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For Indians, any time is snacks time!
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Thursday, 17 March, 2011, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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Munching between two meals or at tea /coffee time is a habit with most Indians. The variety of snacks offered is almost mind-boggling with specialities from all regions, which have gained national acceptance. For example, banana chips from Kerala is sold not only across the country, but the entire world. Potato wafer is no longer considered a wafer-thin business. According to an Apeda (Agricultural and Processed Food Products Export Development Authority) survey, there are about 1,000 snacks items and 300 types of savouries sold in the country. Salty snacks – whether potato chips, banana chips or crispies made of corn or wheat flour, just fried or baked for the health-conscious – today have usurped home-made savouries to become the first choice not just for people in the big cities but also in small-town India. No wonder then, the market today for branded chips and wafers alone stands at Rs 1,100 crore. It has grown more than 60% over the last six years. And it is by far the single biggest item in the snacks and savoury category.
The snacks food industry in India can broadly be categorised into three segments – staple (biscuits category), traditional (namkeens) and ready-to-eat packaged snacks (chips / crisps). The RTE snacks food is slowly but surely coming into its own, with a number of new / high profile entrants joining the fray. As consumers and companies turn experimental, as reflected in the new variety of snacks available in the market, extruded snacks which include the likes of PepsiCo India’s Kurkure will soon overtake potato chips as the biggest snack item in the Indian market. Extruded snacks are snacks cooked, pressurised and pushed out of a die that gives them their unique shape. According to a report by consultancy firm KPMG, the market value for extruded snacks which in 2009 stood at $223.7 million will touch $298.7 million by 2011. Not just that, it will be growing the fastest in the next five years.
While Haldiram’s, one of India’s oldest traditional snacks makers, and PepsiCo with its Lays and Kurkure brands dominate the market, the last five years have seen more companies join the fray. Not so long ago, the unorganised players had a field day with the consumer opting for quantity over quality. The trend is slowly changing with rising incomes and health-consciousness. Brand consciousness is taking precedence over cost consciousness among a large section of consumers.
To PepsiCo goes the credit of expanding the organised snacks market. Till 1995, when PepsiCo introduced two brands Lays and Cheetos, there were only Haldiram’s and Amrit Agro that launched potato chips under the brand name Uncle Chips. When PepsiCo launched Kurkure in 1999, it became a runaway success. In 2000, Frito Lay India, a division of PepsiCo India, acquired the Uncle Chipps brand. And from then on there was no looking back. Aliva, the latest in its kitty, marks Frito Lay India’s creation of yet another category – borrowing ingredients and textures from biscuits and flavours from namkeens and is positioned as a healthier snacking option.
The next big leap happened in 2007, when fast moving consumer goods company ITC launched an array of potato chips and finger snacks products under the brand name Bingo! Within a year, it grabbed a market share of 9%. Bingo brought tastes which were familiar to the Indian taste buds but with a hint of unfamiliarity. The next innovation in the market came in lesser time. Parle Agro’s Hippo and Parle Products’ Smart Chips entered the market in 2009. Currently, the salty snacks market stands at around Rs 7,000 crore. It is the high pace of growth that has attracted a lot of players. The increase in competition has seen players launching their own versions of the popular snacks of their rivals.
Consumers now want variety and new tastes. They are not loyal to any particular brand. Another factor that has worked towards the shift from the home-made snacks to the branded packs is the price. It is challenging to give quality and quantity at the price points of Rs 5 and Rs 10. The bulk of the consumers are in the middle and lower middle classes. Therefore, affordability is what has driven the upsurge in the demand for snacks.
Even as there has been a proliferation of brands in the salty snacks category, there has been a gradual shift towards offering healthier snacking options. Whether it is the no trans fat tag or healthier snacks like Smart Chips or Aliva, consumers are looking for healthier alternatives in every food category. “What is driving innovation in the segment is the need to balance taste and health without compromising on one or the other and break this credit-debit lifestyle we live every day,” says Deepika Warrier, marketing director, Froto Lay India, PepsiCo.
Several manufacturers are putting new face on snacks. One is appropriately named Sensible Portions that presents a wide range of “better-for-you” snacks including “all-natural” choices such as multigrain crisps, pita crackers and pita chips. In addition to convenient packaging that gives built-in portion control, ingredients like whole grains, soya protein, vitamins, iron, and fibre are included and trans fats, saturated fats and cholesterol are avoided. It provides a healthier feel to snacking that is highly marketable.
Use of nuts in healthy snacks continued to rise including staples like almonds and cashews as well as exotics like pistachios and hazelnuts. Skinless almonds and cashews are roasted with real herbs and spices for extraordinary flavour. One line of almonds has been released with low-sodium sea salt, vinegar and bold wasabi soya variants . Another nut company introduced snack nuts that are gluten-free with all-natural ingredients and some organics like cocoa, vanilla extract and coconut.
Peanuts can support and complement a vast range of spices and flavours. Peanut is a canvas upon which one can display works of art, delivering healthy snacks. Fat in peanuts is also healthy which can help lower LDL cholesterol and the risk of cardiovascular diseases. It is an excellent source of protein.
Indeed, Indians continue to show a great appetite for snacks. According to a survey conducted by electronics payments company VISA on mystery spending or cash spent but which cannot be accounted by consumers, Indians spend the second highest on snacks. The average mystery spending per week of young Indians in the age group of 18 to 24 years stood at Rs 383 of which almost 36% was on snacks. The total spending per year on snacks for one person thus stands at around Rs 7,000.
As per data from The AC Neilsen Company, the compounded annual growth rate for snacks in the rural market over the last two years stood at 26.7% as against 13.2% for urban areas. Though rural’s contribution is only about 33%, it’s growing much faster than the urban markets. The way things are happening -- better spending power of the people, good knowledge and great exposure – better times are ahead for the snacks industry.
(With additional inputs from Munching on Salty Success by Rahul Sharma)
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