) ) INDIAN SNACKS INDUSTRY: An Overview

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 savouries are sold across India. The branded snacks are sold at least

25% higher than the unbranded products. Savoury 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.

The industry has 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. 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%. The

The snack food market in India is valued at Rs. 1530 crore and is one of the largest markets in the world, out of which potato chips holds the major market share of around 85%. Big players like McChain Smiles and NP Foods have also entered into Indian potato snack industry in 2005. 

Products covered

Potato chips Savory snacks Snack nuts Popcorn French fries

New Delhi: According to a study by McKinsey&Co, the Indian food market will grow two fold by 2025 with the rapidly growing Indian economy and improving lifestyles of Indians contributing in a big way to this growth. Quoting the study by McKinsey&Co, a report by the US Department of Agriculture stated "The market size for the food consumption category in India is expected to grow from US$ 155 billion in 2005 to US$ 344 billion in 2025 at a compound annual growth rate of 4.1 per cent."

The Indian snacks market is worth around US$ 3 billion, with the organised segment taking half the market share, and has an annual growth rate of 15-20 per cent. The unorganised snacks market is worth US$ 1.56 billion, with a growth rate of 7-8 per cent per year. There are approximately 1,000 types of snacks and another 300 types of savouries being sold in the Indian market today. Potato chips and potato-based items are the most popular products with more than 85 per cent share of the salty snack market, the report said. In the organised potato chips market, Pepsi and Haldiram's are some of the leading players.

There is a big market for snacks in India as urban Indian consumers eat ready-made snacks 10 times more than their rural counterparts. Indians in the western regions eat the maximum amount of snacks, followed by the people in northern region.

"Consumers are willing to pay a premium for both value-added private and branded products, creating immense opportunities for manufacturers and retailers,' the report stated. "There is a widespread recognition in India that consumers are likely to replace light meals with snacks", it further added.

Well, When We talk about the evening in India, various yummy and regional snack foods do pop into the mind of Indian people. Because they have fervent love for food, especially local & home made snacks which are eaten at any hour of the day. Advent of snack industry has widened the choices which enable people to snack discreetly with absolutely no compromise on palatable taste. Though snacking is rather a new segment of the food industry and still at an embryonic stage.

Globalization has brought about radical changes in the snacking pattern, liberalization, mall culture and urbanization have laid profound impact on dietary pattern of the people across the nation, resulting into the escalating intake of processed and fast food. Wide expansion of nuclear families has also brought forth a quantum leap in demand of snack foods which are hygienic, nutritious, portable and substitute for hot snacks.That is leading the snack industry to a great height. It is a vehement temptation for healthy ready to eat snacks that urge the people to gobble up occidental snacks like Pizza, Burger, Chips, and French Fries which have conquered the palate of people. Thus, the snack industry has opened the floodgates of opportunities in the food processing market.

If we look at growth rate of the snack industry is really stupefying, and is also prognosticated that production of branded snack food grows at annually 20% in upcoming 2 years. The Indian snack market has got at worth of $ 459 million in 2006, is one of the largest snack markets in the Asia-Pacific region, and accounts for three per cent of the total Asia-Pacific snack market revenue. Australia, China, Japan and South

Korea are the only countries which have won greater revenue from the sale of snacks than India.

Potato chips are by far the largest product category within snacks and holding the largest share about 85% of the total market revenue. The branded chips market has been prospering at a fast pace of about 20 to 25 per cent annually and its production is forecast to be 6500 tons alone in India. Snack nuts and savory snacks are following the suit, but at present popcorn and other flavored corns have yet to make headway in the Indian market.

The Indian snack industry is awfully fragmented and extensively unorganized, is a matter of deep concern. Home made snacks and grubs sold by local vendors are still reining supreme in the market that is replete with cheaper products such as Potato and Banana Chips, Pizza, and Fun Food for attracting the consumers and suiting the pocket of lower income groups. So in order to unify the Food Processing Industry, corporate growth strategy and implementation of food safety and standards act are needed so that it can expand the production & export base.

The prospect of the industry is pretty promising, because big names of the snacks business have stepped into the Indian market. Expanding and flourishing snacks market are attracting new players as well to venture into this industry. And well established companies are offering several different variety of healthful and nutritious snack options, and snack parlors & fast food restaurants are springing up all across the country. All these augur great for the snack industry in India.