By Taruna Sondarva *
Indians are known for their taste buds due to the varied culture and region specific flavours and so is the case with snacking. There are ample options for snacking for Indians; ranging from confectioneries, biscuits and chocolates to bakery items, western snacks and the traditional home made savouries. Also, sometimes it’s the street food at the local joint that satisfies the craving of snacking for Indians in between their meals. Additionally, the choice of consumption of snacks is related to different festivals and occasions. For example, on the biggest Indian festivals, it’s the sweets and savouries that are in demand whereas on other social occasions, it’s the combination of traditional home made savouries and sweets that attract consumers.
The savoury snacks market in India has been gaining momentum for the last few years due to the penetration of packaged branded snacks in the market. If we look at the entire savoury snacks market, it can be broadly classified into traditional snacks and western snacks. Traditional savouries are the ready to eat mixes, various kinds of Indian namkeens etc. whereas western snacks mainly consist of chips and the extruded ones. The market is so diverse that it can be classified based on the product base as well. For example; potato, rice, corn, cereals & pulses, gram flour, nuts and seeds based and the flavour/taste based such as salty, tangy, spicy, onion, garlic or cheese.
With the entry of global giants that have capacity for R&D and capital to spend on understanding consumers, they can come up with new segments to satisfy the tastes and preferences of Indian consumers. As Indians are known for their affection towards local culinary taste and flavours, these players come up with a third type of savoury called “bridge snacks” meaning taste and flavour is local but the product format adopted is western.
If we look at the market potential, according to IKON’s estimates, the savoury snacks market in India (branded packaged and unbranded packaged or loose) is ready to hit the Rs 1,000 billion mark by the end of the current decade, growing at a healthy double digit CAGR. The factors driving the growth of the market are easy availability, affordability, convenience and hygiene factors. Also, it has been observed that for the past few years the market is gradually starting to shift towards the organized (branded packaged) segment, which holds almost 60 percent of the market and the remaining is shared by the unorganized (unbranded packaged or loose) market segment. The ‘Western Snacks’ is a quickly growing segment in India, however, ‘Traditional Snacks’ still dominate the market of savoury snacks in India due to various reasons. Holding the major chunk, the rural market is also growing almost equally in pace with the urban market. It’s not just in the domestic market, but as like Indians are omnipresent, so are the Indian snacks. In the last fiscal year 2016, India exported nearly $ 2.8 million worth of savoury snacks including extruded or expanded products, registering a YOY growth of almost 22 percent from the previous year. The top 5 import countries were USA as the prime market followed by Australia, Thailand, Isreal and United Arab Emirates due to the huge Indian expat population.
The major players ruling the packaged savoury snacks market in India are, PepsiCo – the market leader with its Cheetos, Kurkure, Lay’s Lehar & Uncle Chips brands Haldiram, Balaji Wafers (Balaji), Parle (Hippo, Parle), ITC (Bingo), Bikaji, Bikanervala, Prataap Snacks (Yellow Diamond), and DMF (CRAX) amongst others. Apart from these, there are a large number of regional players doing wonders in their respective territories and exporting globally. Although, with the availability of larger variants, the potato chips and potato based snacks dominate the market, the market trends are changing quickly from traditional snacks to innovative and healthy packaged snacks with regional flavours gaining more popularity in the country.
To stay competitive, the branded packaged snacks players have adopted numerous strategic initiatives to offer tailor-made delivery of snacks that appeal to both taste and psyche, understanding the important factors that drive consumers to choose one product rather than another. The branded packaged snacks players have considered the importance of packaging as an effective medium of communication and branding in India. The leading market players have adopted strategies for attractive product packaging showing brand name, graphics, size/shape, product information and technology used in manufacturing of products. Indian consumers usually differentiate and recognize the snacks’ brands based on its product packaging.
The Indian market for savoury snacks holds tremendous growth potential. The future growth of savoury snacks market should be attributed to two key reasons –increasing population and increasing disposable income. The growing middle class would spend more on snack food. There will be continuously high demands from urban market, however, with increasing disposable income and widening distribution network; the rural market will become more prominent. Western snacks, specifically the ‘Extruded snacks’ are expected to show healthy growth in the future.
As rightly said by Azaz Motiwala – Founder & Chief Marketing Consultant of IKON Marketing Consultants, “It’s the taste, [that] may not remain a key value proposition for the snack brands in coming days. The ‘healthy snack’ is going to be a buzzword in the market and likely to be a prominent category of the snack industry. Today’s consumer is more inclining towards the nutritional value of the food products and to keep up with this trend, snack brands must focus on creating such value in their products rather than just emphasizing on taste and price.”
* Taruna Sondarva is Principal and Senior Consultant at IKON Marketing Consultants, a leading marketing consulting firm in India that helps companies to solve their marketing problems and achieve business objectives. Visit www.ikonmarket.com to know more.