Report Biscuit Industry INDEX |Sr. No. | Topic | Page No. | |1. |Introduction to the product |3 | |2. |Section Analysis |4 | |3. Major Players and Market share of major players |6 | |4. |Manufacturing, Raw material for product and Government regulations |9 | |5. |Market segmentation |10 | |6. |Substitute Available |11 | |7. Mode of Supply to the market |13 | |8 |Financing from institutions like banks, schemes available, investment required |14 | |9. |Differentiating factors for major players and positioning |20 | 1. Introduction to the product Biscuit is a hygienically packaged nutritious snack food available at very competitive prices, volumes and different tastes.
According to the NCAER (National Council for Applied Economic Research) Study, biscuit is predominantly consumed by people from the lower strata of society, particularly children in both rural and urban areas with an average monthly income of Rs. 750. 00. India Biscuits Industry is the largest among all the food industries and has a turnover of around Rs. 4350 crores. Though India is considered as the third largest producer of Biscuits after USA and China, the per capita consumption of biscuits in our country is only 2. 1 Kg. per annum, compared to more than 10 kg in the USA, UK and West European countries and above 4. 5 kg in south east Asian countries, Singapore, Hong Kong, Thailand, Indonesia etc. China has a per capita consumption of 1. 90 kg, while in the case of Japan it is estimated at 7. 5 kg. Biscuits are estimated to enjoy around 37% share by volume and 75% by share by value of the bakery industry. Biscuits constitute about 7% of the Rs 478 billion FMCG markets in India. India Biscuits Industry came into limelight and started gaining a sound status in the bakery industry in the later part of 20th century when the urbanized society called for readymade food products at a tenable cost.
Biscuits were assumed as sick-man’s diet in earlier days. Now, it has become one of the most loved fast food products for every age group. Biscuits are easy to carry, tasty to eat, cholesterol free and reasonable at cost. The Federation of Biscuit Manufacturers of India (FBMI) has confirmed a bright future of India Biscuits Industry. According to FBMI, a steady growth of 15 percent per annum in the next 10 years will be achieved by the biscuit industry of India. Besides, the export of biscuits will also surpass the target and hit the global market successfully. 2.
Section Analysis It is classified under two sectors: organized and unorganized. The two major bakery industries, viz. , bread and biscuits account for about 82% of the total bakery products. The production biscuit in the country both in the organized and unorganized sectors is estimated to be around 11 lakh tonnes. Of the total production of biscuits, about 35% is produced in the organized sector and the remaining is manufactured in the unorganized sector. The organized sector caters to the medium and premium segments, which are relatively less price-sensitive.
The organized sector is unable to compete at the lower price range due 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. Organized sector consists of 15 major players whereas in organized products there are more than 30000 bakeries. 2. 1 Government Policies: a. Government has dereserved the biscuit production in 1997: Dereservation means biscuits have been deleted from the list of items reserved for exclusive manufacture in the small scale sector with effect from 3rd April, 1997.
As a result, large scale production facilities can be set up to achieve economies of scale without any requirement for licensing. It resulted in a few MNCs, i. e. Sara Lee, Kellogs SmithKline Beecham, Heinz etc entering the biscuit industry in India, most of them, with the exception of SmithKline Beecham (Horlicks Biscuits), have ceased production in the countries b. Import of biscuits Especially in the high price segment has been allowed from 1998-99, but however, the quantum of imports has not so far increased alarmingly and has remained at around 3. 75% of the consumption of biscuits in the country in the year 2001-02.
However, recent imports from china industries cheaper verities of biscuit, needs to be examined with cautions, especially in the context of the price as the low margin based domestic industry, which is operating at 60 % of the total installed capital. c. Various Taxes: Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass Consumption Goods) sector. The commodity is also price sensitive, as a consequence of which, even when the Excise Duty was doubled on biscuits in 2000-01 biscuit manufacturers, including the major brands, were not able hike MRPs to the extent of the steep increase in the Duty.
Taxation, both Central Excise Duty as also State Sales Tax, other miscellaneous levies i. e. turnover tax, local area tax, mandi taxes, purchase tax, octroi etc, has been a major deterrent in the growth of the biscuit industry. 3. Major Players and Market share of major players Biscuit manufacturers in the country are Britannia, Parle, Surya foods and agro (Priya gold), ITC foods (Sunfeast), Biskfarm, Dukes, Cremica, Priya, Veeramani, Bonn, Bhagwati, Raja, Champion, Sobisco, Madhabi, Nezone, Windsor, Cookieman Ankit, Shangrila, Nalanda, etc.
Out of the above Britannia, Parle, Surya foods and agro (priya gold) and ITC foods (Sunfest) combine to form 85% of market share with Britannia being the market leader. Britannia has following well known brands in its kitty: Good day, Bourbon, 50-50, Tiger, Cream Treat, Nutri choice and Marie gold. Parle has following well known brands in its kitty: Parle – G, Krackjack, Majix, monco, Kreams, Parle 20-20 cookies, Nimkin, Chox, Hide and seek, Hide and seek Milano, Digestive marie, Parle marie, Milk shakti, Goldenarcs, Kreams gold and Monaco Jeera.
Surya foods and agro (Priya gold) has following well known brands in its kitty: Butter bite; Classic cream; Kids cream; Bourbon; Big boss; Marie Lite; Magic gold, CNC, Cheese cracker, Snacks zig zag, Don and Coconut crunch. ITC foods (Sunfeast) have following well known brands in its kitty: Milky magic, Marie, Dream Cream, Snacky, Special and Bennevita. History: Since the last ten years several new players have entered the market to compete with Britannia and Parle. Some prominent amongst them are ITC foods (Sunfeast) and Surya foods and agro (Priya gold).
Priya gold has entered the rural and semi-urban market market with its low prices. While sunfeast entered urban market through high quality and intensive advertising campaign. It also had a good distribution network because of its existing network because of ITC’s cigarettes business. There has also been increase in the exports of the biscuits. The market was started with glucose and marie biscuits and later developed because of cream biscuits. Still Glucose and Marie biscuits are the backbone of the industry in India with Britannia and Parle leading the market.
There has been significant improvement in the packaging and advertising in the industry because of increased competition. The biscuit industry in India witnessed annual growth as below: [pic] (source: IBMA) Demand: Pattern of Biscuit Consumption (On Zonal basis) in the country are as below: Northern Zone – 25% Western Zone – 23% Southern Zone – 24% East Zone – 28% (Including North East) Glucose and milk biscuits account for 25% each and Marie biscuits 20% of the biscuits market. (source: IBMA) Exports: Exports of Biscuit are estimated to around 10% of the annual production during the year 2008-09.
India exports to Middle East, Africa, South East Asia and the more sophisticated economies like U. S. A. , UK, Canada, Australia and New Zealand. Exports have increased with Indian biscuits turning favourite choice in several Middle East markets. The export of high end products (like cream biscuits) to former East European countries has also begun to rise. The two major biscuit exporters in Indian industry export to following countries: Parle biscuits: Middle East, Africa, South East Asia and the more sophisticated economies like U. S. A. , UK, Canada, Australia and New Zealand.
Britannia: USA, Ghana; Singapore and middle east nations. (source: respective company official websites) Market Share: The industry is primarily held by top players like Britannia and Parle. In terms of value, Britannia leads the market with 37 per cent market share, followed by Parle’s 31. 3 per cent. However, a new competitor on the scene – ITC’s Sunfeast – has slowly been transforming the industry with its foray in 2003. With its focus on bringing new and innovative products to consumers, ITC steadily gained a considerable market share which currently stands at 6. 3 per cent.
Priyagold has market share of 10% due to the its penetration in rural market. [pic] (source: respective company official websites) 4. Manufacturing, Raw material for product and Government regulations. Manufacturing process The process is conventional and easy. Wheat flour along with other ingredients is mixed with water and dough is prepared. Then it is kept at a normal room temperature for about couple of hours to allow proper fermentation. Then it is placed in biscuit moulding trays and these trays are placed in oven for baking. After requisite baking, trays are taken out, cooled and Biscuits are packed.
The process flow chart is as under: Raw material: Wheat Flour, Sugar, Partially Hydrogenated Edible Vegetable Oils, Invert Syrup, Leavening Agents, Salt, Milk Solids, Emulsifiers and Dough Conditioners The raw materials are available in India so don’t need to import anything. Regulation and Control: • Automatic investment approval (including foreign technology agreements within specified norms) up to 51% foreign equity or 100% NRI [including Overseas Corporate Bodies (OCBs)] equity is allowed. • Up to a maximum of 24% foreign equity is allowed in SSI sector • Use of foreign brand names is now freely permitted. MRTP (Monopolies & Restrictive Trade Practices Act) rules and FERA (Foreign Exchange Regulation Act) regulations have been relaxed to encourage investment and expansion by large Corporates. • Most of the items can be freely imported and exported except for items in the negative lists for imports & exports. Capital goods are also freely importable, including second hand ones in the food processing sector. 5. Market segmentation Main Categories of Biscuits are broadly as under: Glucose, Marie, Sweet, Cream and Milk. Market for biscuits is scattered all over the country. There are three distinct market segments . Urban, 2. Semi-urban 3. Rural. Urban and semi-urban markets are dominated by many national and regional brands but even then many local manufacturers have also carved a special niche as their products are fresh, they offer many varieties and they are cheaper. The market can also be segmented according to the age group as follows: 1. 5 – 15 years: Glucose, cream and milk biscuits 2. 15 – 25 years: Glucose and cream biscuits 3. 25 – 45 years: Glucose and Marie 4. 45+ years: Marie. The organized and unorganized sectors of the biscuit industry are in the proportion of 55%:45% ratio. (source: IBMA) 6.
Substitute Available: Cookies The name “Cookie” is derived from the Dutch word “koekje or koekie” and it refers to a piece of small cake. One can make Cookies very easily and quickly, provided the right ingredients, right recipe and right methodology is adopted. Cookies are normally a combination of all-purpose flour, baking powder (soda), unsalted butter, granulated and/or brown sugar and flavorings. Cookies can be made in different sizes, shapes, flavors and textures. Nankhatai Nan khatai is a soft crunchy Indian cookie which simply melts in your mouth. Nan Khatias are sweet in taste and have a Golden finish to it.
Nan Khatai is baked and is one of the finest bakery sweet with an Indian Taste. Nankhatias are available in various flavors, which are Special Nankhatai, Rava (Semolina) Nankhatai, and Ealaichi (Cardamom) Nankhatai. Toast Toast is sliced bread which has been browned by exposure to dry heat. Indian Toast with a golden brown finish is another of our mouth watering bakery products. The Toast is soft yet crispy and yummy to eat. They are an ideal low cal must have during tea time. Toast is often served with butter, cheese, marmalade, or any number of other toppings. CakeRust
A Rusk is dry, crisp and with a golden brown finish and available in three flavors. , Tea Rusk and Suji Rusk. plain, Rusk is one of the most popular products in the market. Rusks are known in France as “biscotte” and in Germany as “Zwieback. ” A Rusk is a slice of yeast bread which may be thin or thick. Each crunchy Rusk takes a while to eat, and a couple of them can easily satisfy a person with average diet. Baker Street offers delicious, non-fat Rusks in various flavors which are perfect and a healthy diet Khari Khari is also known as Salted Puff. It makes one of the best combinations with a cup of tea.
It is regarded as one of the tastiest savories to have at tea time. SALTED PUFF with its delicate thin layers is fun to eat. Indian Spices and Herbs are added to its thin layers with No Artificial Flavors and made with original spices like Jeera (Cumin), Methi (Fenugreek), Ajwain (Bishops Weed), Amchur (Dry Mango), Pepper, etc 7. Mode of Supply to the Market: It follows the typical mode of supply. Here in the Manufacture manufactures the goods which are then supplied to the dealer within a particular area then this dealer sells it to wholesaler which in return sell it retailer.
Finally retailer sells them to the consumer . This is the generally followed where in the consumer doesn’t receive any discounts generally provided. Nowadays mall culture has broken this typical flow so that the consumer receives maximum benefit in terms of price. 8. Financing from institutions like banks, schemes available, investment required 8. 1 Financing from banks The food and agro-based processing sector is eligible for classification as priority sector for lending by banks and biscuits industry comes under it. This industry is classified into Small and Medium Enterprises.
Based on the recommendations of an Internal Working Group, the Reserve Bank of India (RBI) has come out with revised guidelines on priority sector lending which take into account the revised definition of small and micro enterprises as per the Micro, Small and Medium Enterprises Development Act, 2006. As per the revised guidelines RBI will allow banks to include direct finance to companies for agriculture and allied activity of upto Rs1 crore as priority sector lending (PSL) exposure as against the earlier exposure of Rs20 lakh.
Direct finance to agriculture shall include short, medium and long term loans given to Corporates, partnership firms and institutions up to the limits indicated. Direct finance to small enterprises shall include all loans given to micro and small (manufacturing) enterprises engaged in manufacture/ production, processing or preservation of goods, and micro and small (service) enterprises engaged in providing or rendering of services, and whose investment in plant and machinery and equipment (original cost excluding land and building and such items as mentioned therein) respectively, does not exceed the amounts specified.
Retail Trade shall include retail traders/private retail traders dealing in essential commodities (fair price shops), and consumer co-operative stores. Loans up to Rs. 20 lakh to individuals for purchase/construction of dwelling unit per family, (excluding loans granted by banks to their own employees) and loans given for repairs to the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to Rs. 2 lakh in urban and metropolitan areas. The Government announced a ‘Policy Package for Stepping Credit to Small and Medium Enterprises.
The measures in the Policy Package to increase the quantum of credit to SMEs (including Micro and Small Enterprises-MSEs) include: (i) Public sector banks to fix their own targets for funding SMEs in order to achieve a minimum 20 percent year-on year growth in credit to the SMEs sector. (ii) Public sector banks to follow a transparent rating system with cost of credit linked to the credit rating of the enterprises. (iii) Commercial banks to make concerted efforts to provide credit cover on an average to at least 5 new tiny, small and Medium Enterprises at each of their semi-urban/urban branches per year. iv)The Reserve Bank of India (RBI) to issue detailed guidelines relating to debt restructuring mechanism so as to ensure restructuring of debt of all eligible Small & Medium Enterprises. 8. 2 Schemes Available The Government of India has identified food processing industries as a priority area to be encouraged for growth and development and created the Ministry of Food Processing Industries (which was till then a Dept in the Ministry of Agriculture), headed by an Ministry of State with Independent charge.
The Food Processing Ministry has been rendering yeomen service to the industry, of which biscuit manufacturing is an important part. The Ministry has an objective of enabling food processing Industries to undertake technology upgradation and diversification. Expansion as also to set up new units has formulated scheme of Grants and Financial Assistance. Other areas of concern to industries of food products like Biscuits include multiplicity of food laws and their enforcing agencies in the Central and State Governments with overlapping functions & implementation.
At the persistent instance of industry organizations including FBMI the Ministry of FPI took the initiative in evolving an Integrated Food Act, harmonizing the existing multifarious legislations enabling better compliance. The Draft Unfiled Food Bill 2002 has been prepared and now awaits approval by the Cabinet and the Parliament, which will fulfill an important need of the industry and pave way for accelerated development and growth. Industries such as Biscuit are also languishing as they are not able to achieve their potentials for higher production, in the absence of the concrete food Processing Industry Policy.
FBMI in close coordination with other organizations and apex Chambers, initiated to urge the Govt. of India to formulate a comprehensive Policy Document, for smooth growth and harmonious development of the industry. The Food Processing Industry Policy, which has been evolved as a result of various workshops, deliberations and representations by a large cross section of food processing industries, is yet to be finalized. It is hoped that the Ministry of Food Processing Industries, GOI would initiate action for implementation of the Policy expeditiously. • Food Parks
In an effort to boost the food sector, the Government is working on agri zones and the concept of mega food parks. Twenty such mega parks will come are proposed across the country in various cities to attract Foreign Direct Investment (FDI) in the food-processing sector which includes biscuits manufacturing. • Infrastructural Development The Policy will facilitate: • Building up a strong infrastructural base for production of value added products with special emphasis on food safety and quality matching international standards. • Development of area-specific Agro Food Parks dedicated to processing of the predominant produce of the area. Development of Anchor Industrial Centre and/or linkage with Anchor Industrial Units having network of small processing units. • Development of Agro-industrial multi-products units capable of processing a cluster of trans-seasonal produces. • Backward Linkage The Policy will promote: • Mechanism to reduce the gap between the farm gate price of agro-produce and the final price paid by the consumer. • Development of Futures Market in the best interest of both the farmers and the processors ensuring minimum price stability to the farmer and a sustained supply of raw material to the processor. Setting up of an Equalization Fund to ensure sustained supply of raw material at a particular price level and at the same time to plough back the savings occurring in the eventuality of lower price to make the Fund self-regenerative. • Forward Linkage The policy will promote: • Establishment of a strong linkage between the processor and the market to effect cost economies by elimination of avoidable intermediaries. • Establishment of marketing network with an apex body to ensure proper marketing of processed products. Development of marketing capabilities both with regard to infrastructure and quality in order to promote competitive capabilities to face not only the WTO challenge but to undertake exports in a big way. 8. 3 Investment Required Capital Input Land and Building It is advisable to buy a readymade shed of around 75 sq. mtrs. rather than buying land and then undertaking construction. This would save cost as well as time. The main production area would occupy about 40 sq. mtrs. whereas a store-cum-packing room and sales counter would be accommodated in remaining 35 sq. mtrs. The total cost would be Rs. 1. 25 lacs.
Plant and Machinery: It is suggested to have installed production capacity to manufacture 50 tonnes of biscuits per year assuming working for about 330 days for 12-14 hours every day. This would require following set-up. [pic] (Rs. in lakhs) Miscellaneous Assets: Other assets like storage facilities, furniture and fixtures, weighing scales, sealing and wrapping machine and glass covered display counter for sales would need investment of about Rs. 90,000/-. Utilities: Electricity requirement shall be 20 HP whereas daily consumption of water for process and potable and sanitation purposes will be around 500 ltrs.
Raw Materials: The all important raw material will be wheat flour. The requirement will not be substantial but supply arrangements with flour mill of the region would ensure smooth supplies. Other items like yeast, sugar, ghee, milk powder, salt, edible colours, flavors etc. will be required in small quantities. Packing wrappers and polythene bags will be the packing materials. MANPOWER REQUIREMENTS: [pic] (Rs. in lakhs) TENTATIVE IMPLEMENTATION SCHEDULE: [pic] (Rs. in lakhs) Details of the Proposed Project: Building: Readymade shed of around 75 sq. mtrs. will be sufficient as explained earlier.
Its cost is assumed to be Rs. 1. 25 lacs. Plant and Machinery: The total cost under this head is likely to be Rs. 3. 15 lacs as detailed earlier. Miscellaneous Assets: A provision of Rs. 0. 90 lac would take care of all the requirements. Preliminary & Pre-operative Expenses: A provision of Rs. 50,000/- would take care of pre-production expenses like establishment, administrative and legal charges, travelling, interest during implementation, trial runs etc. Working Capital Requirement: It is assumed that the plant would operate at 60% activity level in the first year for which following working capital will be required: pic] (Rs. in lakhs) Cost of the Project and Means of Financing: [pic] (Rs. in lakhs) Source – www. mofpi. nic. in 9. Differentiating factors for major players and positioning Wholesale and Retail marketing in the Biscuit industry is carried out with a network of C & F Agencies (for States and/specific Districts) Dealers / Wholesalers and Retail shops. The major players use the following positioning and differentiating strategies: 1. Britannia: It is positioned on “eat healthy, be healthy”. It focuses on the health of the consumers. It follows intensive add campaigns for all its brands.
It has very good presence in the Urban and semi-urban market with biscuits in all segments. It has a good brand value and focuses on giving good quality of biscuits which are good for health. 2. Parle: Parle has very good presence due to its Parle-G brand which has maximum penetration and brand value. It is present an all the three segments with is positioned as common mans biscuits with good quality. It has positioned itself as an energy biscuit. 3. Priya gold: It entered the market when Britannia and Parle had already established itself.
It followed a different strategy to enter the market. It started a new trend of low price biscuits and in large quantity. It mainly targeted rural and semi-urban market. Its tagline was “hakk se mango” (ask with an right) and positioned itself as biscuits in large quantities and low prices. 4. Sunfeast: It entered the market in 2003 with an already established distribution network of ITC due to its cigarette business. It made its presence felt with intensive ad campaigns having Mr. Shahrukh khan as its brand ambassador. The brand was positioned as a delicious and tasty biscuit.
It targeted the urban and semi-urban market. It also entered the rural market due to its strong distribution network. References: http://mpstateagro. nic. in/Project%20Reports%20pdf/BISCUIT%20PLANT. pdf http://www. biscuitfederation. org/indus_profile. htm http://business. mapsofindia. com/india-industry/biscuits. html http://www. mofpi. nic. in/content_printpage. aspx? categoryid=1073 http://www. unitedbankofindia. com ———————– Mixing and Dough Making Fermentation Baking Packing Manufacture Dealer Wholesaler Retailer Consumer Consumer Retailer Manufacture
