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A Project ReportOn
INDEXSATHYABAMA UNIVERSITY/MBA Page 1
Sl.no Topics
1) INTRODUCTION
2) HISTORY OF POTATO CHIPS
3) MANIFACTURING METHODOLOGY
4) VARIANCE OF PRODUCT
5) INDIAN BRANDS
6) INTERNATIONAL BRANDS
7) MARKET CONDITION
8) PROMOTION AND BRANDING
9) INDUSTRY SWOT ANALYSIS
10) THE MOST PREFFERED BRAND
11) CONCLUSION
12) ADVERTISING COPY
13) BIBBILOGRAPHY
SATHYABAMA UNIVERSITY/MBA Page 2
INTRODUCTION
India is the 3rd largest potato producer in the world, after China at #1 and Russia at #2 and before the United States at #4. Potato production increased more than 850% since 1960, due to both increased production area and yield. The per Capita Potato consumption in India has risen from 12 kg/capita/year in the early nineties to over 16
kg/capita now, with a slight decline in recent years (Source: FAOSTAT)
SATHYABAMA UNIVERSITY/MBA Page 3
However, the potato processing industry is expanding fast:
The sector developing most rapidly is the snack foods sector, including potato chips. Market leader is Frito-lay with a 45 % market share. Haldiram's has a 27% market
share. The market is far from stable: recently ITC , an IT/cigarette company making huge inroad in the CPG market, has managed to get a market share of 11% with its
potato chip "Bingo" in just 6 month. Also a dairy manufacturer (Amul) just announced to move into the snack market. Key weapon in this war for the Indian snack market
are the Indian flavours.
The development of the snack market has also created a growing demand for dehydrated potato products, used as raw material for snacks.
With regards to frozen potato products, India has long been handicapped by the lack of infrastructure for the frozen food distribution chain. Nevertheless, world's largest
French Fry manufacturer McCain Foods is active in India since 1995. With the recent completion of the new McCain factory in Gujarat, the production of French Fries in
India has been brought to a new level. And for those that want their french fries even more Indian than that: just last month Mandeep Singh, a Punjab farmer turned French fry manufacturer, planned to start the production of frozen fries with his
company Satnam Agro Products in Jalandhar.
Intriguing aspect of the potato supply chain in India is the strong vertical integration: ITC bought earlier this year the Australian company Technico ,that developed
technology for rapid multiplication and variety improvement. Also the company Merino Industries (dehydrated potato products among many other
products) has its own tissue culture laboratories for multiplication and potato variety development.
Although CPRI certainly has done a good job in developing suitable varieties for processing for the Indian cultivation conditions, the degree of involvement of
processing companies in the multiplication and further development offers a lot of promise for the future potato processing potential in India.
HISTORY OF POTATO CHIPS
Where Was the Potato Chip Invented? - It is important to keep in mind that the idea of frying potatoes was a normal part of American cooking by the middle 1850s when
the potato chip first appears. The "History of the French Fry" [credits Thomas Jefferson with bringing the idea from France in the "late 1700s." From the
SATHYABAMA UNIVERSITY/MBA Page 4
descriptions of what George Crum did with the sliced potatoes, they must have been sliced across the narrow axis of the potato and fried. They were also eaten with a fork at that time. So it is certain that restaurants all over the country were serving
fried potatoes but only at the Moon Lake Lodge in Saratoga Springs, NY, did a chef slice them thin enough that they became something different.
When you consider how simple the idea of a potato chip is, the a possibility of independent invention arises. There is good evidence that something very much like
a potato chip was common enough in England to be included in a cookbook. In 1854 in Soyer's Shilling Cookery, was a recipe for fried potatoes that required them
to be cut very thin, fried in about two inches of fat and manipulated with a skimmer to keep them from sticking together (in Walton 1992, 24)
While it appears that Saratoga Springs is the place of origin, a history of the community (Brandon 1901) made no mention of the invention. Neither did another light history of famous watering places (Barrett 1941). This is not uncommon with
items of popular culture like the potato chip and does not mean that it did not happen in 1853 in Saratoga Springs.
When Was It Invented? - The summer of 1853 is clearly the approximate time period. One
completely undocumented source I found on the web boldly states it was Aug. 24, 1853 (D.T. 1997) but no one else seems to be so
certain. 1853 is the year, however, but you will occasionally see the dates a little mixed up of
1835.
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Who Invented Potato Chips - All the writers agree that the inventor was a cook named George Crum. For many brief tellings that is all you find out about the man. But
other sources mention his racial background, e.g. "Crum was part Indian, part black, a former guide in the Adirondacks, and in his own way a rather colorful figure in this area" (Gribb 1975). Other times only his Indian heritage is mentioned (Snack Food
Association 1987; Barrett 1941). He is occasionally mentioned in histories of significant African-American figures but not as often in collections dealing with native Americans. There appears little doubt that he actually existed, was a cook at Moon's Lake House on Saratoga Lake and later purchased his own restaurant on the lake.
MANUFACTURINGPROCEDURE
The process of making Potato chips
Potato is sliced by rotating the blade
Long and narrow slices are produced
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The potato slices are fried in hot oil
Frying takes several minutes
The finished product
VARIANCE OF POTATO CHIPS
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Another type of potato chip, notably the Pringles and Lay's Stax brands, is made by extruding or pressing dough made from ground potatoes into the desired shape
before frying. This makes chips that are very uniform in size and shape, which allows them to be stacked and packaged in rigid tubes. In America, the official term for Pringles is "potato crisps", but they are rarely referred to as such. Conversely
Pringles may be termed "potato chips" in Britain, to distinguish them from traditional "crisps".
An additional variant of potato chips exists in the form of "potato sticks", also called "shoestring potatoes". These are made as extremely thin (2–3 mm) versions of the
popular French fry, but are fried in the manner of regular salted potato chips. A hickory-smoke flavor version is popular in Canada, going by the vending
machine name "Hickory Sticks". Potato sticks are typically packaged in rigid containers, although some manufacturers use flexible pouches, similar to potato chip
bags. Potato sticks were originally packed in hermetically sealed steel cans. In the 1960s, manufacturers switched to the less expensive composite canister (similar to
the Pringle's container). Reckitt Benckiser was a market leader in this category under the Durkee Potato Stix and French's Potato Sticks names, but exited the business in
2008.
A larger variant (approximately 1 cm thick) made with dehydrated potatoes is marketed as Andy Capp's Pub Fries, using the theme of a long-running British comic
strip, which are baked and come in a variety of flavors. Walkers make a similar product called "Chipsticks" which are Salt and Vinegar flavored. The Ready Salted
flavor had been discontinued.
Some companies have also marketed baked potato chips as an alternative with lower fat content. Additionally, some varieties of fat-free chips have been made using
artificial, and indigestible, fat substitutes. These became well known in the media when an ingredient many contained, Olestra, was linked in some individuals to
abdominal discomfort and loose stools.[21]
The success of crisp fried potato chips also gave birth to fried corn chips, with such brands as Fritos, CC's and Doritos dominating the market. "Swamp chips" are
similarly made from a variety of root vegetables, such as parsnips, rutabagas and carrots. Japanese-style variants include extruded chips, like products made from rice or cassava. In South Indian snack cuisine, there is an
item called HappLa in Kannada/vadam in Tamil, which is a chip made of an extruded rice/sago or multigrain base that has been around for many centuries.
There are many other products which might be called "crisps" in Britain, but would not be classed as "potato chips" because they aren't made with potato and/or aren't chipped (for example, Wotsits, Quavers, Skips, Hula Hoops and Monster Munch).
Kettle-style chips (known as hand-cooked in the UK/Europe) are traditionally made by the "batch-style" process, where all chips are fried all at once at a low
temperature profile, and continuously raked to prevent them from sticking together. There has been some development recently where kettle-style chips are able to be produced by a "continuous-style" process (like a long conveyor belt), creating the
same old-fashioned texture and flavor of a real kettle-cooked chip.
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Non-potato based chips also exist. Kumara (sweet potato) chips are eaten in Korea, New Zealand and Japan; parsnip, beetroot and carrot crisps are available in the
United Kingdom. India is famous for a large number of localized 'chips shops', selling not only potato chips but also other varieties such as plantain chips, tapioca chips, yam chips and even carrot chips. Plantain chips, also known as chifles or tostones,
are also sold in the Western Hemisphere from the United States to Chile. In the Philippines, banana chips can be found sold at local stores. In Kenya, chips are
made even from arrowroot and casava. In the United Kingdom, Sweden, Finland and Australia, a new variety of Pringles made from rice have been released and
marketed as lower in fat than their potato counterparts. Recently, the Australian company Absolute Organic has also released chips made from beetroot.
Examples of regional varieties
In Canada, seasonings include dill pickle, ketchup, barbecue, all dressed, salt and vinegar, and sour cream and onion. In Toronto and Vancouver, Lay's
offers wasabi chips. In Hong Kong, the two prominent potato chips are the spicy "Ethnican" variety
by Calbee,and barbecue by Jack'n Jill. Lay's are also popular in Hong Kong. (With the most popular being BBQ and sour cream and onion.)
In Japan, flavors include nori & salt, consommé, wasabi, soy sauce & butter, garlic, ume, barbecue, pizza, mayonnaise, and black
pepper. Chili, scallop with butter, teriyaki, takoyakiand yakitori flavored chips are also available. Major manufacturers are Calbee Koikeya and Yamayoshi.
In Norway, most chips are flavored with salt, salt and pepper or paprika. More exotic flavors like mushroom and horseradish are also available. Major brands
include KiMs, Maarud and Sørlandschips. The market in the United Kingdom is dominated by Walkers (a regional brand
of Lay's) which is known for its wide variety of crisps. The three main flavors are ready salted, cheese & onion, and salt & vinegar; however, other examples are prawn cocktail, Worcestershire sauce (known by Walkers as Worcester
Sauce), roast chicken, steak & onion, smoky bacon, lamb & mint, ham & mustard, barbecue, BBQ rib, tomato ketchup, sausage & ketchup, pickled
onion, Branston Pickle, and Marmite. More exotic flavors are Thai sweet chili, roast pork & creamy mustard sauce, lime and Thai spices, chicken with Italian
herbs, sea salt and cracked black pepper, turkey & bacon, caramelized onion & sweet balsamic vinegar, stilton & cranberry, mango chili, and special flavors such
as American Cheeseburger and English Roast Beef & Yorkshire Pud. Kettle Foods Ltd's range of thick-cut crunchy crisps include gourmet flavors: Mexican Limes with a hint of Chilli, Salsa crisps were widely on sale and received much
publicity. McCoys Crisps are also popular in the UK. In the United States, popular potato chips flavors include original (plain or with
salt), sour cream and onion, barbecue, ranch dressing, salt and vinegar, and cheddar and sour cream. Stores in regions with a significant Hispanic population
sell lime flavored chips using the Mexican name, limón.
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INDIAN BRANDS
SATHYABAMA UNIVERSITY/MBA Page 10
INTERNATIONAL BRANDS
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MARKET CONDITION
Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is described as a Small quantity of food eaten between meals or in place of a meal. Snack food generally comprises bakery products, ready-to-eat mixes, chips, namkeen and other light processed foods According to the ministry of food processing, the snack food industry is worth Rs 100 billion in value and over 4,00,000 tonnes in terms of volume.
Though very large and diverse, the snacks industry is dominated by the unorganized sector According to an Apeda survey almost 1,000 snack items and 300 types of savories are sold across India.
The branded snacks are sold at least 25% higher than the unbranded products Savory snacks have been a part of Indian food habit, since almost ages. Though there is no particular time for snacks, normally they are consumed at teatime.
The variety is almost mind-boggling with specialties from all regions, which have gained national acceptance industry. he been growing around 10% for the last three years, while the branded segment is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crore, due to various reasons like Multiplex culture, snacking at home while watching TV, pubs and bars (where they are served free). AC Nielsen's retail audit shows that the large sales volumes are due to a marked preference for ethnic foods, regional bias towards indigenous snacks and good value-for-money perception.
Of course the branded segment is much smaller at Rs 2,200 crore, which is what makes it so attractive to food Companies that are looking at bigger shares and in the branded snacks market, to get down to basics, Frito Lay commands a share of 45%, followed by Haldiram’s at 27% and ITC at 16%.
SATHYABAMA UNIVERSITY/MBA Page 12
The rest is divided between a handful of new entrants, wannabes and many regional players.
Of the wide range of snacks available, potato chips constitute a sizeable segment of the Indian snack food industry, according to India Info line. The potato chip market is generally an unorganized industry. Nearly all potato chip snack products are manufactured and sold locally.
There is also no uniform standard for packaging, as there is in Europe, the United States and other more developed regions. Many snack foods are sold loose or packaged in poly-pouches, which may only be folded, or in some cases, stapled closed.
As the Indian economy continues to grow, and production standards improve, many snack food companies are making significant investments into plant equipment and packaging machinery.
Pepsi Foods Ltd., now known as Frito-Lay India Ltd., produces India's largest snack food Manufacturer’s brands including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy local tastes.
Procter & Gamble's Pringles brand of potato crisp was launched in Delhi in 1999. Pringles is also a baked potato crisp, unlike many other potato based Indian snack foods that are fried. P&G currently imports the Pringles product and therefore the product has been priced at a premium and is marketed to a micro-niche.
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Promotion and branding
Potato chips manufacturers start their marketing strategy by first identifying whether a marketing opportunity exists. They proceed to determine whether to target the mass market or a niche market, and subsequently position their products. Very often, “fancy” looking products, despite their Great taste, fail to break the barrier of routine buyer behavior. Where the market is crowded, companies try to differentiate their products by new forms or new packaging concepts.
With the increase in both domestic and global competition, companies have to deal with and reconcile two conflicting elements in marketing strategy – namely-Profitability and market share. Greater market share involves higher marketing costs and lower profitability. In India, over the years, Lay’s has become known for its engaging and innovative promotions and campaigns.
The brand known for its ‘No one can eat just one’ campaign has moved its positioning to ‘What’s the programme?’ making Lay’s ‘the main food of every programme‘! Saif Ali Khan has been the face of the brand for over five years, and has recently been joined by the captain of the Indian cricket team M.S. Dhoni. Both embody the youthful energy and appeal of the brand.
In June 2009, Lay’s launched its new positioning platform: ‘Lay’s – Be a Little Dillogical’. The new Dillogical concept makes an instant connect with youth caught between the desire to succeed and the desire to remain engaged with certain moments that offer a deep emotional fulfillment.
This friction is like a game between the heart and the head, a struggle between what you want to do and what you have to do. It’s all about making things that matter to the heart, happen.
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INDUSTRY SWOT ANALYSIS
Strengths:
Well-established distribution network extending to rural areas. Strong brands in the FMCG sector.
Low cost operations
Weaknesses:
Low export levels. Small scale sector reservations limit ability to invest in technology and
achieve economies of scale. Several "me-too’’ products.
Opportunities:
Large domestic market. Export potential
Increasing income levels will result in faster revenue growth.
Threats:
Imports Tax and regulatory structure Slowdown in rural demand
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THE MOST PREFFERED INDIAN BRAND
Lay’s, the world’s largest and favorite snack food brand, has steadily established itself as an indispensable part of India’s snacking culture since its launch in 1995. With its irresistible taste, international and Indian flavors and youth-centric imagery, Lay’s has established itself as a youth brand and continues to grow in
the hearts and mind of its consumers. Over the years, Lay’s has become known for its engaging and innovative promotions and campaigns. The brand known for its ‘No one can eat just one’ campaign has moved its positioning to ‘What’s the programme?’ making Lay’s
‘the main food of every programme‘! Saif Ali Khan has been the face of the brand for over five years, and has recently been joined by the captain of the Indian cricket team M.S. Dhoni. Both embody the youthful energy and appeal of the
brand. In 2008, Lay’s launched the never-before ‘Fight for Your Flavor’ allowing consumers to vote for the flavour of their choice. The flavour with the maximum
votes would continue in the market. The flavours have been selected by the Lay’s brand ambassadors Saif Ali Khan and M.S. Dhoni with each celebrity rooting for
the flavour of their choice. In November 2008, Lay’s made yet another innovative breakthrough – the Chip-
n-Sauce pack. This first-to-market pack has been launched for cricket lovers as they settle in their seats to savour the best sporting action of the season. The
Lay’s Chip-n-Sauce large pack comes in two unique flavours – Chilli Chinese with a Schezwan Sauce sachet and Chatpata Indian with a Tamarind Sauce sachet
inside the pack. The new platform has been launched with a series of ads built around the universal consumer struggle between what the mind asks one to do and what the heart desires. A powerful 360 degree approach supports the new TVC, and has
indeed prompted consumers to be a little Dillogical. In 2006, Lay’s launched the first premium crisp, Lay’s Stax. These perfectly
shaped, bite-sized crisps come in six irresistible, international flavours. These crisps are stacked in a shareable tray in a trendy can. Lay’s Stax caters to the
global Indian citizen. Brand Advantage
Lay’s is 100 percent vegetarian. Quality Standards
HACCP(Hazard Analysis and Critical Control Point).
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Certification by TQCSI (Australia), which confirms that products are manufactured in a food safety environment and the manufacturing process has
adequate controls to track products.
American Institute of Baking (USA), one of the best auditing bodies for confirming process and product safety.
Our Plants are ISO 14000 certified , which confirms that the manufacturing process ensures environmental safety.
Our plants are also certified to ensure that the safety of products, processes, environment and people is maintained at a very high level. This certification is
issued by OHSAS 18001 (Occupational Health and Safety Assessment Series), USA.
The production process begins on farms in select regions across India where the best potatoes are grown specifically for Frito-Lay. Upon the potatoes’ arrival at plants, it can take as little as 24 hours for the chips to be made. Lay’s chips are
made using the following simple process: Wash – the potatoes are thoroughly bathed in water.
Peel – next, we gently peel the skin off the potatoes, even as the flavour remains intact.
Slice – The potatoes are thinly sliced and rinsed again to remove any remaining starch.
Cook - The slices are cooked to a crispy crunch in edible vegetable oils. Season – Finally, the chips are topped off with a mouthwatering sprinkle of salt or
seasoning The potatoes have now become delicious chips and are packed and delivered to
a store near you. Did You Know?
Lay’s is made with India’s best-quality fresh potatoes, simply sliced and cooked in edible vegetable oils, and then seasoned with delicious flavours!
Lay’s also answers the call of the ever growing ‘health-consciousness’ trend in India. In order to protect your health, Frito-Lay potato chips have zero trans-fats
and no added MSG!
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CONCLUSION
India is set to be the most lucrative investment destination for the potato chips market in future. India's over Rs 2,500-crore potato chips market could be in for a
rearrangement, with Pepsi-Co discreetly launching 'Lehar', a new potato chips brand that is 40% cheaper than its flagship Lays. With a 20g pack priced at Rs 5, the US-based snacks and soft drink maker hopes to reclaim market share nibbled away by
domestic players such as Balaji, Haldiram, Parle and Prakash Snacks.It is the time for transformation for the company to focus on healthy products with
continuous effort to expand in the health space.
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BIBLIOGRAPHY
Websites:pepsicoindia.co.in/brands.html
www.potatopro.comwww.thehindubusinessline.com
www.google.comwww. wikipedia .org www.itcportal.comwww.haldiram.com
Newspapers:
The Business LineThe Economic Times
People magazine
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