**[investwise]** Citi: Zydus Targets Indian Obesity With Nutralite And Sugar Free

 

Citibank For As Long As Humans Live, they will need food and medicenes Health & Wellness (H&W) is a multi-year trend… — Globally, an ageing population, higher levels of obesity and rising incomes have in combination led to increased spending on H&W foods and beverages. Globally, the H&W market is forecast to grow ~35% in value (CY07-12) – around US$120bn – with fortified /functional foods and naturally healthy foods expected to account for ~US$80bn of the growth, as per Euromonitor.  … and India is no different — Changing lifestyles and genetics have resulted in India being home to ~40m diabetics and ~50m cases of coronary heart disease. A study by The Tata Strategic Management Group suggests that H&W foods will grow at 24% pa to Rs183.5bn by FY15, from Rs50.5bn in FY09. Corporate response — For domestic players like Marico and Dabur, functional or better for you foods / beverages account for ~9-14% of revenues. MNCs like Nestle India, General Mills India, Kellogg's, Hindustan Unilever, etc. have made small beginnings introducing healthy variants like wheat noodles, multi grain wheat flour, or functional products – probiotic yogurt, vitamin B infused tea,fortified breakfast cereals.  Small category sizes and lack of consumer awareness of global brands imply that MNCs will need to invest heavily in A&P. Smaller domestic players that focus on select niches will thus be relatively less disadvantaged than their MNC peers. Profiling Zydus Wellness (ZYDS.BO) — Zydus is one of few pure plays on the 'Wellness' theme in India with 3 niche brands, Sugar Free (~40% of FY09 rev), Nutralite (34%) and EverYuth (26%).  Management is targeting doubling revenues over the next 3 years, given the strong underlying growth in main brands. Growth is driven by a mix of: a) affordability (as incomes rise), and b) increased awareness of the benefits of H&W as lifestyle diseases like diabetes and CVD (cardio vascular diseases) increase, given changes in lifestyles and dietary habits. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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