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FMCG companies vie for a bite of branded snacks growth pie

Nov 22 2012, 04:09 IST
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SummaryWith increasing competition, the market dynamics will soon change in the Rs 6,500-crore branded snacks sector in India, which is growing at 25% annually.

With increasing competition, the market dynamics will soon change in the Rs 6,500-crore branded snacks sector in India, which is growing at 25% annually.

FMCG companies such as Parle Products, ITC Foods, Parle Agro, PepsiCo India and CavinKare are looking at fresh packaging initiatives, relaunches, new launches and expansion of distribution and manufacturing capacity to drive volumes.

For instance, Parle Products, the makers of Parle-G biscuits, is revamping its new launch — Parle Namkeen — with new packaging. It’s competitor ITC Foods is sharpening its focus on optimisation of supply chains and smart commodity sourcing to promote its brand Bingo.

After acquiring the Mumbai-based Garden Namkeens in 2009, CavinKare Private has set up a new manufacturing facility in Thane, Maharashtra at the cost of R75 crore two months ago to increase the production of Garden snacks for its national roll out.

With changing lifestyles, the branded snacks sector is expected to grow further by 30% this year, predict industry analysts. Meanwhile Parle Agro, makers of Hippo, is expanding its distribution network by 40 to 50% to market the snack brand across the country. Currently, PepsiCo India leads the pack in this sector and the other players include ITC 's Bingo, Parle Products, Haldiram and Parle Agro's Hippo.

On Parle Products' strategy, B Krishna Rao, group product manager, Parle Products, said the new launch was test marketed in selected cities of Uttar Pradesh and Madhya Pradesh for a few months.

"After seeing the response to it, we are now taking it to other markets. To induce trials, we will be offering our customers 25% extra on each packet. Our goal is to capture 20% market share by end of this financial year,” he added.

The product is now available across kirana stores and modern retail formats. According to a spokesperson from ITC, the company has built a healthy pipeline of innovative variants and product formats to enhance its market standing in high growth categories such as the branded snacks sector.

“With a view to optimising supply chain costs and improving market servicing, the business will invest in disaggregated manufacturing and distribution infrastructure,” he added.

Like ITC, Parle Agro, makers of Footi, is also investing in research and development projects to introduce new products in the branded snacks business.

"We have adopted an clutter breaking approach for packaging, pricing and advertising for Hippo. We have just added a new range of munchies to our snack brand Hippo

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