Britannia Industries‘ vice-chairman, MD & CEO Varun Berry was candid enough to admit last week that the company had many “battles to fight in smaller territories” as regional competition was on the rise.
This would include being aggressive with pricing, increasing distributor margins, and launching local biscuit flavours in response to small brands operating in northern and eastern states.
“We are doing specific analysis on each of these competitors. If there is a need to be competitive in certain territories, we will make sure that we do it. We are ready with a war chest to compete against these players at multiple levels,” he said.
Berry’s broadside comes as small and regional brands such as Jaya Biscuits in the east, Priyagold, Anmol and Mario Biscuits in the north improve household penetration.
Regional challengers gain ground
So goes the case with Gippi Noodles from Balaji Wafers, which has grabbed over 60% market share in Gujarat in two years on the back of affordable pricing (Gippi’s pack of 4, for instance, available for Rs 45 to Maggi’s Rs 60 for pack of 4) and regional flavours, according to trade channels.
Nestle India’s former chairman and MD Suresh Narayanan recently acknowledged that small brands could no longer be ignored. They offered variety to consumers in small catchments and were easy on the pocket.
“The strategy will be to premiumise at the upper end where Gen Z and millennials are ditching loyalties for new-age brands. At the lower end, large players will have to think small,” he said.
One such new-age brand that younger consumers are going after is Zoff Foods, which is into spices and competes with Nestle’s Maggi masala portfolio. Co-founder Akash Agrawal said that the startup is set to touch Rs 200 crore by FY26-end in four years, thanks to the rise of quick commerce.
“It is unimaginable how small and new brands have grown over the last few years due to quick commerce. We began in 2018 as an offline brand. We pivoted in 2021 to an online brand following the Covid-19 pandemic. Since then the response has been phenomenal. We now find offline retailers open to stocking our products without a hitch,” he said.
In biscuits, for instance, conversations with industry executives, retailers and distributors reveal that brands such as Jaya Biscuits have seen penetration grow by around 20% in the last one year in the east on the back of an aggressive push of its Rs 10 packs into local stores.
On the other hand, Priyagold, Anmol and Mario Biscuits have pushed household penetration by about 15-16% in the last one year in the north, riding affordable packs, higher grammage and buy one get one offers, trade sources said.
How big FMCG firms are fighting back
Yet, large players are not giving up yet. Firms such as Hindustan Unilever (HUL) have turned to producing in small batches with seven nano factories, which manufacture more than 500 products across categories, boosting direct distribution to ensure shelf space in the face of local competition at stores. The company has been rolling out more access packs across brands (such as a Rin Liquid at Rs 99 or Rs 2 satchets of Bru Coffee) to take on small and regional players.
With direct-to-consumer (D2C) brands, the strategy has been to acquire some of these labels as companies from Marico to HUL, ITC to Emami have demonstrated over the last few years. Saugata Gupta, MD & CEO, Marico said that the strategy for large players will be to balance premiumisation, acquisitions and distribution expansion to stay ahead in a rapidly evolving FMCG market.
Marico has already put this strategy in place with a digital-first portfolio led by acquisitions of D2C brands such as Beardo (male grooming), Plix (plant-based nutrition) and True Elements (food brand). While Project Setu, introduced in FY25, is aimed at growing direct distribution by 50% in two years.
“The FMCG market does not consist of large, listed players alone. You have unlisted players, including D2C brands, unlisted MNCs and regional or local brands, whose performance may not be getting accurately captured by a retail audit. While commentary by unlisted players suggests a better performance, large players post Covid-19 have brought significant changes in every function,” he said.