Lesser Known Struggles And Opportunities Of The Indian Plant-Based Industry

India is one of the largest business economies in South Asia. In this region, the demand for plant-based meat alone is projected to grow 200% in the next five years according to a recent research paper. Opportunities for the plant-based industry are countless in India, but entrepreneurs often face some common challenges which need to be addressed to develop this sector.

To understand what these roadblocks are and how entrepreneurs are working around them, we at Vegan First speak to Shivnayan Aggarwal, Lead at The Plant Factor; where they work towards bringing together businesses, investors and industry experts together.

What does the plant-based industry lack in India?

One of the most important factors which hamper the growth of this sector is the absence of cold chain logistics in the country. Indian retailers in general are still warming up to varied products which need temperature controlled environments.  Alternative dairy products, especially plant-based ice creams, do not have access to low cost temperature-controlled transportation. This often hinders companies from expanding across states and in smaller retail stores

“Most of the products are temperature-controlled in this segment. Infrastructure in terms of logistics really needs to be built in the country right now. And this is what hampers with the growth rate of these companies as well because scalability becomes an issue,” shares Shivnayan.

Another issue is a lack of access to capital. The plant-based industry is currently an underfunded sector in India, and insufficient capital is a major obstacle in reaching price parity by most brands. Since Indian consumers are price-sensitive, this is a major obstacle for growth.

“Being a food tech company in the plant-based sector is in itself a risky prospective. That also reduces the funding in this sector.”

Apart from that, the industry faces higher regulatory hassles than other food tech industries. The plant-based market has more entry barriers, and brands often struggle on how to position themselves in a market which is still warming up to plant-based products. 

For instance, dairy milk is an easily understood concept for the customer due to its prevalence in the market. Plant-based mylks*, on the other hand, have restrictions on how they are marketed, labelled, and categorised, which tends to affect sales.

“There is also the lack of manufacturing infrastructure, but I think that's a very solvable problem as we move forward in this segment in time.”

Collaboration is the Key

“The industry is very new, so participation of all stakeholders is required for the rapid growth and expansion of the sector. So government funding, support and attention is definitely required.”

Many issues that the plant-based industry faces are common to other sectors as well. For example, the issue of temperature-controlled transportation is present in the ice-cream industry at large, as well as the pharmaceutical sector. The higher price point of plant-based alternatives is another hindrance. The reality is that dairy is a highly subsidised sector in India. In Feb 2020, an allocation of Rs. 4460 crores was made towards dairy farming, which was further boosted with another Rs. 15,000 crores in June 2020 towards animal husbandry.

These, according to Shivnayan, can also be solved through collaboration between incumbents of different industries.

While some companies focus on manufacturing, some take up logistics and solving market issues, connecting companies with investors, technologies and experts. The corporate sector and the distribution and logistics sector can come together to tackle different obstacles. The plant-based industry will be one of the beneficiaries from this collaboration.

The entrance of new innovations and technologies is certainly helping the segment grow. This aspect of the industry is paving the way for its expansion and increasing the accessibility of plant-based products. It can tackle the major factors determining the acceptability of plant-based foods by the average Indian consumer – taste and texture, affordability and convenience.

“Food technology is where we have seen evolution and what has given a jump-start to this sector which has been sitting quiet for a long while, especially in India.”

The pandemic has definitely brought this sector to the attention of both consumers and investors. People now wish to make more ethical, healthy and environmentally-conscious choices, and even companies in the F&B sector are trying to achieve a more sustainable food system, thus shifting to plant-based products.

Investors are observing this potential and the industry has raised a notable amount in the last few years. The last year itself saw an investment of $3.1 billion in this sector globally, which accounts for half of the total capital the industry raised in the last decade.

Using India’s Uniqueness To Its Advantage

India is a vast market. It is also extremely diverse – both culturally and economically. This offers wide opportunities for brands to try new things, as there is always a consumer base for different products. It gives them a chance to introduce their products to different palettes, cultural preferences, consumer behaviours – the possibilities of exploration are many.

“There is so much room for experimentation before you roll out your product for the masses. That is a very special opportunity a country like ours provides to plant-based products.”

What happens when global brands enter the market and can? Can Indian brands tackle the competition effectively? We think so. Regular knowledge exchange between food technologists and various other stakeholders can make homegrown companies thrive in an agriculturally robust environment like India.

Very often, achieving acceptability to please the diverse consumer behaviours is a challenge for entrepreneurs.

This is what sets apart the Indian plant-based market, and can be a reason for the growth of a variety of sub-sectors in the industry.

Plant-based meat alternatives, for instance, have a lot of potential in the Indian market. Shivnayan comments, “We [at Plant Factor] think that it would have a larger impact in terms of getting the message of why we should be consuming plant-based products through.”

‘Keep Experimenting’

Shivnayan emphasizes on the nascent stage of the plant-based sector in India, and states that this gives brands a chance to innovate. The market is still fresh, and the scope of growth is vast. Moreover, the technology is evolving everyday, paving the way for newer innovations including 3D-printed plant-based meats, and more.

He advises brands to keep experimenting, as that is a way to achieve innovation. Since the industry is new, it is easier to carry out data-driven experiments.

*’Mylk’ is used to mean an edible white like liquid obtained from plants or nuts.