Packaged snacks are getting a lot of attention from big, branded players. So Frito-Lay, with its Lays, Cheetos, Kurkure, Lehar, Uncle Chipps and Quaker Oats snack brands is seeing some pretty concentrated competition from ITC’s Bingo! with its 16 flavours, Britannia’s 50-50 Chutkule, and Amul’s Munch Time.
ITC spotted the opportunity six months ago and launched Bingo!. Britannia, which test marketed both the new 50-50 snacks eight-nine months ago in Hyderabad, is rolling them out nationally. Amul is taking its time with Munch Time. R.S. Sodhi, general manager, marketing, GCMMF, states, “As of now, there are no intentions to go for a national rollout.”
The decision of big players such as Britannia and ITC to get into branded snacks makes sense, considering the market size. Ravi Naware divisional chief executive, ITC Foods, says, “The branded snacks segment is worth Rs 2,000 crore and growing at a healthy 25-to-30 per cent.” Branded snacks is a part of the larger category of the ready-to-eat market, which Neeraj Chandra, VP, marketing, sales & innovation, Britannia, pegs at Rs 7,000 crore. “This large category has shown double digit growth, amongst the highest for any large FMCG sector.”
Another reason why more big players may want to enter the segment is the predominance of unorganised players. Nikhil Vora, an FMCG analyst with SSKI Securities, says, “The share of the unorganised players is over 50 per cent.” So there is enough opportunity in the market for more branded players.
The drivers for the segment’s growth are changing lifestyles, with more consumption-on-the-go. Chandra says, “Changing consumer demographics (young, higher disposable income, experimentation, urbanisation), further fuelled by a greater awareness of health and nutrition on the one hand and more hedonism on the other, is rapidly enlarging the opportunity. The consumption overdrive, anchored by the frugal heritage of the Indian consumer, is exploding growth for relevant and differentiated propositions that, however, must be offered at the right price value.”
Frito-Lay is market leader in branded packaged snacks. Deepika Warrier, VP marketing, Frito-Lay India, says, “The company operates 38 distribution centers that serve over 2,500 active stockists, reaching approximately one million retail outlets that in turn makes the products available at an arm’s length.” The other big players also have strong distribution clout. Bingo is available in five lakh shops across 280 markets in India.
Warrier still maintains Frito-Lay’s leadership position when she says, “Convenience food is the most rapidly growing segment and our success has obviously attracted other players. This helps grow the category and provide consumer confidence via increased choices.”
ITC, with its deep pockets, has already grabbed a 15-16 per cent market share. At the time of Bingo’s launch, Naware had said that the company will invest Rs 150 crore in a period of two years. It is eyeing a 25 per cent market share of the organised packaged snacks market in a period of four-five years.
For Britannia, the foray is more of a natural extension for a dominant player in the snacks segment to benefit from opportunities in other formats. Chandra says, “Biscuits are a part of the large macro snacking space, which has a diverse set of product forms, both branded and unbranded. Our brands are not limited by their format and would also seek out opportunities influenced by adjacent spaces such as snacking. Our approach to such opportunities will be rooted in strong differentiation and leveraging our strengths.”
Reliable sources say that Britannia’s adspends on its snack may be between Rs 5 and Rs 10 crore annually. McCann Erickson has bagged the 50-50 Chutkule account. Naware says, “Now that the brand has registered and brand acceptance is confirmed, we will focus on strengthening our distribution muscle while the communication will address Bingo!’s variety, attractive proposition and taste attributes” ITC has also come up with bingeonbingo.com, a social networking site to promote the entire Bingo range. Naware insists that the platform is quite sticky and that it has made more consumers taste the product.
So get ready to see a lot of crunchy ads on TV as the growing competition will only grow the branded packaged snacks market, feel most industry players and analysts.