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Sweets & snacks sector growing at 16%; Branded growth: 25%
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Saturday, 01 November, 2014, 08 : 00 AM [IST]
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Libin Chacko Kurian, Mumbai
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fiogf49gjkf0d India, one of the largest snack markets in world, has a market of value $1 billion and over four million tonnes in terms of volume. The industry has been growing at around 16 per cent for the last three years, and the branded segment is growing around 25 per cent per annum.
Alongside the confectionery and chocolate industries, the snack food industry has tremendous growth opportunities in the country. Its growing population, the rapid urbanisation and the changing consumer preferences are expected to keep the demand increasing in future too.
Candy market
With a well-integrated supply chain and a good marketing strategy, a tremendous opportunity lies for these industries in India. The Indian candy market is currently valued at around $664 million, with sugar confectionery holding a 70 per cent share ($461 million), and chocolate confectionery accounting for the remainder ($203 million).
The organised market for confectionery in India is valued at Rs 2,000 crore. As per the study by Euromonitor, the Indian sugar confectionery market is projected to expand at a compound annual growth rate (CAGR) of ten per cent. Convenience and comfort are the terms that trending ruling the market.
Nielsen’s recent report on the global snack industry stated that non-sugary snacks, closely aligned with meal-replacement foods, were showing strong growth. This signalled a shift in the consumers’ mindset to one focused on health.
“While conventional cookie, cake and confectionery categories still hold a major share of snack sales, innovations in the healthy snacking and portable food segments are necessary to adjust to this changing dynamic,” it added.
The report stated, “There is a perception that snacks are intended more for in-between meals than for actual meal replacements. But busy, on the-go lifestyles often dictate a need for quick meals, and many opt for fast food options that can be high in calories and low in health benefits.”
“There is a massive untapped opportunity to gain market share in the nutritious, portable and easy-to-eat meal alternative market that snack manufacturers could fill,” it added.
With demand for high-end confectionery going up, India is becoming an attractive place for foreign investments, with large multinational companies entering the Indian chocolate and confectionery market.
Consumption of snacks
Snack companies in India were constantly working to remove a guilt feeling in consumers during the consumption of snacks, as most of them are less nutritious and unhealthy in nature.
As more urban Indians choose snacks over meals, particularly lunch (as shown by studies), the demand for healthy snacks is on a rise.
Snack over meals
Snack consumers are searching for a good enough source of energy to make a meal in snacks only. Market experts in the Indian snack industry have found a remarkable growth in the snack market share and expect a growth of 20 per cent per annum. The industry is also closely watching the changing urban lifestyles and moulding their products accordingly.
Vikram Agarwal, director, Greendot Health Foods Limited, said, “The trend of snacks over meals would definitely benefit Greendot Health Foods in increasing sales.”
“Greendot Health Foods is manufacturer of Cornitos, a brand of nachos in the healthy snacking category. Cornitos’ flavoured tortilla chips are made of non-genetically-modified organism (GMO) corn, which is a good source of energy, dietary fibres and can be treated as a good meal in itself,” he added.
“The aim of our brand is to create awareness among consumers for a guilt-free snacking which can provide them energy, less oil and good dietary fibres,” Agarwal stated.
“Cornitos’ flavoured tortilla corn chips are a big hit with the consumers who are tired of consuming ordinary snacks. Greendot Health Foods can leverage nutrient-conscious consumers in establishing Cornitos’ branded nachos,” he added.
“They are baked and fried in corn oil until golden brown to make them crisper. The goodness of quality protein makes it healthier as well,” Agarwal informed.
“Cornitos has upto 40 per cent less oil than regular potato chips. The chips are thin and crispy with zero cholesterol and trans-fat-free. The chips are also monosodium glutamate- (MSG) free and gluten-free,” he stated.
“The Indian snack market is experiencing rising demand, and the organised snack sector has shown remarkable growth in terms of market share in the last few years,” Agarwal informed.
“Its expected growth is estimated to be around 20 per cent per annum. Greendot Health Foods has a share of about 80 per cent in the branded nacho market,” he added.
“The snack market promises good growth, spurred by the growing demand due to changing urban lifestyles,” Agarwal informed.
“The company’s focus would be on providing more options to consumers in the healthy and nutritious snack category,” he added.
“It would run a youth-dominated awareness campaign to promoting its natural and high-quality snacks,” Agarwal stated.
A large segment of urban India belongs to the working class. As the fast-paced lives of the working population leaves limited or no time for meals, they opt for quick or on-the-go bites which ensure the maximum utilisation of their time.
This trend seems to be going upward with more and more people opting for such meals. The industry also found that chocolate is the most opted item as snacks in urban India. Companies are introducing many snacks with chocolate as an ingredient, as it is the one ingredient which is liked by all age groups.
Anupam Saluja, chief executive officer, CookieMan India, said, “We understand the demands of this lifestyle and the need for such food items.”
Function and style
“Cookie Man products are unique, of high quality and good value for money. The scrumptious cookies are available in an extensive range of international flavours and carefully packed in a variety of packaging solutions that effectively combine function and style making it the customer’s quick sweet fix and an ideal snack,” he added.
“According to the Associated Chambers of Commerce and Industry of India (Assocham), said, “India’s sweet and snack industry is estimated to be about Rs 49,000 crore, and has been growing at a compound annual growth rate (CAGR) of ten per cent,” Saluja stated.
“On the contrary, India’s chocolate industry is growing at a CAGR of about 25 per cent and is currently worth about Rs 5,000 crore,” he added.
“Chocolate is one ingredient which is liked by children and adults alike. Our range of cookies are divided into different segments including Crispy Crunchy cookies, indulgent cookies and cream-filled cookies which has chocolate included in certain variations of flavours,” Saluja said.
“Along with that, we have an additional segment for chocolate lovers, called chocolate-dipped cookies. Dipped in sinful chocolate sauce made from an exclusive blend of premium imported chocolate, our range of chocolate-dipped cookies is the perfect blend of dark chocolate, milk chocolate and other special ingredients,” he added.
“We have our range of muffins and brownies, in which chocolate is one of the main ingredients. Also, our array of premium chocolates is a popular corporate gifting option,” Saluja said.
“Food is reportedly the biggest consumption category in India, and accounts for 31 per cent of the average consumer’s budget,” he informed.
Key factors for rise
“The snack market industry in India is currently on the rise. A lot of reasons for this increase include higher disposable incomes, which have enabled consumers to enhance their purchasing power and rapid urbanisation, which leads to busy lifestyles and subsequent inclination of consumers toward packaged food products,” Saluja added.
“In addition to these, the other factors which are contributing towards the rapid growth of the industry include the growing number of working women and the convenience factor associated with snack consumption,” he said.
“The premium freshly-baked cookie industry brings in a revenue of around Rs 150 crore, of which Cookie Man has a share of around 40-45 per cent. What started with one store in Chennai’s first mall, Spencer Plaza, in 2000, has expanded to 28 cities,” Saluja informed.
Increase in outlets
“Over the next five years, we are hoping to increase the number of outlets to 300 in India. Of these, 30 per cent would be on high streets and in neighbourhoods,” he added.
“While the brand operates in a very niche segment, it has grown by 15-18 per cent year on year over the last three years, and is currently available in 70 stores across 28 cities in India. We are expecting to grow at 20 per cent over the next three years,” Saluja stated.
“With the current lifestyle pattern of urban India, the snack market is definitely expected to grow in the coming years. Cookie Man is also looking at increasing its footprint across India with a new store launched recently in Mangalore,” he added.
Those crunchy, crispy and chewy snacks are the new comfort food for many urban population. The new trends reveal that healthy and nutritious snacks be competitive and flourish in the Indian market, as most of them want to skip their meals.
If the snack industry can emerge as a better alternative for meals by providing healthy, nutritious and energy providing snacks, there is a huge potential and room for development in the industry.
Convenience is another trend that capturing the industry due to the busy lifestyle of the working class and urban population.
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