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Demand for bakery on the rise due to low price and high nutrient value
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Manish Malhotra and Vaibhav Verma
December 30 , 2014
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Traditionally, Indian kitchen does not consist of a baking oven as a standard.
Till
recently this has been the case in most Indian households even in
modern kitchens in urban areas. As a result, the bakery section in the
grandiose Indian cuisine solely consists of baking techniques which do
not require baking ovens and use only unleavened flat breads which are
baked over direct fire.
'Baking', as the term is used in European
and Western countries, is not part of the cooking knowledge of the
average Indian individual and was always the exclusive knowledge of few
professional bakers in the community. And even these, so to call “Indian
bakeries,” are until present days more of a sweet shop that mainly
serve traditional Indian delights.
In conclusion, Indians are not
familiar with the habit of baking at home, in fact, the basic assumption
is that a piece of cake, a small pastry, a loaf of bread or a special
cake for any celebrated occasion are purchased items only and are never
home made.
Demand rising
With the quick food culture catching
up, demand for bakery products has increased tremendously. The bakery
industry or for that matter all the businesses catering to bakery are
witnessing a sort of revolution. With the quick food culture catching up
(indicated by the growth of fast food outlets and cafeterias in the
country), the demand for bakery products has increased tremendously.
Gone are the days of small artisan bakeries. In an age where malls,
hypermarkets and supermarkets have become the customer's preferred
destination, the concept of chain bakeries has come into its own. Bakery
industry in India today has an important place in the industrial map of
the country. Bakery products are an item of mass consumption in view of
its low price and high nutrient value. With rapid growth and changing
eating habits of people, bakery products have gained popularity among
masses. The sector, typically, constitutes cakes, breads and biscuits.
The
bakery industry has achieved third position in generating revenue in
the processed food sector. The market size for the industry is pegged at
US$4.7 billion in 2010 and is expected to reach US$7.6 billion by 2015.
The shining star of the sector remains the biscuits industry, which is
expected to outperform the growth of the sector overall. The sustained
economic growth in the country has led to increased disposable incomes
among Indian consumers. Urban dwellers are becoming increasingly
health-conscious and are demanding healthier options. Along with this
consumers are also willing to spend more and experiment. As more women
join the workforce, convenience and time have become major factors among
urban households. Consumers are increasingly relying on snacks and
baked goods as substitutes to traditional breakfast.
Quick breakfast option
With
the launch of a series of cookies and sandwich biscuits offerings,
biscuits are now being viewed as a quick breakfast option among women
and children. This has helped drive sales of biscuits, especially
cookies and sandwich biscuits, over 2013. The biscuits category is
dominated by Britannia Industries, Parle Products and ITC, which
together are set to hold a combined retail value share of 80% in 2013.
These are well established domestic players and have strong distribution
networks across the country, including rural areas. The biscuits
category is expected to grow by a CAGR of 10% in constant value terms
over the forecast period. Sustained economic growth has led to an
increase in disposable incomes among Indian consumers. Indian consumers
are now willing to spend more and indulge themselves. As a result, there
has been a shift in eating habits with consumers willing to experiment.
Consumers are moving towards premium biscuits offerings and are
increasing their consumption of cookies and sandwich biscuits. This
trend is expected to continue over the forecast period. Premium biscuit
offerings, such as cookies and sandwich biscuits, are expected to
witness strong growth over the forecast period. Manufacturers are also
likely to launch a number of premium biscuits over the forecast period
in order to tap into this demand.
The per capita consumption of
bakery products in India, as it stands today, is one to two kg per
annum, which is comparatively lower than the advanced countries where
consumption is between 10 to 50 kg per annum. The growth rate of bakery
products has been tremendous in both urban and rural areas. The sector
has indicated promising growth prospects and has been making rapid
progress.
The bread market
The bread market has a business
volume of 1.5 million tonne. The bread industry has a production of
approximately 27 lakh tonne. This segment is characterised by high level
of fragmentation, and high margin. The major factors for growth in this
segment are Brand loyalty; Volumes; and Strong distribution networks.
?The
major challenge faced by the organised bread sector at present is low
margins of profit. Hike in the prices of major raw materials like sugar,
vegetable oil, milk, and wheat flour has been accounted for the
industry's low margins of profit.
Major players
The major players in the bread industry that hold about 90% of the market share are Britannia and Modern Industries Ltd.
The biscuits market
The
biscuits market has a total production volume of 1.1 million tonne. The
growth drivers for the biscuits industry are focussed advertising,
urban market, and new launches.
Major players
The major players in the biscuits segment are Britannia; Parle; Bakeman; ITC Foods Ltd; Surya Food and Agro Pvt. Ltd; and HLL.
Major brands
The major brands of biscuits are Britannia; Parle; Bakeman; Priya Gold; Elite; Cremica; Dukes; Anupam; and Horlicks.
The
sector faces challenges in the form of raw material fluctuations, high
taxation as well as its unorganised nature. Industry’s raw materials
being agricultural in nature are exposed to seasonal fluctuations in
terms of availability and price movements. Rising competition in the
sector due to low capital requirements and high growth rate of the
sector is another impediment faced by the industry. However even after
such challenges, the industry has opportunities galore. Low consumption
of bakery products in the industry and spurt in the organised retail in
the country are some of the biggest opportunities for the bakery
players. Rising incomes as well as emergence of new middle-class segment
will also be key factors in the growth of the industry. The Indian
bakery segment is already in a favourable position with high rural
penetration of its products which will help it tap the Indian rural
consumption boom.
Cafe culture - Strong trend
The
coffee café culture across urban India has gained momentum over the last
decade. It is a trend that is fast traversing from being vogue to being
mainstream, across urban India. These sleek coffee café retail outlets
are serving as ideal settings for romantic rendezvous, animated
discussions and calculated business parleys for the new-age upwardly
mobile India, along with hot or cool beverages and sumptuous snacking
options. These hangout zones of today and most probably of tomorrow are
offering innovative range of coffee concoctions along with an impressive
array of appetising snacking options, which the Indians attuned to
globalised tastes, are savouring.
These days, many of the young
and even the not so young crowd in the sleek coffee cafes are seen
sipping Americano, Mocha, Cappuccino and many other exotic styles of
coffee, which not so long ago were foreign to the then comparatively
conservative tastes of India.
The future for the coffee café
retail chains in India seems full of aroma of profits. The burgeoning
retail coffee market has lately experienced the entrance of many foreign
players to capture a market share, which has strengthened the aroma of
competition that in turn is expected to waft across in the days, months
and years ahead in the form of more evolved consumer preferences.
And
these sleek coffee café outlets, which have also doubled or are fast
doubling up as restaurants serving breakfast, lunch and dinner options,
are serving a host of bakery products along with myriad varieties of
coffees. Therefore, it is evident that the growth of the café retail
chains can in turn give a better future for the Indian bakery industry.
(The authors are assistant professors, Banarsidas Chandiwala Institute of Hotel Management and Catering Technology)
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