Tuesday, 8 May 2018

Indian Packaged Snack and Savouries Market

Packaged foods include ready-to-eat / cook foods that are packed and sold to consumers. They are primarily aimed at convenience and usually undergo a certain degree of processing to increase shelf life, taste, stability, etc. It includes food items like bakery products, canned / dried processed food, frozen processed food, meal replacement products, dairy products, snacks, confectionaries,beverages, etc.

The Rs 500 billion Indian snacks market is characterised by a large number of unorganised players across all product segments. This stems from each type of snack being very specific to each region, and hence, many small companies used to cater to that market. These players have a slim portfolio of products, usually of a single category and in many cases only provide traditional snacks items. They also operate in a small geographic range confined to a single state or city. Apart from this, there is a large presence of players that supply fresh products in chips and traditional Indian snacks categories.

The organised snacks market has been witnessing high growth over the last few years. This is because of the overall growth in the processed foods segment, followed by the moving trend towards consolidation of markets. Some of the traditional Indian snacks have fared better than western snacks.

Competitive Landscape

In the organised snacks segment the market has been historically dominated by major FMCG companies such as PepsiCo, ITC, Parle Products, etc. PepsiCo, with its Lays’ and Kurkure brand has dominated the chips and extruded snacks market with close to 50% market share in each of the segments. A large portfolio of products, innovative flavours, regular new product launches, aggressive advertisements and promotions, celebrity endorsements, and large retailer margins have been instrumental in PepsiCo gaining dominance in these categories.

Analysis of Extruded Snacks Market in India

Extrusion technologies have an important role in the food industry as an efficient manufacturing process. The products developed by this process are known as extruded snacks and they differ in colour, shape, and aroma. Extruded food products are mainly corn flour and potato-based but a combination of flours can also be used. Fast-paced lifestyle, high disposable income, rising urbanisation, and transforming food culture have attributed to the growth and demand of the Indian snacks market, including extruded snacks.

North and West India are the largest markets for extruded snacks. Both these regions also witness the largest competition in both the organised and unorganised segments. Small pack size is imperative to push sales volumes, especially in the rural markets, where penetration is minimal. Even in extruded snacks, the products that are sold across the various regions vary depending on what is native to the region and the typical flavours enjoyed.

One of the key varieties of extruded snacks is rings. This includes corn rings and accounts for about 8%-10% of the total extruded snacks market. This segment is entirely targeted at children. Corn-based extruded snacks are of various types. But the most common one would be the puffed variety. Variants such as cheese balls, cheese puffs, and spicy corn puffs are popular. Fryums are also a popular category in the market, with a large presence of unorganised players.

The demand for extruded snacks is expected to increase at a CAGR of 15% over the next five years. The market size is expected to be app Rs 125 billion by 2020. An increasing young population, the demand for multiple snacking items and flavours, increasing disposable income and the influence of social media, are some of the major factors that are driving this growth.

Analysis of Chips Market in India

Chips are one of the largest segments in the Indian snacks market. There are a large number of players in the market operating at a national level as well as in the regional level. In addition to packaged chips, there is a notable market for fresh chips (not covered under this study). In addition to potato chips, tapioca chips and banana chips are the top varieties present in the market. Potato is the most popular variety and accounts for more than 90% of the total chips market.

Similar to the other snack segments, the market for chips is also highly unorganised and fragmented; the main difference being chips is already a mature market in India. Even in the organised market, many players are restricted to certain regions or cities, while big players have a larger reach. While the unorganised segment dominates the market, a move toward a more organised industry structure is expected in the future. With increasing urbanisation, exposure to various cultures and tastes, the consumer is becoming increasingly demanding and only companies that play in the organised segment will possess the capabilities to continuously innovate to satisfy consumer demands. Furthermore, companies that play in the organised segment are perceived as healthier and hygienic in comparison to the unorganised ones. Additionally, the colourful and multi-layer packaging seen in branded products is both attractive and retains freshness when compared to products sold by the unorganised players. Hence, a move toward a more organised market is inevitable.

Since chips make a fairly mature market, the demand is expected to grow at 11% over the next five years.The market size is expected to be Rs 130 billion by 2020. Growth in the organised segment is expected to be more than the growth in the unorganised segment

Analysis of Namkeen Market in India

Namkeen covers a broad range of products that are traditionally consumed in India. Most of these products were traditionally cooked at home and consumed. However, current lifestyles restrict the time available for such activities forcing consumers to purchase these products for consumption. This has resulted in the Indian market experiencing high growth over the last few years. The broad range of products, availability of raw materials and higher margins are some of the key factors that deem this segment attractive. In response, many companies are adding more namkeen in their product portfolio. Moong Dal and Aloo Bhujia are the most popular products in the segments. Due to the varied eating habits across India, the preference for traditional snacks varies across the country.

A high growth of nearly 20% over the next four to five years is forecasted. The growth is also supported by the large presence of the unorganised segment, catering to unique taste-requirements in each region and ensuring reach to even the most rural markets. In the long run consolidation of the unorganised sector is expected

Overview of the packaged sweets industry in India

The overall Indian traditional sweets market is estimated at over 350 billion in 2015 and is largely dominated by the unorganised players. Due to the integral role played by sweets in Indian culture and festivities, the market for traditional Indian sweets is expected to grow at about 10% over the next few years. The organized confectionary market in India is estimated at about Rs 25 billion in 2015. The market for confectionaries is estimated to grow at about 15%-18% over the next four to five years driven primarily by chocolate confectionaries.

Latin Manharlal Group            

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