Gut-friendly dairy market takes root in India

Credit: Hryshchyshen Serhii / Shutterstock.com

Gut-friendly products are a growing focus for the dairy industry in India, where probiotics have long been a central part of the country’s cuisines.

Brands are launching probiotics, promoting the products through educational and advertisement campaigns with encouraging results.

“Rising disposable income, growing consumer interest towards health and wellness, and enhanced favourability towards dairy-based products are driving growth in the category,” Manish Bandlish, managing director of Uttar Pradesh-based Mother Dairy Fruit & Vegetable Pvt Ltd, tells Just Food. “Though currently a niche segment, the probiotic dairy products category is expected to grow at an annual compound growth of around 25% by 2032, as per industry estimates.”

India-based management consultants IMARC Group put the sales of probiotic drinks, curd and yogurt in India at $2.2bn in 2024 and forecast they will reach $10bn by 2033, representing a compound annual growth rate (CAGR) of 17.8%.

These growth projections are encouraging Indian dairy companies. Hyderabad-based Heritage Foods launched a probiotic buttermilk in August and, according to Srideep Kesavan, the company’s CEO, it already contributes 15% of the company’s overall buttermilk sales. “It is growing very rapidly and by next year it would probably be double current volumes,” he tells Just Food.

The success of probiotic products has been delivered by supermarket chains and home delivery services. According to Kesavan, 95% of Heritage Foods’ probiotic sales come from these channels, in contrast to most packaged food sales in India, which are still dominated by small neighbourhood shops.

While supermarket chains account for a substantial portion of these sales, the trend is gaining momentum due to the rapid growth of organised home delivery, Kesavan says. Smaller neighbourhood shops struggle to sell probiotic products. “These are fresh items and there is a problem of the shelf space in mom-and-pop stores,” Dr K Rathnam, CEO of manufacturer Tamil Nadu-based Milky Mist Dairy, says, adding the consumers of probiotic products are mostly centred in urban areas where e-commerce has a presence.

Probiotic yogurt brings better margins than yogurt and protein-plus probiotic yoghurt gives even higher profits

Dr Satish Kulkarni, former National Dairy Research Institute scientist

As India’s market for ‘gut-friendly’ dairy products continues to grow – “It is getting commoditised very fast,” notes Sharma – manufacturers are eyeing the margins the category can offer.

Dr Satish Kulkarni, former principal scientist of the National Dairy Research Institute, points to products being released by dairy companies including Nandini, Mother Dairy, Milky Mist, Heritage Foods, Verka and Amul. “Yogurt gives more profit than liquid milk, probiotic yogurt brings better margins than yogurt and protein-plus probiotic yoghurt gives even higher profits,” he says.

Meanwhile, expert health advice on the importance of gut health continues to increase demand in a country where drinking yogurt drinks such as lassis is a well-established tradition.

According to Kuldeep Sharma, founder of Uttar Pradesh-based dairy consultancy Suruchi Consultants, probiotic sales were boosted by the Covid-19, which encouraged consumers to buy products touted to support immunity. Public medical advice about good nutrition also stressed the key role of gut health in resisting the worst effects of the virus. At the time, for example, India’s ‘ministry of ayush’, which promotes traditional medicine, said: “Good nutrition is important in supporting the immune response and also in promoting a diverse gut microbiota”.  

In 2023, the Food Safety and Standards Authority of India (FSSAI) published a book (3) entitled Healthy Gut, Healthy You – Traditional Recipes with Potential Probiotic Benefits. It stressed that probiotics have always been an integral part of Indian cuisine and Ayurvedic texts have elaborated on the effects of fermented milk products in preventing and treating many digestive disorders.

Dr Sreemathy Venkatraman, a clinical dietitian in Bengaluru and the book’s editor, asserts that young Indians are developing more gut health issues as they consume more ultra-processed foods. “Probiotic dairy items are a remedy for them,” she tells Just Food.

Promotional material from dairy companies contains such messages, too. India’s largest dairy brand Amul promotes its wares thus: “Take a glass full in the early morning in place of tea, Amul probiotic buttermilk will improve the digestive function … Replace your soup with Amul probiotic buttermilk, it will give you dieting benefits.”

While such marketing draws on support for traditional products and ingredients that support gut health, younger Indians influenced by online content could be a target for brands, according to Hannah Cleland, senior consumer analyst at GlobalData, Just Food‘s parent company.

“Indian food and medicine is culturally inclined towards gut health even before it became a popular health trend in western markets. That said consumers indicating they are actively trying to improve their gut health in India was on a par with the global average,” Cleland says, citing a global consumer survey carried out by GlobalData in the first quarter of the year. The survey showed around 43% of Indian consumers said they are actively trying to improve their gut health in India, close to the global average of 42%.

GlobalData’s survey notes the impact on young Indians of online health and wellness influencers. For example, 46% of Indian millennials were most likely to actively improve their gut health compared to 37% of Generation X consumers, it said.

However, Cleland says brand owners need to do more to drive awareness of the products. “The number of consumers in India who find turmeric to have positive health benefits was above the global average, at 68% versus 65%,” she says. “This is unsurprising given that turmeric is heavily used for anti-inflammatory properties in Ayuverdic medicine. By contrast prebiotics, probiotics, and postbiotics. which are an ingredient group that has become closely linked with gut health in other markets, under-index for positive health perceptions in India.”

Nevertheless, brands in India are attempting to market more sophisticated gut health products. Yakult is another, launching its Yakult Light Mango in August, which emphasised its probiotic content to promote better digestion and nutrient absorption. Yakult wisely used cues to appeal to Indian consumers. Mango is a popular ingredient in India and the marketing campaign for the product signed up Bollywood actress Sanya Malhotra.

However, with this growth has come regulation, with the FSSAI mandating a list of micro-organisms that would qualify a product as probiotic if present in a quantity of at least 100 million ‘colony forming units’ (a measure of viable bacterial or fungal cells in a sample) per gram.

The FSSAI list includes ‘streptococcus thermophilus’ and ‘lactobacillus delbrueckii subsp. Bulgaricus’, present, for example, in Greek-style yoghurt sold by Mumbai-based Epigamia in India for Rs250 ($2.94) for a 400g pack. The product, however, is not labelled as probiotic.

While a considerable proportion of probiotic dairy products sold in India come in single serve packs of 100g to 200g (for yogurt) and 100ml to 200ml for buttermilk. Heritage Foods offers probiotic yogurt only in larger packs of 400g and probiotic yogurt packs in 400ml. “In smaller packs it is really not viable for us to absorb the cost of cultures at this point of time,” Kesavan says. “Probiotic bacteria are much more expensive than the normal fermenting cultures.”

Mother Dairy does offer 100ml of probiotic buttermilk priced at Rs20, which is double the price of its non-probiotic buttermilk in similar packaging. For yogurt, the difference in price of probiotic and standard lines is only 20%, with the latter costing Rs for a 400gm pack.

According to Dr Kulkarni, while the cost of purchasing a bacteria culture for making a kilogramme of standard curd is Rs1. For probiotic lines, it is Rs2.

Most strains used by Indian dairy companies for all products are imported from Europe, Kesavan says. “The supply of fermented cultures in India is led by global giants such as [Denmark-based] Novonesis and [US-based] IFF-Dupont,” he explains.

Kesavan adds dairy companies hope the popularity of probiotic variants of yogurt and buttermilk will boost sales of standard lines, which many consumers still make at home from milk.

He predicts that, as they cannot make probiotics, the growth of the gut-health segment will build the habit of buying packaged yogurt and buttermilk. “We are investing to build the category and maybe in two to three years it will become more profitable.”

Sign up for our daily news round-up!

Give your business an edge with our leading industry insights.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}