India's favourite biscuits got yummier - and more profitable

Biscuits have surpassed expectations in the pandemic period. Other than rural distribution and diversification of the product range, Aultrin Vijay looks at how packaging made biscuits munchy

07 Feb 2021 | By Aultrin Vijay

India's biscuit market is projected to reach Rs 52,771 crores by 2022

The organised biscuit market in India, which is valued at Rs 37,000 crore in size, grew at double the rate of growth in April-May against pre-Covid levels as people stockpiled on essential goods during the lockdown. It is believed that the organised market surged to levels of about 12-15% in April-May from 7-8% seen before the lockdown in terms of growth rate. This has since been cut to 10%, but most biscuits makers continue to report double-digit growth in rural and semi-urban areas as consumption continues to be strong.

With changing eating habits, consumers are now ready to experiment with new products – especially healthy and safer ones, which has prompted companies to look at interesting and affordable products.

According to a market research conducted by BlueWeave Consulting, the Indian biscuits market is estimated to grow significantly by 2023, “owing to a change in consumer taste and preferences, increasing health-conscious consumers, and rising demand for convenience food”.

“Increasing indulgence, health concerns, and familiarity with luxurious taste, which has developed among Indian consumers, have led Indian manufacturers to experiment with a variety of biscuits and cookies. This has also led to higher growth in the premium segment compared to the economic and mid segments of the industry,” the research found.

Diversifying products
The cookies segment is estimated to be the fastest growing product type of India biscuit market, whereas non-premium category biscuits are the leading segment in the Indian biscuits market.

Keeping this in view and the growth in demand during the pandemic, prominent biscuit manufacturers in India have started diversifying their product portfolio with new ranges of cookies and biscuits. In some cases, companies have also adopted reinstating some of their old brands coupled with new flavours.

For instance, Mondelez India has announced its expansion into the biscuits segment with the launch of Bournvita Crunchy and has planned more launches across Bournvita and Oreo brands.

The company, which makes and bakes some of India’s favourite snacking brands such as Cadbury Dairy Milk, Bournvita, Oreo, is further strengthening its product offering, fulfilling the constantly evolving snacking needs of consumers looking for a balanced indulgence. Bournvita Crunchy was made available on shelves, across the country, from mid-December 2020.

 Mondelez India has announced its expansion into the biscuits segment with the launch of Bournvita Crunchy

As per Mondelez's recently released State of Snacking Report, most Indian adults say they are snacking more today than before. Sudhanshu Nagpal, associate director – marketing (biscuits), Mondelez India said: “Given the unprecedented times, health and hygiene have become very important for our consumers and they are looking up to their trusted snacking brands for nourishment and wellbeing.

"Taste continues to remain an important factor for our consumers, as they choose snacks to create eating experiences with their families, at home. Bournvita Crunchy brings together the best of our global category expertise and innovation with these local insights and experience."

The report informed the company’s strategy to bite into the USD1.2 trillion total snack industry. The biscuit category has been among the fastest growing food segments in the last few months, led by in-home consumption during the pandemic.

Mondelez has been present in India for over 70 years and has a nearly 10% share of the cream cookies market, dominated by players such as Britannia, Parle Products and ITC. The new Bournvita Crunchy is priced at Rs 30 for a tray pack (100 gms) and Rs 60 for a carton pack (200 gms).

Meanwhile, Britannia Industries has cashed in on the sudden surge in demand especially home snacking amid the lockdown, and launched new products and expanded its rural reach.

The company, which bakes Good Day and Tiger Biscuits, has planned to invest Rs 700 crore over the next two years to set up greenfield facilities and scale up capacities of core products. Another Rs 300 crore investment has been planned for new launches including dairy, taking total investment to over Rs 1,000 crore, said Varun Berry, managing director, Britannia Industries.

“We are looking at a capex of around Rs 700 crore to set up new facilities in Uttar Pradesh, Tamil Nadu and Bihar, while also expanding manufacturing capabilities of our existing plants in Maharashtra and Odisha,” Berry stated.

In a normal month, the biscuit maker’s production is about one lakh tonnes a month and currently, it has even gone up to 1.15 lakh tonnes a month. Croissants and salty snacks are still in the test market stage but are likely to hit markets soon after getting the taste right.

Unibic has set a target to double its revenue to Rs 1,000 crore by 2023

Similarly, Bengaluru-based cookie maker Unibic has planned for an aggressive expansion with a slew of new product launches. The company, with a top line of around Rs 500 crore in the Rs 37,000 crore biscuit market, is looking at setting up a new plant with an investment of around Rs 87 crore, which will help it double production capability.

Unlike its bigger competitors such as Britannia, Unibic’s focus has been largely the urban market, which has insulated it from the demand slowdown in the FMCG sector.

By 2023, Unibic has set a target to double its revenue to Rs 1,000 crore, backed by plans to diversify into newer categories such as crackers and new product launches. In the current year, Unibic plans to launch four new variants of cookies. With 30 different variants of cookies to offer, Unibic is tweaking its flavours and packaging to gain traction in the north, east and western parts of the country.

Likewise, ITC’s Sunfeast brand and Parle Products have also launched new products with different flavours to diversify its product portfolio and appeal to the masses.

Role of packaging
However, there’s a catch for the packaging printers and converters. Growing variants of biscuits mean more opportunities for packaging firms.

Amrinder Singh, director at Bonn Group of Industries emphasised on the importance of packaging in the years to come. In a blog post, he stated that India is one of the largest biscuit manufacturing countries after the US and China. “Increasing consumption of packaged and convenience foods, the availability of a variety of biscuits and an increase in disposable incomes have provided a major boost to the industry.”

He mentioned in the blog: “As consumers are now looking for something healthy and convenient, they are increasingly looking for packaged products. It has been seen that the food consumption is grown within a very close distance and has popularised multiple food and beverage products.

Packaging can be a game changer for the biscuit market

“Packaging can play an interesting role to become more distinct, expressing the uniqueness of its content and where the pack visuals could be inspired by its origin. Brands can also communicate these benefits to consumers through enhanced transparency and traceability to help the consumer know more about the origin of the product.”

According to the Market Outlook report, India's biscuit market stood at Rs 28,387 crores in 2016, and is projected to grow at a compound annual growth rate (CAGR) of 11.27%, in value terms, between 2017 and 2022, to reach Rs 52,771 crores by 2022.

According to a recently published report India Biscuit Market Overview, 2017-2023, the organised biscuit market accounts for more than 70% of value share in the overall Indian biscuit market. The sector is expected to surpass the revenue figure of Rs 400 billion by 2023.

Along with the major biscuit players of India such as Parle Products, Britannia, Mrs Bectors, Surya Food and Agro, there are many regional players who are aiming to tap the Rs 37,000-crore market. These biscuits produced by these companies are well- labelled and packaged yet healthy to eat and available at a low price, which makes it affordable for the low-income consumers and signals a wide range of opportunities for packaging printers and converters.

Packaging perspective about biscuit trends

Maneesh Sharma, packaging expert

The demand for healthy biscuits comprising of ingredients such as oats or ragi has been on the rise since the last three years. This trend has picked up during the Covid-19 pandemic. As fresh and healthy consumption has become the topmost priority for consumers, a range of companies are outsourcing their biscuits to third party manufacturers in the proximity of the market. The agility of the supply chain will become the key to ensure consumers enjoy fresh biscuits. Also, the range that the biscuit market offers, right from low to high unit packs has helped garner more sales for both – the rural and urban markets. 

In terms of packaging, the organised market is dominated by flexible, followed by cartons and tins. As the laminate consumption according to the minimum order quantity of each Stock Keeping Unit varies, the manufacturers want the converters to be flexible. Flexible packaging also has an upper hand in the aspects of sustainability as their production consumes lesser energy in comparison to cartons. Besides this, new technologies have been developed such as air cushions inside flexible packs to maintain their shelf appeal. However, the boom of eCommerce has boosted the availability of premium biscuits which was perceived as festive product earlier; due to its cost-effectiveness, cartons might have an edge over tins in this segment. Another trend on the rise on a global scale are paper-based packages. This trend will gain more traction along with the advent for biodegradable alternatives.

Amit Kale, packaging expert

As earlier, the focus was to increase the shelf life of biscuits, the manufacturers were using extrusion lamination. But today, with the boom of ready-to-eat products, a range of manufacturers are using PET/metPET structures. This has helped manufacturers save cost.

In terms of mono-polymer alternatives, unless we develop a high-barrier lacquering or coating for the films that ensure the moisture vapour and oxygen transmission rate requirements are fulfilled, switching to these alternatives would not be possible. I would like to also stress on the point that sustainability requires self-discipline as even the mono-layer package will lie in the ocean or the dumping grounds if not disposed of properly.