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Kolkata:
India's Rs.150-billion ($3 billion) biscuit industry, the third
largest in the world, is witnessing a major shift towards 'premiumisation'
as consumer preferences change, fuelled by soaring disposable
incomes in smaller towns and health awareness.
People with lower incomes are also upgrading from the 'affordable'
glucose biscuits to mass cream biscuits and mass cookies.
The biscuit industry, which consists of economy, middle, premium
and super-premium segments, is likely to grow at 20 percent
annually in the next few years.
But the premium and super-premium segments, according to industry
experts, are believed to be growing at a much faster rate,
probably more than 30 percent on a year-on-year basis.
"Currently, economy and middle segments (mass segment) comprise
about 70 percent of the total biscuit market in India. I think in
the next five years, the share of the mass segment would come down
to 60 percent and the rest would be premium and super-premium
segments," Parle Products group product manager B. Krishna Rao
told IANS over phone from Mumbai.
Parle, which is India's largest biscuit maker with a 45 percent
market share, said biscuit companies in the country are coming up
with more products in the rapidly growing premium segments to tap
the market.
"Competition in the economy segment is extremely difficult as it
would put pressure on the bottom line (profit)," Rao said.
Explaining the reasons for the consumers' growing preferences
towards the premium biscuits than the mass products, he said
smaller towns were now having modern trade centres with consumers
possessing more disposable incomes, which resulted in spreading of
mall culture.
"Currently, there are about 40 mini metros across the country. The
scenario was different a few years ago. Smaller towns like
Durgapur, Asansol, Surat and Rajkot now have modern trade centres
like malls. Retail chains like Big Bazaar are coming up also in
tier II and tier III cities," he observed.
He said while the economy segment was likely to grow at a range of
15 percent to 18 percent annually, the premium segment was
expected to clock 30 percent growth.
As a result, Rao said, a lot of companies would introduce products
in the premium and super-premium biscuit segments in the days
ahead.
Parle, which owns brands like Parle-G glucose biscuits and 20-20
in the mass segment, also possesses brands like Hide & Seek and
Hide & Seek Milano in the premium segment.
While biscuits priced at Rs.100-150 per kg are categorised as
middle segment, biscuits with an MRP of Rs.125-150 per kg fall in
the premium category. Priced at below Rs.100 a kg are in the
economy segment and above Rs.150 a kg in the super-premium
segment.
Another biscuit major Britannia seconded Parle's observation on
the consumers' preference shifts towards premium products.
"Over the last few years, the biggest shift that has been
happening (in the country's biscuit industry) is the
premiumisation shift," said Anuradha Narasimhan, category
director, health and wellness, Britannia Industries.
"And this is best borne out by the reducing contribution of the
glucose segment. The glucose segment used to contribute 33 percent
by value a couple of years ago and this has dropped to 24
percent," Narasimhan stated.
According to her, people belonging to the lower income group are
upgrading to mass cream biscuits and mass cookies.
She said the current trend would not just continue but grow in
magnitude and people would prefer not just 'affordable delight'
but seek specific benefits in food products, including health
needs.
"We see the benefits of health as well as indulgence being played
out - these benefits will democratise and not just be the purview
of top-end audiences. Health and convenience are primary drivers
of food consumption - with the health need being very key," she
pointed out.
Narasimhan said the health wave in India was being fuelled by the
high prevalence of diseases such as diabetes and hypertension as
well as awareness driven by the media.
"We believe the biscuit market will continue to grow in the range
of 20 plus percent - with premium segments growing much faster,"
she added.
Britannia, which operates in both the mass and premium segments,
has popular brands like Marie Gold, Little Hearts and Time Pass.
(Mithun Dasgupta can be contacted at mithun.d@ians.in)
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