36 |^ Progressive Grocer^ |^ Ahead of What’s Next^ |^ July 2019
Category Watch Snacks
f Increasing demand for regional snacks leading
to the rise of regional brands: Th e market has
witnessed strong performance from regional
brands such as Haldiram and Balaji Wafers.
Capitalising on the high consumption of
traditional snacks or local fl avoured snacks,
these companies have been able to gain
signifi cant market share from western snack
manufacturers, such as Pepsi.
f Th e slower growth rate of Pepsi, in comparison
to the regional manufacturers, signifi es the shift
in consumer preferences towards packaged
traditional snacks.
f Owing to a hectic lifestyle, the preparation of
traditional snacks at home is also declining.
However, the availability of snacks on-the-go
and in packaged form is able to satiate this
desire and demand of Indian consumers, who
are famous for their taste buds.
f Receding impact of GST: Th e implementation
of GST created considerable uncertainty in
the market, primarily aff ecting the category
growth in 2017. However, the market has
stabilized and is forecasted to chart double digit
growth in 2018 and beyond. Tax rates havenow been simplifi ed, which has improved their
margins. Th ese improved margins mean that
manufacturers can pass on the benefi ts to the
consumers, either by lowering the retail prices
or by increasing the volume of snack in the
package, without changing the price point.
f A high demand for snacks with local taste and
fl avors, coupled with a spike in the consumption
of traditional snacks, especially during festivals,
are the other growth drivers for this category.
However, the value growth rate was 14% in
2018, touching INR 335 billion by the end of
the year.
Another industry report says that the overall
market for namkeen and snacks in India is of
about INR one lakh crore. Being a most vibrant
industry, it has seen an unprecedented growth in the
recent past and continues to expand rapidly. Indian
consumers seem to have recovered their taste for
traditional snacks such as sev, bhujia and namkeen/
mixtures, which are contributing to the impressive
growth rate of the fi rms. About 30% coverage
of this market is in the hands of organized trade
players dominated by Haldiram’s, Pepsico, Balaji
(wafers & namkeens), ITC (Bingo), Prataap Snacks
(Yellow Diamond), Bikanervala (Bikano), DFM
Foods (CRAX), among others.
With the entry of major players like PepsiCo,
ITC, and Balaji Wafers in the snacks category,
salty snacks have grown tremendously over the past
decade. Th e introduction of brands such as Lay’s,
Uncle Chipps, Bingo! and Balaji within potato
chips and brands such as Kurkure, Cheetos, and
Bingo! within puff ed snacks have proved to be a
huge hit among consumers. According to market
researcher Euromonitor International, salty snacks
is the largest selling snack product in terms of retail
value sales with a contribution of 55%-58% of total
value sales within snacks in India. It is also the
largest in terms of volume share.
“Th e size of the Indian snack market is Rs.
28,000 crore currently and it has been growing at
a CAGR of 15% over the past few years. Western
snacks comprising mainly of extrudes and bridges
are a Rs. 16,000 crore segment as of now. We
expect to maintain or accelerate this growth going
forward, given the speed of the movement to the
organized market, supported by healthier consumer
choices and regulatory changes like GST, etc,” says
Shaswat Goenka, Sector Head - Spencer’s Retail
Ltd, RP Sanjiv Goenka Group, adding that the
number of healthy snack options available in the
market today have multiplied tremendously. “Th is
trend is further infl uenced by the high visibility
and success in sports, fi tness and proliferation of
health centres and gyms, communication around
health measurement and monitoring devices, as well
as by relevant and strong messages from leaders,
sportspeople, health experts and celebrities.”The two most
important
factors that will
drive the growth
of the snack
category are a
commitment to
healthier choices
and diversity in
offerings that
appeal to niche
consumers (i.e.
organic, gluten-
free, etc.).