India is behind the United States and China as the third biggest biscuit producer, though Indians still aren’t eating them in large quantities compared to other countries, says market intelligence agency ValueNotes.
The country’s consumption of biscuits, at an average of 2.1kg per person last year, is less than one-tenth that of Ireland, the world’s biggest consumer.
Gaining in popularity
Still, biscuits are gaining in popularity, and account for around 72% of of sales in India’s bakery segment, with increasing consumption of convenience food, a wider variety of brands available and an increase in disposable incomes providing a major boost to the industry.
Indeed, India’s biscuits market was valued at Rs145bn (US$2.3bn) last year, and is expected to grow at an annual rate of 14% to reach Rs279bn (US$4.4bn) by 2019.
Manufacturing giants Britannia and Parle dominate the industry with the pair taking over 60% of the market last year thanks to their weighty distribution and retail networks, according to ValueNotes.
Increasing indulgence, mounting health concerns and greater familiarity with premium tastes have led Indian manufacturers experiment with a variety of biscuits and cookies. This has also led to increased growth in the luxury segment compared to the economy and mid-segments.
Emphasis on premium segment
According to Tejaswee Shrestha, senior research analyst at ValueNotes: “In the last few years, the majority of the new product launches have been in the premium segment.
“High margins, the proliferation of modern supermarket chains and increasing affluence amongst consumers have encouraged manufacturers to introduce different kinds of premium biscuits and cookies.”
The glucose market, one of the lowest price points in the industry, is expected to decline to account for only 15% of the industry by 2019, compared to its current 25%.
Meanwhile, the premium segment, which includes cream, health and sweet biscuits and cookies, is seen to have a better growth potential. Manufacturers have started offering premium products in smaller packs, making them affordable across all levels of society.
Jockeying for leadership
Last week, Parle revealed that it was considering selling its premium range of biscuits online, and deciding whether to launch an internet-only range for web consumers.
The move comes shortly after its main competitor, Britannia, launched its super-premium chocolate chip cookie Good Day Chunkies exclusively on Amazon.
Parle Products claims a 38% share of the domestic market, and recently launched a range of healthy biscuits under the Simply Good brand name.
Britannia, meanwhile, is planning to significantly increase international sales by improving manufacturing capacity in the Middle East, boosting exports and making acquisitions or entering joint ventures.
“Our ability to double exports from India and to substantially increase the manufacturing footprint in the Middle East can increase our international sales to Rs7bn [US$111m) or so in a year to 18 months,” Britannia’s managing director, Varun Berry, told Live Mint.