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BAKERY

Indian biscuit market projected to reach $7.25 billionin next four years
Wednesday, 02 May, 2018, 08 : 00 AM [IST]
Kunti Kachave
Introduction
A biscuit is a small baked product, whose exact meaning varies markedly in different parts of the world. The origin of the word biscuit is from a Latin phrase (via Middle French) meaning cooked twice.

The Indian biscuits Industry came into the limelight and started gaining a sound status in the bakery industry in the latter part of the 20th century, when the urbanised society called for readymade food products at a tenable cost.

Biscuits were assumed to be a sick man’s diet in earlier days. Now, it has become one of the most-loved fast food products for every age group. Biscuits are easy to carry, tasty to eat, cholesterol free and reasonably priced.

States that have the larger intake of biscuits are Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh. Maharashtra and West Bengal, the most industrially-developed states, hold the maximum amount of consumption of biscuits.

Two sectors of biscuit industry
In terms of volume, biscuit production by the organised segment is estimated to be 1.30 million tonne.

In the organised sector, the industry is dominated by Britannia and Parle, which account for 70 per cent of the industry’s volumes.

Britannia’s market share stands at Rs 27 billion. Parle derives a large portion of its revenues from low-priced biscuits. Parle-G and Britannia derive a fairly large share of their revenues from the medium- and premium varieties. In fact, Britannia’s market share in the medium and premium varieties is significantly higher.

Other organised players include domestic players like Bakeman’s, Champion, Kwality, Priya and multinational corporations (MNCs) like SmithKline Consumer, Kellogg’s, Sara, Heinz, Excelsia (Nestle) and United Biscuits.

The unorganised sector consists of small bakery units, cottage and household type manufacturing their goods without much packaging and distributing their goods in the surrounding areas. Lower overheads due to limited local area, family management, focused product lines and less expenditure on marketing help the unorganised sector to grow.

Scenario of biscuit industry in India
India biscuit market stood at $3.9 billion in 2016, and is projected to grow at a compound annual growth rate (CAGR) of 11.27 per cent, in value terms, between 2017 and 2022, to reach $7.25 billion by 2022.

In 2015-2016, the cookie segment, which includes brands such as Bournvita Biscuits and Britannia Good Day, witnessed a rising number of  health-conscious consumers, an expanding working population and increasing urbanisation. These are boosting the country’s biscuit market.

Moreover, augmented disposable incomes, along with changing lifestyles, increasing awareness regarding healthy diets and changes in food consumption patterns, are some of the other factors expected to propel demand for biscuits over the course of the next five years.

According to 6Wresearch, the Indian biscuit market is projected to reach $8.2 billion by 2023. The plain biscuit segment captured majority of the market share in 2016. However, cookies and sandwich biscuits are expected to exhibit a high growth rate during the forecast period.   

In terms of centre-filled biscuits, the segment is majorly dominated by the urban population. Further, non-premium biscuits accounted for majority of the revenue share in 2016. Nevertheless, premium biscuits are gaining huge acceptance in Tier-I and II cities.

In 2015, the cookie category accounted for the largest market share in the country’s biscuits market, and was closely followed by plain biscuits and sandwich biscuits.

The western region is the largest regional market for biscuits in India, as it is home to millions of consumers with higher personal disposable incomes than the rest of India.

Biscuit industry market, size and brands available

Market size and growth industry segmentation
The biscuits and cookies industry in India has been growing at a CAGR of 10 per cent for the last three years, and is currently valued at Rs 145 billion.

India is currently the world’s largest biscuit consuming nation. The industry is expected to grow at a CAGR of 14 per cent till financial year (FY) 2019. It will be worth approximately Rs 279 billion (approximately $4.65 billion) by FY 2019.

Glucose biscuits (which account for about 25 per cent) have the highest share in the industry.

Compared to other fast-moving consumer goods (FMCG) products, the penetration of biscuits and cookies, in both the urban and rural areas, is quite high (94 per cent and 83 per cent, respectively).

East and North India have the highest consumption of biscuits and cookies in the country. Eighty per cent of the market is currently organised.

The top four players in the market for biscuits and cookies are Parle Products, Britannia, ITC and Surya Foods and Agro. Both Britannia and Parle account for 61 per cent share of the market.

Executive summary
The biscuit and cookie industry in India has been given an industry attractiveness rating of 6.7.

Industry attractiveness rating evaluation system’ drivers and challenges drivers
Increasing disposable incomes, changing lifestyles, growth in organised retail and increasing consumption of processed and packaged food are the main drivers of the industry.

Challenges
Increasing tax incidence and rising input costs are the main challenges that the biscuit and cookie industry is currently facing.

TOC Market Overview Annexure and Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers and Inhibitors Industry Attractiveness

Parle: 34 per cent
Britannia: 27 per cent
ITC: 8 per cent
Surya Foods: 4 per cent
Anmol: 2 per cent
Others: 25 per cent

March 2015
India is considered to be the third largest producer of biscuits in the world, after the United States and China.

While the country is the largest biscuit consuming nation, per capita consumption is low at 2.1kg – compared to Ireland, which is the highest at 21.76kg.

The market for biscuits and cookies in India has come a long way accounting for about 72 per cent of the sales in the bakery industry.

Increasing consumption of packaged and convenience foods, the availability of a variety of biscuits and an increase in disposable incomes have provided a major boost to the industry.

The major brands of biscuits are Britannia, Parle, Bakeman, PriyaGold, Elite, Cremica, Dukes, Anupam, Horlicks, Craze and Nezone, besides various regional and state brands.

Growth of the biscuit industry in India
During the first five-and-a-half decades of post-Independent India, the biscuit industry in the country has achieved a position of pre-eminence as the third-largest producer of biscuits in the world, after the United States and China.
The biscuit industry is been experiencing steady growth of 14-15 per cent annually. In 2008, the growth exceeded 16 per cent mark on account of exemption from Central excise duty on biscuits.

The Indian Biscuit Manufacturers’ Association (IBMA), instrumental in obtaining the excise duty exemption, has estimated the annual growth of around 20 per cent in the year 2008-09.

The growth in biscuit marketing has been achieved also due to improvement in rural market penetration.

The annual growth showed a decline of 3.5 per cent in 2000-01; mainly due to 100 per cent hike in Central excise duty (from nine per cent to 16 per cent).

Production in the year 2001-02 increased very marginally by 2.75 per cent, where in 2002-03, the growth is about three per cent.

Challenges
The implementation of uniform Goods and Services Tax (GST) of 18 per cent across all biscuit segments in 2017 is likely to impact the overall growth of the industry post-2017.

This would pose a greater challenge for local players of plain biscuits who are majorly targeting the rural market.

Further, comparatively lower tax rates on namkeens, wafers and other snack items are likely to hinder biscuits market growth over the coming years.

Brief  profile of players in the industry
Britannia Industries Limited
It is an Indian company based in Kolkata, which is famous for its Britannia and Tiger brands of biscuits, which are highly recognised throughout the country.

Britannia is one of India’s leading biscuit firms, with an estimated 38 per cent market share.

Once upon a time, in 1892 to be precise, a biscuit company was started in a non-descript house in Kolkata with an initial investment of Rs 295. It is the company we all know as Britannia.

The main products produced by Britannia industries are Good Day,Tiger, Marie Gold, 50- 50, Choco-chips, Choco-nuts, Little Hearts, NutriChoice, Bourbon, NiceTime, Pure Magic, Milk Bikis, Jim-Jam, Cream Treats, Time Pass, Digestive, etc.

Parle  Company
In 1929, a small company by the name of Parle Products emerged in British India. The intent was to spread joy and cheer to children and adults alike all over the country with its sweets and candies.

Parle Products has been India’s largest manufacturer of biscuits and confectionery, for almost 80 years.

Makers of the world’s largest selling biscuit, Parle-G, and a host of other very popular brands, the Parle name symbolises quality, nutrition and great taste.

With a reach spanning even the remotest villages of India, the company has definitely come a very long way since its inception.

The major  products  produced  by Parle are Parle-G, Hide and Seek, Krackjack, Hide and Seek, Milano, Magix, Digestive, Marie Monaco Parle Marie, Kreams, Milk Shakti, Parle 20-20 Cookies, Nimkin, etc.

ITC  Limited
ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited.

Its foray into the foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth.

It began in August 2001 with the introduction of Kitchens of India ready-to-eat Indian gourmet dishes. In 2003, Sunfeast was introduced, marking the company’s foray into the biscuit segment.

The major products by ITC are Milky Magic, Marie, Golden Bakery, Dark Fantasy, Glucose, Dream Cream, Snack, Sweet n Salt, Nice, Vita, Special, etc.

Surya Foods and Agro Limited
Surya Food and Agro Ltd was incorporated in November 1992, and commenced its commercial operations of manufacturing and selling of biscuits under the brand Priyagold in October 1993.

Over a period, It established strong manufacturing capabilities and have invested substantially in developing consumer preference for products.

Its trademarks and brands, Haq Se Maango and Priyagold have emerged as one of the most powerful brands in the FMCG sector.

The major products produced by Surya company include Butter Bite, Classic Cream, Kids Cream, Bourbon, Marie Lite, Big Boss, Magic Gold, NC, Cheese Cracker, Snacks Zig Zag, Don, Coconut Crunch, Cheez Bit and Chat Patta.

Range of products
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)
    • Others (8 per cent)
Recent trends and opportunities in the biscuit market

    • The global biscuit market is driven by rising urbanisation, increasing disposable incomes and the strong demand for convenience foods, mainly because of busy lifestyles
    • Companies are increasingly experimenting with new flavours, new ingredients and trying out new combinations, to fuel the interest of consumers
    • Healthy biscuits are in high demand due to the increase demand from health-conscious individuals
    • The nutritional values of biscuits should favour the current trend, where the consumers are focusing on high-fibre biscuits together with calorie intake overall
    • High-fibre biscuits, which are popularly known as digestive biscuits, have become a favourite in the biscuit market, and the demand for it is expected to last for the coming years as consumers are becoming more health-conscious, where the inclination towards high-fibre food products will drive manufacturers to include fibrous and other nutritious ingredients in their products
    • As consumers are showing interest in organic products, food manufacturers are starting to use organic ingredients, eliminating artificial flavours and preservatives, along with discarding high fructose corn syrups (HFCS) in the recipe
    • Manufacturers are also promoting the idea of variety and convenience, focusing on servings and sizes

Current trends
Biscuits contribute Rs 8,000 crore to the FMCG industry and provide a vast opportunity for growth, as the per capita consumption of biscuits is less than 2.1 kg in our country, as compared to more than 10 kg in the US, UK and Europe and above 4.25 kg in South East Asian countries. Higher disposable incomes and the willingness of consumers to try new brands have attracted a number of players to the biscuits industry, both, at the national & local level and generated intense activity in the marketplace. The branded market grew around 15-16 per cent last year. Commodity inflation continues to have a significant impact on input cost and this inflationary pressure has put industry profits under pressure. Today, there is a greater consumer choice both at the local and national level, together with a diversity of tastes & benefits ranging from health & nutrition to pure indulgence. However, most players are facing extremely high and unprecedented cost scenario and some irrational competition too. The result is a huge pricing pressure with limitations on price hikes for the entire industry and a shrinking profit pool of the industry. Wheat and oil prices are already showing an increase of more than 20 per cent. In addition, the steep increase in crude oil prices and hike in petrol & diesel prices announced by the government have led to a significant increase in the price of packaging materials, freight and also production costs

The critical success factors of the biscuit industry in India are:
    • India’s lower- and middle-class segment will continue to hold the key to success of the biscuit industry in India
    • Distribution (in rural markets), advertising (in urban markets, innovation) and launching of new brands are being adopted by the companies to grab the market
    • The companies have added new variants into their existing brands, including stylish packaging
    • The focus on urban markets has also contributed significantly to the growth of the biscuit industry
    • Standard grocers are the leading distribution channel, with one-third of the Indian biscuit market by value. Traditional grocers are the only other channel to take a double-digit share
    • Alliances The biscuit manufactures able to maintain good relations with distributors, wholesale suppliers and regional institutions will have greater market share due to word-of-mouth publicity and media attention
    • The industry players will try to lower the procurement, production and distribution costs through programmes such as JIT, JITD, TQM and per stock-keeping unit (SKU) cost-revenue analysis and will pass on these benefits to the end consumers in terms of lowered prices

                                                                                                                                
(The author is PhD scholar, department of food chemistry and nutrition, College of Food Technology, VNMKV, Parbhani.)
 
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