The Indian Snacking Industry

7/27/2019 The Indian Snacking Industry

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The Indian Snacking Industry

Global market intelligence firm, Netscribes launched its latest report on the "Snacks

Market in India" that elaborates the competitive market scenario of the Indian snacks

market and its growth prospects. The report states that the Indian snacks market iswitnessing rising demand due to a variety of factors that are in turn is making the

market lucrative for manufacturers.

The Indian food and beverage sector is huge and highly competitive in nature. The

industry comprises of several sub-sectors such as fruits & vegetables, meat & poultry,

dairy, marine products, grains and consumer foods. Snack is one of the major

segments of the packaged food division, which comes under the broad category of

consumer foods. Though the snacks market in India is dominated by the unorganized

sector, the organized sector has shown remarkable growth in terms of market share in

the last few years.

The report provides a snapshot of the Indian snack industry which has witnessed

several changes since 1995. In the initial years, the market was dominated by two

players - traditional snacks player Haldiram and 'Uncle Chips' manufacturer Amrit

Agro. Eventually however, with the entry of global beverage and snacks player

PepsiCo, the market dynamics changed completely. Today, the market is dominated

by PepsiCo with of its massive product portfolio. Other major players include Parle

Agro, ITC, Parle Products, Balaji Wafers and Parle Wafers among others. A number

of regional players have also entered the market in the last few years and are giving

tough competition to the big players.

The snacks market is classified into two broad segments - Western and traditional

snack segments, wherein western snacks enjoy more popularity in comparison to thetraditional snacks. Moreover, the western snack segment is dominated by large

number of MNCs and organized snack manufacturers.

Factors drivig the growth of the snacks market in India include higher disposable

income leading to greater spending power by consumers, rapid urbanization leading to

busy lifestyle and subsequent inclination of consumers toward packaged food products

and aggressive marketing campaigns by all the players to break the product clutter and

attract consumers towards their brand. In addition to these, other factors include


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growing working women population, fast expanding retail network and the

convenience factor associated with snack consumption.

Though there is no specific regulation pertaining to snacks, quality standards laid by

FSSAI has to be followed by the industry players. Various government policies thathave been formulated for the food processing sector such as FDI, tax benefits and

export promotions are applicable for the snack category as well.

To sum up, the Indian snacks industry is a stable market at present and has strong

growth potential in the future years.

The Indian consumers taste and preferences have undergone a radical change in the

past two decades when it comes to snacking habits. Snacks which essentially are a

hunger quencher between meals were once limited to traditional food items like

pakoda, poha, samosa, upma, sheera etc. However, Lays (then Ruffles), Uncle Chips,

Haldirams and several unorganized players changed the snacking scenario in India.

There was something very interesting that was happening in the industry, something

that led to the industry growing to the tune of Rs. 6500 Crores by 2012.

The Indian consumer felt a growing need of having something that was tasty yet

hassle free as snacks between the meals. Traditional snacks lost out as they were

cumbersome to make and chips, namkeens, biscuits etc now became the preferred

choice of snack. Changing lifestyles, fast paced life, incessant advertisements,

stronger distribution channels and shrinking SKU sizes were the key reasons for these

changing snacking habits. The entry of several major FMCG players such as Pepsico,

ITC, Parle Agro and Britannia made sure that there wasnt a single moment of peace


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in the newly begun Snack Wars. And just then, a cute fat animal entered the

battlefield, apparently to fight the evil of hunger.

About Parle AgroParle Agro is a trusted household name in the beverages industry and has been

refreshing India since two decades with leading brands like Frooti, consistent winner

of India's most trusted fruit beverage brand, Appy, Appy Fizz and packaged drinking

water, Bailley. A pioneer in the Indian industry, Parle Agro is associated with many

firsts. We were the first to introduce fruit drinks in tetra packaging, first to introduce

apple nectar and the first to introduce fruit drinks in PET bottles. In 2007, Parle Agro

forayed into foods with the launch of two confectionery brands, Mintrox mints and

Buttercup candies. This was soon followed by two more brands - Buttercup Softease

and Frewt clairs. Recent beverage products from Parle Agro include Saint Juice,

LMN and Grappo Fizz. In 2009, Parle Agro forayed into snacks with the launch of

Hippo, a move that will take the company closer towards its vision of becoming a

leader in the foods and beverages industry.


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The Curious Case of Hippo the Snack

Ask about Hippo the snack and a majority would say they have heard of it but ask

about who is the maker of Hippo and hardly anyone knows that its from the Parle

Agro Stable. Ask about what is Hippo and one would get varied answers: Chips, just asnack, munchies, bread snack and so on. However, Hippo is neither potato chips nor a

biscuit. Its a baked wheat munchy that is available in several unconventional

flavours.

Launched in 2009, Hippos value proposition is that its aHunger Killerthat is made

up of Wheat and Free of MSG (monosodium glutamate) & GMO (genetically

modified organism). Hippo differentiates itself from its competitors by the virtue of its

assortment of international flavours and a very unconventional brand endorserA fat

Hippo. The brands communication plays on the generic need platform i.e. Hunger

and the mascot Hippo is this earnest, easygoing guy who understands that often, we

don't take care of our health by neglecting to eat.

The Good!


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Most of Hippos Brand Promotional activities have been a grey area. The most

striking and notable aspect is of Packaging. Hippo packs have used bright and

unconventional colors solely to stand out of the clutter in shops. If we closely

observe its advertising campaigns, every campaign has aninterwoven socialmessage which is strikingly different from other competitor campaigns which usually

focus only on the taste.

The word HIPPOwritten is in huge font goes very well along the brand personality.

The Hippo mascot also is very conspicuous and a lot of effort has been taken to

promote the mascot as a friendly and affectionate character. . The creation of Hippo as

a mascot (and one that stays behind the scenes, as his face isn't shown throughout the

film) is, in a way, the brand's way of saying that the true heroes are its consumers, and

that Hippo cares for them. The innocence and goodwill associated with Hippo

associates a sense of happiness and positivity with the Brand Character.

The Bad!


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While Hippo has caught many eyeballs through its absolutely innovative

advertisements and brand promotions, there are several signaling and positioning

errors that the company has committed while communicating the brand.

The Advertisements

It is not clear whether Hippo is being portrayed as a healthy baked snack or notthrough the advertisements.

Hunger is the key highlight of Hippos advertisements but such a word alone cannotcreate a differentiation per se.

Hippo also suffers from an on/off kind of advertising strategy which will do moreharm than good especially in an industry like snacks.

Although there is a strong social message in the advertisements it has no realconnection with snacks and deviates from its actual value proposition.

A market such as snacks is heavily dependent on taste and how appealing the productis but Hippos promotions have seldom focused on these aspects.


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The Mascot

Hippos Mascot, Hippo the animal, isnot relatedto snacks in any way and is notvisually appealing.

It may in fact give out a wrong messageas Hippo is usually associated with termssuch as: Fat, Ugly, lazy and unhealthy.

F lop on Facebook

Although Hippo creates wall posts related to latest events, a tactic very similar toAmul Butter, it hardly talks about the product itself.

While Amuls Ads focus on somehow getting the butter into the advertisements,Hippos posts make no such attempt to create product awareness.

The Fabulous!

Using Br and to overcome the Technical glitches in Marketing

The Big Challenge

Hippo, a new entrant in the $1.5 billion Indian snack market, was launched in 400,000

stores across India. The sales and distribution network of Hippo was in a nascent

stage. It was essential to ensure consistent availability to encourage trail and first time

purchase. Stocks were drying up in stores by the hour and they found it challenging to

track and re-stock the empty stores quickly. The challenge was to track empty stores

quickly and plug the lag in supply and help Hippo cope with this super demand.

The Fabulous Soluti on

Hippo blurred the line between sales, distribution, and consumer by using socialmedia as an information channel to fill the gaps in its distribution network. Hippo got

his followers on Twitter to send him a tweet @HelloMeHippo whenever they were

unable to find Hippo packs at a store. Thus the customers not only became a feedback

channel but also as an inventory tracking interface. A core cell was set up to collect

and disburse this information to the respective sales teams which restocked the store

within hours.


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Results

Tweets poured in from 45 cities across India. At zero cost, Hippo had 400 additional

people helping with Sales & Distribution over Twitter equivalent to almost 50%

of the strength of its Sales & Distribution network itself. Sales rose by 76% in thefirst few months of its launch. The campaign even helped Hippo identify, gauge

demand, and prioritize its high potential new markets.

Exploi ting the deli cious connection between Cr icket and Snacking

The Big Challenge

Hippo, upon its launch faced two main challenges. Firstly, it had to stand out of the

clutter of an already crowded snack market and secondly, to create a strong brand

preference and recall for Hippo Toasties in the mind of an average Indian Consumer.

The key point to address this challenge was to associate Hippo with what the average

Indian connects the most to. Cricket, was the obvious answer.



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Hippo launched a campaign called the Indian Food league that catered to the Indian

Fans love for snacking while he enjoyed his T20 matches. The IFL comprised of nine

regional teams symbolised by the regions most popular dishes, with Chennai being

represented by Idli Sambhar, Mumbai by Pav Bhaji and Delhi by Papdi Chaat. Otherdishes include Kanda Poha, Aloo Paratha, Daal Baati, Masala Dosa, Roshogolla and

Dum Biryani representing the regions Pune, Punjab, Rajasthan, Bangalore, Kolkata

and Hyderabad, respectively. So essentially, a Mumbai Vs Bangalore match for

Hippo became a match between Pav Bhaji and Masala Dosa. Every Todays Special

mirrored the match schedule.

Results

IFL received overwhelming response with Hippos sales going up during the IPL

season. This also proved to be a classic example of using crowd-sourcingin brand

building and developing customer engagement.

Using Augmented Reali ty to enthrall audience The Chal lenge

With the launch of Meri Maa campaign, Hippo aimed at entering the regular Indian

Household by selling its proposition of providing food like a mother. It was in line

with its positioning of Killing Hunger. Hippo faced a challenge of establishing a

strong brand connect with a maternal figure and realized the potential of technology in

simulating a life-like scenario to instill this proposition onto the customer.



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Hippo Momline was a campaign that used augmented reality while trying to bring the

rich essence of a mothers cooking in a ready-to-eat snack. Hippo website identified a

packet of Hippo Round Round using an augmented reality set-up and a web cam.

Once the packet was identified, a customized visual would pop-up depending on the

packet a person had bought. The visual, that was seen once the packet faced the web

cam, was that of a mother who told the visitor about Hippos tasty snack and how it

followed her recipe. The option of calling ones mother was also available for a

visitor. All he needed to do was feed in his mobile number along with his mothers

mobile number and the website would connect the two parties.

Result

This campaign was a runaway success and was nominated for many awards. This

campaign resulted in 2,50,000 calls made across 35 cities and towns just during the


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festive season. Hippo mom line caused a spike of 16% sales in Hippo Round Round in

Indian cities while towns saw a 37% spike which is phenomenal considering the size

of the Indian snack market.

InsightsThere seems to be a clear disconnect between the company lens and the consumer

lens.

Company Lens Consumer Lens

Conscious deviation from Category norms

to create differentiation and gain attention

Hippo being fat/unhealthy weakens its

brand proposition as mascot

Attempt to create a self made category

called Munchies

Unable to differentiate its munchies from

other snacks like chips/wafers due to lack

of signaling

Trying not to cater to niche health snacks

but to delicious product that pampers the

taste buds

Confused Positioning between Baked and

Healthy OR Tasty and indulgent

Campaigns like Pyar batt te challo and

Flavors without borders in tune with

main theme Hunger killer

Lack of association between snacks and

war/ conflict situations. Difficult toconsumer to relate war/brotherhood with

snacking

The company has made mistakes but at the same time carried out some good branding

initiatives. The company needs to reevaluate its Brand Positioning and Signaling in

the snacks market and reduce the consumer dissonance it is causing due to

contradictory signaling. The aspect of association of social themes with snacking also

needs to be reconsidered and also reframed to impress upon people the reasons to buy

Hippo which is a product in the impulsive buyingcategory and not an emotional or

value based one. The company is using Digital media effectively although here also it

presents symptoms of weak brand associations. Once the signaling and brand

positioning are re-evaluated, Hippo does seem to have a bright future ahead!

Brand Analysis Count


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Another brand has entered into the highly competitive snack- food market. The brand

Hippo was nationally launched recently by Parle Agro. The Indian branded snack-

food market is worth Rs 6500 crore has now become a battle ground of titans.

Indian snack-food market growing at 25% p.a is witnessing marketing fight worth

watching. The players are trying every tricks of the trade. This intense marketing

competition has expanded the market and also created new segments. One such new

segment is the healthy snack segment.

Marketers were aware of the gradual trend among consumers towards healthy foods.

Although this trend is limited to certain sections of society, marketers are calculating

that healthy snack-foods will become a mainstay category in the snack-food market.

Infact Ms Indra Nooyi of Pepsico had openly stated her vision of Pepsico leading the

healthy food movement.

The healthy snack segment in the Indian Snack market has got a big boost in recent

times with the launch of Aliva brand by Pepsico and Monaco Smart Chips by Parle.

Earlier, Lays tried its hand by launching a low-calorie version to counter Bingo's

claim of 'baked not fried 'proposition. The high profile campaign of Monaco Smart

Chips featuring Aamir Khan put the spotlight on the healthy angle of snacks.

Hippo calls itself " Delicious Baked Munchies ". This baked wheat based munchy isneither a potato chips nor a biscuit, but something in between ( source Business India).

The munchies are available in Pizza flavor,Chinese Manchurian, Hot N Sweet, Thai
http://3.bp.blogspot.com/_1pKvii0Z9Cs/S5YyA1ubqNI/AAAAAAAACTc/HSRQMPpSsIw/s1600-h/Hippo.gif


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Chilly , Yoghurt Mint Chutney and Indian Chatpatta. The

brand is priced at Rs 10 per pack.

Hippo is currently running its launch campaign across channels.

Watch the ad here :Hippo

Hippo has tried to position itself differently from the rest of the brands. While the

other snack brands have positioned itself on product properties, Hippo brand tried to

take the generic need platform.

For example :

Lays is positioned as a convenient snack,

Bingo on the different tastes,

Aliva also on health + taste

Monaco Smart Chips on health ( baked ).

Hippo is being positioned as a hunger- killer. The brand wants to be a guilt-free snack

for hunger moments. The brand is banking on two properties - made from wheat and

free of MSG & GMO to prove its healthy snack claim.

The brand also chose a different way to communicating its positioning to the

consumer . The brand is trying to tell a story. The story is based on the premise that '

Hunger is the root cause of all evil. So the brand motto is ' fight hunger, fight evil'.

The brand has adopted the mascot Hippo who is in the forefront of eliminating hunger

and thus eliminating evil. Hippo has the tagline " Hippo Fights Hunger ".
http://indianbrands.blogspot.com/2010/03/hippo-fight-hunger.htmlhttp://indianbrands.blogspot.com/2010/03/hippo-fight-hunger.htmlhttp://indianbrands.blogspot.com/2010/03/hippo-fight-hunger.htmlhttp://2.bp.blogspot.com/_1pKvii0Z9Cs/S5YyKWXAChI/AAAAAAAACTk/3gPpE6An-rY/s1600-h/hippo+logo.jpghttp://indianbrands.blogspot.com/2010/03/hippo-fight-hunger.html


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Although the brand has tried to tell a story and successfully created an initial hype, I

have serious reservations about the differentiation of the brand. The brand has taken

the " Hunger" platform, but how is it different from other snack-foods that offer samequalities ? How is Hippo different from a Bingo or Monaco Smart Chips ? .

I feel a lack of uniqueness in the brand. The problem of lack of differentiation will

come into forefront when the initial consumer interest dies down. Without a clear

USP, the brand needs to constantly stay on top of the Share of Noise to drive the sales.

If you observe the campaigns of Parle Agro brands, the company adopts a " On/Off "

kind of advertising strategy. Sometimes there are lot of ads, and sometimes, there is

no sign of any brand communication. In a category like Snacks such intermittent burst

of ads may not work. One needs to have a steady continuous stream of campaigns

( ATL and BTL) to drive the sales.

From the first campaign, I don't see any attempt from the brand to create a

differentiation. What the brand had tried to do was to establish brand familiarity which

it had done successfully. But the brand needs to find a meaningful differentiation if it

wants to survive for the long term. The brand can develop its positioning further using

its core brand promise of " Guilt-free snack for hunger moments ".

One of the most striking aspect about this brand is the packaging. The company has

put in lot of work behind making the packaging stand out in stores. Since the purchase

of snacks are highly spontaneous, the packaging offers immense strategic importance.Hippo has really differentiated itself from the rest of the crowd in the packaging front.

Another aspect of the brand is its emphasis on ' After-Marketing". After- Marketing is

what the brand does after it has sold itself to the consumer. Like Appy Fizz, Hippo has

cleverly used the packaging to engage the consumers after the purchase. The pack

contains interesting information and one-liners which takes the brand-consumer

conversations beyond advertising .


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As a new product launch, Hippo has done all the right marketing moves. The brand

has a catchy name , good product qualities, excellent packaging, nice pricing,

distribution reach etc. It has also created right kind of noise in the media during thelaunch. The real test is after the initial euphoria. The brand is fighting players with

deep pockets. It will be interesting to watch how Hippo takes on the giants.

Market dynamics:

In India the branded snack category is approximately of 6500 crore and is growing at

the rate of 20-25 % per year. Competitors in this market are Pepsi Cos Frito Lays

(with Lays, Kurkure and Uncle Chips), ITCs Bingo and Parle Products Musst (Bites,

Stix and Chips) and Sixer.

Hippo has been launched under five flavors: Pizza, Chinese Manchurian, Hot-n-Sweet

Tomato, Thai Chilli and Yoghurt Mint Chutney. Each variant will be priced between

Rs. 5 and Rs. 10, initially.

Communication:

Creative Land Asia every time comes with the surprises by bringing new clutter

breaking ideas. Some of them have potential sustain over very long period. Be it SaintJuices Juice the way god meant it to be (100% juice, nothing else), Frootis why

grow up, LMN or Appy, all most all ideas have potential to establish the brand.

Hippos commercial trying to convey that the root of all the evil is hunger and Hippo

has the answer for it. Hippo is a sweet cook and he cares for all. He is disappointed
http://3.bp.blogspot.com/_zmYmcqDVjGI/S3FC0SsqBWI/AAAAAAAAAIg/9bou82_aHQ8/s1600-h/hippo.jpg


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with few people in the world because they dont understand what the biggest enemy of

humanity is.

Another aspect of this TVC is of sharing. After watching the commercial consumer is

influenced to do the same in real life (but it is not true in the case of every ad). E.g.:When customer sees Cokes ad (Open Happiness) or Dairy Milks ad (Kuchh Mithas

Ho Jaaye), customer recognizes the emotion attached to the product. In most of the

cases, when customer feels or want to feel the similar emotions in real life situation,

he/she will buy the product. TVC of Hippo in same way influences the viewers to

share the love by giving others Hippo Munchies. Since love and share situations occur

in life very frequently, so consumer can identify themselves in such situations.

Music, incidents and lyrics are so nice that people can enjoy this TVC. Ad conveys

the message in such a simple way that viewers can easily understand it.

When it comes to individual website of the Parle Agro's products, either they are

incomplete or not the detailed one. The ideas behind the brands have the potential

create wholesome experience for customers even through social media, because most

of the ideas are fresh and young, which appeals the youth. Youth spends their good

amount of time on social media, so this opportunity should be leveraged.


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Advertising Policy

Parle Agro, a trusted household name in the beverage industry and an upcoming

player in the foods segment, released the first TVC for its new snack brand HIPPO.Having completed a nationwide rollout since its launch in June last year, the brand has

come out with its first television commercial. With social consciousness high on the

company agenda, HIPPOs first ad is a light hearted and satirical take on an issue with

social relevance.

The TVC is based on the belief that hunger is the root cause of evil - therefore kill

hunger, kill evil. The campaign highlights the evils of society being resolved by

offering HIPPO in situations of conflict, restoring cheer, goodness and happiness

amongst people.

The entire film is seen through the eyes of Hippo, the brand mascot who is on a

mission to make the world a happier place by fighting hunger. Throughout the film,

Hippo relentlessly fights tribulations such as terrorism, child labour, violence and

adulteration by offering HIPPO munchies to people. The line in the TVC, Hippo ka

manna hain ki duniya mein harr buraayi ki jadd hain bhook. Toh please, bhooke mutt

raho (Hippo believes that the root of all evil in the world is hunger. So please, dont

be hungry), explains the HIPPO philosophy. The classic Kishore Kumar number,

Pyaar baante chalo which plays in the background further strengthens the brands

message of spreading love through snacking.

The insight that an empty stomach is the devils workshop stands true when one

observes how an irritable or grumpy mood can be changed by killing hunger. Thus

food is a great way of calming one down. The HIPPO ad campaign shows everyoneresolving their problems and celebrating the 'fight' over hunger with packs of HIPPO.

This approach not only breaks category norms but generates interest as well.

Speaking on the ad campaign, Nadia Chauhan, Joint Managing Director & CMO,

Parle Agro, said, With the new TVC for Hippo, we have attempted to move away

from category norms. Hippo doesn't want to be a me-too brand in a category cluttered

with frivolousness in its communication. In he TVC, we have tried to integrate a


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social message into the brand in order to add soul and purpose to HIPPO. Hippo has

taken snacking responsibly by positioning itself as a solution for hunger.

The commercial, shot in Mumbai, has been released in seven languages. It is

conceptualized by Creativeland Asia and directed by Equinox Films. The 100-secondad has 50 and 20 second edited versions airing on TV as well.

A website, www.hippofighthunger.com, has also been created to generate buzz around

the brand and take the proposition forward. It will involve contests and other

engagement properties. Some corporate social responsibility initiatives are also being

planned, apart from outdoor and radio advertising.


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CONCLUSION AND RECOMMENDATIONS

Promotions Seasonal Combo packs Tie up sales with Frooti Title sponsors for programs targeting youth

So, make Hippo available not only in general stores but also in all collegecanteens and bus stands, railway stations

Advertising Increase budget allocation towards TV advertisement to reach all segments Promote Healthiness of the munchies Focus on taste and variety of flavours Theme for advertisementvarying with flavour

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The Indian Snacking Industry