FNB News - Bread and biscuits account for 82 % of Indian bakery industry

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Bread and biscuits account for 82 % of Indian bakery industry

Saturday, 10 June, 2006, 08 : 00 AM [IST]

Phani Raj, Hyderabad

h includes bread, biscuits, pastries, cakes, buns, rusk etc is estimated to be 50 lakh tonnes in 2004-05 with estimated value of Rs 69 billion. The two major bakery industries, viz., bread and biscuit account for about 82 per cent of the total bakery products. The organised sector has a market share of 45 per cent and the balance 55 per cent is with the unorganised sector in the baked products, as per a recent FICCI report.

The bread industry with estimated production of 27 lakh tonnes in 2004-05 and having 7.5 per cent growth is represented by both the organised and unorganised sectors with 55 per cent and 45 per cent contribution to production.

The large organised sector players who are prominent in the high- and medium-price segments include Britannia, Modern Industries Ltd. Brands like Modem and Britannia are major players in the bread market and together they account for 90 per cent of the organised bread market.

Local manufacturers with numerous local brands cater to populous segment and contribute considerably in the bread segment. Low margins, high level of fragmentation are the main features in the bakery industry. Volumes, brand loyalty and strong distribution networks are the main drivers of growth.

Organised bread industry is facing problems due to low margins of profit due to escalating prices of major raw materials, particularly wheat flour, vegetable oil, sugar, milk.

In the biscuits industry, the large organised sector players who are prominent in the high- and medium-price segments include Britannia, Parle and Bakeman. The major brands of biscuits are Britannia, Parle, Bakeman, Priya Gold, Elite, Cremica, Dukes, Anupam, Horlicks. Within the sector, Britannia has become aggressive with its Tiger brand with variants to compete with Parle's Parle-G in the glucose biscuits category. Britannia and Parle dominate in branded biscuit segment, the report pointed.

The Surya Food and Agro Private Ltd with its Priya Gold brand has come out of the local fold. ITC Foods Ltd has expanded network and is promoting its Sunfeast biscuits across 1000 schools in the country. Foreign players like United Biscuits and McVities have also entered the fray. However, these players have concentrated themselves in the super-premium and premium segments. The companies have added new variants into the existing brands as done by Britannia in Good Day ; Parle G in Hide & Seek with addition of flavours like butter, badam, pista and cashew; HLL in Kisan Grudy biscuit.

The focus on urban markets has also contributed significantly to the growth of the biscuits industry. Focused advertising and new launches helped the biscuits industry to grow. The World Food Programme procuring about 25,000 tonnes of biscuit through a tendering process from Priya Gold, Cremica and Anmol for school children in Pakistan, Iraq and Afghanistan has opened opportunities for the Indian companies. The top five manufacturers - Britannia, Parle, Priya Gold, Cremica and Anmol have competed with each other over prices and quantities.

Britannia, which is a market leader in the top end, has been trying to make a dent into the mass market segment with the Tiger brand with more emphasis to tap the rural market. Parle is doing the opposite, trying to break into Britannia's strong hold with its popular Parle-G brand.

The per capita consumption of biscuits in India is about 1.52 kg as compared to more than 12 kg in developed countries. Besides the two major players, Parle and Britannia, the state-level markets show the presence of strong regional players such as Bakeman, Priya Gold, Shalimar, Windsor and Champion - brands present in almost all markets.

Biscuits' packaging has undergone a swift transformation. From Britannia's functional protective blister wraps, which prevent breakage, to Parle's stylish offering packaging has been completely transformed. Major players are now trying to differentiate their brands to reflect their superior quality through superior packaging, the study revealed.

The sectors that have recorded a high growth rate between 10 per cent to 20 per cent during 2004-05 in bakery segment include bread, cakes and pastry. Sectors like bread have recorded moderate and single digit growth. The sectors that are projected to achieve high growth between 10 to 20 per cent in 2005-06 in bakery segment include bread, cakes, pastry which are expected to achieve up to 11 per cent growth, and biscuits over 13 per cent.