The Indian bakery industry is dominated by the small-scale sector with an estimated 50,000 small and medium-size producers, along with 15 units in the organized sector. Apart from the nature of the industry, which gravitates to the markets and caters to the local tastes, the industry is widely dispersed also due to the reservation policies (relating to the small scale industries) of the government.
Biscuits and bread which are considered to be the major bakery product and they account for 82% of all bakery production. The unorganized sector accounts for about half of the total biscuit production estimated at 1.5 million tonnes. It also accounts for 85% of the total bread production and around 90% of the other bakery products estimated at 0.6 million tonnes. The last includes pastries, cakes, buns, rusks and others.
Biscuits are estimated to enjoy around 37% share by volume and 75% by share by value of the bakery industry. The organized sector caters to the medium and premium segments, which are relatively less price-sensitive. The organized sector is unable to compete at the lower price range due to the excise advantage enjoyed by the informal sector. The organized segment in biscuits has witnessed a steady growth of about 7.5%, conforming broadly to the growth rate of GDP.
Biscuits constitute about 7% of the Rs 478 billion FMCG markets in India. During 2003-04 biscuits market grew at double digit (about 11%) compared to a growth of 1.4% for the FMCG industry as a whole, and 4.4% average growth over last five years (1999-2003).
In India the annual per capita consumption of branded confectionery is still under 100 gms. Hard-boiled candy is reserved for the small-scale sector. There are about 5,000 units catering to the local markets. The big players have used a mix of franchise arrangements (with small units) and product formulations to get out of the reservation mode.
The total contribution of the sugar boiled confectionery market in the organized sector, comprise plain, hard-boiled candies, toffees, éclairs and gums is around Rs. 20 billion. Add to this the unorganized sector and the market for all types of confectionery is Rs. 50 billion. However, in terms of value the organized sector commands 60% of the market share. With the exit of MNCs and other established organized players from very low priced (25 paise) category, the unorganized sector has grown very fast. MNCs and high-powered advertising support substitute products like chewing and bubble gums. With Rs. 3,250 million market shares, the gum and mint market is growing at a rate 10 to 15% annually. Fruit and mint rolls being marketed by companies with sound strategies are going ahead rapidly.
Biscuits
Demand: Past and Future
Year Thousand MT
2000-01 1110
2001-02 1188
2002-03 1307
2003-04 1444
2004-05 1523
2005-06 1607
2006-07 1696
2007-08 1804
2008-09 1920
2009-10 2043
2014-15 2758
Market Structure
Market Segmentation
Segment Share (%)
Organised 50
Informal 50
North 36
East 19
West 23
South 22
Market Growth Rates
1990-91 - 1996-97 5.5%
1996-97 - 2001-02 5.8%
2001-02 - 2006-07 7.4%
2004-05 - 2009-10 6.4%
2009-10 - 2014-15 6.2%
Bread
Demand: Past & Future
Year Rs bn.
2000-01 11.90
2001-02 12.85
2002-03 13.85
2003-04 14.80
2004-05 15.85
2005-06 16.90
2006-07 17.90
2007-08 18.95
2008-09 20.00
2009-10 21.10
2014-15 26.90
Market Structure
Market Segmentation
Segment Share (%)
Organised 15
Informal 85
North 35
East 10
West 30
South 25
Market Growth Rates
1990-91 - 1996-97 5.4%
1996-97 - 2001-02 7.9%
2001-02 - 2006-07 6.9%
2004-05 - 2009-10 6.0%
2009-10 - 2014-15 5.0%
Product Variation
Segment Share (%)
Milk Bread 85
Brown Bread 10
Fruity 3
Nutritional and other specialty 2
