Britannia plans second foray into India’s salty snacks sector to take on PepsiCo

By Gill Hyslop contact

- Last updated on GMT

Changing consumer preferences is boosting the trajectory of the Indian snacks market. Pic: ©GettyImages/Indapicture
Changing consumer preferences is boosting the trajectory of the Indian snacks market. Pic: ©GettyImages/Indapicture

Related tags: Britannia Industries, India, Biscuits, Haldiram's

India’s biggest biscuit maker is making a move to capture a share of the Rs 24,000 crore ($337m) salty snacks market dominated by PepsiCo and Haldiram’s.

According to Varun Berry, MD of Britannia Industries, the company will launch a range of salty snacks under its Time Pass brand next month as part of its strategy to expand into non-biscuit segments.

The Kolkata-headquartered company had tentatively dipped a toe into the snacks category back in 2000, but exited after a few months.

“This time, the outlook in the segment, our capabilities and the product characteristics are completely different,”​ said Berry.

“It will be a differentiated product range and we will leverage on the fact that we have about 80 factories making our products. In [the] snacking segment, transportation is the biggest cost but, with our manufacturing footprint, our costs will remain tight and efficient.”

Snacks versus biscuits

Britannia selection

The 100-year-old company has traditionally earned a majority of its revenue through the sale of biscuits, but since Berry’s ascension to MD in April 2014, the focus has been on introducing new products and categories as India’s Rs 50,000 crore ($703m) biscuit market is predicted to slow down given changing consumer preferences.

On the other hand, snacking is a significant market with terrific long-term predictions.

According to the UK India Business Council, the sector was valued at £1.7bn ($2.23bn) in 2017 and will grow at a CAGR of 31% to reach £3.7bn ($4.87bn) by 2020, growing at a CAGR of 31%.

The growth is being driven by rising urbanization and increasing per capita income, busier lifestyles and a morphing food culture.

The Indian consumer – like those worldwide – is opting for convenient, smaller snacks throughout the day as opposed to the traditional ‘three square meals’.

Aggressive promotional campaigns by leading snack manufacturers in India, novel offerings and a fast expanding retail network that is penetrating the rural parts of the country have also contributed to the boost in India’s snack industry.

Disrupting the sector

The re-entry of Britannia is anticipated to agitate the salty snacks sector dominated by major players PepsiCo and Haldiram’s, along with a plethora of traditional producers, including Prataap snacks, Bikaji foods, Bikanervala Foods and DFM Foods, that are snapping out lower priced products tailored to appeal to specific sectors of the country.

India has 29 states, each with a different preference for snacks.

However, Berry is not intimidated by the likes of PepsiCo, having worked for PepsiCo India since 1993 to 2014; the final five years as CEO.

His track record also shows a certain swashbuckling je ne sais quoi,​ having taking on Britannia when the consumer market was slowing. The company had a portfolio of mostly premium products even though many consumers were cutting back on discretionary items.

Since then, Berry has more than doubled the company’s distribution reach, especially in the Hindi heartland where it was traditionally weaker, with the result that the company now directly reaches more than two million outlets.

According to an Edelweiss Financial Services report, Britannia’s volume growth has been the best in the industry.

‘The company’s journey towards becoming a total foods company is gaining flavor with entry into new categories and geographies and rising share of premium products that will keep the company in good stead,’ it said.

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