The biscuit industry today stands at R9,500 crore and is looking at a compounded annual growth rate (CAGR) of 8% in the next three years. Pegged at R9000 crore, the glucose biscuits segment takes the biggest share at nearly 75%, growing at 13% annually, according to management consultancy firm KPMG in India. But that is changing. The health biscuits category, which comprises tea biscuits such as Marie, Milk Rusk and Cream Cracker besides digestive biscuits, is worth only R3500 crore today but boasts of a 25-30% annual growth rate. More importantly, within the health biscuit category, the tea biscuit segment is one of the fastest-growing segments growing at 20-25% a year, and it is coming at the cost of glucose biscuits segment as consumers migrate from glucose to the next affordable range of healthy biscuits with an increase in disposable incomes. The other two segments, namely, cream biscuits and cookies, and salt and savoury biscuits are also worth about R3500 crore each. Consumers are not downgrading, rather they are shifting from glucose biscuits to healthier options such as Marie, Rusk and Cream Cracker. Different pack sizes and price points have made it easier to make the shift, said Anuradha Narasimhan, director, marketing, Britannia Industries.
Ankur Bisen, senior vice president, retail and consumer products division at Technopak, a management consulting firm, calls the tea biscuit category the cash cow of the Indian biscuit industry. It is one category which has always enjoyed a healthy and loyal consumer base, irrespective of economic slowdown. It has been and will always remain the cash cow of the industry. Refreshing the category only helps in further bolstering the growth of tea biscuits and helps biscuit makers to cover their cost and margins during uncertain times, said Bisen.
Interestingly, much of the action is riding the health platform. Considered to be a healthy snacking food product traditionally, tea biscuits such as the Rusk from the local bakery or the branded Marie and Cream Cracker have helped in bridging the gap between the entry-level glucose biscuit and the premium digestive biscuit. As traditional tea biscuits such as Marie, Rusk or Cream Cracker are non-intrusive in taste apart from being low on fat and sugar, they are considered to be healthier than cream biscuits. So it is very easy to position these as health biscuits, said Chittaranjan Dhar, divisional chief executive for foods at ITC.
However, healthy food isn't necessarily tasteless food. For example, in addition to relaunching the original Sunfeast Marie Light early this year, ITC has variants such as oats enriched and orange flavoured. Similarly, Britannia has launched Vita Marie Gold, targeted at women. Taste plays a big role. Throughout the day people want to have food that taste different. While morning is about eating a balanced diet, around 11 am people tend to eat a light biscuit like a Marie or Rusk and 4 pm is the indulgent moment where people like to have a cookie or cream biscuit, said Narasimhan. Britannia launched its brand of rusks in 2005.
Anand Ramanathan, associate director, KPMG in India says that while the health factor acts as an enabler, ultimately it is the taste of the product that wins over the customer. A typical Indian consumer wants a good experience in terms of taste, which can be then reinforced with the health factor. Also, variants are like micro-segments which help in building consumer loyalty, said Ramanathan.
To be sure, affordability has played a big role in increasing the popularity of tea biscuits amongst consumers. At a time when consumers are not too enthusiastic about spending on non-essential items, this category acts as an affordable option against the otherwise premium range of health biscuits such as Britannia's NutriChoice range of digestive biscuits. The tea biscuit is lighter on the stomach as well as on the pocket of the consumer thus making it an apt food item for snacking, said Pravin Kulkarni, general manager, marketing, Parle Products.
According to Bisen, consumers tend to be price sensitive during inflationary times. During such times, the idea is not to seek premiumness but differentiated value at the same price. Consumers do not like to experiment during difficult times and prefer to opt for products they are familiar with, such as tea biscuits which have been present in the country for decades, said Bisen.
In their attempt to push consumption of tea biscuits, manufacturers have come out with smaller pack sizes. The small packs priced at R5 are in huge demand. It drives trial of the products as consumers can easily buy the new product at a less price, and eat the entire pack without worrying about it getting soggy, said Narasimhan of Britannia Industries. For example, Britannia Marie Gold biscuit is available at different price points starting from R5 for 50 gm up to R120 for a 171 gm pouch. Similarly, a 60 gm pack of Sunfeast Marie Light is available for R5, while the 250 gm pack is available for R20. The launch of smaller pack sizes has helped in bringing a new set of consumers people belonging to the lower income groups, those who are mostly eating while commuting or are outside their homes and those who want to migrate from glucose biscuits to a healthier option. That is a segment that Parle Products is targeting with its newly launched Rusk which is priced at
R25 for a 200 gm pack. Rusk is a big category in India readily available in local bakeries across the country. Currently the market is largely dominated by unorganised players. Within the organised sector there is just a single national player (Britannia) monopolising the market and we see this as a big opportunity, said Shalin Desai, group product manager, Parle Products.
Brand consultant Harish Bijoor, CEO, Hairsh Bijoor Consults points out that smaller pack sizes come handy especially during inflationary times, driving volume of sales. Instead of buying one large pack a customer can buy several small packs of different biscuits. This way the consumer gets to eat a variety of biscuits at an affordable price, he said.
However ITCs Dhar points out that large packs too play their part. Large packets are mainly meant for family consumption and are bought by customers who have more than four family members as they like to stock up for the month. Generally, customers from the lower middle class tend to buy the large packets, he says.
Presentation also plays an important role, when it comes to making biscuits an integral part of the food basket. In addition to introduction of health components such as vitamins and minerals, the packs are now more colourful. The new youthful look has helped in breaking the perception that tea biscuits are consumed by the older members of a family. A more youthful look has been provided to the category by using light colours. Additionally, the packets also display the nutritional value provided by these biscuits. For example, the Sunfeast Marie Light Oats packet which is golden in colour, carries a picture of oats. The new packaging has helped in catching the attention of the youth, added Dhar.
The change in looks has also brought about a change in the style of conversation with consumers, as indicated by recent ads of Marie Light where a young mother is seen eating these biscuits. With a lot of young consumers drinking tea now, the category has dropped the old way of talking, where the focus was on the older members of the family. Tea biscuits are now positioned as healthy snacks which anybody can eat. Biscuit makers have also got rid of the seriousness attached to the category, as tea biscuits are promoted as food which can be enjoyed, said Bisen of Technopak.
The game of packaging in this case transcends beyond good looks as biscuit makers have been careful in including the functional benefits. The new packaging also promotes on-the-go consumption, especially the smaller pack sizes. Apart from this, thanks to new packaging these biscuits can be stored for later consumption, as a plastic tray is used inside which prevents them from breaking and getting soggy, said Ramanathan.
In fact, biscuit makers claim that the new contemporary look has helped in boosting sales of tea biscuits. A customer first interacts with the pack. She interacts with the product after she opens the pack. Therefore, packaging plays a decisive role in the life of these products. Also, there are times when a consumer buys a product, including a premium one, just because she liked the way the product has been packaged and this has happened with all of us. The new style of packaging has made it more popular amongst consumers, who no longer think that these biscuits are meant for patients, said Narasimhan.
Even as television continues to dominate advertising of tea biscuits, a large chunk of the advertising budget has now shifted to retail and modern trade. Kulkarni of Parle Products says at lot of attention is now paid to the way a product is displayed at a kirana store or a modern retail outlet. The idea is to make sure the customer notices Marie or Rusk even before the customer reaches the biscuit aisle. Therefore, the products or product standees are placed in a way that they are able to grab the customers attention the moment they enter a store, said Kulkarni.
According to Britannias Narasimhan, the company has tied up with about 15,000 retail outlets across the country which includes mom-and-pop shops to ensure visibility for its tea biscuit range. In addition, the company uses radio extensively as it helps in targeting women who are ultimately the decision makers when it comes to buying groceries.
Consumption of tea biscuits has been a regional phenomenon largely, with each region favouring a particular kind of tea biscuit. For example, Marie is the largest category in eastern India, accounting for almost 35% of the market by value, while Rusk is popular among consumers in the north. Biscuit makers are now taking these biscuits across the country. For example, Britannia which launched its Milk Rusk six years back claims to be aggressively marketing the biscuit in the southern and eastern markets. Parle Rusk, which was recently launched by Parle Products, too is available across the country. Distribution helps in creating demand of a product even before the launch of any campaign. We all have a tendency to try something new, especially in case of packaged food items, said Dhar.
Agrees Ramanathan who points out that urbanisation has lead to migration of people who are constantly looking for food that they are familiar with. Additionally, consumers also now look for more options and are more than ready to experiment today thanks to their increasing knowledge about food. This change in lifestyle has lead to biscuit makers expanding the market for tea biscuits, he adds. It is the urban and semi urban cities that account for more than 50% of the sales of tea biscuits. In villages, tea drinking either is a community act or is accompanied by a big snack, therefore the scope of growth of the tea biscuit category is very limited. Consumption of tea biscuits is actually on the rise in semi-urban towns where families are changing their lifestyles as incomes go up. Industrial cities such as Muzaffarpur in Bihar, Nadian in Gujarat and Sona in Haryana are some of the big markets for tea biscuits, says Bisen.
Dar of ITC believes that the tea biscuit category will continue to grow steadily for another seven to eight years before it hits a deadend. The category will be then merge with the health biscuits category. As the genre is similar there is little demarcation between tea and health biscuits apart from pricing. In the future biscuit makers will bring both the categories under one roof, after which the health biscuit category which includes digestive will grow at a faster rate of about 18,000-20,000 tonne a month, said Dar.