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Popularity of biscuits, key trend in bakery industry
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Tuesday, 22 November, 2011, 08 : 00 AM [IST]
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Dr S V Suresha & Jamuna
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The bakery sector in India is the largest of the food industries with an annual turnover of about Rs 3,000 crore. India is the second- largest producer of biscuits after USA. According to estimates, the bakery industry in India is worth $69 billion. Out of this, bread and biscuits hold about 82 per cent of the share. Bread, biscuits, pastries, cakes, buns and rusk are some of the bakery products fast catching up in popularity in India.
The biscuit industry in India comprises organised and unorganised sectors. At present, it stands third in position among food industry in revenue generation. As per the data from several sources, the bread market has a business volume of 1.5 million tonnes. The bread industry has a production capacity of approximately 27 lakh (2.7 million) tonnes. Though the business is characterised by high margin it is highly fragmented. The major factors for growth in this segment are brand loyalty, volumes and strong distribution networks.
Unorganised sector
In India, there are 85,000 bakery units, of which 75,000 operate in the unorganised sector occupying 65% of the market share. The per capita consumption of bakery products as it stands today is 1-2 kg per annum, which compares very low with that in the advanced countries - 10-50 kg per annum. The urban areas hog a major share of the Indian bakery, comprising 77.5% of the total market, owing to two vital factors – rising disposable incomes and time constraints in the working population residing in these areas. Industry is growing at a healthy CAGR of 7% per annum.
The industry has traditionally been and largely continues to be in the unorganised sector contributing over 70% of the total production. Though the bakery industry in India has been in existence since long, real fillip came only in the later part of 20th century. The contributing factors were urbanisation, resulting in increased demand for ready-to-eat products at reasonable costs etc.
Growth buoys
With opening up of the Indian economy, significant developments took place for healthy growth that also touched the bakery industry in India. Access and easy availability of critical inputs that were hitherto not available made baking business more exciting. Thus baking became relatively an easy avocation with enhanced quality and providing variety with its affordability by consumers.
Biscuits are popular
The bakery units are unevenly spread among states. These are mainly concentrated in the states of Maharashtra, West Bengal, Andhra Pradesh, Karnataka and Uttar Pradesh. Industrially advanced states like Maharashtra and West Bengal have very large number of bakery units. The per capita consumption is very high in industrialised states like Maharashtra and West Bengal. The biscuits are becoming quite popular in rural areas as well. Nearly 55% of the biscuits are consumed by the rural sector. The higher consumption of biscuits in the rural area could be attributed to its position as a snack; longer shelf life and better taste, which is liked by a cross-section of the population. Bakery products still remain the cheapest of the processed ready-to-eat products in the country. The production of bakery products has increased from 5.19 lakh tonnes to 18.95 lakh tonnes in 15 years. Bakery products are produced by the small-scale sector consisting of both factory and non-factory units. The growth rate for bakery products is estimated at an average of 9.8% per annum. The demand for bakery products will continue to increase in the future. The estimated growth rate of 9.8% is on the lower side considering the present potentiality of bakery products, particularly in the rural areas, where about 70% of the population lives. Encouraging trends in consumption of bakery products by population of lower and middle income groups indicate vast scope for consideration of nutritional enrichment of bakery products.
This is a new challenge to the baker and he needs to update his information, technology, products and services to meet the changing needs of the Indian consumer. To meet the new challenges, the Government of India encourages small and medium enterprises (SMEs) with very attractive financing schemes, to modernise and upgrade their units and also for those who are interested in taking up the bakery as an enterprise. This has opened up opportunities not only to SMEs but also to new entrepreneurs.
Trends in the market
● With globalisation and cultural integration, eating habits of the discerning urban and rural consumers are fast changing. Changing consumerism is witnessing product innovations and retail formats are going to be great platforms for product push in the near future.
● Bakery joints are slowly becoming popular hangout places. A typical trend is for a variety of bakery snacks, top quality products and value-for-money.
● The present-day consumer looks for new bakery products, better appeal, taste and convenience from bakery foods. With a population of 1 billion plus, India has the largest middle-income consumers, who demand varieties in food, clothing, transport and improved living standards, also wish to eat out. Another fastest growing segment in India is bakery cafes and restaurants, which cater to the needs of fast food.
● The bakery industry has become more organised in the recent past. It is following the path of restaurants - as the industry has become more organised, chain restaurants have taken over the market and standalone restaurants have found it really tough to survive. Do not be surprised to find a similar trend in the near future in the bakery sector as well.
● Consumers are increasingly concerned about their health and are well aware of the relationship between nutritious food and optimal health. Various concerns have caused consumers to demand for healthier bakery products. Concerns like growing media coverage on health, rising incidence of health conditions (obesity, diabetes and cardiac problems), increasing concern over physical appearance, changing lifestyle and soaring costs of healthcare are key. Some popular trends in the market are the introduction of low/light, functional, natural and organic products.
● In addition to healthier products, consumers also are purchasing products that satisfy their taste buds. The taste enjoyment factor is vital in the marketplace, as the large range in bakery products available provides a wide range in consumer choice. With lifestyles becoming increasingly stressful, consumers may indulge in food for comfort. On-site manufacturing of bakery products in bakeries and supermarkets directly contributes to this trend, as it is well known that the smell of freshly baked breads and other products is a strong motivational factor in subsequent purchases.
● Indulgence/luxury products are becoming more pronounced as a key trend in the bakery industry. Consumers increasingly seek for premium, gourmet and exotic products to satisfy their desire to indulge. Cakes, pastries and biscuits are the typical indulgent products within the bakery sector.
So it can be said that trends in consumer preferences suggest increasing demand for baked products. Demand for bread is likely to grow faster than the demand for biscuits. Presently bread is consumed mostly in large cities. Its consumption is expected to grow in smaller towns also. States with higher per capita income would continue to lead in the consumption of baked products. Among diversified products, full bran wheat bread has also been gaining popularity.
The future o
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