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Eighteen per cent GST on biscuits, urban India’s top quick munch option
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Wednesday, 05 July, 2017, 08 : 00 AM [IST]
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Nandita Vijay, Bengaluru
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Biscuits are an urban Indian’s choice for a quick munch option. From glucose, Marie arrowroot, digestive and chocolate to cream and Jim Jam, biscuits are always on the menu for on-the-move consumption. Moreover, the launch of a new biscuit brand or variant leads consumers to nibble and savour it almost immediately.
India is the third-largest producer of biscuits, after the United States and China. The biscuit industry in the country constitutes both the organised and unorganised sectors. The key factor driving the growth in the biscuit category is the population who is willing to experiment.
The young demographic population in the country is willing to splurge and plunge. There is also a growing in-home consumption, where people are looking for variety in taste. Therefore, the biscuit industry revolves around taste, texture, appearance and alluring packaging formats.
Even as India’s Goods and Service Tax (GST) Council has imposed an 18 per cent levy on biscuits, consumers are not concerned.
Small pack offerings
“From a company perspective, it could be small pack offerings to maximise the demand and to ensure that there is no dip in sales. This is because biscuits are part of an Indian lifestyle, be it a bakery item or a branded biscuit,” said Chetan L Hanchate, chief executive officer, Centre for Processed Foods, consultant, food processing, and former president, Bengaluru chapter, Association of Food Scientists and Technologists (India).
He said, “Biscuits are a key component in the food processing industry and in the bakery sector. There is a profusion of new biscuits in a variety of flavours and packs. There are immense growth prospects for investing in multi-grain, high-fibre and diabetic- friendly biscuits, which are a trend.”
Key players
India’s biscuit industry has players like Britannia, Parle, Unibic, ITC, Mondelez, J B Mangharam and Company, McVities, Bisk Farm, Future Foods and Kwality, to name a few.
These vie with Cafe Coffee Day’s cookies, Cookie Man, KMF’s Milk Bikis, Nilgiris and a host of local bakeries across the country, including Butter Sponge, Bics and Bakes, Kyani Bakery and Co, Karachi Bakery, Kokkie Jar, Wenger’s Deli, Glen Bake, Au Bon Pain and Baker Boy, which are known for their in-house biscuit brands.
Britannia, with its range of Good Day, Tiger, NutriChoice, Milk Bikis and Marie Gold, are household names in the country.
The company’s tag line, Eat Healthy, Think Better, was conceptualised after it removed over 8,500 tonne of trans-fats from its products and went on to become India’s first zero-trans-fat company.
Over 50 per cent of the company’s portfolio is enriched with essential micro- nutrients. In 2009, it set up the Britannia Nutrition Foundation to focus on iron and multiple micro-nutrient-fortified products.
Recently, the company launched Good Day Wonderfulls in three variants - Choco Nut, Butter Almond and Berries & Nuts - to strengthen its dominance in the Rs 4,000-crore premium cookie category.
“Good Day Wonderfulls has a rich taste, crumbly bite and melt-in-the-mouth experience. It brims with ingredients like cranberries, blackcurrant, roasted almonds, nuts and chocolate. The mid-premium cookie segment grew by 23 per cent last year, which clearly
indicates that Indian consumers are upgrading to indulgent cookies. They now demand unique formats and richer cookie experiences,” said Ali Harris Shere, vice-president, marketing, Britannia Industries.
According to Britannia, Good Day is the largest brand, with a revenue of Rs 2,600 crore, and reaches over 30 per cent of the households across the country. The brand has a range of variants, including cashew, butter, choco-chips and a super-premium offering called Good Day Chunkies.
Strong network
Yet another household rave is the ubiquitous Parle G or glucose biscuits. From a small neighbourhood grocery shop to a rural eatery hamlet, Parle-G's strong distribution network covers over five million retail stores in India. The taste is a hit among all age groups, and its low price is another important factor in Parle-G’s popularity.
ITC Foods, with its Sunfeast brand, straddles all segments of the market, led by Dark Fantasy at the premium end. High-quality innovations has helped the Dark Fantasy Choco Fills to wow the Indian consumer with its innovative centre-filled format and premium packaging.
No maida, no added sugar
In addition, the company has launched the Sunfeast Farmlite Digestive All Good digestive biscuit, which, according to the company, is India’s only digestive biscuit made with no maida and containing no added sugar.
This biscuit is made from Aashirvaad whole wheat flour, which makes it naturally rich in fibre content. Sunfeast’s other popular variants include Delishus, Dream Cream and Bourbon Bliss Cookies.
Another biscuit, Sunfeast Bounce, has introduced the Every Minute Every Day offer, which entitles over 84,000 children to win gifts like re-colourable bags. Sixty winners stand a chance to win a hoverboard.
Each pack has a 10-digit code. Each participant consequently needs to follow instructions via SMS to complete the entry. This offer is valid across the country on all Sunfeast Bounce packs priced at Rs 5 and Rs 10 between March and November 2017.
According to Hemant Malik, divisional chief executive, ITC Foods, “Sunfeast Bounce is the market leader in the creams segment, and the brand constantly endeavours to create engaging experiences for kids.”
Fun and excitement
“The Every Minute Every Day offer is once such initiative that intends to build on our purpose to being the partner of fun and excitement to every growing kid,” he added.
“With this offer, Sunfeast Bounce looks forward to increase brand visibility and recall by providing branded goodies as giveaways to kids,” Malik said.
The 17-year-old Bisk Farm is a Kolkata-based brand which is owned by SAJ Food Products, a part of the Aparna Group of Companies. Its range of biscuits include Thin Arrowroot, Classic Marie Sweet, The Top and Googly.
Unibic Foods India Pvt Ltd had its genesis in Australia, where the brand Unibic originated. Unibic India was set up as a subsidiary of Unibic Australia. Now Unibic Foods India is a privately-held company backed by leading international private equity firms.
Premium cookies
The Bengaluru-based company is headed by Nikhil Sen, who serves as its managing director. It has a state-of-the-art manufacturing unit, which has manufacturing and marketing premium cookies for over a decade in the country. Currently, it has about 30 different types of cookies in the Indian market and is engaged in exports.
Cafe Coffee Day offers Double choco dip and Honey & Oatmeal cookies. Nilgiris, the supermarket chain acquired by Future Group, is known for its Golden Bakes brand of butter, salted, sweet, cashew, chocolate and pistachio cookies.
McVitie’s Digestive biscuits from the United Kingdom is now manufactured in India and is now for its double cream biscuits in four variants (orange, chocolate, vanilla and strawberry).
J B Mangharam and Company is known for its cream wafer biscuits, available in three flavours (strawberry, pineapple and chocolate). It is now in available in Bengaluru.
Cookie Man was launched in India in 2000 by Australian Foods, and is known for its premium range of cookies. It has set up its outlets in malls across the country.
The flavours include Choc Chip, Coffee Walnut, Brandy Snap, Honey and Oats, Coconut Macaroon, Shortbread, Peanut and Ginger.
60 outlets in 28 cities
Currently, Cookie Man operates 60 outlets in 28 cities in New Delhi, Noida, Gurgaon, Jaipur, Kanpur, Raipur, Bhopal, Chandigarh, Ahmedabad, Baroda, Surat, Rajkot, Nagpur, Mumbai, Pune, Sangli, Chennai, Bengaluru, Coimbatore, Salem, Hyderabad, Kolkata, Thrissur, Mangalore, Vijayawada, Bhubaneshwar and Shillong.
In 2011, Cadbury Oreo, a part of Kraft Foods, entered the Indian market, which indicates remarkable growth and is a testament to rapidly-evolving consumer tastes, which are ideal to garner consumer acceptance.
This was stated was a company spokesperson, who added that Oreo biscuits were a rave among the younger generation. These are preferred not just as serving on occasions, but also as mid-morning snacks for schoolchildren.
Good food value
The biscuit industry is an integral part of the fast-moving consumer goods (FMCG) sector. Biscuits have a good food value.
“There is a huge presence of bakery players, who are also presenting their range of biscuits, which are positioned as convenient and ready-to- serve foods, and hence, gaining a great deal of importance in the busy lives of the people,” stated S V Suresha, coordinator, Bakery and Value Addition Centre, University of Agricultural Sciences, Bengaluru (UAS-B).
“Biscuits are also becoming popular with rural masses, and hence, it has made inroads in to the rural areas. It is a positive indication to show that the sector has got a lot of growth opportunities even in the rural and remote areas. This has broadened the base of biscuits, because these are ready to eat and convenient to use,” he added.
“Biscuit-making is a conventional activity in many parts of the country. Despite the advent of modern, large-capacity and automatic biscuit-making plants, a large section of people, especially in the semi-urban and rural areas, still prefer fresh biscuits from the local bakeries, as they are cheap and offer many varieties,” Suresha said.
“These manufacturers are able to cater to the local palates as well. Thus, they are able to withstand competition from the organised sector units,” he added.
According to Abhyuday Techno Economic Consultants, “Biscuits can be broadly categorised into the following segments: glucose (44 per cent); Marie (13 per cent); cream (10 per cent); crackers (13 per cent), milk (12 per cent) and others (eight per cent).”
Per capita consumption
“Though India is considered as the third-largest producer of biscuits after the United States and China, the per capita consumption of biscuits in our country is only 2.1kg,” it added.
“It is over 10kg in the United States, the United Kingdom and West European countries, and over 4.25kg in South-east Asian countries like Singapore, Hong Kong, Thailand and Indonesia. China has a per capita consumption of about 1.90kg, while in Japan, it is estimated to be 7.5kg. The growth rate of the biscuit industry is between seven and nine per cent,” the firm stated.
“Consequently, there is a wide scope for new-age entrepreneurs to develop good-quality and nutritious biscuits. This is because of the promising demand prospects of biscuits in the market, as they make an ideal and satiating snack for out-of-home and on-the-move consumption,” said Chandrashekhar Basavanna, partner, Orgtree (which makes Ginger + Finger Millet Cookies, which contain no dairy or processed ingredient).
“Biscuit sales accelerate, because all age groups are willing to experiment and splurge and are looking for healthier alternatives,” he added.
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