Buiscuit Industry In India

Topics: Marketing, Biscuits, Manufacturing Pages: 6 (2291 words) Published: October 21, 2014

Biscuit Industry in India
Overview
Biscuits have been a favorite in our snacks menu. They fall in the category of essential consumer goods. Having a total turnover of 8000 Cr., India is considered as the third largest biscuit manufacturing country worldwide after US and China. An industry classified into organized and unorganized sectors - 65% revenue from organized and 35% revenues from the unorganized sector. Around 90% of the population consume biscuits. The consumption of biscuits in India is more than the imports. India happens to be one of the prime exporters of biscuits also. An industry which enjoys 85% penetration in Urban and 55% penetration in rural areas has ultimately made it as the largest among all the food industry in India revenue wise. It also happens to be the largest employment generator of all food industries in India employing around 4 lakhs people both directly and indirectly. Today, biscuits contribute to approximately 33% of total bakery production. Also, 79% of biscuits are produced by bakery industry’s small scale sector in the country. History

In the late 1900s, when the urbanized society called for readymade food products as a viable expense, Indian biscuit industry started gaining sound status in the bakery industry. Biscuits were considered a sick-man's diet in the past.

Biscuit - Best suited for local production.
This fact has made India a big biscuit center. Biscuit Industry has flourished in India enormously over the years and is still growing phenomenally. As of 2013, the top 4 players of the biscuit manufacturing industry are: Britannia

Parle
Priyagold
ITC
This report includes information about the market structure of the biscuit industry in India covering the demand-side effects and supply-side effects. Along with this, the report talks about the various competitors and their strategies as well as the current trends and regulations associated with it. Market Structure

The Indian Biscuit industry has an Oligopolistic market structure offering differentiated product to the consumers. An Oligopoly is a market structure wherein the market is shared between a few sellers i.e. it is highly concentrated. Although a few firms dominate, it is possible for many smaller firms to operate in the same market. The existence of few sellers in the market makes it difficult for new firms to enter into the industry. There are huge barriers to entry in the biscuit industry because of huge capital investment and economies of scale. In biscuit market, price and output decisions are indeterminate as prices fixed by one firm depend on those fixed by the others. Parle-G and Britannia are price setters in the biscuit industry. Demand-Supply Analysis

Demand
DD Curve
There is always demand for biscuits. Biscuits fall under essential consumer goods category. Consumers tend to buy essential goods irrespective of the change in their prices. Therefore, even if the price of biscuit is increased, the demand remains inelastic. The law of demand is not applicable for essential goods like biscuits. Price

0
Quantity

Supply
Price
We can see that the Supply Curve for the Biscuit industry follows the law of supply. SS Curve

0
Quantity

Annual Production (2003-04 to 2012-13)

Annual Growth

Source :- Indian Biscuit Manufacturers Association (IBMA)
Interpretation: While the growth rate has been decreasing during last 4 years, it picked up momentum during the 2008-09 mainly on account of exemption from Central Excise Duty on biscuits with MRP up to Rs.100/per kg, as per Indian Union Budget (2007-08). However, growth further declined from 2009-10 to 2011-12 and the first half of 2012-13. Market Share

Market Share (Sector-Wise)
Organized Sector – 65%
Unorganized Sector – 35%
Market Share Penetration (Population-Wise)
Urban – 85%-75%
Rural – 65%-55%
Market Share (Region-Wise)
North Zone – 25%
South Zone – 24%
West Zone – 23%
East Zone – 28%
Market share data for Indian biscuit industry...
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