For many consumers, regimented breakfast-lunch-dinner lifestyles have ceased to exist. They are simply grabbing a bite on the run and in cars, while waiting for the bus in long-winding queues. Or while watching the seemingly endless saas-bahu sagas on television, plonked on their drawing-room sofas.
Little wonder the snack food market is growing fatter err faster than ever before. The market, which was growing at a steady trot of 16-20% for the past few years, is expected to clock 25% growth in 2007 to stand at Rs 5,000-Rs 5,500 crore. Of course the branded segment is much smaller at Rs 2,200 crore, which is what makes it so attractive to food companies that are looking at bigger shares. In the branded snacks market, to get down to basics, FritoLay commands a share of 45%, followed by Haldirams at 27% and ITC at 16%. The rest is divided between a handful of new entrants, wannabes and many regional players.
Since snacking is largely a hunger-driven impulse decision rather than a planned eating occasion, staying top of mind is high on the agenda of most big players in the segment. Look at the kind of things the big boys are doing to grab more eyeballs and, as a corollary, a larger share of the wallet.
Kellogg India, the subsidiary of breakfast cereal maker, Kellogg Co, is beefing up its distribution network to promote its snack brand K-Pak (Rs 10 per pouch), which was launched last year and targets kids. On Kelloggs new initiative, Anupam Dutta, managing director, says, K-Pak is basically an accessibility initiative. We have developed a unique positioning for it in Indiaas a nutritious afternoon snack for school children. Hence, the ad for K-Pak reads Sham ka Nashta.
Currently, K-Pak range has four variants in India. Our core focus will be on school contact programmes. Our target is to contact 3 lakh schools across tier-I, II and III towns across the country, Dutta adds. To this end, the company is also beefing up its brand building activities, including a new mass media campaign. To support its mass media plans, Kellogg will unveil a slew of below-the-line activities which include on-ground promotions and sampling exercises.
With sales of $11 billion, Kellogg Co is considered the worlds leading producer of ready-to-eat cereals and convenience foods. Of course, the company has flirted with the snack food segment beforemost notably through the launch of Cheez-It baked cheese crackers in 2002. The company withdrew the product the very next year and said it wished to focus single-mindedly on breakfast cereals. Things, of course, have changed since then. We are extending our distribution footprint to catch up with our nutritious equity footprint, Dutta says.
Whether snacks are healthful or indulgent, one of their most important needs is convenience, especially in terms of portability. That helps explain the rise of small-size packs and pillow pouches. Market leader FritoLay, for example, has flooded kirana stores and school/college canteens with Rs 5 packs of karare peanut, shahi mixture et al.
Fighting on price seems to be the mantra at the headquarters of new entrant, Parle Products, which is planning to invest heavily on its snack brand Musst Bites after seeing the response it received. The company forayed into the namkeen market in June 2007. Available in pouches at Rs 5 and Rs 10, Musst Bites is stressing on size and affordability to draw consumers.
According to Shalin Desai, senior brand manager, Parle Products, To support our mass media plans, we are looking at relevant below-the line activities which include ground promotions. To this end, Parle recently shifted the advertising account of Musst Bites from Ogilvy & Mather India to Everest Brand Communications.
Meanwhile, ITC Foods, which entered the branded snack food market last year with Bingo, is chalking out a two-pronged growth strategy to take on the market leader FritoLay. To start with, the company is planning to double its distribution network to reach out to a wider audience. Plus, stay top-of-mind through high decibel media activities.
On ITCs growth strategy, Ravi Naware, CEO, ITC Foods, says, Currently, our distribution network covers 4 lakh outlets. We plan to extend it in the next three months. There will be a 30% increase in our ad budget too this quarter to promote Bingo. To support its mass media plans, the company is looking to host consumer activation programmes in malls as well as colleges, clearly aimimg the youth, the biggest consumers of snackfoods.
In the midst of the melee, PepsiCos Frito Lay too is fine-tuning its marketing activities to stay one up on competition. The company has just kicked off a major portfolio promotion under the Chala Change Ka Chakkar umbrella campaign. Lays Kurkure, Cheetos, Uncle Chips and Lehar will be the centre of focus. On Pepsis gameplan, Gautham Mukkavilli, managing director of FritoLay India, says, We are set to reinvigorate our product portfolio in 2008. We have appointed MS Dhoni as our new brand endorser. We are looking at new flavours and promotions. In essence, its action time at FritoLay.
This comes after the company undertook a rebranding exercise last year and introduced the concept of Snack Smart through which it reduced the amount of saturated fat in its products by 40%. Although healthy products remain a small percentage of the overall indulgent snack market, the indication is that a growing number of consumers wish to snack in a guilt-free manner, say observers.
In other words, there is an extremely profitable niche available for companies wishing to compete in a market that seeks both price and nutritional values. So many of the new releases are designed to meet the desire for low-fat, less sodium, fewer calories and thus, better nutrition. Points out Pavas Bhatia, associate director at retail consultants Technopak India, Health will drive the market as more and more brands see sense in aligning themselves with this politically correct proposition. This is a reflection of the same sentiment that is pushing people to jog, gym and so on. And thats the trend worldwide.
According to Mukkavilli, FritoLay is also sharpening its focus on its premium offering, Lays Snax, this year. Its from our global portfolio, he adds. Incidentally, the companys new marketing campaign Chala Change Ka Chakkar has received a favourable response in Mumbai, to begin with. If for nothing else, people are buying these products to win prizes ranging from Rs 5 to 2.5 crore. I think its a clever strategy to promote sales, said a retailer from south Mumbai.
But the vital question is: Will branded players edge past their unbranded counterparts Watch this space.