(NCAER) = National Council of Applied Economic Researchparticularly children in both rural and urban areas with an average monthly income of Rs. 750.00. IMPORTS of biscuits in India have not shown any significant growth during the last two years and have not affected production/sales by the Indian Biscuit industry.
START FOR THIS--To establish a brand in this tough market is never easy. Since Biscuits are convenience goods, new tastes and new products are essentialto built excitement in the market……..Biscuit industry practices mass marketing, which appeals to masses. It is a product liked by everyone and does not cater only to a specific group or part of the whole market. Thus the industry adopted mass production, mass distribution and mass promotion of products for all buyers.
The commodity is also price sensitive, as a consequence of which, even when the Excise Duty was doubled on biscuits in 2000-01 biscuit manufacturers, including the major brands, were not able hike MRPs to the extend of the steep increase in the Duty. Taxation, both Central Excise Duty as also State Sales Tax, other miscellaneous levies i.e. turnover tax, local area tax, mandi taxes, purchase tax etc, has been a major deterrent in the growth of the biscuit industry.
Opportunities Indian Biscuit Manufacturers’ Association (IBMA) estimates annual growth of around 20% in next couple of years. The $220 Billion food industry is expected to grow to $300 Billion by 2015. Per capita consumption of Biscuits in the country is only 1.8 kg as compared to 2.5 kg to 5.5 kg in South East Asian countries and European countries, and 7.5 kgin USA. Growing demand of Sugar free cream crackers & diet biscuits. Opportunity to further grown in Urban & Rural market; Current penetration levels are, Urban Market: 75% to 85% Rural Market: 50% to 65%Grow in southern and east India.
Indian BISCUIT INDUSTRY By: PRASOON MISHRA MBAL 10202/26/2013 1
HISTORY OF BSCUIT INDUSTRYBiscuits are a very significant part of the food industry in mostcountries of the world.A biscuit is a small baked product; the exact meaning variesmarkedly in different parts of the world.The origin of the word "biscuit" is from Latin which means "cookedtwice" (similar to the German Zwieback).Biscuit is most suited for local production. This factor alone has made India a big biscuit center. Biscuit Industry has flourished in India enormously over the years and is still growing phenomenally.2/26/2013 2
FEDERATION OF BISCUIT MANUFACTIRE OF INDIA (FBMI) FBMI, Established in 1950 It is the premier forum of the organized segment of the biscuit industry in India andit consisting of small scale, medium and large biscuit manufacturers located in all zones and all States of the countryIt is serving with the prime objective of protecting and promoting the interests and development of the Biscuit industry. 2/26/2013 3
FBMI as the apex body of the biscuit industry, the Federation strivingwith some objectives. The objectives are:- To promote and protect the interest of the Biscuit manufacturing industry, particularly in the small and medium secto To promote and develop a systematic and hygienic Biscuit manufacturing Industry To promote research and product development for the biscuit manufacturing industry and the establishment of any research organization for the purpose same 2/26/2013 4
To assist the small and medium biscuit manufactures in thepurchase of flour, inputs and other commodities and the provisionfor technical advice for improving manufacturing techniques andmarketing methodTo create appropriate bodies to advise Government of variousaspects connected with the development of the biscuitmanufacturing industryTo obtain Government authority rights, concessions whichbenefited biscuit manufactures.2/26/2013 5
OVER VIEW OF THE INDIAN BUSCUIT INDUSTRY Biscuit industry contribute Rs 8,000 crore to the FMCG industry and provide a vast opportunity for growth, per capita consumption of biscuits is 1.8 kg in our country but it is increasing day by day. India Biscuits Industry came into limelight and started gaining a sound status in the later part of 20th century when the urbanized society called for ready made food products at a tenable cost. Biscuits were assumed as sick-mans 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 reasonable at cost. 2/26/2013 6
Maharashtra and West Bengal, the most industrially developedstates, hold the maximum amount of consumption of biscuits.The rural sector consumes around 55 percent of the biscuits in thebakery products.Apart from Big 3 ( Britannia ,Parle , ITC ) there are around 150medium to small biscuit factory in India.2/26/2013 7
Few years back, large scale bakery manufacturers like cadbury, nestle,and brooke bond tried to trade in the biscuit industry but couldnthit the market because of the local companies that produced onlybiscuits.The Federation of Biscuit Manufacturers of India (FBMI) hasconfirmed a bright future of India Biscuits Industry. According to FBMI, a steady growth of 15 percentper annum in the next 10 years will be achieved by the biscuitindustry of India.2/26/2013 8
Two Sectors of Biscuit IndustryIn terms of volume biscuit production by the organized segment isestimated at 1.30 million tones.In the organized sector, the industry is dominated by Britannia and Parle, which account for 70 per cent of the industrys volumes.The two major organized players are Britannia and Parle.Britannia’s market share stands at Rs 27 billion.Parle derives a large portion of its revenues from low-pricedbiscuits.Infact , Britannias market share in the medium and premiumvarieties is Significantly higher.2/26/2013 9
Other organized players includedomestic players like Brakeman’s, Champion, Kwality, Priya andMNC’s like SmithKline Consumer, Sara, Heinz, Excelsia (Nestle)and United Biscuits. The unorganized sector consists of small bakery units, cottage and household type manufacturingThe goods distributing in the surrounding areas without goodquality packaging.Lower overhead cost due to limited local area, familymanagement, focused product lines and less expenditure on marketing help the unorganized sector to grow. 2/26/2013 10
IMPORTANT BRANDS PITCHED AGAINST EACH OTHER OR PRODUCTCOMPARISION Category Britannia Parle Leader Glucose Tiger Parle-G Parle –G Marie Marie Gold Parle Marie Marie Gold Salty snacks 50-50 Krack Jack Krack jack Choco chips Good day Hide n seek Good day Milk Milk bikis Milk sakhti Milk bikis Bourbon Bourbon Hide n seek Bourbon Nice Nice ----------------- Britannia Nice Multi grain Nutri choice ------------------- Nutri choice Cream Cream Treat Kreams Cream treats Cookie Good day 20-20 Good day So the battle for market share continues and advantage is for consumers who will get better product from both these biscuit majors . 2/26/2013 11
GROWTH OF THE INDUSTRYAfter 2005 India is - third largest producer of Biscuits in theworld, after the USA and China. Annual growth of 14-15% .Growth in biscuit marketing has been achieved due to improvementin rural market penetration. According to the NCAER Study, biscuit is predominantly consumed by people from the lower levels of societyEXPORTS of Biscuit are estimated to be around 15% of the annualproduction during the year 2010-11 & IMPORTS of biscuits in Indiahave not shown any significant growth 122/26/2013
Annual Production:The organized biscuit manufacturing industry‘s annual production figures are givenbelow: PRODUCTION (In lakh metric tonnes) 25 20 18.25 19.1 17.44 16.14 16.57 14.29 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2/26/2013 YEAR 13
Based on the production in India biscuits can be broadly classified into:-2/26/2013 14 Source:- Indian Biscuit Manufacturers’ Association (IBMA)
Industry Research • Objective: To study eating habits with regards to consumption of biscuits amongst people. • The composition of choices of food of people for breakfast and snacks shows that only 16% prefer biscuits.2/26/2013 15 Source:- Indian Biscuit Manufacturers’ Association (IBMA)
Industry Research • Of the people who consume biscuits 25% people prefer cream biscuits, • 12% prefer wafer biscuits, • 34% prefer sweet plain biscuits and • 29% of people prefer namkeen or salty biscuits.2/26/2013 16 Source:- Indian Biscuit Manufacturers’ Association (IBMA)
Industry Research • The number of people who eat biscuits include 37% of people who eat them everyday, • 29% eat twice a week, • 14% eat four times a week, • 8% eat once in 15 days, • 6% eat once in 10 days and once in a month.2/26/2013 17 Source:- Indian Biscuit Manufacturers’ Association (IBMA)
MARKETING OF BISCUTWholesale and Retail marketing in the Biscuit industry is carried out with anetwork of Dealers / Wholesalers and Retail shopsMarket share data for Indian biscuit industry:Here are market share data for biscuit industry from report s available at IBMA( Indian Biscuit Manufacturers Association) Major Market Share Holders – Organized Sector % OF MARKET SHARE BRAND WISE INDUSTRY SHARE (VOLUME) PARLE 40% PARLE BRITANNIA 38% BRITANNIE PRIYA GOLD 15% PRIYA GOLD ITC ITC 11% REST REST 6% 2/26/2013 18
Market Share - Sector wise Market share penetration-Popln. wiseORGANISED UNORGANISED URBAN RURALSECTOR SECTOR70% 30% 85%-75% 65%-55%Market Share – product wise Market share - Region wise: Market share of the industry in india as per regionMarie and Glucose 50% ZONE % CONTRIBUTIONsweet, crackers , 50%cream ,milk NORTH ZONE 25% WEST ZONE 23% EAST ZONE 28% SOUTH ZONE 24% 2/26/2013 19
Marketing practicesBiscuits are consumed by people of all ages, from the rich to thepoor, living in cities & in villages. While some have it for breakfast, For others it is a complete wholesome meal For some its the best accompaniment for tea, While for some its a way of getting charged whenever they are low on energy. Biscuit industry practices mass marketing, whichappeals to masses. Thus the industry adopted mass production, massdistribution and mass promotion of products for all buyers. 2/26/2013 20
Pricing mixBiscuit is a comparatively low margin food product in the PMCG(Packaged Mass Consumption Goods) sector.The commodity is also price sensitive,Taxation has been a major deterrent in the growth ofthe biscuit industryMost of the companies in the industry adopted the MarketPenetration strategy i.e. low price along with capturing of a largemarket.Also they focus on providing good quality products at the same time, which means it uses the value pricing method. 2/26/2013 21
Cont…The value-for-money positioning helps to generate large sales volumes for the products.The biscuits industry now has two clear models. Parle products playthe low price game at all varieties of biscuits from glucose tocream.But Britannia and Sunfeast look at a two-pronged strategy. Highmargins in cream variants and high volumes for the Marie andGlucose segments.For instance, cream biscuits from both Britannia and Sunfeast costRs 10 for 100 grams. Parle, however, only charges Rs 5 forits cream variants. Except for Hide & Seek, all of Parle’s products liein the price range between Rs 4 and Rs 6 for 100gram packs.2/26/2013 22
PackingThe packaging of bakery products is closely interlinked withproduction, preservation, storage, transportation and marketing.The importance of packaging is thatIt constitutes a fair portion 10 to 25% of the entire cost of the pack.Its common sight now that retailers are keeping small packs of biscuit in Jar.Britannia as well as Parle s biscuits are now available in Jars and products priced in the range of Rs12/- Rs 15/- also. 2/26/2013 23
PromotionIndustry’s ability to connect to large population through various promotional events (such as school’s industry visits to plant, talk & TV shows, rural programs) to target different age segment will decide the market share.Biscuits are available to consumers, even in the most remote placesand in the smallest of villages with a population of just 1500. 2/26/2013 24
ADVERTISEMENTSThe products were advertised mainly through press ads. Thecommunication spoke about the basic benefits of energy and nutrition.Good advertisement policies due to which people are motivated tobuy their product at least once.For instance, ITC has the advertisement about a child entering thecream world makes the children excited about the product leadingto increase in sales. In the year 1997, Parle-G sponsored the tele-serial of the Indian superhero Shaktimaan. That went on to become a huge success ITC typically follows a branding strategy under the umbrella name"Sunfeast". With multiple sub-brands created under this banner. 25 2/26/2013
Current market position of Britannia biscuits Nutri Choice I N Treat Good Day Little Hearts T Pure Magic Tiger Marie R Nice O D U C T M I A O T D N U E G R CSales L R I O T I W Y N T E H Time 2/26/2013 26
Current market position of Parle biscuits I N Hide & Seek Krackjack Parle g K T R Monaco r e O D a U m C s T I M O A N T D U E R C G LSales I R I O T Y N W E T H 2/26/2013 Time 27
Strengths WeaknessesBrand building capabilities Dependence on retailers and groceryDiversified product range of the industry stores for displaying diversified covering all segments. products on shelf.The depth of distribution Lack of technology up gradationLow and mid price range of the productsIndustry catering to masses, as in mostdeveloping economies, increasingpurchasing power is aiding the shift to affordable options. Opportunities SWOT ThreatsPer capita consumption of Biscuits in India is only 1.8 kg Fluctuations in the prices of rawGrowing demand of Sugar free biscuits. materials, transportation costs &IBMA estimates annual growth distributionof around 20% in next couple of years. cost due to high wedges and oil prices,The $220 Billion food industry is Entry of ITC (having very good expected to grow to $300 Billion by distribution channels) in to biscuit 2015. industry)A package of fiscal incentives provided by 2/26/2013 Emerging local bakery products. 28 various State governments
Conclusion In Indian BISCUIT Industry even the small companies are able to make profits. Indian biscuit Industry has a continuous growth and will not behindered due to external factors. Biscuit Industry has flourished inIndia enormously over the years and is still growing phenomenally Entrepreneurs or businessmen who are in process of buying, installation of new biscuit line should keep following points in mind, apart from legal requirement of industrial licenses pollution clearances and of course finance2/26/2013 29