Pantomath’s Bharat Value Fund (BVF) on Friday said it had picked up a minority stake in Kolkata-based Haldiram Bhujiawala, which sells ethnic snacks and sweets under the Prabhuji brand and is operated by a branch of the family that owns the Haldiram’s brand nationally. Haldiram’s itself was in talks to acquire a majority stake in rival Prataap Snacks in January.
Another ethnic snack maker, Bikaji Foods, which is on the radar of a clutch of food brands and strategic investors, says it is on the prowl itself. About a year back, Bikaji bought stakes in Bhujialalji and Ariba Foods.
Multinationals such as PepsiCo have in the past evinced interest in buying out Balaji Wafers. The Rajkot-based snack maker crossed the annual sales mark of Rs 5,000 crore in the fiscal year ending March 2023.
India’s booming `42,700-crore (FY24) snack food market has become the cynosure of many eyes — from local start-ups to food giants that are rustling up healthy options for the new-age customer. While larger players are banking on wide distribution and top-of-mind recall, newer brands are experimenting with hyper-local flavours and personalisation to carve out a space in the market.
Haldiram’s, Balaji and Bikaji collectively contribute about 70% to the branded snack food segment. Their biggest asset: deep penetration and the ability to adapt to changing tastes and preferences.
Take Haldiram Bhujiawala, which has about 2,000 distributors servicing over 2 lakh retailers nationwide. That apart, it operates 19 retail outlets and 60 franchise stores, which give it significant consumer reach. It has three manufacturing units with a total production capacity of 6,035 metric tonnes per annum. West Bengal, Bihar, Jharkhand and the North-Eastern region are its biggest markets. The company plans to use the new funds to expand its manufacturing capacity and foray into markets outside its stronghold.
For Bikaji Foods International, product diversification and quality are the key focus areas. Rishabh Jain, CFO, Bikaji Foods International, says innovative packaging (such as zip pouch packs, and tin lid-cans that enable on-the-go consumption and storage) and easy availability have helped the brand reach consumers in tier-2 and tier-3 cities, and maintain an edge over smaller brands.
Traditional channels like kirana stores and pan shops account for the bulk of the sales, with the `5 price point being a popular choice for a significant segment of ethnic snack consumers, even in larger cities.
So what will it take for home-grown snack food brands to keep up the growth momentum?
Recipe for growth
There is no one-size-fits-all formula to expand presence because this is one market where regional preferences prevail, says Mayank Rastogi, markets leader, strategy and transactions practice, EY India. That essentially means the market is fragmented, with smaller brands steadfastly focused on regional tastes. According to recent estimates, regional and niche brands now represent around 30% of the organised snack market, which translates to approximately `13,000 crore.
Take states like Maharashtra and Gujarat, where bhakarwadi is a local favourite, and smaller local brands such as Chitale Bandhu Mithaiwale have that segment firmly under their belt. Or West Bengal where Bapi and Mukharochak are the go-to chanachur brands.
These brands have the advantage of agility, allowing them to cater to changing local tastes without much hassle. Salloni Ghodawat, director, Ghodawat Consumer Ltd, says smaller brands have the advantage of being quick on the foot and can react to changing consumer demands in no time. They have done a good job of aligning with local festivals and events to stay top of mind.
The other trend these large snack food brands must adapt to if they are serious about growth is the shift to healthy options. Conscious snacking that strikes a balance between health and taste is the No 1 priority for younger consumers, say analysts. In 2023, supermarkets and hypermarkets accounted for more than 40% of the healthy snack distribution.
Many national food companies have begun responding to this trend by introducing snacks with ingredients like ragi, while offering baked options instead of fried. With a gentle push from the government, says Naveen Malpani, partner, Grant Thornton Bharat, millets have also gained popularity among snack food makers and consumers. Brands such as Farmley and Soulfull (Tata Consumer Products acquired the Soulfull brand in February 2021) are already among the most popular in this niche.
The ethnic snacks leaders acknowledge this shift but remain optimistic. They are adapting to the trend by exploring “light” varieties, without straying from their core flavour profile.
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