India Popcorn Market - Jan'14


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India Popcorn Market - Jan'14

  1. 1. India Popcorn Market All rights reserved. This publication is protected by copyright. No part of it may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic mechanical, photocopying, recording or otherwise without the prior written permission of the publisher.
  2. 2. Popcorn Market in India- Overview Apart from multiplexes, the demand for popcorn is also growing in market streets and hence a popcorn vending machine is a common sight in the local markets these days. The popcorn industry in India is growing extensively with multiplexes coming up in every corner of the cities. Popcorn has become a favorite munching snack for the young movie watchers. Apart from multiplexes, the demand for popcorn is also growing in market streets and hence a popcorn vending machine is a common sight in the local markets these days. In addition to increasing demand in out of home markets, the in home-home consumption market for popcorn is also increasing. With people preferring convenient easy to make snacks due to hectic schedules, popcorn has become a favorite alternative pass time snack for people. India Popcorn Market
  3. 3. Market Size and Growth Figure 1: Indian Popcorn Market (Crore INR), 2012-2015 2034 1675 1420 1235 2012e 2013e 2014f 2015f Source: RNCOS The popcorn market in India was estimated at INR 1235 Crore in 2012 and is forecasted to reach INR 2034 Crore by 2015 growing at a CAGR of 10.3% during 2012 to 2015. Consumption from metro cities and tier I cities are the major drivers of popcorn sales in India. Out-of-home consumption i.e. the consumption in malls and multiplexes among others comprises of the majority of the popcorn consumption market in India. In 2012, around 75% of the popcorn market was estimated to be held by out of home popcorn consumption market. The balance 25% was garnered by the in-home consumption market. The in-home consumption market consists of pressure cooker variety and microwave popcorn segment. Consumption from metro cities and tier I cities are the major drivers of popcorn sales in India. India Popcorn Market
  4. 4. Figure 2: Indian Popcorn Market by Consumption Pattern (%), 2012 Figure-3: In-Home Popcorn Market (Crore INR), 2012-2015 594.0 25.0% 465.0 375.0 308.8 75.0% Out of Home Consumption In-Home Consumption 2012e 2013e 2014f 2015f Source: RNCOS Source: RNCOS Estimation The in-home popcorn market was estimated at INR 308.8 Crore in 2012. With many players apart from Agrotech expected to enter the pressure cooker variety & the microwave variety coupled with growth of convenience food snack market, the inhome popcorn market in India is forecasted to reach INR 594.0 Crore by 2015. On the other hand, the out of home popcorn market was estimated at INR 926.3 Crore in 2012 and is forecasted to reach INR 1440.0 Crore by 2015. The introduction of new flavors coupled with provision of attractive combos by multiplexes, are expected to drive out of home popcorn market in India. Figure 4: Out of Home Popcorn Market (Crore INR), 2012-2015 1440.0 1210.0 1045.0 926.3 2012 2013 2014 2015 Source: RNCOS India Popcorn Market
  5. 5. Opportunities & Challenges Opportunities • Reducing Reliance on Popcorn Imports by increasing Maize Cultivation The two major popcorn players - Agro Tech Food, which has Indian rights for American company Con Agra’s Act II brand, and Banaco Overseas - import around 23,000 tonnes of popcorn annually. Agrotech and Borges import maize from Argentina, which is then processed in India. With the growing popularity of popcorn both in in-home consumption market and out of home consumption market, Indian farmers should start focusing on growing maize, which is currently facing a decline in production. Apart from fulfilling the requirements for the popcorn industry, it will also serve as an alternative to feed poultry as it is a rich source of protein. • Opportunity for Foreign Players to enter the Industry Multiplexes are cropping up in every corner of the city, surging the demand for out of home popcorn consumption. Further, with growing industrialization and busy schedules of people, people are relying on easy to make snacks, increasing the demand for in-home popcorn consumption to some extent. The above two reasons coupled with the fact that the industry is presently dominated by only a few organized players, present an opportunity for foreign players to enter the market. • High Profit Margins for Domestic Manufacturers On the manufacturer’s front, manufacturers are being benefitted by the profit margin given by the popcorn business. A corn kernel supplier sells raw material for INR 120-150 per kg and the retail price of 1 kg popcorn is INR 1500 including the cost of production to packaging. Hence, the manufacturer’s margin is INR 1350 per kg . This presents an opportunity for the savory snack manufacturers and other local manufacturers to concentrate on popcorn category. Challenges • High Custom Duties on Imports Popcorn is mainly imported from the American Continent. There is a 56% Customs duty on quality imported corn. Moreover, for countries exporting corn to India, there is a higher tariff on popcorn for distribution as most end users of popcorn are not in the business of distribution. But, due to insufficient production or production of low quality popcorn, organized players have to rely on imports. • Domestic Popcorn Variety is of extremely Low Quality, posing hindrance for exporting produce Indian unbranded popcorn is of low quality with popping ratio of 20:1, vis a vis international standard of 40:1. For microwaveable popcorn domestic brands source or process the maize in India, using low grade corn or packaging and fail to reach international quality. Around 25% of corn produce goes to the food industry, but the share of popcorn-worthy corn (small-kernelled, flinty type corn with very low starch content) is still small. India Premium Footwear Market
  6. 6. Major Players August 2013: Hyderabad-based Venagro has started contract farming for corn and will launch its brand this year. It will be selling 100 gm pack of popcorn in different flavours under the Cornella brand August 2013: Mohar Singh Ratan Lal, a recognized trader, processor, wholesaler, retailer and supplier of agricultural products has started supplying popcorn in 100-200 gm packs to retail stores under the Farm Way brand. June 2013: 4700BC, India’s first Gourmet Popcorn Brand, introduced pop corns in more than 18 evolved flavours in cheese, caramel, chocolate and candy categories. Customers can choose from Italian Herbed Golden Cheese, Tex-Mex Salsa Golden Cheese, Magical Rainbow Potpourri to Nutty Tuxedo Choco-All-Ate. January 2013: Popz, a global snack brand owned by a POPZ USA LLC, has entered the Indian market through the JV route. It’s operations in India will be based at Delhi. The products will be imported from its plant in Europe initially; till the company sets its own world-class production facilities in India. Table 1: Major Players in Popcorn Market in India Brand Name Borges India Agrotech Foods Limited Bajoria Foods Pvt Ltd (American Garden) Venagro Banaco Overseas Farm Way (Mohar Singh Ratan Lal) 4700BC Source: RNCOS Compilation India Popcorn Market
  7. 7. Future Outlook The popcorn industry, which is witnessing new investments and great margins, is expected to show a double digit growth in the future also. Despite of out of home category being highly priced, consumers are happily paying these prices as the demand for this American snack seems inexhaustible. This high demand/high margin popcorn business is inducing a major change in India’s agriculture and farmers have started responding to the market by setting aside acreage devoted to popcorn-worthy corn. Farmers are considering cultivating in areas close to urban centres which have good storage facilities, as the popping strength of corn depends on good storage. On the consumer front, consumers are increasingly preferring consuming healthy snacks and popcorn serves as a perfect alternative as it is low on calories. On the manufacturer’s front, more number of players are eyeing the Indian market as the entertainment and multiplex boom is catching pace among the younger generation. Players which entered the inhome popcorn market with the introduction of small packets of microwave and pressure cooker variety for the purpose of test marketing, have also shown faith in the market and have started coming up with larger packets. Thus, the industry is set to witness more developments in the coming years. India Popcorn Market
  8. 8. Looking for an in-depth study Our Proposition RNCOS is a leading Business Consultancy firm helping its clients to enter new geographies and in attaining growth by developing market strategies for them. GROWTH PARTNER We help you make informed decisions through the practical application of research, hand holding you to your success… Critical questions that businesses need to address: • • • • Where should you set up your business? Who should be your distributors? What is the current market structure & size? Who should be your customers? We understand your immediate needs and your long-term goals and objective and work with you on how to accomplish them. RNCOS blends the best of strategy consulting with the best of market research to provide organizations with accurate, succinct answers to their most important business questions. Our offerings Product Segments Market Insights • • • What is the market size Structure of the market Who are buyers • • Identification Competitive Assessment • Most suitable distributors and channels for your business. • Analyzing their strength, credibility. Similar products in the market Features, attributes & market share of these products • Customer preferences • Price range of these products • Financial & strategic analysis of existing competition • Acceptance level among customers India Popcorn Market
  9. 9. For more information on how we can work with you, contact MARKETING TEAM RNCOS E mail: Website: Phone: +91 120 4224700 /01 / 02/ 03