The Indian Biscuit Market

Prepared and submitted by: Ritushree Ray Abhishek Bagheria Ajinkya Desai Bhumika Gupta

Table of Contents
Table of Contents...............................................................................2 The Biscuit Scenario in India An analysis........................................3 A look at the Market layers in Biscuit Industry...................................! S"#T A$A%&SIS' Analy(in) the *o+To+Market A,,roach biscuit by biscuit..............................................................................................Consu.er Sur/ey'............................................................................00

Purpose:.................................................................................................11 Methodology:..........................................................................................11
Sur/ey 1esults'................................................................................00

13-20 years............................................................................................11 23-26 years............................................................................................12 !- !! years...........................................................................................12 "etailer#s point o$ %ie&...........................................................................12

The Biscuit Scenario in India An analysis

Biscuits, which were once considered to be a sick-mans diet, have now become one of the most loved food product in the country. The growth prospects of the Indian biscuit industry are bright. Even though the country is the third largest consumer of biscuits after the ! and "hina, the per capita consumption is very low. It stands at about # kg in comparison to more than $% kg in the ! and &. 'arious factors including availability of cheap labor in the country and easy availability of raw materials present huge e(port potential to the industry. )layers including )arle, IT" and Britannia are e(panding overseas. "ountries such as the !*, Bangladesh and the +ussia are being seen as the potential markets. The India food processing sector is currently growing at an average rate of $,.-. annually. The industry is e(pecting a higher growth rate due to the government support being provided in terms of improving the supply chain, by building large primary collection and distribution centers across India involving the private sector, in the period #%$#-$/. This article aims at studying the Indian biscuit market in detail by carrying out a situation analysis to understand the dynamics, current scenario of the industry and the future prospects for e(isting manufacturers and new entrants. *t present the following states can be regarded as the biggest consumers of biscuits in India0 1aharashtra &arnataka 2est Bengal ttar )radesh *ndhra )radesh The rural sector in India presently accounts for almost -- percent of the biscuit consumption. Pattern of Biscuit Consumption (On Zonal basis) in the country are as below:

The Indian biscuit industry has a yearly production of almost I3+ , thousand crores and is the biggest among all the food based industries operating in the country. The Indian subcontinent on the whole is regarded to be one of the top producers of biscuits in the world along with countries like the !.

Annual Growth

The biscuit industry in India witnessed annual growth as below0-

Annual Production
The organi4ed biscuit manufacturing industry5s annual production figures are given below0

Organi ed ! "norgani ed sector balance in the Biscuit Scene#

The organi4ed and unorgani4ed sector of the biscuit industry is in the proportion of 70%:30% ratio. +ural- rban penetration of Biscuit0 Urban $ural ar!et: 7"% to #"% ar!et: "0% to %"%

The Biscuit Case study# $ens on Parle G

)arle introduced its offering in the glucose segment way back as $6,6 under the name )arle 7lucose, which was later renamed as )arle 7 in the $68%s. !ince launch the biscuit brand has been strongly associated with offering value for money, a marketplace perception that has remained unaltered for more than 9% years. This value for money perception lead to Parle G becoming the largest selling biscuit brand in the world in 2002. This consumer perception has not been limited to the brand itself but has e(tended to the entire glucose biscuit category. "onse:uentially, all manufacturers of glucose biscuits within the Industry have been forced to tow the low price line.

Proble%s at hand#

&' Short ter% (roble%s# ;owever due to increasing prices of crucial inputs such as wheat and sugar which comprise --. of manufacturing costs, )arle is faced with a decisional dilemma. *lthough )arle 7 as a brand en<oys formidable e:uity in the market, its e:uity is based on '=1 positioning. It is the only value dimension due to which consumers are loyal to )arle 7 and the 7lucose biscuit category which is under crisis because of factors like inflation, '*T increase, and increase in cost of inputs. The increased costs have led to a decline in a margins from $-. to around $%. which is not feasible for the continuation of the brand category. 2. $ong ter% (roble%s: It is a market leader for the established product )arle-7. It also has the largest distribution network. 3evertheless, )arle-7 has no brand loyalty. The pressure to reinstate margins has led to consideration of an increase in prices that could adversely affect consumer perception and demand. >n the *dvertising point of view IT", !unfeast and Britannias Tiger are adopting the similar attitude towards 7lucose biscuits concentrating on the ?I@ development and growthA of the children same as )arle-7s approach of ?7 mane 7eniusA fame. ;ere a uni:ue and fresh perspective needs to be brought in to maintain dominance in the market. !till untapped avenues of rural markets which needs to be broken into for )arle 7 to reinstate its claim as the 1arket Beader.

=or the purpose of this article we have studied the following companies- )arle, Britannia, !unfeast, )riya-7old and *nmol.

The Situation Analysis using Porter)s fi*e forces#

Taking )orters fiver forces analysis method into play we know the five dynamic forces affecting the current market scenario0 C Intensity of competitive rivalryD C Threat from new entrantsD C Threat from substitutesD C Bargaining power of buyersD C Bargaining power of suppliers Eraw materialsF

Causes of the Proble%s +aced by Parle G, The Glucose Giant

&' $ise in prices of inputs: +ising prices of almost all raw materialsGinputs, i.e. wheat flour, vegetable oil, sugar, milk, etc. !harp increase in the cost of production because of hike in cost of packaging, fuel, transportation, wages etc.

(' $ise is Pro)uction Cost: *dverse impact on production and marketing of biscuits due to levy of value added ta( E'*TF at the highest rate of $#.-%. Ein place of sales ta( H 8.F as compared to vat I. on similar food products.

3' *ecrease in Profit ar+in: !tagnation in prices of biscuit on account of stiff competition and thin margin of profit Biscuit Industry especially the !mall J 1edium !ector, consisting of around #/- units are facing erosion in their profitability and competitive capability, due to steep hike in

cost of production on account of increase in prices of ma<or raw materials, i.e. 2heat =lour 'eg. >il, !ugar, 1ilk, )ackaging 1aterials, =uel 2ages, etc. +ecent increase in prices of )etrolGKiesel in 1ay #%%8 has further resulted n cost push. ,' Chan+e in Consumer Perception Inade:uate adoption of modern technology, e:uipment, packaging and distribution. Increase in the awareness of consumers have led to increase in e(pectations and aspirations which at times are difficult to meet.

The Ob-ecti*e#
The main ob<ective to be focused throughout the case analysis lies in solving the problems of0 To reinstate the margins back to $-. but it involves analysis of various constraints through logistics and reasoning. It is a very price sensitive market owing to the 'alue for 1oney E'=1F which has been the underlying !) of 7lucose biscuit category of )arle 7. !o maintaining the same and battling the increasing prices is one of the ma<or ob<ectives of the )arle-7 case. *nother ma<or ob<ective of the situation crisis is re-instating the brand )*+BE-7 on a premium scale as well concentrating more on the high :uality premium biscuits and cookies to build on the B+*3K loyalty and ensure customer satisfaction on a higher and more permanent level. Tapping the remote and untouched rural market share and build a brand awareness among them.

These being the weaknesses hold competition as its main weakness. It could further lead to profit erosion and entry of unbranded players into the market. 3otwithstanding these threats, the company beholds many opportunities such as e(ports and affluence. The growing affluence shows the rise in purchasing power of the consumers. )arle-7 has been strongly associated with offering the 'alue for 1oney, a marketplace perception that had remained unfaltering for more than 9% years. 3ow we discuss the "ompetitors of )arle 7 in a detailed manner below with their corresponding products in market and the chunk share0

A loo. at the /ar.et Players in Biscuit Industry Parle Products $T0'

=ounded in $6#6, )arle )roducts )vt. Btd ranks among the top biscuit brands in India. The company has / manufacturing units of its own and -$ manufacturing units on contract. *ccounting for about ,%-,-. of market share in the biscuit industry this company is famous for brands like )arle L 7, &rack<ack, ;ide J !eek 1ilano, ;ide and !eek, 1agi( and 1onaco. )arle has been one of the leading biscuit brands in India for the last 8 decades. )arle-7 is reputed to en<oy the most sales among all biscuit brands in the world. Its biscuits offer a

fantastic combination of :uality, taste, and nutrition. )arle biscuits are available even in faraway villages. *t present the company has a I% percent share of the Indian market for biscuits and is a multimillion dollar organi4ation. =ollowing are the various brands of biscuits offered by )arle0 o o o o o o o )arle 7E7lucose BiscuitF 1onaco-!alted "racker ;ide J !eek "hoco "hips ;ide J !eek Bourbon ;ide J !eek =ab "oconut "ookies 1ilk !hakti

Britannia
Based in Bangalore Britannia Industries Btd. is reputed as being one of the top biscuit brands in India. The company was established way back in $86# and till today has managed to maintain a distinctive position in the Indian biscuit industry specially with its most popular brand called Tiger. Britannia is presently one of the biggest brands in India and also the leading food related brand. It is well known for its ground breaking approach towards product manufacturing and marketing. =orbes 7lobal has rated it as one of the Top #%% !mall "ompanies of the 2orld J it is also the second most trusted brand in India. =ollowing are its various brands in the biscuits segment0 o o o o o 1ilk Bikis TigerE7lucose biscuitF 3utri "hoice -%--% +usks

Sunfeast
!unfeast is the biscuit brand of IT" and was initiated during Muly #%%,. To start with the brand dealt with glucose, 1arie, and cream biscuits. =ollowing are the ma<or brands of !unfeast0 o o o o o !unfeast 1ilky 1agic !unfeast Kream "ream !unfeast Kark =antasy !unfeast 7lucose BiscuitE7lucose BiscuitF !unfeast Kark =antasy "hoco =ills

Priya Gold
)riya 7old is a part of !urya =oods J *gro Btd that was established during 3ovember $66#. Its commercial operations, which included selling and making biscuits under the brand name )riya 7old started during >ctober $66,. =ollowing are the various biscuits and cookies offered by )riya 7old0 o o o o o Italiano "ookies Butter Bite 7lucose L'Eglucose biscuitF &ids "ream "lassic "ream

An%ol 12orth ! 3ast 4egional (layer5

*nmol Biscuits is especially popular in eastern and northern India. It has a couple of top class production units at 3oida and Kankuni in 2est Bengal. =ollowing are its main products0 o o o o o Bemon 1a4aa *nmol 7lucose Biscuit "oco 3utty "ream "racker Bakersville

*nmol Biscuit is available in I# !& s.

S6OT A2A$7SIS: Analyzing the Go-To-Market Approa h !bis uit by bis uit"
-.$/01.2P4$7/ (Parle 19 Bow cost 7ood ads and visibility 1arket Beader in 7lucose Biscuit !i4eable market share Bargest distribution system Kifferent si4es of packing available. 3/450/-=ewer share in )remium biscuit market and largely Kependent on )arle-7 Back of schemes for retailers and distributors OPPO$.U06.6/Tie-up with schools as a part of meals and corporatesGhotel chains E(pected Increase in the number of middle income group households. .2$/4. 40478-6;ighly advertised brands of the competitors. "ompetition from multinationals, local companies and local bakeries. Emerging substitutes

6.C -unfeast (6.C -unfeast 1lucose biscuits9

2ide distribution network Bow cost and good :uality product

Kependence of the company on tobacco sales. 3egative association with tobacco ;eavy e(penditure on advertising and marketing !imilar products produced by many companies means high brand switching "oncentration on a few geographic segments only. Back of skilled work force Bimited advertising and visibility Bimited advertisement and visibility "oncentrated in 3oida ), still seen as a regional player, nationwide coverage missing.

+ural markets Tie up with hotels, government, schools, hospitals, etc.

!imilar biscuit products by competitors

B$6.40064 (.i+er9

40 O7 B45/$8 P:. 7.* (4nmol 1lucose Biscuits9

-urya ;oo) an) 4+ro 7t) (Priya 1ol) < 1lucose :9

!trong distribution network *vailability of products even in the remotest of areas 1a<ority share in the market. 1arketing and advertising efficiency $%%. vegetarian ingredients. . In total #I biscuit products. 1arket entrant in the 7lucose Biscuit category and good hold over regional share $-%%%% 1T pa capacity +ecent I+"T" e(clusive kiosks tender

Increase in purchasing power of people in India )roduct line e(tension E(pansion in other countries

Bower price offering competitors Bocal bakeries 1arket capture by competitors especially )arle.

Tie up with local government bodies for greater e(posure. Increased production at new plant in >disha ntapped national market 1ore diversified products in the range of biscuits, cookies, chocolates, confectioneries, beverages and <uices.

Established players like Britannia, IT" !unfeast, )arle etc 1any local competitors like )riyagold, +a<a Biscuits etc. Bocal bakeries. Big manufacturers like )arle, IT", etc +egional competitors like !obisco, *nmol Bakers )vt. ltd, +a<a Biscuits etc

4esearch %ethodology#
Involves the study of lifestyle and mindset of people with respect to biscuit consumption. ses the concept of psychographic analysis to understand the culture associated and take it into consideration while designing surveys and verbal :uestionnaires. The ne(t step involves sampling based on the research design adopted0

Sa%(ling#
The consumers from both urban and rural areas are targeted since this will take into account a ma<or chunk of the consumer base for insecticides in India. This is planned over a period of # months during different season all over India depending on the environmental factors. 2e will be using the probability sampling as it allows us to calculate confidence limits for sampling error.

4esearch design#
=ollowing the above market research plan the following steps need to be followed for successful research and analysis0

Consu%er Sur*ey#
Purpose: The purpose of conducting the consumer survey was to understand consumer behavior and perception about various biscuit brands present in the market. !ome parameters that were observed were brand consciousness, spending trends, taste preferences and fre:uency of eating. etho)olo+y: =or conducting the survey in an effective manner, a :uestionnaire was developed to assist us in recording the consumer responses. The location for conducting the survey was !an:uelim market due to its pro(imity to the campus. The team conducted the survey on a !aturday in anticipation of increased customer footfall at shops and supermarkets due to the impending weekend and the festival of 3ag )anchami. The :uestionnaires were filled by a sample si4e of #% consumers. The survey was conducted mainly at kirana stores and few supermarkets in !an:uelim. "onducting the survey proved difficult due to the following reasons. "onsumers were not willing to spare few minutes to answer the :uestions asked. The group faced difficulties in asking :uestions due to lack of familiarity of the local language. !ome of the consumers were not willing to disclose their spending patterns.

Sur*ey 4esults#
nderstand how do the consumers think, relate, select J consume Biscuits Ewhat could be some the basis for segmenting the consumersF The survey was conducted on small sample si4e of people in the following age groups $,-#% years #,-#9 years I---- years

In addition to consumers a few retailers were also interviewed. &3=(0 years This group mainly consists of school going and college kids who rely on their parents for the purchase. The key points in this group are The people in this group are concerned with the taste Buy the products after watching the commercials especially the ones they can relate to but are not brand conscious.

(3=(% years This group consists of young professionals who are self-reliant and have a fast paced life. The key points of this group are0 The people of this group feel that the brand matters the most as the brand alone initiated the buying process They are concerned as to where they buy. They gathered information mainly through T.' commercials.

,"= "" years This group consists of middle aged people. They are not brand conscious. &ey points are0 They look out for simple tastes unlike the younger generations that prefer cream biscuits 1any of them would buy from a local manufacturer E unorgani4edF than from a supermarket.

;ow a seller manages !& s of biscuits, do they have any insight Ewith respect to biscuit marketingF $etailer>s point of ?iew * few retailers were also interviewed and were asked their views on the whole scenario !ome retailers dont keep small !& s Estock keeping unitsF of glucose biscuits as they have smaller profit margins. They avoid purchasing certain brands based on close monitoring of customer buying habits. They make the most profit on medium !& s of cream biscuits They owe their sales to brand loyalty and good e(periences with the previous purchase of a product They claim that the children play the decision makers in the family hence attributes like taste and design play an important role in the purchase of the product There is however a mi(ed response as to whether the price or weight should remain constant.

Alternate Solution#
The reach of the organi4ed sector in the rural areas is -%.-9%. as compared to /%.-8-. in the urban areas. These local rural players have established a long lasting relations which the brands are not able to break. )eople in rural interiors prefer the freshly baked biscuits to the packed ones. They believe them to be fresh and healthy. !o to resolve this issue the alternate solution that can be proposed is0 Ob@ecti?es: 2hile targeting the rural consumers, the companies have to take into account the factors of low literacy level, under developed infrastructure and logistic, low purchasing power, difficulty in media reach, etc. !o creating awareness is the ma<or step. The product not <ust has to be available to them, but also acceptable and accessible. )arle can organi4e day fairs, melas and haats like the pushkar mela, rural sporting event, establish rural retail hubs like the hariyali kisan ba4ars, aadhars, choupal sagars etc. *part from these marketing gimmicks, it is important that the right manager is entrusted with tapping in the rural market as it re:uires a different mindset and separate marketing and sales skills. >pen plants near the villages to give the villagers options for cheaper and fresh biscuits readily available with low cost of production to the company

Barriers: "ost of setting plants "onvincing villagers and changing mindset is easier said than done. 1anager mindset and pro(imity to villager Econsumer mindsetF is tough to create.

4eco%%ended Solution and 8ustification:

.actical mo?e Case &: Price increase from 60$ & to 60$ ( with &%'" -5U (+rams9' Indian masses prefer the small packages as it garners product purchase by nonusers, one time users and new users. !mall packages has helped a lot of leading 13"s attract non users, one time users and new time users. They helped in creating demand for low penetration categories. 4ssumption: *ssuming an income rise at the bottom of the pyramid and Indian trends, the popular $9.- !& of )arle-7 biscuits demand should not be affected This should help in achieving the $-. revenue.

Case (: Price unchan+e) for 60$ , an) -5U (+ms'9 re)uce) from #('" +ms' to 7('% +ms' I3+ I !& of the )arle 7 is the most popular brand among the )arle 7 products. It fetches -%. of the annual sales revenue. =rom the provided data of the past Ein #%%IF we find out that0 sales do not get affected with the reduction in the !& s with price unchanged. But with price hike of +s. %.-% there was a I%. decrease in sales ;ence this similar strategy which was followed in the past to reduce the !& s with the same price will definitely increase the re:uired profit percentage along with sales as well as maintaining the trust of the consumers and will help in raising the revenue to the original $-.. This move will also boost the '=1 E'alue for moneyF !) of )arle-7. -trate+ic o?e

Taking into consideration , ma<or players in the glucose biscuit category0

)arle 7, Britannia Tiger !unfeast glucose0 It is found that0

Current .ar+et

ar!et0 !chool going children.

4)?ertisin+=Promotion 4pproach0 "oncentration on the ?health and intelligence increasingA attributes of the product.

Propose)

ar!et:

$. !chool going children #. ;ealth conscious youth ,. Elderly population

Propose) Pro)uct /Apansion:

$. 1ulti grain glucose biscuits #. 'itamin and protein enriched glucose biscuits. ,. !ugar free 'ariety of 7lucose biscuits

3o sugar free biscuit has been introduced in the glucose category of biscuits, hence )arle 7 can be a pioneer yet again in the market with diversified range of )roducts under the 7lucose Biscuit "ategory Thus )arle 7 will emerge as a uni:ue brand providing a host of varieties in the glucose category of biscuits catering to the '=1 market as well as the premium market.

4eferences#
$. #. ,. I. -. http0GGwww.ibmabiscuits.inGindustry-statistics.html http0GGwww.mindtools.comGpagesGarticleGnewT1"N%8.htm http0GGwww.markintell.comGporters-five-forces-analysis )arle 70 I'EO 6B$%*%## by + "handrasekhar http0GGbusiness.mapsofindia.comGtop-brands-indiaGtop-biscuit-brands-in-india.html