Covid-19: Sudden Boost In Biscuit Industry Revenue.

Among all the snacks that have been vanishing from the market during the lockdown, biscuits have still managed to be consumer’s preferred snacking choice. The organised biscuit market in India is valued at Rs 37,000 crore (US$4.86 billion) in size, witnessing double growth rate in April-May 2020 compared to pre-Covid-19 rates as people started storing these in abundance during the lockdown.

The lockdown bought a significant change in consumer trends from necessities to high-value and ready-to-eat food items such as snacks, processed food, packaged meat, and frozen dessert. Retailers such as Future Group, Metro and Lots Wholesale saw a spike in demand for packaged food products such as biscuits and noodles, resulting in an increase in the average purchase value per customer. As most people are working from home, snack items, biscuits and hot beverages are in demand amongst customers.

Indian biscuit industry is huge. Over the years, the industry has grown immensely in India and continues to expand remarkably.  The industry has several players but most of it is dominated by Britannia and Parle, which jointly account for nearly 70 per cent of the revenues of the industry. Sara, Heinz, Excelsia (Nestle), SmithKline Customer, United Biscuits, Bakeman’s, Champion, Kwality are other companies operating in this market.

Parle-G sales skyrocket during the Covid-19 pandemic  
Parle-G has been a popular choice of snack with tea for many in the country for nearly 80 years. Additionally, the country ‘s recent lockdown has proved once again that it is still India ‘s favourite biscuit. Parle Products Pvt. Ltd, which owns the Parle-G biscuit brand, saw surge in sales during the lockdown, as the firm’s prominent cookies and value packs found popularity amongst Indians stuck at home. Parle Products produces their biscuits in India across 130 factories among which, 120 are reportedly contract manufacturing units whereas, 10 are property owned. Parle-G falls into ‘below Rs 100/kg’, an affordable priced segment, which accounts for the one-third of the overall industry revenues, accounting for more than 50 per cent of sales volume.   

During these times, when the country is battling with the Covid-19 pandemic, Parle Products have registered the highest ever sales compared to the past eight decades for Parle-G biscuits. Sales of these fairly priced biscuits increased significantly in the country as people stocked up on easy and basic food products.

This lockdown in country has brought negative impact on sales of everything from vehicles to clothes, forcing big companies to cut down production and increasing their expectations that the government would announce an economic stimulus to revive growth.

Parallel to this, throughout the months of April and May during the Covid-19 lockdown, Parle Products, which is one of India’s leading food company, recorded massive surge in sales of Parle-G biscuits. Several state governments in India also requested biscuits from the company. They were in frequent touch with the biscuit maker and also kept a watch over their stock position.

Moreover, several NGOs bought massive quantities of Parle-G biscuits from the company. The sale of the 5-rupees-a-pack biscuit grew significantly, as it was majorly consumed by many migrants who walked hundreds of kilometres to get back home. Also, many people stored it at home during the nationwide lockdown, which was imposed on March 25 and different organisations and individuals also distributed the Parle-G packets to the needful.

As a result of these sales, the company’s market share increased in the highly competitive biscuits segment by up to 5 per cent from 4.5 per cent. This sales boost turned out to be a positive thing for country’s biscuits giant, which warned last year that it could reduce production and its workforce during slowing economic growth and falling demand.

Britannia partners with Dunzo to home-deliver food essentials
Britannia Industries has partnered with Google-backed personal concierge start-up Dunzo to deliver its essential products including biscuits, cookies, wafers, milkshakes and ghee. This move by the leading biscuits manufacturer comes as a response to ensuring consistent supply of essential items in the country due to the Covid-19 outbreak. This new partnership will allow consumers to order products from Britannia Essential stores through the Dunzo app. Additionally, with a major rise in demand for at-home delivery, Britannia is leveraging Dunzo’s technology platform.

Britannia Industries, producer of Good Day and Tiger biscuits, has a turnover of about Rs 10,000 crore (US$1.31 billion). Dunzo is an e-commerce company that brings together retailers, partners, and consumers to promote transactions through couriers, trades, and commutes, delivers packages in top Indian metro cities. Shares of fast-moving consumer goods (FMCG) company Britannia Industries surged by 10 per cent to close at Rs 2,818 on the Bombay Stock /exchange after its partnership with on-demand e-commerce platform Dunzo for home delivery of all its products.

The Indian biscuit industry is on a roll with companies registering flourishing sales during the Corona virus lockdown on account of migrant labourers, NGOs, and buyers rushing to store the packaged staple. The biscuit industry was growing at 15 per cent pre-Covid-19 pandemic but during the lockdown it went up to over 50 per cent.

Apart from increase in sales of Parle-G, other biscuit brands across affordable price points such as Britannia ‘s Good Day, Tiger, Bourbon, Marie, Milk Bikis, Parle’s Monaco, Hide & Seek and KrackJack, all witnessed strong sales in the lockdown. ITC also witnessed an exclusive surge in demand for diverse biscuit offerings including Sunfeast Bounce, Mom’s Magic, Sunfeast Marie, and Sunfeast Veda Marie during the lockdown period. Veda Marie has received immensely encouraging responses from consumers in the health and wellness segment.

Premiumisation of biscuits will be seen in near future in comparison to other food categories, including cookies, chocolates, and soft drinks, which are usually more expensive than biscuits. Consumers therefore make these trade-offs in the overall food category and instead opt for biscuits, which has led to increased consumption of premium biscuits in last few years. The premium category of biscuits has risen significantly as demand for low-priced biscuits has decreased even in rural markets over the last few years. However, concerning the number of biscuits sold during the last three months after Covid-19 impact, it can be observed that affordable biscuit segment led by Parle-G had taken a march over its high-priced peers.

(The author is research director for TechSci Research. He can be contacted at sales@techsciresearch.com)

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