Biscuit segment to see more premiumisation: ITC - Business Today
Feb 09, 2012
After leading the lifestyle business at ITC Ltd, Chitranjan Dar moved on to head the Foods Division, where he's been since 2008, first as chief operating officer and then as chief executive since August 2009. ITC shook up the biscuit market over the last few years and has launched a range of premium biscuits. In an interview with Geetanjali Shukla, Dar says premium biscuits will play a larger role in India. Edited excerpts:
Q: How do you see the biscuits market shaping up in India through 2012?
A: I see a lot of 'premiumisation' that is going to happen. There is going to be a lot more focus on offering a more healthy product. I see that segment getting to play a larger role in terms of positioning and brands.
Q: By premiumisation do you mean there are going to be a lot more product launches in that segment?
A: A lot of premium segment products are going to come in. We believe it will happen a lot more this year than in the past.
Q: Has some of this already happened with the launch of the Oreo biscuit in the last year? It has positioned itself at the top of the segment.
A: I think we saw a bit of it. It would be wrong to say that Oreo's position is right up there. People became a lot more aware of what the premium segment had to offer. But there are quite a few biscuits that play in that space, it is not just Oreo. We still believe that the premium segment in India is pretty small compared to what the potential of the premium segment could be. The potential is likely to be far more than what we have seen.
Q: What would be the share of the premium segment in the Rs 13,000-crore biscuit market?
A: A glucose kind of biscuit would represent a 30-35 per cent share now. But in the days to come with an increasing propensity to premiumise - not only from a manufacturer's point of view but also the consumer's desire - this is likely to see a bit of a decline.
For instance, in the last year-and-a-half the cookie segment in terms of consumer spend has overtaken the glucose segment. At a small level this is happening, but we will see a lot more of this in the future. Overall there is a tendency on the part of the Indian consumers to premiumise themselves at a brand level, at a very emotional level, so it is not enough for them to just consume basic foods or the basics in every category.
Q: Are price hikes expected -- given the way input prices are moving?
A: Commodity prices have been seeing an increase in the last few months; therefore it would be natural to believe that this could result in some kind of price increases.
Q: How has the biscuit segment changed with the entry of Oreo and a company like Kraft entering the space?
A: It is only a premium sector activity, so I don't know if everybody has been impacted. But the success of Kraft has certainly opened up people's eyes to the fact that there is a lot of play which is possible if the offer is right and you are able to communicate the value to the customer, and therefore that it needn't just be a cost game. But this trend towards premiumisation has been happening before Kraft came in. It has been happening over the last few years.
