Bakery n Confec Food Process Order

8/6/2019 Bakery n Confec Food Process Order

1/21

Print Food process order site

Bakery and Confectionery

The confectionery market of India includes sugar boiled confectionery, hard-boiled candies,

toffees and other sugar-based candies. Sugar boiled confectionery had penetrated an estimated

15% of the households only further suggesting a large potential for growth. Considering the 22%penetration in the urban market, the confectionery industry could hope to be in for great times.

In India the annual per capita consumption of branded confectionery is still under 100 gms.

Hard-boiled candy is reserved for the small-scale sector. There are about 5,000 units catering to

the local markets. The big players have used a mix of franchise arrangements (with small units)

and product formulations to get out of the reservation mode.

The total contribution of the sugar boiled confectionery market in the organized sector,

comprise plain, hard-boiled candies, toffees, clairs and gums is around Rs. 20 billion. Add to

this the unorganized sector and the market for all types of confectionery is Rs. 50 billion.

However, in terms of value the organized sector commands 60% of the market share. With the

exit of MNCs and other established organized players from very low priced (25 paise) category,

the unorganized sectorhas grown very fast. MNCs and high-powered advertising support

substitute products like chewing and bubble gums. With Rs 3,250 million market share, the gum

and mint market is growing at a rate 10 to 15% annually. Fruit and mint rolls being marketed by

companies with sound strategies are going ahead rapidly.


2/21

The organised market is a dominated giant player like Parry and Nutrine. The Perfetti India

(Alpenliebe), Warner Lambert, General de Confiteria has made their presence felt. The MNC

chocolate majors like Cadbury India (Googly, Gollum and Frutus) and Nestle (Polo Mints) have

also jumped into the confectionery competition. Cadbury India has had a limited success.

Nestle, known best for its Polo mints, has also had only a limited success in the confectionery

market under Allen's banner. Perfetti India's Alpenliebe, however, has made it big in the recent

couple of years. Indian brands like Maha Lacto with the production of 15,000 tonnes, Aashay

7000 tonnes, Coca Naka 4000 tonnes, Dishum 3,000 tonnes, Honey Fab 1,500 tonnes and Eclairs

are the prominent offerings in the Indian confectionery market.

Several global players like Bassetts; Maynards, Pascall and Trebor were trying to enter the

Indian market. The initial entry-level brands are: Maynards' Wine Gums; Bassett's Liquorice

of all sorts; Trebor Extra strong mints, mighty mints and softy mints.Polo, Alpenliebe, Pan

Pasand, Melody, Poppins, Hajmola, Kismi and Coffy Bite have been quite successful in the

Indian market. Each one has its USP and, perhaps, sells because of it. Ravalgaon's Pan

Pasand was the first candy with 'paan' flavour. Parle's Melody is a toffee-chocolate-eclair

hybrid. The same company's Poppins has a unique form and sells in a variety of colour. Dabur's

Hajmola Candy tastes like a churan, a sweet and sour mixture of assorted traditional digestives.

Parle's Kismi entered as a unique toffee slab. Parry's Coffy Bite came with a mixed taste of its

own. Some of the more recent successes are Nestle's Polo, which is a mint with a hole.

Interestingly, the hole, it is claimed, is the USP. Perfetti's Alpenliebe is a caramel candy.

Alpenliebe, priced at Rs 5 for a 35 gm roll, is a success in urban areas. At the lower end of the

market, the movement from unbranded to local brands is evident.

There have been three large operators, Nutrine Confectionery, Parry's Confectionery (PCL) Parle

Products and Ravalgaon Sugars. With de-reservation, the large organized sector can look

forward to a big potential for expansion.

A fascinating market phenomenon emerged. When brands like Coffy Break, Eclairs, Coffee


3/21

Bite, and Coconut Cookies hit the market in the mid-1980s, Parle's Poppins started disappearing

from urban stores. But Poppins re-appeared and is selling well. There has been a locational shift.

Poppins is found in rural and semi-urban general stores and the pan-beedi shops. A strategic

decision to position itself in a different market saved the brand.

Parry's had tied up with Huhtamaki OY Lief of Finland and Chups of Spain to set up joint

venture companies in India. The popular products of the collaborators in Europe included Pay

Day, which is a chocolate bar and Jolly Rancher, candy. The total project cost was estimated at

Rs 415 million. Parry's Confectionery, which manufactures and sells the well-known Parry's

range of sugar confectionery, is a part of the Madras-based Murugappa Group. Parrys has

penetrated the rural market, which is growing and comparable in size to the urban market and is

mainly catered to by the unorganised sector at present. The company later called off its joint

venture proposal with Chups S.A. of Spain. Parry's has got limited success with its new launches

of Cricket, Madras Cafi and Indian. Its traditional brands, Coffee Bite, and Lacto King continue

to be its main- stay. Mars of the US has set up a wholly owned subsidiary, Effem India, to

distribute its chocolate brands - Mars, Milkyway, Snickers - in the Indian market. The privately

held company is now planning to set up a manufacturing unit in India in order to reduce costs

since imported chocolates cost three times more than locally made ones. Effem is also in the

process of establishing a cold chain as the chocolates melt at 20o C. Mars intends to launch

biscuits and food products such as sauces, seasoning and snacks too in the near future. Effem

India recently launched its pet food in the south. The company is planning to set up a

manufacturing unit for pet food as well.

Chewing gums and mints are a preferred worldwide with the new-style-living, but in India, the

category did not boost for quite a while. It has now caught on: from Rs 500 million to Rs 3000

million in just three years and is currently placed at Rs 3,500 million. It must be due to product

quality and effective marketing - which includes brand equity. In chewing gum, Perfetti leads,

followed by Warner Lambert and then Wrigley's, which came late and has a distribution alliance

with Parry's. In bubble gum, Perfetti leads with Big Babool, followed by GDC's Boomer.


4/21

Italian parent Perfetti entered the country in 1994. Agrolimen of Spain followed it, which is a

51:49 joint venture between General de Confiteria and Dabur India. Daburhas since withdrawn

from th

e joint venture; General de Confiteria launch

ed bubble gum with

th

e brand, Boomer,which is targeted at kids for sale. Perfetti also introduced three products, Center Fresh, Big

Babool and Brooklyn, with designed segmentation: Center Fresh, available in three flavours,

targeting the entire market; Big Babool targeted at children in the age-group upto 5

years; Brooklyn, a stick chewing gum, meant for the teenagers. Warner Lambert has reinforced

its interest, which launched Clorets chewing gum positioned as a mouth freshner while Chiclets

is targeted at teenagers.

Confectionery (including Edible Gums)

Demand: Past and Future

Year Rs bn

1990-91 8.2

1991-92 9.15

1992-93 9.6

1993-94 10.51994-95 11.44

1995-96 12.32

1996-97 13.36

1997-98 14.4

1998-99 15.6

1999-00 15.4

2000-01 16.5

2001-02 17.6

2002-03 18.9

2003-04 20.15

2004-05 21.7

2005-06 23


5/21

2006-07 23.75

2007-08 25.4

2008-09 26.8

2009-10 28.2

2014-15 36

Market Structure

Market Segmentation

Segment Share (%)

Organized 35

Informal 65

North 28

East 17

West 32

South 23

By age groups

2 to 8 years 15

8 to 25 years 55

25 to 64 years 25

Over 64 years 5

Market Growth Rates

1990-91 - 1996-97 8.9%

1996-97 - 2001-02 7.3%

2001-02 - 2006-07 6.4%

2004-05 - 2009-10 5.4%2009-10 - 2014-15 5.0%

Product Variation

Type Share (%)


6/21

Plain candies 43

Toffees 39

Adult Candies 9

Gums 3

clairs 6

Lead Players and Alliances in Confectionary

Parrys' Lief, Finland, Nutrine, Ravalgaon, Candico (India) Curt Georgi UK, Cadbury, P&G

Hygiene, Warner Lambert, Nestle

Leading Brands

Allen Splash, After Eight, Quality Street, Polo Mints, Melody, Poppins, Paan Pasand, Toffo

Toffee, Rolla-a-Cola, Coffee Bite, Pascal, Trebot, Lacto King, Coconut Punch, Caramilk,

Eclairs, Googly, Roe Candy, Americano are the leading confectionary brands in the Indian

market.

Biscuits and Bakery Products

The Indian bakery industry is dominated by the small-scale sector with an estimated 50,000

small and medium-size producers, along with 15 units in the organized sector. Apart from the

nature of the industry, which gravitates to the markets and caters to the local tastes, the industry

is widely dispersed also due to the reservation policies (relating to the small scale industries) of

the government.

Biscuits and bread which are considered to be the major bakery product and they account for

82% of all bakery production. The unorganized sector accounts for about half of the total biscuit

production estimated at 1.5 million tonnes. It also accounts for 85% of the total bread production

and around 90% of the other bakery products estimated at 0.6 million tonnes. The last includes

pastries, cakes, buns, rusks and others.


7/21

Biscuits are estimated to enjoy around 37% share by volume and 75% by share by value of the

bakery industry. The organized sector caters to the medium and premium segments, which are

relatively less price-sensitive.Th

e organized sector is unable to compete at th

e lower price rangedue to the excise advantage enjoyed by the informal sector. The organized segment in biscuits

has witnessed a steady growth of about 7.5%, conforming broadly to the growth rate of GDP.

Biscuits constitute about 7% of the Rs 478 billion FMCG markets in India. During 2003-04

biscuits market grew at double digit (about 11%) compared to a growth of 1.4% for the FMCG

industry as a whole, and 4.4% average growth over last five years (1999-2003).

Britannia has rationalized its product portfolio pruning the number of its brands. The company

moved into the mass market for biscuits introducing low-priced varieties under the umbrella

brand, Tiger. The success of this brand has enabled Britannia to expand its market share in the

glucose biscuit market. Its other major brands are 50:50, Mariegold, Bourbon, Pure Magic, Nice,

Snax Coconut Crunchies, Glucose-D, Pure Magic, Good day. Its bread portfolio consists of

Britannia, Britannia Premium Bake, Tiger and Chekkers.

Britannia has a tie-up with Danone of France. Danone is one of the largest processed food

producers of Europe - ranking seventh globally. It has a 22% equity stake in Britannia. Britannia

has the option to draw from the product portfolio of Groupe Danone.

Over the past couple of years, it has launched a number of dairy products (processed cheese,

flav0oured milk, butter, ghee and dairy whitener) and ethnic snack foods such as alloo bhujiyaand chana choor.

Although MNCs, like Nabisco, Arnotts and United Biscuits ventured into the market, Britannia

enjoys a premium position. It has dispersed plants geared to the four metros, which account for a


8/21

major slice of sales (65%). It also has 20 dedicated small units around the metros to help

produce about 50% of biscuit production.

Britannia Industries launched chocolate-based products and was exploring several variants incheese, cakes and biscuits. The company has decided to enter into areas where it will have the

potential of becoming number one operator. Britannia started selling lassi and cold coffee in

tetrapak.

Britannia was also extending its successful biscuit brand, Tiger, into categories like milk or milk

powder. Britannias French partner, Danone, may consider taking the mass biscuit brand to its

other Asian markets like Malaysia and China as well as Russia. Britannia Industries has acquired

49% stake in Kwality Biscuits. It has also acquired Kwality Chef and several other trademarks

along with copyrights, designs in labels and packing material. The four group companies to be

merged with Kwality Biscuits are Vajram Traders, Camilla Investments, Malakala Traders,

Mytrayasa Traders. The domain of Kwality Biscuits includes baking, manufacture of biscuits,

cakes, breads, buns, cornflakes and other breakfast foods, popcorn, wheat shreds, pastries and

flour. Britannia is looking for more acquisitions in food business.

Britania Industries has made an investment of Rs 600 million for its capacity expansion project

at Pantnagar. Parle is the second largest producer of biscuits in the organised sector. In the

popular brands segment, its Parle G remains a popular brand in the glucose biscuit segment. In

the premium segment, its Hide and Seek is attracting competition due to the sway it holds in the

market place. In the saltish biscuits, Monaco has been quite popular, especially in the cocktail

circuit. Parle's, however, derives a major part of its revenues from the low-priced products. The

company has, nevertheless, outpaced the industry growth in step with the market leaderBritannia. Parle Products is setting up a new biscuit manufacturing unit at Pantnagar,

Uttaranchal.

Kellogg's, known worldwide for breakfast cereals, entered a new product segment - biscuits. It


9/21

has launched Kellogg's choco-biscuits, an extension of its Chocos cereal. Kellogg's found

that there was an opportunity to carve out a niche for itself in the market by leveraging the core

equity of some of its large cereal brands.

SmithKline has succeeded with the launch of Horlicks (a healthfood brand) biscuits. Nestle has

recently taken over the biscuit manufacturing joint venture with Dabur, Excelsia and converted it

into a wholly-owned subsidiary. Dabur India has divested its entire 40% stake in the

controversial joint venture Excelcia Foods with Swiss major, Nestle SA, thus exiting the biscuit

business altogether.

Lancer Foods is launching cookies, biscuits and namkeens. Vita Gold is positioned against

Parle's Glucose brand. Lancer Food Products, a late entrant in the biscuit market, had planned to

set up two additional manufacturing plants at Noida, UP. The new plants of Lancerhave a biscuit

manufacturing capacity of 150 tonnes a day. Some 85% of the company's total production is

exported to countries in Africa and the Middle East.

Priya Food Products set up with an investment of Rs 26 mn had a capacity to produce 5 tonnes of

biscuits per day. In the past near two decades, it has come a long way and today commands a

significant share of the biscuit market.

A study has shown that Bakeman's market share has remained stagnant. In contrast, older players

like Britannia, Parle and SmithKline Beecham and a host of new players like Kellogg's have seen

their shares expand. On the otherhand, Bakeman is planning a major expansion which is

expected to make it the largest biscuit plant under one roof in Asia and the third largest in the

world.

The size of the bread market is estimated at Rs 15 bn. There are a number of producers in both

sectors, organized and unorganized.


10/21

Modern Foods, a Central public sector undertaking, and a leader in the bread segment was

privatized by the government in a strategic sale to Hindustan Lever at a price of Rs 1054 mn.

Th

e later was to induct a fresh

equity of Rs 200 mn into th

e company, wh

ile th

egovernment retained 26% equity, giving it the right to block special resolutions. The deal marks

HLL's entry into bread making, having already forayed into ice creams and marketing of flour

under the brand name Annapurna. This was its first foray into baking business. Modern Foods

had nearly half of the organized market to itself.

Britannias bread market share declined sharply in 1995-96 and continued till 1998-99 mainly

because of the competition from Modern Foods. However with the takeover of Modern Foodsand the time spent in restructuring has enabled Britannia to have a major share of the bread

market.

Earlier, Britannia introduced Premium Bake, premium bread. The brand created a high-end

segment for the daily staple item used by all segments. Britannia has since been joined by other

bread manufacturers like Candico (India), Elite Breads and a host of others with small

market presence.

From a low priced commodity, bread has graduated into a branded product with discriminating

prices. Barring Premium Bake, the others are priced high - almost double the standard bread

brands. Premium Bake comes closer to the 'normal' price, a mid-way pricing strategy.

BiscuitsDemand: Past and Future

Year th MT

1990-91 650

1991-92 690


11/21

1992-93 735

1993-94 785

1994-95 835

1995-96 850

1996-97 896

1997-98 945

1998-99 996

1999-00 1050

2000-01 1110

2001-02 1188

2002-03 1307

2003-04 14442004-05 1523

2005-06 1607

2006-07 1696

2007-08 1804

2008-09 1920

2009-10 2043

2014-15 2758

Market Structure

Market Segmentation

Segment Share (%)

Organised 50

Informal 50

North 36

East 19West 23

South 22

Lead Players and Alliances


12/21

Britannia Denone France, Parle Biscuits, Bakemans, Glaxo SmithKline, Priya Food

Market Growth Rates

1990-91 - 1996-97 5.5%1996-97 - 2001-02 5.8%

2001-02 - 2006-07 7.4%

2004-05 - 2009-10 6.4%

2009-10 - 2014-15 6.2%

Sensitivity Coefficient 7.3%

Product Variation

Segment Share (%)

Glucose 60

Milk 10

Marie 10

Cream 5

Crackers 7Others 8

Leading Brands

Marie, Glucose, Nice, Krackjack, Bourbon, Good Day, Pure Magic, Milk Bikis, Parle G, Snax,

Top, Monaco, Little Hearts, Glucose-D, Baker's Choice, 50-50, Tiger, Salto, Happy Day,

Creamwich, Mariegold, Jacob's Thin, Circuits, Elaichi, Cream, Priya Gold, Perk, KitKat,

Chekkers, Jim Jam, Cream Treat are the leading brands of biscuits in the market.

Some International Brands

United Biscuits, RJR Nabisco, Arnotts, Unilever are some international biscuit brands.


13/21

Bread

Demand: Past & Future

Year Rs bn.

1990-91 6.42

1991-92 6.70

1992-93 7

1993-94 7.30

1994-95 7.65

1995-96 8

1996-97 8.80

1997-98 9.401998-99 10.15

1999-00 10.75

2000-01 11.90

2001-02 12.85

2002-03 13.85

2003-04 14.80

2004-05 15.85

2005-06 16.90

2006-07 17.90

2007-08 18.95

2008-09 20.00

2009-10 21.10

2014-15 26.90

Market StructureMarket Segmentation

Segment Share (%)

Organised 15

Informal 85


14/21

North 35

East 10

West 30

South 25

Lead Players

Modern Foods,Britannia Inds are the lead players in biscuit in the market.

Market Growth Rates

1990-91 - 1996-97 5.4%

1996-97 - 2001-02 7.9%

2001-02 - 2006-07 6.9%

2004-05 - 2009-10 6.0%

2009-10 - 2014-15 5.0%


Product Variation

Segment Share (%)

Milk Bread 85

Brown Bread 10

Fruity 3

Nutritional and other specialty 2

Leading Brands

Britannia, Modern, Bakeman Sujana, Premium Bake, Whyte Kollar, Ovenfresh, Premium Bake,

Gardema are the leading brands in biscuits.

II. Chocolates

The chocolates market is estimated at around 33,000 tonnes valued at approximately Rs 8.0

billion. The counter market is estimated at about nearly Rs 2.5 to 3.5 bn and the rest is made up

of chocolate bars. Chocolates make up less than a fourth of the sweet-tooth products including


15/21

sugar-boiled confectionery, mints and chewing gums. Sugar confectionery is by far the largest

segment. To push sales, chocolate majors have been targeting adult audiences. Chocolates are

being presented as snack food for the new target audiences. Another strategy sought was the

introduction of smaller editions.

Although the players resorted to very aggressive promotional drives, the overall penetration

levels in 1999 and 2000 did not register any significant increase. Perhaps, the increases by 5% to

15% in selling prices due to increase in cocoa prices caused the stagnation.

After the worm controversy in October 2003, there was a meltdown in chocolate sales. Cadbury

India appears to be on a recovery path. The company, whichhad lost its market share by about

4% in January 2004, regained its market position in May 2004 with a market share of about 70%.

However, the company's net profit for 2003 declined by 37% compared to 21% increase in the

preceding year. The industry, nevertheless, is growing at almost 11.5%.

While Cadbury leads in both the segments of the chocolates market, Nestle is the other major

player. Amul and Campco (producing for Amul) have, however, managed to corner significant

shares of the market. Cadbury has actually become the generic name for chocolates in India.

Cadbury with its Dairy Milk, Five Star, MilkTreat, Eclairs, Golden, is ruling the roost. It

proposed to introduce a host of its global offerings like Flake, Timeout, Wispa, Caramel, Fuseand Cherry Ripe into the Indian market. Cadbury dominates the chocolate segment with a share

of around 70%. In chocolate-based drinks, it claims nearly 50% of the market. Cadbury India's

market share in cocoa-based products is 35%, with Dairy Milk brand alone accounting for 29%.

Perk and Five Star account for another 20%. Cadbury derives 76% of its revenues from

chocolates and other confectionery sales.

Nestle India registered a significant growth due to a spurt in exports at 11% with turnover of Rs21.54 bn in 2003-04. The spurt is attributed to a recovery in coffee exports to Russia. In the

domestic market, Nestle India has been deriving its revenues from five products baskets-coffee

(Nescafe Select, Sunrise); milk products (Milkmaid condensed milk and ready mixes,

Coffeemate coffee creamer, Everyday dairy whitener); foods for infants include Cerelac,


16/21

Nestum, Lactogen; chocolates, confectionery and malted beverages like Milo, Kitkat, Charge,

Munch, Polo; and food products include Maggi noodles, soups. The recovery in exports and

price increases in chocolates has helped Nestle record a healthy growth in profits of 26% at Rs

2.62 billion. Nestles' chocolate portfolio of Kitkat, Munch and Charge has slowed

down significantly. The company is going into new areas like liquid milk, bottled water and

biscuits. The foray into biscuits is through the joint venture Excelsia Foods. Nestle was planning

to end its company's production facility in Karnataka. The Puttur factory manufactured around

3000 tonnes of finished products and around 2000 tonnes of semi-finished products annually.

Britannia launched two new flavours of Chekkers-orange and black currant. Philip Morris's food

subsidiary Kraft Jacob Suchard, registered in India as KJS India launched its global brand Milka

chocolates.

Chocolates


Year th MT

1990-91 10.5

1991-92 11.3

1992-93 12.5

1993-94 11

1994-95 13.2

1995-96 14.4

1996-97 15.7

1997-98 17.1

1998-99 18.6

1999-00 20.3

2000-01 22.12001-02 24

2002-03 30

2003-04 32.7

2004-05 35.5


17/21

2005-06 38.4

2006-07 41.3

2007-08 44.2

2008-09 47.2

2009-10 50.2

2014-15 67.2

Market Structure

Market Segmentation

Segment Share (%)

2 to 8 years old 16

8 to 25 years old 53

25 to 54 years old 22

Over 55 years old 7

North 35

East 12

West 33

South 20

Market Growth Rates

1990-91 - 1996-97 6.9%

1996-97 - 2001-02 8.9%

2001-02 - 2006-07 11.5%

2004-05 - 2009-10 7.2%

2009-10 - 2014-15 6.0%


Product Variation

Segment Share (%)


18/21

Moulded Chocolates 50

Countline bars 33

Sugar panned 13

Choco panned 4

Lead Players

Company Share (%)

Cadbury's 68

mmNestle 22

Amul 8

Lotus

Leading Brands

5-Star, Gems, Eclairs, KitKat, Dairy Milk, Perk, Break, Relish, Amul, Butter Scotch, Fruit and

Nuts, Tiffins, Nutties, MilkTreat, Gollum.

Demand: Past and FutureYear MT

1990-91 255

1991-92 268

1992-93 280

1993-94 294

1994-95 310

1995-96 320

1996-97 345

1997-98 375

1998-99 405

1999-00 435

2000-01 470


19/21

2001-02 505

2002-03 535

2003-04 570

2004-05 605

2005-06 640

2006-07 685

2007-08 730

2008-09 780

2009-10 830

2014-15 1165

Snacks & Fun foods


Year Rs bn

1990-91 16.6

1991-92 18.1

1992-93 18.6

1993-94 19.5

1994-95 20.5

1995-96 21.51996-97 22.6

1997-98 23.7

1998-99 24.9

1999-00 26.15

2000-01 27.5

2001-02 28.85

2002-03 30

2003-04 31.5

2004-05 33.2

2005-06 35

2006-07 37

2007-08 39.25


20/21

2008-09 41.75

2009-10 44.5

2014-15 62.5

Market Growth Rates

Snacks & Fun-foodsPotato Chips/ Namkeens

1990-91 - 1996-97 5.3% 5.2%

1996-97 - 2001-02 5% 7.9%

2001-02 - 2006-07 5.1% 6.3%

2004-05 - 2009-10 6% 6.5%

2009-10 - 2014-15 7% 7.0%

Sensitivity Coefficient

Potato Chips / Namkeens 8.6%

Snacks and Fun-foods 9.5%

Lead Players

Company Share (%)

Potato chips (branded)

Pepsi Foods 40

SM Foods 22

MTR Foods 18

ITC Foods 10

Speedway 10

Market Segmentation

Segment Share (%)

North 58

East 8


21/21

West 24

South 10

Namkeens

Branded 22

Local producers

85Snack mixes

Others

Leading Brands

Lay, Kurkure, Uncle Chipps, Lehar Namkeen, Bischips, Star Nuts, Crispies, Peppy Soya wheels,

Ruffles, Haldirams, Fun Flips, Cheetos are the leading snacks brands in the market.

Documents

Bakery n Confec Food Process Order