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Bread industry in India to reach INR 53 billion by 2020

The document provides a comprehensive overview of the bread industry in India, with insights into its market growth, structure, and key players. It highlights a CAGR of 9% from 2015, projecting growth to INR 53 billion by 2020, while also discussing the increasing demand driven by changing lifestyles and urbanization. The report focuses on organized and unorganized sectors, key industry drivers, and challenges faced by the market.

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Bread Industry / Market in India  2015 - 2020 Picture Courtesy: www.info.wowlogistics.com
2 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved • 43 cities in India have a population of 1mn+ • Cities in India are classified on the basis of cost of living. • 4 Metros including Mumbai, Delhi, Chennai, Kolkata • 9 Tier 1 (+5 million ) cities including Pune, Ahmedabad and Bangalore • 22 Tier 2 cities (1 million to 5 million ) including Patna, Kochi, Rajkot, Madurai • 41 Tier 3 cities (less then 1 million ) including Ranchi, Mangalore, Gwalior, Roorkee India - Snapshot Population growth 1.4% p.a Land Area 3.29 mn sq km Population density 324 persons per sq km Form of government Democracy Number of States 29 states & 6 union territories Capital New Delhi Per capita income Nominal: USD1,124.4 p.a Religion 6 main religions Languages Hindi (national language), English (business language), 22 (official languages) Currency Rupees Exchange rate (USD to INR) 1 USD = INR 63.97 (as on 13th May 2015) Rural-urban mix 68% people reside in rural areas Households 246 mn Literacy rate 74.04% Source: Government websitesMetro cities Tier-I cities TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness India Fact File Andhra Pradesh Arunachal Pradesh AssamBihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu and Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal Mumbai Pune Hyderabad Bangalore Jaipur New Delhi Kolkata Chennai Ahmadabad Lucknow Nagpur Patna Surat Telangana West North South East
Preface to the Report 3 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Who is the reader?  Any participant or stakeholder in the bread and bakery industry  Analysts, industry experts or any person with an interest in tracking the progress of the bread industry Purpose of the report  Gives the reader an overview of the bread industry in India  The report provides estimates the size and expected of bread industry till 2020. It offers intelligent and actionable insights on the drivers and challenges faced by the industry and its key segments, i.e. by end users and by geography  It provides the profiles of the top industry players in the bread industry in India Scope of the report  This report covers: • Current estimated market size and future growth • Industry structure • Growth drivers and inhibitors • Competitive landscape  Bakery products such as biscuits and cookies, cakes and pastries do not come under the purview of this report TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness
Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Executive Summary Slide 10 1 Industry Structure Slide 11 1.1 Bread industry structure Slide 12 1.2 Evolution of bread industry in India Slide 13 1.3 Definition of bread for the report Slide 14 1.4 Bread industry classification Slide 15 1.5 Industry supply chain Slide 16 2 Industry Overview Slide 17 2.1 Market size & growth Slide 18 2.2 Industry segmentation 2.2.1 - By flavor Slide 19 2.2.2 - By category Slide 20 2.3 Consumption by category Slide 21 2.4 Urban and rural market Slide 22 2.5 Geographical analysis Slide 23 3 Drivers & Inhibitors Slide 24 3.1 Driver 1 : Changing lifestyle and preference of the consumer Slide 26 3.2 Driver 2 : Increase in disposable income Slide 27 3.3 Driver 3 : Growth in organized retail Slide 28 3.4 Driver 4 : Product and technology innovation Slide 29 3.5 Inhibitor 1: Infrastructure problems Slide 30 4 Industry Trends Slide 31 4.1 Recent trends witnessed Slide 32 4 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness TableofContents
Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved 5 Industry Analysis Slide 33 5.1 Porters analysis Slide 34 5.2 Industry attractiveness index Slide 35 6 Competitive Environment Slide 36 6.1 Industry segmentation – Organized and Unorganized Slide 37 6.2 Market share of players Slide 38 6.3 Brand positioning – Price & quality analysis Slide 39 6.4 Competitive benchmarking Slide 40 6.5 Competitor profiles Slide 41 6.5.1 Bonn Nutrients Slide 42 6.5.2 Britannia Industries Ltd. Slide 44 6.5.3 Harvest Gold Industries Pvt. Ltd. Slide 46 6.5.4 Kitty Industries Pvt. Ltd. Slide 48 6.5.5 Modern Foods Industries Ltd. (HUL) Slide 50 7a Annexure Slide 52 Price index of Wheat flour, Sugar and Butter in last few quarters Slide 53 7b Appendix Slide 54 7b.1 Abbreviations and Bibliography Slide 55 7b.2 Glossary Slide 56 7b.3 Research methodology Slide 57 5 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness TableofContents
Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved6 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness TableofContents|ListofCharts&Tables Chart 1 Supply-chain in Indian bread industry Slide 15 Chart 2 Share of bread in bakery segment in 2014 – India Slide 17 Chart 3 Bread industry market size & growth (INR billions) Slide 17 Chart 4 Bread industry segment by category (by value) Slide 18 Chart 5 Market segmentation by flavor (by value) Slide 19 Chart 6 Consumption by category Slide 20 Chart 7 Share of urban and rural market in India Slide 21 Chart 8 Bread industry market size & growth (INR billions) Slide 21 Chart 9 Geographical segmentation of bread consumption in India (2014) Slide 22 Chart 10 Growth of young population in India (millions) Slide 25 Chart 11 Growth of urban population in India (millions) Slide 25 Chart 12 Female work participation – Overall and Urban Slide 25 Chart 13 Rise in per capita income Slide 26 Chart 14 Consumer breakdown by income level (USD millions) Slide 26 Chart 15 Increase in organized retail in India (INR crores) Slide 27 Chart 16 Organized retail market in India (INR crores) Slide 27 Chart 17 Estimation of distribution in various parts Slide 29 Chart 18 Porter’s analysis of bread industry in India Slide 33 Chart 19 Organized and unorganized segmentation of the bread market Slide 36 Chart 20 Market share of key players Slide 37 Chart 21 Price and quality perception of bread products Slide 38 Chart 22 Annual turnover of Bonn Industries Ltd Slide 42
Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved7 TableofContents|ListofCharts&Tables Chart 23 Key manufacturing locations of Bonn Industries Ltd. Slide 42 Chart 24 Annual turnover of Britannia Industries Ltd. Slide 44 Chart 25 Key manufacturing locations of Britannia Industries Ltd. Slide 44 Chart 26 Annual turnover of Harvest Gold Industries Pvt. Ltd. Slide 46 Chart 27 Key manufacturing locations of Harvest Gold Industries Pvt. Ltd. Slide 46 Chart 28 Annual turnover of Kitty Industries Pvt. Ltd. Slide 48 Chart 29 Key manufacturing locations of Kitty Industries Pvt. Ltd. Slide 48 Chart 30 Annual turnover of Modern Foods Industries Ltd. Slide 50 Chart 31 Key manufacturing locations of Modern Foods Industries Ltd. Slide 50 Chart 32 Price index of Wheat flour, Sugar and Butter from FY 12 to Q3 FY 15 (INR) Slide 52 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness
Copyright @ 2014 ValueNotes Database Pvt Ltd. All rights reserved8 Table 1 Bread market share and expenditure – Key states Slide 21 Table 2 Competitive benchmarking of top players in India Slide 39 Table 3 Financial indicators of Bonn Industries Ltd. Slide 42 Table 4 Financial indicators of Britannia Industries Pvt. Ltd. Slide 44 Table 5 Financial indicators of Harvest Gold Industries Pvt. Ltd. Slide 46 Table 6 Financial indicators of Kitty Industries Pvt. Ltd. Slide 48 Table 7 Financial indicators of Modern Foods Industries Ltd. (HUL) Slide 50 TableofContents|ListofCharts&Tables TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness
Bread Industry ValueNotes India Market Intelligence Dashboard Market share of top 5 firms = 80% Output in organized Sector = 45% Organized SectorConcentration Macro Data: Market size, growth, market shares of key players, customer segments, key industry metrics Micro Data: Segmental market size & growth, financials of key players Completeness: All data points is available Quality: Accuracy of data Recency: Latest period data is available: Source of Data Data Availability Industry Structure Ministry of Statistics and Programme Implementation (MOSPI), Economic Survey of India, Census, etc National Council of Applied Economic Research (NCAER), IBEF, Euro Monitor, World Bank, Company Websites, News Articles, Food & Beverages News, National Sample Copyright © 2015 ValueNotes Database Pvt Ltd. All rights reserved. www.valuenotes .biz 2015 Government Bodies Primary Research Trade Interviews , etc Completeness Quality Recency Macro Data Micro Data All India Bread Manufacturer's Association (AIBMA)
Market Size And Growth Industry Segmentation and structure  The bread industry in India grew at a CAGR of 9% over the last three years and is valued at INR 33bn (~USD 0.51bn) in FY 2015 (E)  The industry is expected to grow at a CAGR of 10% over the next five years to approximately INR 53bn (~USD 0.82bn) in FY 2020  Organized segment of the bread industry currently stands at ~45%  Entry of the mid-sized regional players is consolidating the industry towards a more organized structure  Brown and nutritional bread are fast growing segments while white bread is the largest at 75%  Though urban market accounts for ~65% of the demand, rural market is growing faster Key Players  Britannia (BIL), Modern Foods Industries Ltd (MFIL), Bonn, Kitty and Harvest are the market leaders presently  Both BIL and MFIL account for a combined 45% of organized bread market in India 10 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved ExecutiveSummary The bread industry in India has been given an Industry Attractiveness Rating of “Mildly attractive” as per the ‘ValueNotes Industry Attractiveness Rating Evaluation System’ TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Drivers and Challenges  Drivers: Increasing disposable incomes, changing lifestyles and preferences, growth in organized retail and increasing consumption of packaged food are the main drivers of the industry  Challenges: Continuous increase in prices of raw materials and poor infrastructure problems are some of the threats to the bread industry BIL MFIL Bonn Harvest Kitty Others 20% 20% 25% 15% 10%10%
Industry Structure Picture Courtesy: Daifuku
12 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chapter1:BreadIndustryStructure  India is the world’s largest biscuit consuming nation  There are various types of biscuits such as: • Glucose biscuits • Cream biscuits • Cookies • Crackers  Bread has become an integral part of modern living and is available in various patterns and flavors such as: • Sliced Bread • Pav and Buns • Nutritional Bread • Fruit Bread  Cakes and pastries is relatively new but rapidly growing segment  Types of cakes include: • Chocolate Cakes • Cream Cakes • Pastries Bakery industry (INR 223,500mn) Biscuits and cookies (INR 165,000mn) Bread (INR 33,000mn) Cakes and pastries (INR 20,000mn) Other products (INR 5,500mn)  The other category of products in bakery industry include khari, toast, rusk and other small bakery delicacies Bread is the second largest segment in the bakery industry
Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved13 Late 1990s  Government of India had reserved bread industry for Small Scale Industries (SSI) status  Wax-coated paper was the most preferred packaging material as it had the capacity to absorb extra oil. But the wax packaging tended to open up in humid conditions, resulting in the product getting infected 2000 – 2010  Between 2000 and 2010, the bread industry saw a huge shift from manual production to automated production  Early 2000 was the turning point for the bakery products market because of an increase in urbanization, changing food habits and the availability of reasonably priced ready- to-eat products  The industry started using polythene for packaging as it offered a safe and fully sealed product. The producers could create aesthetic packages with transparent packaging Current Situation (2011 onwards)  Growing concern over health and having the ability to choose healthy foods is leading to innovations in bread products  With the fast food culture catching on, the demand for bread products has accelerated  Companies are entering the market with concepts such as live bakery-cum-cafés to cater to today's youth who are looking for a nice ambience and access to wifi, where they can relax and try new products. Global bakery chains like BreadTalk and Cinnabon bakery have started bakery cafes Chapter1:EvolutionofbreadindustryinIndia TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Bread industry has seen rapid changes over the last decade
Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved14 This report covers: • The organized sector including private and public manufacturers registered with All India Bread Manufacturer’s Association (AIBMA) and other federations and associations of bread This report does not cover: • Other bakery products like cakes, rusks, toasts and khari • Unorganized small local bakeries manufacturing bread Chapter1:IndustryDefinition Definition of bread as per the scope of this report  A staple food made from flour or meal mixed with other dry and liquid ingredients, usually combined with a leavening agent. It is kneaded, shaped into loaves, and baked. Based on type of bread, it can be broadly categorized into the following categories: TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness • Sliced Bread: Sliced bread is a pre-sliced loaf of bread • Pav Bread: Pav is a local hand-sized, small dome shaped bakery product with a flat bottom • Other Breads: Other type of breads include exotic breads, flavored breads, burger buns, pizza bases etc
15 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter1:BreadIndustryClassification Bread is mainly classified on the basis of category and flavor TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness White bread  Made from Atta and Maida  Easily available at grocery stores  Used in sandwiches or consumed with milk and tea in households Brown bread  Made of whole wheat flour  Available at most urban grocery stores  Consumed mostly by health conscious consumers Fruit bread  Made of lightly enriched dough and dried fruit with higher sugar content  Available mostly in modern retail outlets and bakery shops  Consumed mostly for breakfast or as secondary staple diet Nutritional bread  Made of various nutrients, multi grains like oats, rye, corn, garlic etc.  Preferred by consumers for its nutritional contents  Mostly consumed in metro cities only Bread can be broadly categorized by its type and ingredients Sliced bread  Sliced bread is a pre-sliced loaf of bread usually available at grocery stores  This segment is dominated by organized players  Consumed as a breakfast item in households with milk, tea or used to make sandwich etc Pavs & Buns  Pav is a hand-sized, dome shaped bakery product with a flat bottom  Industry for this segment is highly unorganized  Commonly consumed in Northern and Western India in food items like pav bhaji, vada pav etc Other breads  This segment consists of exotic breads, flavored breads, burger buns and pizza bases etc.  Premium product segment dominated by organized players  Mostly consumed in urban areas Segments by Type Segments By Ingredient
16 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter1:IndustrySupplyChain Logistics plays an important role in bread industry because of its short shelf life TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Indirect sales Direct sales The chart below depicts the typical supply chain of bread industry in India. The participants and their roles are described in diagram below:  The supply chain of bread industry can be divided into: • Direct sales: This consists of direct distribution of products by manufacturers to organized retail segments like supermarkets, departmental stores, etc. and sometimes directly to the end consumers • Indirect sales: This channel entails distribution of the product by manufacturer through various middlemen like wholesalers, distributors to the front end sellers like retailers, hotels, restaurants, etc. • As bread is a highly perishable item with a shelf life of only 2-3 days, it needs to be distributed within 40 hours of manufacturing. The industry needs to have a strong distribution network including various middlemen and suppliers to reach every corner of the country. Chart 1: Supply-chain in Indian bread industry Wholesalers Distributors Manufacturers Hotels Restaurants Individual consumer Production Zone Distribution Zone Consumption Zone Retailers Super markets B2B segment B2C segment
Industry Overview
X X X X X X X X X X X X X X X X X X X FY 2012 FY 2013 FY 2014 FY 2015(E) FY 2016(E) FY 2017(E) FY 2018(E) FY 2019(E) FY 2020(E) Market Size (Optimistic) Market Size (Pessimistic) Market Size (Most Likely) 18 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chart 3: Bread industry market size & growth (INR bn) The estimated growth of ‘the bread industry’ is based on various factors* including: - xxx - xxx - xxx - xxx - xxx Source: Trade interviews, ValueNotes Analysis Current market Estimated growth Chapter2:MarketSize&Growth Chart 2: Share of bread in bakery segment in FY 2015(E) – India Bread industry to grow at a CAGR of X% in the next 5 years  xxx  xxx TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness CAGR X% CAGR X% CAGR X% CAGR X% Bread X% Biscuit X% Cakes and Pastries X% Others X% Usage of “Three point analysis” to arrive at realistic growth figures: - Optimistic: Maximum growth that can be anticipated, provided all the factors contributing to growth show a positive impact - Most Likely: Most likely growth which has highest probability of taking place - Pessimistic: Least growth, if growth factors are delayed or not implemented
White Bread Brown Bread Fruit Bread Other Nutritional Bread 19 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Source: Trade interviews, ValueNotes Research Chapter2:IndustrySegmentation Brown and nutritional breads are fast growing segments TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chart 4: Bread industry segment by ingredients in FY 2015(E) (by value) White bread  xxx Fruit and other nutritional bread  xxx X% X% X% Brown bread  xxx “There is a growing segment of people ready to pay the extra buck for a healthier bread product. Brown bread sales in the country are rising, especially in the urban areas. Also for bread makers, brown bread is a boon as they get a higher margin with it as against white bread.” P. Krishnakumar Senior General Manager, HUL In an interview with ‘Food navigator – Asia’ X%
Sliced Bread Pav and Buns Other breads 20 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Source: Trade interviews, ValueNotes Research Chapter2:IndustrySegmentation Slice bread is the most popular segment within bread industry TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chart 5: Bread industry segment by category in FY 2015(E) (by value) Sliced bread  xxx Pav & Bun  xxx Other breads (Exotic, flavored, burger buns, pizza base etc)  xxx 76% 14%10% *Popular Indian street food
B2C B2B  xxx 21 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter2:IndustrySegmentation B2C sector is the biggest consumer of bread in India TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness  xxx Source: Trade interviews, ValueNotes Research Chart 6: Consumption by category in 2015(E) (by value) B2C segment B2B segment “Bakery is now being termed as aspirational stepping stone towards high-end F&B facilities mainly caters to quick business meeting where people can have a quick bite while deliberations and even to close friends who wants to enjoy a moment together. Besides, now gifting branded bakery products is replacing the earlier “mithai ka dibba” trend as well.” Pallav Singhal Executive chef, JW Marriott Chandigarh in an interview with ‘FnBnews.com’ 70% 30%
X% X% 22 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chart 8: Share of sales in Tier 1 & Tier 2 cities in urban market in FY 2015(E) (by value) Source: Trade interviews, ValueNotes Analysis Urban market Rural market Chapter2:MarketSize&Growth Chart 7: Share of sales in urban and rural market in FY 2015(E) (by value) Rural market is expected to grow faster than the urban market  xxx  xxx TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Tier 1 Tier 2 * Urban market constitutes of 8 Tier 1 & 26 tier 2 cities, While rural market includes Tier 3 cities ( <1 ml population) and remaining market States Monthly per capita expenditure (INR) Urban Monthly per capita expenditure (INR) Rural Share of states in Urban market (%) Share of states in Rural market (%) Uttar Pradesh X X X% X% Maharashtra X X X% X% Delhi X X X% X% J & K X X X% X% West Bengal X X X% X% Andhra Pradesh X X X% X% Punjab X X X% X% Kerala X X X% X% Rajasthan X X X% X% Karnataka X X X% X% Source: NSS report 2010, ValueNotes Analysis Table 1: Bread market share and expenditure – Key states Source: Reevolv advisory estimates, Trade interviews, ValueNotes Analysis X% X% X% X% X% X% 2005 2010 2015(E) Rural Urban
23 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter2:GeographicalAnalysis X% East (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx South (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx West (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx Source: All India Bread Manufacturer’s Association (AIBMA), Assocham, ValueNotes Research X% X% X% North (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx Northern and Western India are the biggest consumers of bread in the country TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chart 9: Geographical segmentation of bread consumption in India (FY 2015 (E))
Annexure
Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved25 Annexure  Till mid-2014, prices of wheat, vegetable oil, ghee and sugar were increasing on an average by ~20-22% each year. Increasing input cost had resulted in increasing operating costs for manufacturers. This had left the biscuit manufacturers with very thin margins  However, the scenario seems to be changing in the last couple of quarters. The key input prices - wheat and sugar were flat, while palm oil declined y-o-y during the quarter. This has resulted in to increased profitability for the bread manufacturers Chart 32: Price index of Wheat Flour, Sugar, and Butter from FY 12 to Q3 FY 15 (INR) Base Year: FY 11-12=100 Source: Britannia Industries Ltd. - Annual report FY 14 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Industry Attractiveness Raw material prices contribute to more than 50% of retail price of bread 100 121 133 128 135 135 116 114 111 104 93 108 118 116 110 FY 11-12 FY 12-13 FY 13-14 Q1 14-15 Q2 14-15 Q3 14-15 Flour Sugar Butter
Appendix
27 Appendix|Abbreviations&Bibliography Abbreviations USD US Dollar INR Indian Rupee PCI Per Capita Income CAGR Compound Annual Growth Rate GDP Gross Domestic Product mn million bn billion cr crore kg Kilogram FY Fiscal Year p.a. Per annum km Kilometer FMCG Fast Moving Consumer Goods US United States B2B Business-To-Business B2C Business-To-Consumer HUL Hindustan Unilever Limited All India Bread Manufacturers Association (AIBMA) FnB News News Articles Company annual reports and company websites McKinsey Group Institute India Consumer Demand Model Moneycontrol.com Registrar of Companies Bibliography ValueNotes conducted secondary research to obtain information on bread industry in India and referred to following sources: TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved
28 Appendix|Glossary TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness B2B Business-to-business (B2B) is commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer B2C Business that sells products or provides services to end-user consumers Grammage Weight of the product in a packet Polyethene A tough, light flexible synthetic resin made by polymerizing ethylene, chiefly used for plastic bags, food containers, and other packaging. Urbanization Urbanization or urban population refers to people living in urban areas as defined by national statistical offices Working women participation Working women participation rate is the female proportion of the population ages 15 and older that is economically active: all females who supply labor for the production of goods and services during a specified period Glossary Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved
ValueNotes is a full-service market and business research firm. Since 2000, we have helped customers, in India and around the globe, make better business decisions by providing actionable intelligence. Our customized research solutions, by way of projects and continuing engagements, have helped serve specific business needs - market entry strategy, choice of location, partner selection, competitive intelligence, investment appraisal, due diligence, and customer need analysis. Over the years, ValueNotes has developed considerable domain knowledge in a variety of sectors and industries. More important, we understand how to develop and deploy appropriate research methodologies best suited for diverse markets. We've developed proprietary research methods to deal with unorganized, information-scarce markets; and analytical techniques to triangulate, validate and correlate incomplete or unrelated information 29 Bread industry in India Government Websites & Publications Industry Intelligence Industry Associations Publications & News Releases Press Releases & Publications by Industry Players Industry Reports/ Trade Publications ValueNotes carries out industry studies designed around optimal use of secondary (desk) research techniques to gain maximum intelligence with specific insights and information. The steps carried out for “Bread Industry in India” are as follows:  Secondary research: Intensive secondary research sources include, but are not limited to, • Print and online business publications • Analyst reports • Press releases • Trade publications  Industry intelligence and market analysis: Triangulation method is adopted to validate data points from the supply side, demand side, industry reports and trade publications  News releases and publications:  Industry Associations: All India Bread Manufacturer’s Association (AIBMA) About ValueNotes Research Methodology Applied TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry AttractivenessAppendix|ResearchMethodology Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved
As an analyst at ValueNotes, Sujay has worked on various projects such as market sizing, custom research, competitive intelligence, due diligence, market entry strategy and industry reports. His main focus of studies at ValueNotes has been market sizing and customer intelligence in various industries such as consumer markets and engineering industries. www.indianotes.com Indian Markets www.sourcingnotes.com Outsourcing Intelligence www.valuenotes.biz Research & Consulting ValueNotes Database Pvt Ltd 1 Bhuvaneshwar Society, Abhimanshree Road Pashan, Pune 411 008, Maharashtra, India Other Industry Reports by ValueNotes: 1. Packaged fruit juice industry in India 2. Transformers industry in India Disclaimer: This short industry report is published for general information only. Although high standards have been used in the preparation, ValueNotes is not responsible for any loss or damage arising from use of this report. The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavor to update the information herein on reasonable basis, ValueNotes is under no obligation to update or keep the information current. This report is the sole property of ValueNotes and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. In case of any queries, mail us at research@valuenotes.co.in research@valuenotes.co.in | + 91 20 6623 1743 About the author:

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Bread industry in India to reach INR 53 billion by 2020

  • 1.
    Bread Industry /Market in India  2015 - 2020 Picture Courtesy: www.info.wowlogistics.com
  • 2.
    2 Copyright @2015 ValueNotes Database Pvt Ltd. All rights reserved • 43 cities in India have a population of 1mn+ • Cities in India are classified on the basis of cost of living. • 4 Metros including Mumbai, Delhi, Chennai, Kolkata • 9 Tier 1 (+5 million ) cities including Pune, Ahmedabad and Bangalore • 22 Tier 2 cities (1 million to 5 million ) including Patna, Kochi, Rajkot, Madurai • 41 Tier 3 cities (less then 1 million ) including Ranchi, Mangalore, Gwalior, Roorkee India - Snapshot Population growth 1.4% p.a Land Area 3.29 mn sq km Population density 324 persons per sq km Form of government Democracy Number of States 29 states & 6 union territories Capital New Delhi Per capita income Nominal: USD1,124.4 p.a Religion 6 main religions Languages Hindi (national language), English (business language), 22 (official languages) Currency Rupees Exchange rate (USD to INR) 1 USD = INR 63.97 (as on 13th May 2015) Rural-urban mix 68% people reside in rural areas Households 246 mn Literacy rate 74.04% Source: Government websitesMetro cities Tier-I cities TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness India Fact File Andhra Pradesh Arunachal Pradesh AssamBihar Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu and Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal Mumbai Pune Hyderabad Bangalore Jaipur New Delhi Kolkata Chennai Ahmadabad Lucknow Nagpur Patna Surat Telangana West North South East
  • 3.
    Preface to theReport 3 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Who is the reader?  Any participant or stakeholder in the bread and bakery industry  Analysts, industry experts or any person with an interest in tracking the progress of the bread industry Purpose of the report  Gives the reader an overview of the bread industry in India  The report provides estimates the size and expected of bread industry till 2020. It offers intelligent and actionable insights on the drivers and challenges faced by the industry and its key segments, i.e. by end users and by geography  It provides the profiles of the top industry players in the bread industry in India Scope of the report  This report covers: • Current estimated market size and future growth • Industry structure • Growth drivers and inhibitors • Competitive landscape  Bakery products such as biscuits and cookies, cakes and pastries do not come under the purview of this report TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness
  • 4.
    Copyright @ 2015ValueNotes Database Pvt Ltd. All rights reserved Executive Summary Slide 10 1 Industry Structure Slide 11 1.1 Bread industry structure Slide 12 1.2 Evolution of bread industry in India Slide 13 1.3 Definition of bread for the report Slide 14 1.4 Bread industry classification Slide 15 1.5 Industry supply chain Slide 16 2 Industry Overview Slide 17 2.1 Market size & growth Slide 18 2.2 Industry segmentation 2.2.1 - By flavor Slide 19 2.2.2 - By category Slide 20 2.3 Consumption by category Slide 21 2.4 Urban and rural market Slide 22 2.5 Geographical analysis Slide 23 3 Drivers & Inhibitors Slide 24 3.1 Driver 1 : Changing lifestyle and preference of the consumer Slide 26 3.2 Driver 2 : Increase in disposable income Slide 27 3.3 Driver 3 : Growth in organized retail Slide 28 3.4 Driver 4 : Product and technology innovation Slide 29 3.5 Inhibitor 1: Infrastructure problems Slide 30 4 Industry Trends Slide 31 4.1 Recent trends witnessed Slide 32 4 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness TableofContents
  • 5.
    Copyright @ 2015ValueNotes Database Pvt Ltd. All rights reserved 5 Industry Analysis Slide 33 5.1 Porters analysis Slide 34 5.2 Industry attractiveness index Slide 35 6 Competitive Environment Slide 36 6.1 Industry segmentation – Organized and Unorganized Slide 37 6.2 Market share of players Slide 38 6.3 Brand positioning – Price & quality analysis Slide 39 6.4 Competitive benchmarking Slide 40 6.5 Competitor profiles Slide 41 6.5.1 Bonn Nutrients Slide 42 6.5.2 Britannia Industries Ltd. Slide 44 6.5.3 Harvest Gold Industries Pvt. Ltd. Slide 46 6.5.4 Kitty Industries Pvt. Ltd. Slide 48 6.5.5 Modern Foods Industries Ltd. (HUL) Slide 50 7a Annexure Slide 52 Price index of Wheat flour, Sugar and Butter in last few quarters Slide 53 7b Appendix Slide 54 7b.1 Abbreviations and Bibliography Slide 55 7b.2 Glossary Slide 56 7b.3 Research methodology Slide 57 5 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness TableofContents
  • 6.
    Copyright @ 2015ValueNotes Database Pvt Ltd. All rights reserved6 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness TableofContents|ListofCharts&Tables Chart 1 Supply-chain in Indian bread industry Slide 15 Chart 2 Share of bread in bakery segment in 2014 – India Slide 17 Chart 3 Bread industry market size & growth (INR billions) Slide 17 Chart 4 Bread industry segment by category (by value) Slide 18 Chart 5 Market segmentation by flavor (by value) Slide 19 Chart 6 Consumption by category Slide 20 Chart 7 Share of urban and rural market in India Slide 21 Chart 8 Bread industry market size & growth (INR billions) Slide 21 Chart 9 Geographical segmentation of bread consumption in India (2014) Slide 22 Chart 10 Growth of young population in India (millions) Slide 25 Chart 11 Growth of urban population in India (millions) Slide 25 Chart 12 Female work participation – Overall and Urban Slide 25 Chart 13 Rise in per capita income Slide 26 Chart 14 Consumer breakdown by income level (USD millions) Slide 26 Chart 15 Increase in organized retail in India (INR crores) Slide 27 Chart 16 Organized retail market in India (INR crores) Slide 27 Chart 17 Estimation of distribution in various parts Slide 29 Chart 18 Porter’s analysis of bread industry in India Slide 33 Chart 19 Organized and unorganized segmentation of the bread market Slide 36 Chart 20 Market share of key players Slide 37 Chart 21 Price and quality perception of bread products Slide 38 Chart 22 Annual turnover of Bonn Industries Ltd Slide 42
  • 7.
    Copyright @ 2015ValueNotes Database Pvt Ltd. All rights reserved7 TableofContents|ListofCharts&Tables Chart 23 Key manufacturing locations of Bonn Industries Ltd. Slide 42 Chart 24 Annual turnover of Britannia Industries Ltd. Slide 44 Chart 25 Key manufacturing locations of Britannia Industries Ltd. Slide 44 Chart 26 Annual turnover of Harvest Gold Industries Pvt. Ltd. Slide 46 Chart 27 Key manufacturing locations of Harvest Gold Industries Pvt. Ltd. Slide 46 Chart 28 Annual turnover of Kitty Industries Pvt. Ltd. Slide 48 Chart 29 Key manufacturing locations of Kitty Industries Pvt. Ltd. Slide 48 Chart 30 Annual turnover of Modern Foods Industries Ltd. Slide 50 Chart 31 Key manufacturing locations of Modern Foods Industries Ltd. Slide 50 Chart 32 Price index of Wheat flour, Sugar and Butter from FY 12 to Q3 FY 15 (INR) Slide 52 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness
  • 8.
    Copyright @ 2014ValueNotes Database Pvt Ltd. All rights reserved8 Table 1 Bread market share and expenditure – Key states Slide 21 Table 2 Competitive benchmarking of top players in India Slide 39 Table 3 Financial indicators of Bonn Industries Ltd. Slide 42 Table 4 Financial indicators of Britannia Industries Pvt. Ltd. Slide 44 Table 5 Financial indicators of Harvest Gold Industries Pvt. Ltd. Slide 46 Table 6 Financial indicators of Kitty Industries Pvt. Ltd. Slide 48 Table 7 Financial indicators of Modern Foods Industries Ltd. (HUL) Slide 50 TableofContents|ListofCharts&Tables TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness
  • 9.
    Bread Industry ValueNotes IndiaMarket Intelligence Dashboard Market share of top 5 firms = 80% Output in organized Sector = 45% Organized SectorConcentration Macro Data: Market size, growth, market shares of key players, customer segments, key industry metrics Micro Data: Segmental market size & growth, financials of key players Completeness: All data points is available Quality: Accuracy of data Recency: Latest period data is available: Source of Data Data Availability Industry Structure Ministry of Statistics and Programme Implementation (MOSPI), Economic Survey of India, Census, etc National Council of Applied Economic Research (NCAER), IBEF, Euro Monitor, World Bank, Company Websites, News Articles, Food & Beverages News, National Sample Copyright © 2015 ValueNotes Database Pvt Ltd. All rights reserved. www.valuenotes .biz 2015 Government Bodies Primary Research Trade Interviews , etc Completeness Quality Recency Macro Data Micro Data All India Bread Manufacturer's Association (AIBMA)
  • 10.
    Market Size And Growth Industry Segmentationand structure  The bread industry in India grew at a CAGR of 9% over the last three years and is valued at INR 33bn (~USD 0.51bn) in FY 2015 (E)  The industry is expected to grow at a CAGR of 10% over the next five years to approximately INR 53bn (~USD 0.82bn) in FY 2020  Organized segment of the bread industry currently stands at ~45%  Entry of the mid-sized regional players is consolidating the industry towards a more organized structure  Brown and nutritional bread are fast growing segments while white bread is the largest at 75%  Though urban market accounts for ~65% of the demand, rural market is growing faster Key Players  Britannia (BIL), Modern Foods Industries Ltd (MFIL), Bonn, Kitty and Harvest are the market leaders presently  Both BIL and MFIL account for a combined 45% of organized bread market in India 10 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved ExecutiveSummary The bread industry in India has been given an Industry Attractiveness Rating of “Mildly attractive” as per the ‘ValueNotes Industry Attractiveness Rating Evaluation System’ TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Drivers and Challenges  Drivers: Increasing disposable incomes, changing lifestyles and preferences, growth in organized retail and increasing consumption of packaged food are the main drivers of the industry  Challenges: Continuous increase in prices of raw materials and poor infrastructure problems are some of the threats to the bread industry BIL MFIL Bonn Harvest Kitty Others 20% 20% 25% 15% 10%10%
  • 11.
  • 12.
    12 Copyright @2015 ValueNotes Database Pvt Ltd. All rights reserved TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chapter1:BreadIndustryStructure  India is the world’s largest biscuit consuming nation  There are various types of biscuits such as: • Glucose biscuits • Cream biscuits • Cookies • Crackers  Bread has become an integral part of modern living and is available in various patterns and flavors such as: • Sliced Bread • Pav and Buns • Nutritional Bread • Fruit Bread  Cakes and pastries is relatively new but rapidly growing segment  Types of cakes include: • Chocolate Cakes • Cream Cakes • Pastries Bakery industry (INR 223,500mn) Biscuits and cookies (INR 165,000mn) Bread (INR 33,000mn) Cakes and pastries (INR 20,000mn) Other products (INR 5,500mn)  The other category of products in bakery industry include khari, toast, rusk and other small bakery delicacies Bread is the second largest segment in the bakery industry
  • 13.
    Copyright @ 2015ValueNotes Database Pvt Ltd. All rights reserved13 Late 1990s  Government of India had reserved bread industry for Small Scale Industries (SSI) status  Wax-coated paper was the most preferred packaging material as it had the capacity to absorb extra oil. But the wax packaging tended to open up in humid conditions, resulting in the product getting infected 2000 – 2010  Between 2000 and 2010, the bread industry saw a huge shift from manual production to automated production  Early 2000 was the turning point for the bakery products market because of an increase in urbanization, changing food habits and the availability of reasonably priced ready- to-eat products  The industry started using polythene for packaging as it offered a safe and fully sealed product. The producers could create aesthetic packages with transparent packaging Current Situation (2011 onwards)  Growing concern over health and having the ability to choose healthy foods is leading to innovations in bread products  With the fast food culture catching on, the demand for bread products has accelerated  Companies are entering the market with concepts such as live bakery-cum-cafés to cater to today's youth who are looking for a nice ambience and access to wifi, where they can relax and try new products. Global bakery chains like BreadTalk and Cinnabon bakery have started bakery cafes Chapter1:EvolutionofbreadindustryinIndia TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Bread industry has seen rapid changes over the last decade
  • 14.
    Copyright @ 2015ValueNotes Database Pvt Ltd. All rights reserved14 This report covers: • The organized sector including private and public manufacturers registered with All India Bread Manufacturer’s Association (AIBMA) and other federations and associations of bread This report does not cover: • Other bakery products like cakes, rusks, toasts and khari • Unorganized small local bakeries manufacturing bread Chapter1:IndustryDefinition Definition of bread as per the scope of this report  A staple food made from flour or meal mixed with other dry and liquid ingredients, usually combined with a leavening agent. It is kneaded, shaped into loaves, and baked. Based on type of bread, it can be broadly categorized into the following categories: TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness • Sliced Bread: Sliced bread is a pre-sliced loaf of bread • Pav Bread: Pav is a local hand-sized, small dome shaped bakery product with a flat bottom • Other Breads: Other type of breads include exotic breads, flavored breads, burger buns, pizza bases etc
  • 15.
    15 Copyright @2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter1:BreadIndustryClassification Bread is mainly classified on the basis of category and flavor TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness White bread  Made from Atta and Maida  Easily available at grocery stores  Used in sandwiches or consumed with milk and tea in households Brown bread  Made of whole wheat flour  Available at most urban grocery stores  Consumed mostly by health conscious consumers Fruit bread  Made of lightly enriched dough and dried fruit with higher sugar content  Available mostly in modern retail outlets and bakery shops  Consumed mostly for breakfast or as secondary staple diet Nutritional bread  Made of various nutrients, multi grains like oats, rye, corn, garlic etc.  Preferred by consumers for its nutritional contents  Mostly consumed in metro cities only Bread can be broadly categorized by its type and ingredients Sliced bread  Sliced bread is a pre-sliced loaf of bread usually available at grocery stores  This segment is dominated by organized players  Consumed as a breakfast item in households with milk, tea or used to make sandwich etc Pavs & Buns  Pav is a hand-sized, dome shaped bakery product with a flat bottom  Industry for this segment is highly unorganized  Commonly consumed in Northern and Western India in food items like pav bhaji, vada pav etc Other breads  This segment consists of exotic breads, flavored breads, burger buns and pizza bases etc.  Premium product segment dominated by organized players  Mostly consumed in urban areas Segments by Type Segments By Ingredient
  • 16.
    16 Copyright @2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter1:IndustrySupplyChain Logistics plays an important role in bread industry because of its short shelf life TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Indirect sales Direct sales The chart below depicts the typical supply chain of bread industry in India. The participants and their roles are described in diagram below:  The supply chain of bread industry can be divided into: • Direct sales: This consists of direct distribution of products by manufacturers to organized retail segments like supermarkets, departmental stores, etc. and sometimes directly to the end consumers • Indirect sales: This channel entails distribution of the product by manufacturer through various middlemen like wholesalers, distributors to the front end sellers like retailers, hotels, restaurants, etc. • As bread is a highly perishable item with a shelf life of only 2-3 days, it needs to be distributed within 40 hours of manufacturing. The industry needs to have a strong distribution network including various middlemen and suppliers to reach every corner of the country. Chart 1: Supply-chain in Indian bread industry Wholesalers Distributors Manufacturers Hotels Restaurants Individual consumer Production Zone Distribution Zone Consumption Zone Retailers Super markets B2B segment B2C segment
  • 17.
  • 18.
    X X X X X X X X X X X X X X X X X X X FY 2012FY 2013 FY 2014 FY 2015(E) FY 2016(E) FY 2017(E) FY 2018(E) FY 2019(E) FY 2020(E) Market Size (Optimistic) Market Size (Pessimistic) Market Size (Most Likely) 18 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chart 3: Bread industry market size & growth (INR bn) The estimated growth of ‘the bread industry’ is based on various factors* including: - xxx - xxx - xxx - xxx - xxx Source: Trade interviews, ValueNotes Analysis Current market Estimated growth Chapter2:MarketSize&Growth Chart 2: Share of bread in bakery segment in FY 2015(E) – India Bread industry to grow at a CAGR of X% in the next 5 years  xxx  xxx TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness CAGR X% CAGR X% CAGR X% CAGR X% Bread X% Biscuit X% Cakes and Pastries X% Others X% Usage of “Three point analysis” to arrive at realistic growth figures: - Optimistic: Maximum growth that can be anticipated, provided all the factors contributing to growth show a positive impact - Most Likely: Most likely growth which has highest probability of taking place - Pessimistic: Least growth, if growth factors are delayed or not implemented
  • 19.
    White Bread Brown Bread FruitBread Other Nutritional Bread 19 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Source: Trade interviews, ValueNotes Research Chapter2:IndustrySegmentation Brown and nutritional breads are fast growing segments TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chart 4: Bread industry segment by ingredients in FY 2015(E) (by value) White bread  xxx Fruit and other nutritional bread  xxx X% X% X% Brown bread  xxx “There is a growing segment of people ready to pay the extra buck for a healthier bread product. Brown bread sales in the country are rising, especially in the urban areas. Also for bread makers, brown bread is a boon as they get a higher margin with it as against white bread.” P. Krishnakumar Senior General Manager, HUL In an interview with ‘Food navigator – Asia’ X%
  • 20.
    Sliced Bread Pav andBuns Other breads 20 Copyright @ 2015 ValueNotes Database Pvt Ltd. All rights reserved Source: Trade interviews, ValueNotes Research Chapter2:IndustrySegmentation Slice bread is the most popular segment within bread industry TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chart 5: Bread industry segment by category in FY 2015(E) (by value) Sliced bread  xxx Pav & Bun  xxx Other breads (Exotic, flavored, burger buns, pizza base etc)  xxx 76% 14%10% *Popular Indian street food
  • 21.
    B2C B2B  xxx 21 Copyright@ 2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter2:IndustrySegmentation B2C sector is the biggest consumer of bread in India TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness  xxx Source: Trade interviews, ValueNotes Research Chart 6: Consumption by category in 2015(E) (by value) B2C segment B2B segment “Bakery is now being termed as aspirational stepping stone towards high-end F&B facilities mainly caters to quick business meeting where people can have a quick bite while deliberations and even to close friends who wants to enjoy a moment together. Besides, now gifting branded bakery products is replacing the earlier “mithai ka dibba” trend as well.” Pallav Singhal Executive chef, JW Marriott Chandigarh in an interview with ‘FnBnews.com’ 70% 30%
  • 22.
    X% X% 22 Copyright @2015 ValueNotes Database Pvt Ltd. All rights reserved Chart 8: Share of sales in Tier 1 & Tier 2 cities in urban market in FY 2015(E) (by value) Source: Trade interviews, ValueNotes Analysis Urban market Rural market Chapter2:MarketSize&Growth Chart 7: Share of sales in urban and rural market in FY 2015(E) (by value) Rural market is expected to grow faster than the urban market  xxx  xxx TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Tier 1 Tier 2 * Urban market constitutes of 8 Tier 1 & 26 tier 2 cities, While rural market includes Tier 3 cities ( <1 ml population) and remaining market States Monthly per capita expenditure (INR) Urban Monthly per capita expenditure (INR) Rural Share of states in Urban market (%) Share of states in Rural market (%) Uttar Pradesh X X X% X% Maharashtra X X X% X% Delhi X X X% X% J & K X X X% X% West Bengal X X X% X% Andhra Pradesh X X X% X% Punjab X X X% X% Kerala X X X% X% Rajasthan X X X% X% Karnataka X X X% X% Source: NSS report 2010, ValueNotes Analysis Table 1: Bread market share and expenditure – Key states Source: Reevolv advisory estimates, Trade interviews, ValueNotes Analysis X% X% X% X% X% X% 2005 2010 2015(E) Rural Urban
  • 23.
    23 Copyright @2015 ValueNotes Database Pvt Ltd. All rights reserved Chapter2:GeographicalAnalysis X% East (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx South (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx West (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx Source: All India Bread Manufacturer’s Association (AIBMA), Assocham, ValueNotes Research X% X% X% North (X%)  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  Xxxxxxxxxxxxx  xxxxxxxxxxxxx Northern and Western India are the biggest consumers of bread in the country TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Chart 9: Geographical segmentation of bread consumption in India (FY 2015 (E))
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    Copyright @ 2015ValueNotes Database Pvt. Ltd. All rights reserved25 Annexure  Till mid-2014, prices of wheat, vegetable oil, ghee and sugar were increasing on an average by ~20-22% each year. Increasing input cost had resulted in increasing operating costs for manufacturers. This had left the biscuit manufacturers with very thin margins  However, the scenario seems to be changing in the last couple of quarters. The key input prices - wheat and sugar were flat, while palm oil declined y-o-y during the quarter. This has resulted in to increased profitability for the bread manufacturers Chart 32: Price index of Wheat Flour, Sugar, and Butter from FY 12 to Q3 FY 15 (INR) Base Year: FY 11-12=100 Source: Britannia Industries Ltd. - Annual report FY 14 TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Industry Attractiveness Raw material prices contribute to more than 50% of retail price of bread 100 121 133 128 135 135 116 114 111 104 93 108 118 116 110 FY 11-12 FY 12-13 FY 13-14 Q1 14-15 Q2 14-15 Q3 14-15 Flour Sugar Butter
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    27 Appendix|Abbreviations&Bibliography Abbreviations USD US Dollar INRIndian Rupee PCI Per Capita Income CAGR Compound Annual Growth Rate GDP Gross Domestic Product mn million bn billion cr crore kg Kilogram FY Fiscal Year p.a. Per annum km Kilometer FMCG Fast Moving Consumer Goods US United States B2B Business-To-Business B2C Business-To-Consumer HUL Hindustan Unilever Limited All India Bread Manufacturers Association (AIBMA) FnB News News Articles Company annual reports and company websites McKinsey Group Institute India Consumer Demand Model Moneycontrol.com Registrar of Companies Bibliography ValueNotes conducted secondary research to obtain information on bread industry in India and referred to following sources: TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry Attractiveness Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved
  • 28.
    28 Appendix|Glossary TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers& Inhibitors Government Initiatives Industry Attractiveness B2B Business-to-business (B2B) is commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer B2C Business that sells products or provides services to end-user consumers Grammage Weight of the product in a packet Polyethene A tough, light flexible synthetic resin made by polymerizing ethylene, chiefly used for plastic bags, food containers, and other packaging. Urbanization Urbanization or urban population refers to people living in urban areas as defined by national statistical offices Working women participation Working women participation rate is the female proportion of the population ages 15 and older that is economically active: all females who supply labor for the production of goods and services during a specified period Glossary Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved
  • 29.
    ValueNotes is afull-service market and business research firm. Since 2000, we have helped customers, in India and around the globe, make better business decisions by providing actionable intelligence. Our customized research solutions, by way of projects and continuing engagements, have helped serve specific business needs - market entry strategy, choice of location, partner selection, competitive intelligence, investment appraisal, due diligence, and customer need analysis. Over the years, ValueNotes has developed considerable domain knowledge in a variety of sectors and industries. More important, we understand how to develop and deploy appropriate research methodologies best suited for diverse markets. We've developed proprietary research methods to deal with unorganized, information-scarce markets; and analytical techniques to triangulate, validate and correlate incomplete or unrelated information 29 Bread industry in India Government Websites & Publications Industry Intelligence Industry Associations Publications & News Releases Press Releases & Publications by Industry Players Industry Reports/ Trade Publications ValueNotes carries out industry studies designed around optimal use of secondary (desk) research techniques to gain maximum intelligence with specific insights and information. The steps carried out for “Bread Industry in India” are as follows:  Secondary research: Intensive secondary research sources include, but are not limited to, • Print and online business publications • Analyst reports • Press releases • Trade publications  Industry intelligence and market analysis: Triangulation method is adopted to validate data points from the supply side, demand side, industry reports and trade publications  News releases and publications:  Industry Associations: All India Bread Manufacturer’s Association (AIBMA) About ValueNotes Research Methodology Applied TOC Market Overview Annexure & Appendix Industry Trends Competitive Environment Industry Structure Executive Summary Drivers & Inhibitors Government Initiatives Industry AttractivenessAppendix|ResearchMethodology Copyright @ 2015 ValueNotes Database Pvt. Ltd. All rights reserved
  • 30.
    As an analystat ValueNotes, Sujay has worked on various projects such as market sizing, custom research, competitive intelligence, due diligence, market entry strategy and industry reports. His main focus of studies at ValueNotes has been market sizing and customer intelligence in various industries such as consumer markets and engineering industries. www.indianotes.com Indian Markets www.sourcingnotes.com Outsourcing Intelligence www.valuenotes.biz Research & Consulting ValueNotes Database Pvt Ltd 1 Bhuvaneshwar Society, Abhimanshree Road Pashan, Pune 411 008, Maharashtra, India Other Industry Reports by ValueNotes: 1. Packaged fruit juice industry in India 2. Transformers industry in India Disclaimer: This short industry report is published for general information only. Although high standards have been used in the preparation, ValueNotes is not responsible for any loss or damage arising from use of this report. The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavor to update the information herein on reasonable basis, ValueNotes is under no obligation to update or keep the information current. This report is the sole property of ValueNotes and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. In case of any queries, mail us at research@valuenotes.co.in research@valuenotes.co.in | + 91 20 6623 1743 About the author: