How biscuit companies are going through ‘Makeover’ exercise to increase the market share?
India is a transitional market as far as biscuit consumption is concerned. With the advent of MNCs, Indian manufactures are engaged in makeover exercise not only in product offering but distribution channels as well to remain competitive.BY Shipra Srivastava | Dec 08, 2017 | comments ( 0 ) |
Biscuit, a popular snacking item in India has scaled a long journey from simple snacking item to rich cookies. If we can trace back the journey, starting from pre globalization era, there used to be few biscuit manufactures in India, people had less disposable income and they were happy in whatever was easily available. That was the period when there was enough demand in the market but supply was constraint. The companies were not about to fulfill the demand due to number of issues such as legal requirement of licenses, challenges in procuring raw material, kota share amongst others. However, since then things have changed drastically.
Today, India biscuit market stood at staggering $ 3.9 billion mark and growing at a CAGR of 11.27%, in value terms expected to reach $ 7.25 billion by 2022. Moreover, India is one of the largest countries as far as biscuit consumption is concerned.
Predominately, before 2000 biscuits were seen as less functional plain and simple item. The real game began when multinational companies started foraying Indian market with newer products and formats. The evolve taste of people had made the industry to evolved. Post 2000 people are started heavy experience of innovative products such as cream biscuits, cookies with newer formats etc such as choco chips etc.
Speaking on same, Mayank Shah, Category Head, Parle Products Pvt. Ltd said,” Post liberalization the market has evolved immensely. Now the customers have become more discerning and they are ready to adapt newer formats. Thus, Indian manufactures are forced take over a makeover exercise only in offerings but distribution as well, so they can remain relevant to contemporary audience.”
Undoubtedly, the market has evolved and has gone through ground breaking changes not only to stay relevant but increase their market share as well. Let’s shed light on few makeover shifts that leading biscuit manufactures are going through.
Product innovations: ‘Being healthy’ is trending!
Citing the example of Parle Shah informed before 2000 we were associated with people with products Parle G, Monaco, Krackjack, etc. but as the market evolved we had to be operational in various categories. “Our first innovative product was Hide and Seek”, he said. Parle has around 30% market share in overall market. Recently, the company had foryed into the pulse category as well.
Speaking on same, Amrinder Singh, Director- Marketing, Bonn said, “Greater affluence and frequent travelling abroad has influenced customers’ preference in India over the years. They want biscuits with different tastes, flavoursand sometimes even spices. They want cookies that are more than just biscuits. They also want healthy element be thrown in.”
Recently, the company has introduced ‘NuHealth’ range which has many health benefits. The first bread that was launched under this new category was ‘Happy Heart Bread’ which is low on fat and sugar and with 11 types of grains and in addition Omega 3 which is good for heart. Another range the company has introduced is ‘La Americana’ which has gourmet range of cookies offering taste and experience.
Emergence of cookie culture!
Evolution in tastes palate of people and products is a global phenomenon and India is not an exception. And, it is not so much about western culture as it is a case of evolvement of the tastes and preferences of Indian consumers. “Yes there is a change and the change is towards cookies and lot of chocolate offerings. The biscuit makers are catering very well to the changes in the preferences of Indian customers,” said Singh.
Speaking on same Mayank said, “ Biscuit is itself a foreign concept it is because of brands such as Parle G have made this concept affordable and accessible to everybody and anybody in India that people think this one of our snacking item. Fundamentally, there is no difference between cookie and biscuit. What British people called ‘biscuit’ Americans call it ‘cookie’ it is only India where cookie is associated with something rich or heavy.”
Emerging distribution channels
Earlier biscuits were primarily sold through traditional general trade which gradually started shifting towards modern trade. However, in terms of distribution these two channels are clearly bifurcated, all the premium products with less SKUS are sold via modern trade and remaining goes to general trade.
And now there is a new kid on the block called ‘E-commerce’, which has led manufactures baffled about what ticket size and SKUs to be sold via this channel.
“E-commerce is very different and most challenging part of it is last mile delivery. If the cost per unit is high then it become easy for the company sold it from own website. Unfortunately, that does not go with FMCG brands due to low ticket items. The cost of delivery is itself so high it becomes unviable for most of the companies to delivery by their own. The minimum order cost has to be Rs 800-Rs 1000 to justify the delivery cost which is very unlikely case if you are selling biscuits.”
Marketplaces such as Flipkart, Amazon are yet another option which substantially reduces the delivery cost but it comes with own challenges. “With marketplaces the delivery cost reduces to 50%, but in India e-commerce is at very evolving concept. People are buying more there due to heavy discounts which we really not support”
However, going forward a change is coming in when people are giving importance to convince over heavy discounting. That is reason ecommerce are putting focus on faster delivery rather than giving the discounting, he adds.
In fact, other companies are too revamping their websites to tap the potential of this channel. Recently, Priyagold, the leading brand in biscuits manufacturing undergoes a website revamp after 19 years. The new website designed by Bee Online, a digital marketing firm offers quick and easy access to information along with hassle-free navigation. The new website also gives a comprehensive understanding of the brand’s value proposition and its varied product offerings.
Speaking on website makeover, Shekhar Agarwal, Director, Priyagold said, “There was indeed a need to revamp the age old. The new website has all the updated features and matches to the latest trends of the century. We believe that our website will enable visitors to have a very informative experience as we continue to grow, launch new products and increase our market presence.”
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