are aware of these products. 7. 3. View points of dieticians and the food scientists Based on the views of the scientists of reputed instit utes like National Dairy Research Institute, Karnal, the key brokers which will decide the bankers acceptance of these products will be development of products based on Indian likes (e. g. taste, flavour etc. and communication of these products to the consumers. The scientists expressed that the consumers must be educated about the whey protein being the best protein, and the convenience protein as it substantially mixes into the blood. The dieticians at various gyms were acknowledging the fact that whey proteins are the best proteins. They also said that the consumers are very anxious about the results. They expect quick results. Whey proteins because of very high Biological value produce fast result. Whey proteins can also be used for fitness and efficiency building. It can be used by fat and obese people. It not only compensates for their energy requirement but also provides lean muscle.Dieticians expressed that Body to Mass Ratio (BMR) is a very good indicator for protein req uirement. 8. love of Demand of Non-pharma protein supplements in India As already mentioned the Non-pharma protein supplement market in India is highly unorganised and very less secondary information is available in related to number of gyms, gym density, per capita NPPS consumption, market growth rate etc. Therefore primary research was done using consumer survey questionnaire, and checklist for retailers particularly gyms. cabaret cities were taken into consideration. 8. 1. Following assumptions have been taken into consideration while estimating demand of NPPS in India 1. The N-PPS are consumed mainly by the gym goers. 2.The list of the number of gyms available from internet and the number of gyms reported by the gym owners in each city were considered together. The former was given 30% weight and the later was given 70 % . The basic idea was to make an approximation based on the response of the gym owners, consumers and the available list. 3. The annual multiplication factor has been cipher based on the consumption pattern of protein supplements users. Generally a consumer uses the products for 7 months in a year. Around 20% of consumers leave the product in a month, while 80% continue for above mentioned period. Also 80% of the protein supplement users actually continue for 7 months. Thus multiplication factor = 0. 8*0. 8*7+0. 2*1=4. 68. 4.Average per capita monthly consumption of protein supplements (among users only) and their monthly expenses on it are the parameters used for demand inclination in terms of quantity and value. 5. The response of the retailers and gym owners regarding growth of the market has been considered for finding the average annual growth rate and using it for projecting demand for next 5 years. 6. The amount of N-PPS consumed is a mixture of 40 % and 70% whey protein powders. So, the final demand estimated will represent 55% whey protein containing N-PPS. Table 11 City wise demand estimation of N-PPS Cities Population Number of gyms Listed gyms Estimated gyms Gym density 2007(approx. response based internet based ratio(70/30) Mumbai 19264521 500 214 414. 2 46510 Pune 4408248 120 71 105. 3 41864 Delhi 15095075 250 81 199. 3 75740 Gurgaon 1000000 30 21 47619 Panchkula 200000 12 8. 23810 Chandigarh 900000 40 28 32143 Karnal 200000 10 7 28571 Ahmedabad 5304257 100 26 77. 8 68178 Anand 400000 15 10. 5 38095 Total 46772101 1077 871. 5 53669 continued (table horizontally associated with next one) Average gym % of people Avg monthly Avg monthly Supplement Monthly goers/gym going gym consumption(gm) budget(Rs) user/gym consumption(MT) 757 1. 63 825 1750 74 25. 14 580 1. 39 733 1400 65 4. 99 471 0. 2 925 1540 59 10. 90 467 0. 98 733 1233 65 1. 00 367 1. 54 600 850 48 0. 24 450 1. 40 1250 1500 39 1. 37 250 0. 88 750 1550 40 0. 21 450 0. 6 950 1300 33 2. 40 500 1. 31 700 1200 40 0. 29 524 0. 98 830 1369 46. 55 Table 12 Demand estimation of N-PSS of top 35 cities of India Populat ion Number Total Population- % representation Representative Annual Annual 20L-40L 5 14329950 13. 6 Gurgaon, 83. 5 117238752 Chandigarh 40L-80L 5 30816617 31. 52 Ahmedabad, 109. 7 190222388 Pune 80L 3 49839421 68. 94 Delhi, 244. 485241953 Mumbai Total 35 126885770 Red whoreson Energy 47 Monster Energy 12 Rock star Energy 11 Gatorade Sports 85 advocateade Sports 13 Lucozade Sports 1 In India however very few global brands like Red bull, Power House and Gatorade are available. 10.Demand Estimation of Sports and Fitness drinks in India 10. 1. Following features of sports and fitness drinks consumer could be used to estimate the demand of these drinks 1. These are consumed by relatively rich class and upper middle class people. 2. Sports drinks are popular among 15-30 yrs while Fitness drinks popular among 30-60 yrs people. 3. These are sporty in nature and try to adopt the sporty culture very fast, so they like to wear brands related to sports. 10. 2. U. K sports drink market The U. K sports drinks market was estimated to be of 110 mn ltrs in 2006 by Zenith international, a market research agency. Per capita annual consumption has increased from 0. ltrs in 2000 to 1. 8 ltrs in 2006. Following graph shows the Per Capita use of Sports Drinks in U. K. Figure 12 Per capita consumption of sports drinks in U. K pic The growth in per capita consumption can be understood from following diagram. Figure 13 Growth of U. K sports drink market pic From the above diagram it is quite evident that the growth rate was very high initially around 2000-02 but it declined in subsequent years and almost remaining constant at 13-14%. This pattern could be used to further project the demand. 10. 3 Some of the assumptions being made for demand calculations are 1. The pattern of consumption of U.K has been used as an indicator. 2. Adoption of sporty culture has been considered as a comparing parameter. 3. Per Capita annual Income of U. K people has been used to identify the potential consumer. 4. The relationship between Per Capita annual Income and Per capita annual consumption has been used to find out demand for similar kind of Indian consumers. 5. Urban population has been considered only. 10. 4 Steps followed 1. The relationship between PCI and PCC for U. K consumer is estimated using simple regression analysis. The relationship was significant and the set was robust. The relationship obtained is PCC (Ltrs) =-2. 51175+0. 00123PCI (PPP) 2. The segment of population having comparable income to PCI of U. K is found out from secondary data available at www. ncaer. org. The PCI data is converted from nominal to PCI -PPP (Purchasing Power Parity) in dollar terms using 1$ =Rs 42 as conversion factor. 3. Conversion factor for PCI (nominal) to PCI(PPP)=Current PCI (PPP) of India/Current PCI(nominal) of India=$4031/$885 =4. 55 4. The Urban population belonging to age group 15-30 yrs and 30-60 yrs has been taken from www. censusindia. n et . For both the population 0. 6 multiplication factor has been used assuming all males and only 20% of the females as the customers. 5.The adoption of sporty culture has been calculated from the responses of the consumers while conducting consumer survey. The brands like Nike, Adidas, and Reebok have been used for this purpose. 50% of the consumers were of this category. So to the total consumers estimated in tint 4, 0. 5 has been multiplied to obtain the potential customers. 6. By using the relationship in step 1 and Income from step 2, PCC of sports drinks can be calculated. This has been multiplied by the number of potential customers obtained in step 5. This will give the total demand of the sports and fitness drinks. Following table shows the demand of Sports and Fitness drinks in Urban India.Table 14 Calculated Demand of SFD in India pic 1. Amul Capabilities To understand whether Amul could be able to tap this lucrative market, following capabilities have been analysed 1. A vailability of raw materials-whey 2. Technical capabilities. 3. Marketing capabilities. 11. 1. Availability of raw materials-whey Currently the sources of whey for Amul are Paneer, Shrikhand and Cheese. Following table shows the current availability of the whey for Amul. Table 15 Sources of whey in Amul pic As mentioned in the above table, the annual growth rate for cheese, paneer and shrikhand demand could be used to project the availability of whey in next five years.Based on following information the gap between the availability of whey and its demand could be estimated 1. One Kg of whey protein could be obtained from 143 kgs of liquid whey as liquid whey has 0. 7% whey protein. 2. The sports and fitness drinks will have 5% whey protein. 3. The average whey protein concentration of the N-PPS demand calculated is 55%. Figure 14 The future projections of Whey production in Amul pic Following table shows the aggregated gap between the availability and total demand of whey protein ba sed sports and fitness drinks and N-PPS. Table 16 Estimation of gap between the production of whey and demand of whey based substances (N-PPS/SFD). Lakh ltrs Lakh ltrs Whey proteins Demand- Whey protein Equivalent NPPS Year per day Available available(MT) 55% (MT) Content Whey(Lakh ltrs) (MT) 2007 2. 19 658 461 2374 1306 1865. 3 2008 2. 91 872 610 2843 1564 2233. 8 2009 3. 88 1164 814 3419 1880 2686. 4 2010 5. 21 1562 1094 4130 2272 3245. 2011 7. 03 2109 1477 5011 2756 3937. 2 (Continued horizontally) SD/FD Total Whey Required Difference % Whey availability (lakh Ltrs) (Lakh ltrs) (Demand-Supply)-MT 67 1932 1274 34 163 2397 1525 36 285 2972 1808 39 438 3683 2121 42 628 4565 2456 46 Thus the whey available is able to meet around 35% of the total demand of N-PPS and SFD. 11. 2. Amul Technical Capabilities Size of the Whey processing plant Amul currently does not feature any whey processing plant. As there is availability of whey already, to operate effi ciently i. e. supplement upon economies of scale it will have to divert some milk for whey production.It has been observed that the whey processing plant in India is having handling capacity between 5-10 lakh ltrs per day . The capital investment on these plants have been from 60-100 crores. Assuming the plant of capacity 10 lakh ltrs/day, the amount of whey generated will be 67% i. e. 6. 7 lakh ltrs. So the initial difference would be 4. 5 lakh ltrs of whey i. e. 6. 7 lakh ltrs of decamp milk (S. M). Assuming Amul to capture share of 50% of current demand, the capacity required after 5 years hence will be around 8 lakh ltrs of whey i. e. 12 lakh ltrs of S. M. So ideally the plant handling capacity could be 12 lakh ltrs per day. Table 17 Realisation from By-product plant at current market price. Qty(Kg) Price(Rs) Total(Rs) Skim Milk (S. M) 100 13 1300 Casein 2. 7 350 945 Whey protein-35 2. 00 250 500 Lactose 3. 40 100 340 Realisation on S. M 485 % Realisation on S.M 37 All other emailprotected% 325 shed light on realisation 160 % Net realisation 12. 31 For 10 lakh ltrs milk per day or assuming 300 working days, the net realisation will be Rs 48 crores. The investment made on the plant is around Rs 120 crores for 10 lakh ltrs plant. Return on capital engaged would be=48*100/120=40%. Currently Amul has two facilities for product development 1.Vidya Dairy ,Anand 2. Khatrej Cheese Plant 11. 3. Marketing capabilities of Amul For product like Protein Supplements and sports and fitness drinks it is very important to assess the merchandise capabilities before launching the product as these products require non-conventional distribution channel and promotion activities. 11. 3. 1 analysis of Amul as a brand It is very important to understand the popularity of Amul Brand among the potential customers. This will indicate the acceptance of Amul products. The analysis included consumer survey. The consumers were asked the question what Amul is kno wn for. The responses were scaled from 1 to 7, 1 being ompletely disagree, and 4 being neither agree nor disagree and 7 being completely agree. The responses have been summarised below. Table 18 Amul as a brand Features of Amul brand Mean Median Mode Remarks Quality 6. 15 6 6 Strongly oppose Fair Price 6. 08 6 6 Strongly Agree Value for money 5. 93 6 6 Strongly Agree Amul market leader 5. 5 6 6 Strongly agree Availability of product 5. 59 6 5 Strongly Agree Big company entry 4. 2 4 4 Dont agree Amul fit into sports nutrition 5. 3 5 5 Somewhat agree Amul capability 5. 28 5 5 Somewhat agree Existing Distribution/Branding 4. 53 5 6 Somewhat agree From above table it is evident that most of the consumers strongly agreed that Amul is known for its quality, value for money, fair price, and availability of products. Amul can become market leader is well accepted by the consumers. However the challenge lies in fitting the Amul brand into sports nutrition and identifying suitable d istribution channels for such products. The consumers also hinted that by creating awareness this problem could be sorted out 2. Market entry strategy for Amul It has already been identified that the whey business is highly lucrative both as a commodity and in mass market. However sustenance of profitability with less risk lies in mass market. Amul should take the advantage of being the first mover into this category in India .It can leverage upon its brand. The market entry will include following marketing decisions Market segment Target customers Positioning Product, Price, Place and Promotion related decisions. 12. 1 Market segmentation The market for these products i. e. Non-Pharma Protein Supplements (N-PPS) and Sports and Fitness drinks (SFD) could be segmented on the basis of age, location, lifestyle, income, household category etc. The segmentation for N-PPS has been shown in the following table. Table 19Market segmentation for N-PPS pic Similarly the segmentation for SF D consumers could be done as follows. Table 20 Market segmentation for SFD. Age group 15-30 yrs for sports drinks,30-60 yrs for Fitness drinks sexuality Male/female, mainly male Place Urban Profession Upper middle class, Rich class Occupation of the head of the family Middle to senior executives, Professionals Household category A1,A2 Clothes and sports Reputed, branded, sporty Culture Westernization 12. 2. Target segment This is very important as it gives idea about those customers which have maximum potential to purchase these products. To accurately identify the target customers for N-PPS, Discriminant analysis (see below) was done . The results show that those customers who have very high Value for Money (VFM) are most likely to buy these products.So the target customers for N-PPS will be 20-25 years old, gym- goer males. picpic Eigen value, Wilds Lambda and significance were 0. 71, 0. 58 and 0. 00 respectively which shows that the model is robust. Here 1 and 2 sign ify those customers who will buy and will not buy Amul products respectively. Initially the target customers for SFD will be high income category gym going p