The Indian biscuit market offers huge growth potential. It is expected to reach the size of Rs 62,000 crore, from Rs 40,000 crore in 2020 - a 9% CAGR growth over the next 5 years.
An Edelweiss report suggests that per capita biscuit consumption in India has increased by 16% over the past five years. Yet, it is far behind developed economies like the US, UK, and Japan.
It offers huge growth opportunities to the branded players. Rising brand awareness and increasing spending power are the major boosters to that growth. However, the biscuit makers need to consider the regional and cultural complexities of India and customize their products in order to succeed..
The domestic biscuit market is dominated by leading brands like Britannia, Parle, and ITC. Parle derives a large portion of its revenue from Parle-G. The company has the largest volume share led by the Parle-G brand. Mid-premium and premium goods account for the majority of Britannia's sales. And ITC is also attempting to penetrate this segment.
In terms of market share, Britannia leads the pack with 28%, while Parle-G is a close second with 27% of the market share. ITC is growing fast and currently holds 11% of the market share. The rest of the market is shared by the smaller brands and the unorganized players.
Parle Turned the Table in FY21
Britannia and Parle have been the dominant players in India's biscuit market over the last few decades. Britannia had been gaining market share over Parle over FY13-20. Yet, Parle gained significant market share from smaller players in FY21, helping it narrow the share gap with Britannia.
It can be attributed to the large migration of workers to their native states in North India. Parle has a strong distribution network in interior parts of North India versus Britannia. Also, income-related uncertainties have helped Parle's cause as people are opting for low price, high-value consumer products.
Britannia’s Plans To Scale Up North
Britannia has undertaken a large drive covering 1.4 mn square feet of visibility in eight key states covering over 2,000 villages. Britannia is focusing on expanding its rural distribution network in these states.
The benefits are visible as the Northern states have grown 25% more compared to the rest of India. These areas will continue to be a priority for the company going forward.
The company is pushing Milk Bikis atta biscuits in the Hindi belt, where Parle enjoys dominance. The pricing of Milk Bikis is kept like Parle-G. But, being a premium brand, grams are lower. The company has introduced SKUs at low price points to penetrate among the price-sensitive consumers.
Britannia has also continuously improved its e-commerce operations. Today, e-commerce sales are 4.1x FY19 levels and currently account for ~ 5% of sales.