Introduction:

The biscuits industry in India is the largest among all the food industries and has a turnover of
around `8000 crores. India is known to be the second largest manufacturer of biscuits, the first
being USA.

It is classified under two sectors:

1. Organized, 70% market share

2. Unorganized, 30%market share

About 90% of Indians buy and eat biscuits. Bread and biscuits are the major part of the bakery
industry and covers around 80 percent of the total bakery products in India. Biscuits stand at a
higher value and production level than bread. This belongs to the unorganized sector of the
bakery Industry and covers over 70% of the total production.

India is ranked 3rd after US and China amongst the global biscuits producers.
The export of biscuits is approximately 17% of the annual production, the export of sweet
biscuits for year 2007-08 was Rs 145.93 Cr and for year 2008-09(April-Dec) was Rs 280 Cr, the
major exporting regions were Haiti, Angola, USA, Ghana, UAE.

The imports are not significant amount as compared to the total consumption. The penetration
of biscuits in urban and rural market is 85% and 55% respectively. The Biscuit industry employs
almost 3.5 lakh people directly and 30 lakh people indirectly.

Apart from the 3 major companies, Britannia, Parle & ITC, there are around 150 medium to
small biscuit factory in India today.

The Industry is now facing problems from increase in raw material prices. With the
Government’s introduction of VAT at 12.5%, margins have had pressure. At the same time,
biscuit consumption per capita in India has grown to 2.1kg per capita in comparison to 10kg per
capita consumption in USA ,UK and Europe.
Size of the market:

In India, states that have the larger intake of biscuits are:

Maharashtra,

West Bengal,

Andhra Pradesh,

Karnataka,

Uttar Pradesh.

Maharashtra and West Bengal, the most industrially developed states, hold the maximum
amount of consumption of biscuits.

Even, the rural sector consumes around 55 percent of the biscuits in the bakery products. The
total production of bakery products have risen from 5.19 lakh tonnes in 1975 to 18.95 lakh tones
in 1990. Biscuits contributes to over 33 percent of the total production of bakery and above 79
percent of the biscuits are manufactured by the small scale sector of bakery industry comprising
both factory and non-factory units.

The production capacity of wafer biscuits is 60 MT and the cost is Rs.56,78,400 with a motive
power of 25 K.W. Indian biscuit industry has occupied around 55-60 percent of the entire bakery
production. Few years back, large scale bakery manufacturers like cadbury, nestle, and brooke
bond tried to trade in the biscuit industry but couldn't hit the market because of the local
companies that produced only biscuits.

The Federation of Biscuit Manufacturers of India (FBMI) has confirmed a bright future of India
Biscuits Industry. According to FBMI, a steady growth of 15 percent per annum in the next 10
years will be achieved by the biscuit industry of India. Besides, the export of biscuits will also
surpass the target and hit the global market successfully
Market Players:

The BIG 4’s of the biscuit industry in India are Britannia, Parle, Priya Gold & ITC. Besides
these, there are around 150 medium to small biscuit factory in India today.

The major players in the biscuit segment are:

 Britannia
 Parle
 Priya Gold
 ITC Foods Ltd.
 Surya Food and Agro Pvt. Ltd.
 HLL

The major brands of biscuit are:

 Britannia
 Parle
 Bakeman
 Priya Gold
 Elite
 Cremica
 Dukes
 Anupam
 Horlicks
 Monginis
 Dukes
 Harvest Gold
 Modern

Besides these, foreign players like United Biscuits and McVities have also entered the Indian
market. However, these players have concentrated themselves in the super-premium and
premium segments.
Major Players:

Parle, Britannia ITC and Priya Gold are the 4 major players in the segment.

Their market share can be understood by the following stats.

Market Players % Market Share

Parle 30

Britannia 38

Priya Gold 15

ITC 11

Rest of the Players 6

% Market Share
Rest of the Players
6%
ITC
11% Parle
30%

Priya Gold
15%

Britannia
38%
Statistic on the Biscuit Industry:
1. Annual Growth:

The biscuit industry in India witnessed annual growth as below:-

2003-04 - 15%
2004-05 - 14%
2005-06 - 14%
2006-07 - 13%
2007-08 - 15%
2008-09 - 17%

While the growth rate has been stagnating during last 4 years, it has picked up momentum
during the 2007-08 and the first quarter of 2008-09 mainly on account of exemption from Central
Excise Duty on biscuits with MRP up to Rs.100/per kg, as per Union Budget for 2007-08.
Indian Biscuit Manufacturers’ Association (IBMA), instrumental in obtaining the excise duty
exemption, estimates annual growth of around 20% in the year 2008-09. Growth in biscuit
marketing has been achieved also due to improvement in rural market penetration.

2. Annual Production:

The organized biscuit manufacturing industry‘s annual production figures are given
below:
(In Lakh Metric Tonnes)
2003-04 - 11.00
2004-05 - 12.54
2005-06 - 14.29
2006-07 - 16.14
2007-08 - 17.14
Segments : The organized and unorganized sectors of the biscuit industry is in the proportion
Of 60%:40% ratio.
EXPORTS of Biscuit are estimated to be around 15% of the annual production during the year
2007-08.
IMPORTS of biscuits into India has not shown any significant growth during the last two years
and has not affected production/sales by the Indian Biscuit industry .
3. Rural-urban penetration of Biscuit:

Urban Market: 75% to 85%

Rural Market: 50% to 65%
Marketing : Wholesale and Retail marketing in the Biscuit industry is carried out with a network
of C & F Agencies (for States and specific Districts), Dealers / Wholesalers and Retail shops.
HIKE IN COST OF PRDUCTION : Biscuit Industry especially the Small & Medium Sector,
consisting of around 150 units are facing erosion in their profitability and competitive capability,
due to :-
a) Steep hike in cost of production on account of increase in prices of major raw materials, i.e.
Wheat Flour Veg. Oil, Sugar, Milk, Packaging Materials, Fuel. Wages,etc.Recent increase in
prices of Petrol/Diesel in May 2008 has further resulted n cost push.
Detailed Comparative Chart showing adverse impact on Biscuit Industry is given below:

4. HIKE IN PRICES OF RAW MATERIALS

S.NO Raw Martial Jan 099 May 09

1 Maida 12.23 12.00
2 Sugar 15.09 16.00
3 Parmoline Oil 52.99 57.00
4 S.M.P 122.00 127.00
5 Butter 118.94 130.00
6 Laminate 200.00 230.00
7 F.O 26.63 35.00
8 HM Bag 91.92 105.00
Carbon Box Per
9 25.00 28.00
Kg

 The above rates are excluding VAT & other Taxes as well as
 Cost escalation is due to increased prices
 Laminate, hike in prices of Petrol/ Diesel, Revision of wages has also contributed.

5. Pattern of Biscuit Consumption (On Zonal basis) in the country are as below:
Northern Zone - 25%
Western Zone - 23%
Southern Zone - 24%
East and North
East Zone - 28%
(Including N.East)
The per capital consumption as well as pattern of consumption in the four regions, as shown
above, will also increase considerably, in case the industry’s plea for reduction in the rate of
Value Added Tax (VAT) from 12.5% to 4% is acceded to

Main Categories of Biscuits are broadly as under:

Glucose, Marie. Sweet, Cream, & Milk

Popular Brands of Biscuits in the country are, Britannia, Parle, Priyagold, Anmol, Sunfeast,
Biskfarm, Dukes, Cremica, Priya, Veeramani, Bonn, Bhagwati, Raja,
Champion,Sobisco,Madhabi, Nezone, Windsor, Cookieman Ankit, Shangrila, Nalanda, etc

Reference: http://www.ibmabiscuits.in

MAJOR PLAYERS:
BRITANIA INDUSTRIES LIMITED
Positioning & Market Share:
Britannia Industries Limited is an Indian company based in Kolkata that is famous for its
Britannia and Tiger brands of biscuit, which are highly recognized throughout the country.
Britannia is one of India’s leading biscuit firms, with an estimated 38% market share. It is the
leader in all biscuit categories except glucose, where Parle has an edge

The company is operational since 1895. In 1992, it celebrated its Platinum Jubilee. In 1997, the
company unveiled its new corporate identity - "Eat Healthy, Think Better" - and made its first
foray into the dairy products market. Britannia strode into the 21st Century as one of India's
biggest brands and the pre- eminent food brand of the country. It was equally recognized for its
innovative approach to products and marketing. It is the leader in all biscuit categories except
glucose, where Parle has an edge.

Britannia started looking beyond "the physical entity of a biscuit" to explore ways to deliver "the
goodness of a biscuit in a more interesting and fun way." It felt it was time the biscuit shed its
boring image while retaining its core of "energy and health." "As consumerism rose, people
wanted new things, brands and experiences.

Main biscuits produced by Britannia industries are:

Good Day, Tiger, Marie Gold, 50- 50, Choco - Chips, Choco - nuts, Little Hearts ,Nutri Choice,
Bourbon, Nice Time, Pure Magic, Milk Bikis, Jim -Jam, Cream Treats, Time Pass, Digestive,
etc.

Strengths:
 Britannia is currently the market leader in the organized biscuit industry.
 Well defined and appealing advertisements highlighting the core value of “energy and
health”.
  They have 6 power brands which contribute towards 80% of their sales.
 Well diversified portfolio of biscuits and innovative concepts of smaller size packets.
 Only biscuit company to have removed trans-fat from all its recipes, catering to a market
with sensitive needs.

Weaknesses:
 Increase in input costs in putting pressure on the prices.
 Stiffer competition from other players in the segment.

PARLE PRODUCTS:
Positioning & Market Share:
Parle Products is an Indian biscuit company which is based primarily in Mumbai and Bangalore
famous for its Parle G Glucose biscuits. Parle, today is one of India’s leading biscuit firms, with
an estimated 30% market share.

Parle Products, set up in 1929 has been India's largest manufacturer of biscuits and
confectionery, for almost 80 years. Makers of the world's largest selling biscuit, Parle-G, and a
host of other very popular brands, the Parle name symbolizes quality, nutrition and great taste.
With a reach spanning even the remotest villages of India , the company has definitely come a
very long way since its inception

Parle Products has the most extensive bicuit portfolio in the country today. Parle biscuits cater
to all tastes from kids to senior citizens. Tea-time biscuits form a bulk of their product line. They
have the largest number manufacturing units, 14 in India and have an annual turnover of around
2000 crore.

Main biscuits produced by Parle Products are:

Parle G, Krackjack, Hide N Seek, Hide N Seek Milano, Monaco, Magix, Milk- Shakti, Parle
Marie, Milk Shakti, Digestive Marie, Pale 20-20 Cookies, Hide N Seek Bourbon, etc.

Strengths:
 Brand image, one of the oldest in the country
 Well diversified product range.
 Extensive distribution system.
 Low and mid range prices catering to all segments of consumers.
Weaknesses:
 Overdependence on Parle G brand.
 They have to rely more on retailers ad grocery stores to showcase their diversified
product range rather than on individual advertisement of individual products.
 Declining market share
 Stiff competition by other players.

PRIYAGOLD:
Positioning & Market Share:
PriyaGold is a biscuit brand of Surya Food & Agro Ltd. It is an Indian biscuit company which is
based primarily in Greater Noida. PriyaGold, today is one of India’s leading biscuit firms, with an
estimated 15% market share. Surya Food & Agro Ltd. was incorporated in November 1992 and
commenced its commercial operations of manufacturing & selling of biscuits under brand
“Priyagold” in October 1 1993.
Strong brand building and distribution capabilities have enabled PriyaGold to command a
sizable market share in the biscuit market despite competition from well-established players in
the industry.
PriyaGold is positioned in a higher segment in the market where is primarily caters to the mid
and high end consumer offering premium biscuit product range and a large variety of cream
biscuits.

Main biscuits produced by PriyaGold are:

Butter Bit, Classic Cream, Kids Cream Bourbon, Big Boss, Marie Lite, Marie Gold, CNC,
Cheese Cashew Bik, Coconut Crunch etc.

Strengths:
 Glamorous and effective advertising.
 Extensive and varied portfolio of premium biscuits.
 Quality assurance.
 Big budget and willingness to invest in long term phases.
Weaknesses:
 Lacking to cater to the low-income segment.
 Inability to retain target consumers.
 Expensive product range.
 Competition from other biscuit players in the market.

COMPANIES LISTED ON THE STOCK EXCHANGE:

The stock performance of Britannia on the NSE for the last one year was as follows

Britannia Stock Performance on NSE

180
160
140
120
100
Closing Price
80
60
40
20
0
9 09 9 9 0 0 0 10 10
l-0 g- ct-0 c-0 n-
1
ar
-1
ay
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Ju A u O De Ja M M Ju A u

The stock performance of ITC on the NSE for the last one year was as follows

ITC Stock Performance on NSE

180
160
140
120
100
Closing Price
80
60
40
20
0
9 09 9 9 0 0 0 10 10
l-0 g- ct-0 c-0 n-
1
ar
-1
ay
-1 n- g-
Ju A u O De Ja M M Ju A u

Current Trends:
Biscuits contribute Rs 8,000 crore to the FMCG industry and provide a vast opportunity for
growth, as the per capita consumption of biscuits is less than 2.1 kg in our country, as
compared to more than 10 kg in the US, UK and Europe and above 4.25 kg in South East Asian
countries. Higher disposable incomes and the willingness of consumers to try new brands have
attracted a number of players to the biscuits industry, both, at the national & local level and
generated intense activity in the marketplace. The branded market grew around 15-16 per cent
last year. Commodity inflation continues to have a significant impact on input cost and this
inflationary pressure has put industry profits under pressure. Today, there is a greater consumer
choice both at the local and national level, together with a diversity of tastes & benefits ranging
from health & nutrition to pure indulgence.

However, most players are facing extremely high and unprecedented cost scenario and some
irrational competition too. The result is a huge pricing pressure with limitations on price hikes for
the entire industry and a shrinking profit pool of the industry. Wheat and oil prices are already
showing an increase of more than 20 per cent. In addition, the steep increase in crude oil prices
and hike in petrol & diesel prices announced by the government have led to a significant
increase in the price of packaging materials, freight and also production costs.