India Biscuit Market: Will GST Stop Industry Juggernaut?
TechSci expects India biscuit market to grow in
double-digits, but GST regime may cause teething troubles in the short-term
…
Just
this week, India biscuit market leader Parle Products announced a tie-up with
Manpasand beverages for distribution, network-sharing and cross promotion of
their brands. While this step must be seen in a positive light, given that scaling
up of non-production operations will lead to a boost in revenues, a looming
post-GST tax increase is giving India biscuit market players nightmares.
TechSci Research experts
responsible for the report “India
Biscuit Market, Competition Forecast & Opportunities, 2012 – 2022”
were interviewed to provide cutting edge insights into various India biscuit
market trends.
Aforementioned
TechSci Research report suggests that India biscuit market size stood at $3.9
billion in 2016, and is projected to grow at a CAGR of 11.27%, in value terms,
during 2017-2022, to reach $7.25 billion by 2022. With rise in affordability,
major players are tinkering with different flavours to come up with different
products catering to increasingly diverse set of people.
What follows then
is a virtuous cycle where growing revenue generation is invested back in
product diversification, leading to increased consumption which further
improves revenues, thus leading to further promulgation in the India biscuit
market size.
Given that a
positive, self-sustaining ecosystem has been created in the India biscuit market, leading players have a lot more leverage for creative ways of gaining
more market share. E-tailing of biscuit products, keeping with the times to
offer healthy alternatives to enthusiasts etc.
Even though
Parle Products is the undisputed leader in India biscuit market, they have to
keep on their toes due to the growing competitiveness and dynamic nature of the
market. Companies such as Britannia Industries, ITC Limited, Mondelez India
Foods Private Limited, Surya Food & Agro Ltd.
GST Will Force India Biscuit Market to Look Elsewhere
for Growth
The tie-up with
Parle and Manpasand, however, must also be viewed through the prism of the
inculcation of GST. India biscuit market players were blindsided with the
implementation of an 18% tax on the product and this has led to much woe in the
industry.
Livemint
reported that major India biscuit market player Britannia’s net profit for the
period fell 1.4% y-o-y to Rs216.12 crore even as revenues rose 6.21% to
Rs2,375.01 crore. TechSci experts suggest that the decline in net profit in
spite of enhanced revenues implies that the company’s margins have taken a hit
post-GST. Britannia has some other pressing issues as well, pertaining to distributors,
so GST is one of many factors responsible for the decline.
However, there
is definitely a pattern that is being repeated throughout the India biscuit
market, which leads to the conclusion that margins have dropped throughout the
industry. In this case, major players will have to tinker primarily with the
supply-side in order to ensure that the status quo in the demand-side is
maintained.
Others, such as
Parle, are going back to their own ways, by turning back to toffees. Obviously
focusing on both biscuits and toffees at the same time would lead to a strain
in the production capacities of the company, signifying that there will be decreased
focus on India biscuit market products. Regardless, TechSci is keeping a close
watch on the latest developments taking place in this industry.
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