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Market Forecast of Sweeteners in India

Market Forecast of Sweeteners in India Market Forecast of Sweeteners in India
Release date 19.10.2021
Number of pages 49
Formats DOCX, PDF
Cost 45000 ₹

The relevance of research 

Sugar substitutes are certain substances and compounds that give food a sweet taste and are used instead of sugar and sweeteners related to it. These substances can be used in the nutrition of patients with diabetes mellitus, having a sweetness coefficient close to that of sucrose.


Purpose of the study

Analysis of the state of the sweetener market in India, assessment of the market size, analysis of competitors, as well as identification of factors affecting the sweetener market


Content 

Chapter 1. Key Components of the Sweetener Market

1.1. Market size
1.2. Growth Rates of the Sugar Substitutes Market
1.3. The ratio of imported and domestic products in the market
1.4. Volume and dynamics of production of sweeteners
1.5. Import of sweeteners. Volume and dynamics
1.6. Export of sweeteners. Volume and dynamics
1.7. Share of exports in production

Chapter 2. Economic characteristics of the market

2.1. Sweetener Market Trends
2.2. The main problems of the industry
2.3. Estimation of the number of buyers and their financial capabilities
2.4. Estimated consumption per capita
2.5. Analysis of sectoral indicators of financial and economic activity
2.6. Compact location of industry companies in certain regions
2.7. Stage of the life cycle of the sweetener market

Chapter 3

3.1. Economic components
3.2. Social Components
3.3. Technological components
3.4. Political Components
3.5. STEP analysis of the sweetener market

Chapter 4. Assessment of the degree of competition

4.1. Scale of competition (local, regional, national, global)
4.2. Number of competitors and relative market shares of the largest competitors
4.3. Competition from substitute products

Chapter 5 Industry Forecasts

5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
5.2. Analysis of the impact on the state aid industry at the current date
5.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the sweetener market
5.4. Prospects and growth drivers for the sweetener market
5.5. Forecast for the development of the sweetener market in the context of the current economic crisis due to covid-19

Chapter 6 Forecasting Methodology

6.1. Methods for forecasting key industry indicators
6.2. Sources of information for forecasting
6.3. Timing of forecasting


Research excerpt 

Chapter 1. Key Components of the Sweetener Market

1.1. Market size 

Sugar substitutes are certain substances and compounds that give food a sweet taste and are used instead of sugar and sweeteners related to it. These substances can be used in the nutrition of patients with diabetes mellitus, having a sweetness coefficient close to that of sucrose. 

Sweeteners are distinguished by origin:
- natural sugars - monosaccharides and disaccharides (fructose, glucose, maltose, lactose, galactose and others). This also includes carbohydrate syrups (molasses);
- artificial sugars obtained by organic synthesis: sugar alcohols (sorbitol, xylitol, maltitol), aspartame, acesulfame, saccharin, cyclamate and others.

In addition, sweeteners are classified according to the degree of sweetness. The unit of measure for sweetness is SES (SweetnessEquivalencyofSaccharose). The sweetness of sucrose is equal to 1. According to this criterion, the following types of sweeteners are distinguished:
- sweeteners with SES<1 (glucose, lactose, lactulose, molasses, sugar alcohols);
- sweeteners with SES>1 (fructose, glucose-fructose syrup);
- sweeteners with SES>…>1 (intense sweeteners).

The main sweeteners include:

1. Sorbitol is a natural sweetener, water-retaining agent, and color stabilizer. It is absorbed by the body by almost 100%, and also has better nutritional properties compared to synthetic products. 1 gram of the substance contains approximately 4 kilocalories. 
2. Saccharin - is a sweetener of artificial origin and is a hydrated sodium salt. Its crystals are odorless. The taste is about 400 times sweeter than beet sugar. 
3. Xylitol is a natural sweetener used in products for people with diabetes. The glycemic index of this substance is 7, and table sugar is 65. 
4. Licorice root is also an excellent sugar substitute and is 15 times sweeter. When consumed in excess, licorice can cause nausea and even vomiting. 
5. Stevia - a plant with small leaves, similar to mint, which can be grown even at home. Stevia has a very sweet taste, 300 times sweeter than sugar, that is, 100 grams of sugar is approximately equal to 5 grams of this herb. The taste of stevia is bitter, but at the same time sweet enough, which is why this herb is an excellent sweetener. It is she who is now actively being introduced into the diets of people who follow proper nutrition. 
6. Isomalt is obtained from a natural source - sugar beets, therefore it gives the product a natural sweet taste. The substance is also found in honey and sugar cane juice. Abroad, isomalt is often taken by people suffering from cardiovascular diseases. 
7. Mannose - an organic compound from the group of hexoses, an isomer of glucose. Upon entering the human body, it improves the digestive capacity of macrophages. You can also find other names for this substance: mannohexose, D-mannose or L-mannose. 

Thus, the modern market is quite saturated with various sweeteners. Their production is on a larger scale, and every year in India there is an increasing number of people promoting food products containing sweeteners. However, retail trade networks sell them inactively, the main share of sales falls on food production.

1.2. Growth rates of the market of sweeteners 

Consider the dynamics of the volume of the sweetener market in India. 

Diagram 1. Dynamics of the market volume of sweeteners, 2016-2020, million Rs.

According to market experts, the industry, as part of the Indian economy, is ready to increase economic growth rates. This requires a systematic development of consuming industries and, as a result, an increase in demand. 

1.3. The ratio of imported and domestic products in the market 
...

1.4. Volume and dynamics of production of sweeteners 

The domestic production of sweeteners in the study period demonstrates the positive dynamics of its development. 
...

1.5. Import of sweeteners. Volume and dynamics 

In view of the fact that the market for sweeteners in India is mainly formed by import supplies, the introduction of sanctions led to a decrease in the volume of products imported into the country. 
...

1.6. Export of sweeteners. Volume and dynamics

The volume of exports of sweeteners from India in monetary terms in 2016-2020 shows a predominantly positive trend. In 2020, the volume of exports amounted to ... million dollars,

Chart 7. The volume and dynamics of exports of sweeteners in monetary terms, 2016-2020, million dollars

The dynamics of exports of sweeteners in physical terms is identical to the dynamics of exports in value terms. 
...

Diagram 10. Balance of exports and imports, i.e.

1.7. Share of exports in production 

Export deliveries carried out by Indian companies in the market of sweeteners actually represent re-imports. 

Chapter 2. Economic characteristics of the market 

2.1. Sweetener Market Trends

The Indian market for sweeteners and sweeteners grew every year, but due to the crisis of 2014, the market changed the vector of its development. Since 2016, there has been a decrease in import volumes. Nevertheless, this situation contributes to the development of domestic production. The market share of domestic products has increased significantly.

As a result of the healthy lifestyle trend over the past few years, there has been a decrease in the consumption of white refined sugar, and the range of sweeteners is becoming wider and more affordable. 
...

2.2. The main problems of the industry 

Indian consumers are not able to completely abandon imports in the studied market. Firstly, the lack of competition and the closure of the market is the reason for the decline in product quality and rising prices. Secondly, the production capacity of Indian enterprises simply will not meet the demand for products. However, the share of imports in the production structure may be reduced.
To do this:

firstly, the production of products in the widest price range - from the lowest to the highest, or price / quality segmentation will be practically absent throughout the year;
secondly, if the sector demonstrates competitive prices/costs in the production of this product.

2.3. Estimation of the number of buyers and their financial capabilities 

The dynamics of consumption of sweeteners is determined by:

trends in real incomes of the population (see section 3.2);
development trends in the Indian economy and the food industry in particular (see section 3.1).

The market for sweeteners continues to develop in direct proportion to the income and employment of the population.
...

The audience of consumers has noticeably transformed, and now three main groups can be distinguished:

people suffering from diabetes. They use sugar substitutes for medical reasons. Choose mainly options with a low or 0 glycemic index (stevia, saccharin, sucralose, aspartame, erythritol).
people who monitor body weight want to lose weight and reduce calories in their diet. Low or 0 calorie options are important to them. Most often, these are the same types of sugar substitutes that are suitable for people with elevated blood glucose levels.
people who lead a healthy lifestyle. This group refuses sugar in the first place because it is refined and does not carry any benefit. Most often, they choose healthier alternatives (coconut sugar, cane sugar, natural fermented syrups).

2.4. Estimated consumption per capita

...

2.5. Analysis of sectoral indicators of financial and economic activity

Important data for analyzing the state of the industry is the dynamics of such indicators as profitability, liquidity, and business activity. 

Gross margin is gross profit divided by sales revenue (excluding excise taxes and VAT). Gross margin shows how much gross profit falls on a unit of revenue. Gross profitability serves as an assessment of the economic efficiency of an enterprise, which reflects the rational use of labor, material, monetary and other resources.
...

Return on profit

The pre-tax profit margin for the diet food industry relative to the profitability for all industries in India was higher than that of the Indian economy as a whole, in 2020 by 4,8 p.p. 
...

Current liquidity

...

Absolute liquidity

A more stringent liquidity criterion is the absolute liquidity ratio. It shows what part of short-term liabilities can be repaid immediately, if necessary, at the expense of available cash and marketable securities.
...

Business Activity Indices

Business activity is the ability of an enterprise, based on the results of its economic activity, to take a stable position in a competitive market, it is the performance of an enterprise in relation to the amount of resource consumption in the process of the operating cycle. Indicators of business activity are related to the rate of turnover of funds: the faster the turnover, the less semi-fixed costs per turnover, which means the higher the financial efficiency of the enterprise and the industry as a whole as a combination of many enterprises.
...

Financial stability

The stability of the financial position of the enterprise is impossible without effective management of working capital, based on the identification of significant factors and measures to provide the enterprise with its own working capital.

The equity ratio characterizes the availability of own working capital of the enterprise, necessary for its financial stability, it is calculated to assess the solvency of the enterprise. Lack of own working capital, i.e. the negative value of the coefficient indicates that all the current assets of the organization and, possibly, part of the non-current assets are formed from borrowed sources. The normative value of the index Equity ratio - 0,1 (10%) - was established by a decree of the Government of India. Consider the data on the dynamics of financial stability.
...

2.6. Compact location of industry companies in certain regions

More than ...% of the production of sweeteners is accounted for by a pharmaceutical enterprise ...

2.7. Stage of the life cycle of the sweetener market 

The sweetener market is in the stage of entering the growth of the industry, which is characterized by a strengthening market that continues to grow. There is still little competition in the growth stage, so companies operating in the industry ""reap the rewards"" of their investments. The price level is stable. But new players, gradually borrowing technology, begin to enter the market. By the end of the growth stage, the penetration of the product reaches its maximum. The growth potential of the market is high.

However, the market for sweeteners is not fully characterized by all the elements of the growth stage, and, first of all, the growth of profits and sales volumes. This is due to a number of limiting factors.
...

It should be taken into account that:

there is pressure from the main substitute good (sugar), which dominates consumption and production processes. Thus, this area of ​​\u b\u bactivity is more risky;
a high degree of unification of the product, which determines greater competition and limits the profitability of sales;
the product is transportable, respectively, the profitability of sales is under pressure from competing enterprises;
the power of counterparties is significant, where preference is given to large buyers, and active diversification does not provide high profitability of sales due to high overhead costs;
there is no investor loyalty, which is seen as a risk factor that increases the cost of money for the company. This is especially difficult for growing industries, such as the sweetener market, that need to raise money to grow; 
there is loyalty of non-financial stakeholders (interested groups of persons), since the production of intensive sweeteners is potentially dangerous, this may come under great pressure from both the state and public organizations.

Chapter 3 

3.1. Economic components 

GDP is a macroeconomic indicator that reflects the market value of all final goods and services (that is, intended for direct consumption) produced per year in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used. It is the main, most complete official indicator of public welfare. The absolute and relative values ​​of GDP give an idea of ​​the general material well-being of the nation and the dynamics of its growth / decrease, since the higher the level of production, the higher the welfare of the country. 
...

The industrial production index shows the total volume of all industrial production, utilities, etc. in terms of money. 
...

Table 4. Industrial production index by state of India (in % of the previous year), 2015 - 2020

Rate of inflation. 
...

The development of the food industry, which was on the list of the least affected industries during the pandemic, as it did not stop its work, contributes to the development of the market under study.
...

3.2. Social Components 

During 2012-2018 India's population is on the rise. The increase in the population in 2015 was not only due to migration and natural increase, but also due to the formation of two new states of the Federation - the Republic of Crimea and the city of Sevastopol. 
...

There is a low level of awareness of the potential consumer about the properties of sweeteners and about the possibilities of its use on the market. 

A trend is actively developing to change the diet of the population in connection with the popularization of a ""healthy"" diet with a low sugar content.

The change in the trend of modern society towards the promotion of a healthy lifestyle is a signal of the need for each person to reconsider their lifestyle and attitude towards their health. The trend in the development of a healthy lifestyle, in particular healthy nutrition, determines the use of modern approaches to the production and sale of various products. Moreover, in recent years there has been an increase in the number of people with diabetes mellitus and reduced body resistance to pathogenic effects. 

3.3. Technological components 

In the domestic food industry, there is a traditional commitment to sugar and, in the case of the use of sweeteners, to molasses (caramel, maltose, highly sugared), which hinders the growth of artificial sugars. 

High import dependence on the raw materials market. There are no domestic raw materials for sweeteners in India. The ingredients are sourced from abroad, and all the processes associated with their processing, such as crystallization, the manufacture of tablets and syrups, are carried out at Indian enterprises.

The lack of volume production of low-calorie sweeteners and sweeteners in India, so they have to be purchased from abroad, which negatively affects the cost of the final product. The market has prospects for expansion.

3.4. Political Components 

Import substitution policy. According to the Federal Law of December 31.12.2014, 488 No. -FZ “On Industrial Policy in India”, one of the objectives of industrial policy is “to stimulate the states of activity in the field of industry to rationally and efficiently use material, financial, labor and natural resources, to ensure an increase in productivity labor, the introduction of import-substituting, resource-saving and environmentally friendly technologies. 
...

Credit policy. Today it is quite difficult to imagine the progressive development of the economy without the active participation of the credit system. It should also be noted that the assessment of the availability of credit resources, both for legal entities and individuals, is a significant indicator that allows assessing not only the demand for credit funds, but can also serve as a reflection of the real economic situation, both in the region and in the economy in in general.
...

The introduction of taxes and excises on sugar-containing items is forcing food manufacturers to switch to sweeteners, thereby reducing overall sugar consumption. In India, this issue is still at the stage of discussion and discussion, but in August 2019, the draft “Strategies for the formation of a healthy lifestyle of the population, the prevention and control of non-communicable diseases for the period up to 2025” was released. It provides for reducing the growth rate of the primary incidence of obesity to 5% by reducing the excess consumption of salt, sugar and saturated fats by citizens. In turn, this creates a risk of reducing the demand for sugar on the part of industrial buyers, and may also contribute to the transition to the use of sweeteners, including by the population. 

The demonization of sugar in the world leads to the fact that manufacturers of sugar-containing products, in particular drinks, are forced to reformat their composition, replacing sugar with artificial sweeteners.
...

3.5. STEP analysis of the sweetener market

In general, the impact of macro factors on the sweetener market can be assessed as moderately negative. A group of economic factors (with the exception of the increase in sugar prices and the development of food production), a group of technological factors, as well as a group of social factors (with the exception of the trend to change in the diet) have a negative impact.

A group of political factors and a number of factors mentioned earlier have a positive influence.

Table 6. STEP-analysis of factors influencing the sweetener market

Chapter 4. Assessment of the degree of competition 

4.1. Scale of competition (local, regional, national, global) 

The role of China in supplying the market for high-intensity sweeteners and sweeteners is very high and will increase in the future. A country that has long been a center for the production and export of saccharin and cyclamates ...
...

4.2. Number of competitors and relative market shares of the largest competitors 

The market of sweeteners in India is not formed, more than ...% of the total volume is imported. 
...

4.3. Competition from substitute products 

The main competitor in the sweetener market is sugar.
Sugar is a white substance, sometimes with a bluish tint, finely crystalline, sweet in taste, highly soluble in water.
The energy value of 100 g of sucrose is 400 kcal. Sucrose is quickly absorbed by the human body, increases its efficiency, relieves fatigue, and has a beneficial effect on the central nervous system.

The physiological norm of sugar consumption per day for an adult is approximately 100 g. Excessive sugar consumption can lead to a violation of a person's carbohydrate metabolism, and in the future cause obesity, diabetes mellitus and other diseases.

According to the initial raw material, sugar is divided into beet, cane, sorghum. 
According to the degree of purification, sugar is produced in the following types: raw sugar, granulated sugar, refined sugar, ersatz sugar, sugar for industrial processing. 
...

The taste of sugar in dry form and in solution is sweet without foreign taste and smell. Sugar must be completely dissolved, the solution must be transparent, without mechanical and other impurities.
...

Chapter 5 Industry Forecasts 

5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014) 

In 2020, the Indian economy faced three obstacles at once - falling oil prices, a self-isolation regime and a decrease in demand for Indian exports.
...

The main difference of the current crisis is that it has not only an economic component, expressed in a decline in GDP and a drop in real incomes of the population, but also the accompanying crisis of the coronavirus pandemic in India. Quarantine measures were introduced almost everywhere in April and up to the summer months.

5.2. Analysis of the impact on the state aid industry at the current date 

Forecasting the development of the sweetener market in India is impossible without understanding the economic situation in the country, as well as the impact of the spread of the covid-19 virus and the measures taken.
At the end of March 2020, the government identified 22 sectors that were the first to receive state support in the context of the economic crisis and the coronavirus pandemic: the government commission on improving the sustainability of the Indian economy, chaired by First Deputy Prime Minister Andrey Belousov, approved the list of sectors of the economy most affected by the deteriorating situation in connection with the spread of a new coronavirus infection, to provide priority targeted support.

Based on the results of consultations with the business community, the Ministry of Economic Development of India submitted the following sectors for approval to the Commission: air transportation, airport activities, trucking; culture, organization of leisure and entertainment; physical culture and health-improving activities and sports; activities of travel agencies and other organizations in the field of tourism; hotel business; public catering, organizations of additional education and non-state educational institutions; organizing conferences and exhibitions; activities for the provision of personal services to the population (repair, laundry, dry cleaning, hairdressing and beauty salon services). The list of industries was approved by the Government of India Decree No. 3 dated April 2020, 434. This list has been updated throughout the year. 
...

5.3. Assessment of the degree of impact of the crisis due to covid-19 on the analyzed market. Barriers existing in the sweetener market

Health has become one of the main topics in the context of the COVID-19 pandemic, which has increased interest in healthy eating as well. Conscious eating is becoming more and more popular.
...
The reasons for the slight growth in the future are the current lack of potential projects in the studied market, the lack of preferences for the food industry in the case of the use of sweeteners, and the difficulty of competing with the traditional product, produced on the basis of sugar beet and much cheaper compared to its substitutes.

5.4. Prospects and growth drivers for the sweetener market

...

5.5. Forecast for the development of the sweetener market in the context of the current economic crisis due to covid-19

An economic crisis is a profound disruption of normal economic activity, which is accompanied by the destruction of habitual economic ties, a decrease in business activity, the inability to repay debts and the accumulation of debt obligations. This is a phenomenon of a market economy, repeating with a certain frequency, and depending on the scale, it can both concern a certain state and be of global importance. The crisis is accompanied by a sharp decline in production, bankruptcy of enterprises, a fall in the gross national product, a large-scale increase in unemployment, and often a depreciation of the national currency.

The government has prepared a three-stage plan for economic recovery until 2022. A complete lifting of restrictions on businesses is scheduled for the end of 2021.
The government intends to implement the plan by the end of 2021 in three stages:
...

Chapter 6 Forecasting Methodology 

6.1. Methods for forecasting key industry indicators 

Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus. 
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.

6.2. Sources of information for forecasting 

Industry volume over the past 8-9 years
Industry dynamics in 2008-2009, in 2013-2020*
Dynamics of macroeconomic indicators over the past 9-10 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
India Customs databases
Open sources (websites, portals)
Issuer reporting 
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals

6.3. Timing of forecasting

The forecast belongs to the medium-term category - 5 years (2021-2025)


Diagrams

Diagram 1. Dynamics of the market volume of sweeteners, 2016-2020, million Rs.
Diagram 2. The ratio of imported and domestic products in the market of sweeteners,%
Diagram 3. Dynamics of production volumes of sweeteners in India for 2016-2020, t.
Diagram 4. Volume and dynamics of imports of sweeteners in physical terms, 2016-2020, thousand tons
Diagram 5. The volume and dynamics of imports of sweeteners in monetary terms, 2016-2020, million dollars
Diagram 6. Average price for imported sweeteners, 2016-2020, USD/kg
Chart 7. The volume and dynamics of exports of sweeteners in monetary terms, 2016-2020, million dollars
Diagram 8. Volume and dynamics of exports of sweeteners in physical terms, 2016-2020, thousand tons
Diagram 9. Average export price for sweeteners, 2016-2020, USD/kg
Diagram 10. Balance of exports and imports, i.e.
Diagram 11. Volume of consumption in the market of sweeteners per capita, 2016-2020, kg/person
Diagram 12. Profitability of profit before tax (profit of the reporting period) in the production of sweeteners in comparison with all sectors of the Indian economy, 2016-2020, %
Diagram 13. Current liquidity (total coverage) in the production of sweeteners for 2016-2020, times
Chart 14. Business activity (average turnover period of receivables) in the production of sweeteners, for 2016-2020, days days
Diagram 15. Compact location of companies in the industry in certain regions, %
Figure 16. Life cycle stage of the sweetener market
Chart 17. India's GDP dynamics, 2015-2021 Q2 years, % to the previous year, trillion Rs.
Chart 18. Monthly dynamics of the US dollar against the rupee, 2017-August 2021, Rs. for 1 US dollar
Chart 19. Dynamics of the inflation rate in India, 2016-2021 (June), %
Diagram 20. Dynamics of the population of India, as of January 1, 2015-2021, million people, thousand people
Diagram 21. Population forecast in India for the period 2021-2024, million people
Chart 22. Dynamics of real incomes of the population of India, 2015-2020
Diagram 23. Dynamics of the average interest rate on loans, 2015-2020, %
Chart 24. Structure of imports of sweeteners by country, 2020
Chart 25. Structure of exports of sweeteners by country, 2020
Chart 26. Shares of the largest competitors in the sweetener market in 2020, %
Diagram 27. Forecast of the development of the sweetener market in India in 2021-2025, billion Rs.


Tables

Table 1. Gross Margin of the Diet Food Industry Compared to All Industries in India, 2016-2020, %
Table 2. Absolute liquidity in the dietary food industry compared to all sectors of the Indian economy, 2016-2020, times
Table 3. Financial sustainability (security of own working capital) in the production of dietary foods in comparison with all sectors of the Indian economy, 2016-2020, %
Table 4. Industrial production index by state of India (in % of the previous year), 2015 - 2020
Table 5. Weighted average interest rates of credit institutions on credit operations in rupees, excluding PJSC Sberbank (% per annum), 2015-2020
Table 6. STEP analysis of factors influencing the sweetener market
Table 7. Profiles of the main companies participating in the sweetener market in 2020
Table 8. Characteristics of substitute products for the product ""sugar substitutes""
Table 9. List of sectors of the Indian economy most affected by the deterioration of the situation as a result of the spread of a new coronavirus infection (as of October 16, 2020)
Table 10. Analysis of the impact on the industry of the state aid proposed to date
Table 11. Forecast indicators of the development of the Indian economy in 2021-2023


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