Premium promise: Indian bread market to hit $0.81bn by 2020

26-May-2015 - Last updated on 27-May-2015 at 10:11 GMT

Sliced white represents 76% of India's bread market but premium brown variants appeal to urban, affluent consumers, says ValueNotes

Sliced white bread remains king in India but there is huge promise in premium as consumers become more experimental and health conscious, says a ValueNotes analyst.

India’s bread market has grown at a CAGR of 9% over the past three years; valued at $0.51bn in 2015, according to market research firm ValueNotes. And the market will grow further to $0.82bn by 2020.

Sujay Waghmare, research analyst at Value Notes, said growth was being driven by an increase in disposable incomes and changes in lifestyle and preferences.

“Bread consumption has increased because of its ready-to-eat, time saving attribute. A significant consumer base for bread includes the young and working population and nuclear families because of their preference for convenience foods over traditional cooked meals,” he told BakeryandSnacks.com.

Premium promise

Waghmare said sliced white read still dominated the market – representing a 76% market share – but it was the premium segment like brown, fruit and nutritional breads that held growth promise.

“Affluent consumers are willing to experiment beyond plain bread with products such as croissants, sourdough and pizza bases. The premium bread segment is likely to grow stronger as people are increasingly becoming health conscious and tend to prefer foods high in nutritional value.”

He said this was increasingly the case in urban areas of India where several trends were emerging to target this consumer base.

“Bakeries and small manufacturers have taken to e-commerce sites to supplement their sales and marketing efforts in metro cities,” he said.

In addition, he said international and domestic companies like Bon Pain and Theobrama had launched café-style bakeries in urban areas – “bakeries are fast becoming popular places to hang out”.

International v domestic

However, for local bread players, Waghmare said the fast-growing rural market held promise as it remained “fairly untapped” and international companies could look into premium development in urban areas.

“International brands will need to have a strong distribution network which requires a substantial investment. As a start, these brands can focus on the premium segment which offers high margins and is still in a nascent stage with only a few players. This will minimize their potential target area to metros and tier I cities where it is easy to market and distribute the product,” he said.