Milind Rk Parle g

8/3/2019 Milind Rk Parle g

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CHAPTER 1INTRODUCTION


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INDIAN BUSCUIT INDUSTRY

Biscuit industry contribute Rs 8,000 crore to the FMCG industry and provide avast opportunity for growth, as the per capita consumption of biscuits is less than 2.1

kg in our country. India It is classified under two sectors: organized and unorganized.Branded /Organized to Unbranded/Un organized market share of biscuit has been70% for Organized sector and 30% for Unorganized sector . Apart from Big 3(Britannia , Parle , ITC ) there are around 150 medium to small biscuit factory in India.The Industry is now facing problem from increase of raw material price. With

Government VAT up to 12.5% has added to their woes .Biscuit consumption percapita in India has grown to 2.1kg per capita in comparison to 10kg per capitaconsumption in USA ,UK and Europe .

India Biscuits Industry came into limelight and started gaining a sound status in thebakery industry in the later part of 20th century when the urbanized society called forreadymade food products at a tenable cost. Biscuits were assumed as sick-man's dietin earlier days. Now, it has become one of the most loved fast food products for everyage group. Biscuits are easy to carry, tasty to eat, cholesterol free and reasonable atcost. States that have the larger intake of biscuits are Maharashtra, West Bengal,Andhra Pradesh, Karnataka, and Uttar Pradesh. Maharashtra and West Bengal, themost industrially developed states, hold the maximum amount of consumption of biscuits.

Even, the rural sector consumes around 55 percent of the biscuits in the bakeryproducts. The total production of bakery products have risen from 5.19 lakh tonnes in1975 to 18.95 lakh tones in 1990. Biscuits contributes to over 33 percent of the totalproduction of bakery and above 79 percent of the biscuits are manufactured by thesmall scale sector of bakery industry comprising both factory and non-factory units.

The production capacity of wafer biscuits is 60 MT and the cost is Rs.56,78,400 witha motive power of 25 K.W. Indian biscuit industry has occupied around 55-60 percentof the entire bakery production. Few years back, large scale bakery manufacturers likecadbury, nestle, and brooke bond tried to trade in the biscuit industry but couldn't hitthe market because of the local companies that produced only biscuits.The Federation of Biscuit Manufacturers of India (FBMI) has confirmed a bright

future of India Biscuits Industry. According to FBMI, a steady growth of 15 percentper annum in the next 10 years will be achieved by the biscuit industry of India.Besides, the export of biscuits will also surpass the target and hit the global marketsuccessfully.


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HISTORY-Parle Legacy

Parle Products fame and familiarity is undeniable. Considering its extensive reach,the brand Parle is known and recognized by everyone. Over the years, Parles sweets

and biscuits have become a household name. From kids to adults, everyone loves andcherishes these treats. It gives us great pleasure to see our consumers enjoy andembrace Parle products on daily basis. Our confectioners and chefs have the utmostauthority at Parle. Had it not been so, the beginning of Parle would have been quitedifferent.

In 1929 a small company by the name of Parle products emerged in British dominatedIndia. The goal was to spread joy and cheer to children and adults alike, all over thecountry with its sweets and candies. Although, the company knew that it wouldnt bean easy task, they decided to take the brave step. A small factory was set up in thesuburbs of Mumbai to manufacture confectionery products. A decade later this factorywas upgraded to manufacture biscuits as well. Since then, the Parle name has spreadin all directions and has won international fame. Parle has been sweetening the livesof people all over India and abroad.

Apart from the factories in Mumbai and Bangalore, Parle also has factories inBahadurgarh, Haryana and Neemrana, Rajasthan. These are the largest biscuit andconfectionery plants in the country. Additionally, Parle Products also has 10manufacturing units and 75 manufacturing units on contract.

Milestones - The Decades of Progress 1929: The first year of operation. Our only assets were hard work and hope. 1939: Ten years of determined effort brought results. Things began to take shape. And

we tried even harder. 1949: The formative years were over. We had come of age. 1974: Here was the first evidence of Parle as it is today.

OVERVIEW Parle G

Parle Products has been India's largest manufacturer of biscuits and confectionery foralmost 80 years. Makers of the world's largest selling biscuit, Parle-G, and a host of other very popular brands, the Parle name symbolizes quality, nutrition and greattaste. With a reach spanning even to the remotest villages of India, the company hasdefinitely come a very long way since its inception.

Many of the Parle products - biscuits or confectioneries, are market leaders in theircategory and have won acclaim at the Monde Selection, since 1971. With a 40% share


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of the total biscuit market and a 15% share of the total confectionary market in India,Parle has grown to become a multi-million dollar company. While to the consumersit's a beacon of faith and trust, competitors look upon Parle as an example of marketing brilliance.

Available Anywhere Today, the great strength of Parle Products is the extremely widespread distributionnetwork. Even at the remotest places, you can buy Parle biscuits and sweets from thelocal grocer. It has taken years to create this extensive network. Parles sales forcestarted with one salesman in Bombay and some agents in few other cities. Gradually,Parle Products expanded. Soon sweets and biscuits were being sent by rail to Calcutta,Delhi, Karachi, Madras and other major cities. As production increased, distributionwas amplified. Full time salesmen were appointed in different areas. Currently, ParleProducts has over 33, 00,000 distribution outlets.


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Products of Parle

BUSCUIT

HIDE &SEEK

MILANO

BOURBONParle-G

ParleMarie

KrackJack

GoldenArcs

Top

Nimkin

Kreams

Milk Shakti

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CookiesMONACO

Digestivemarie

Other


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SWEETS

Melody Mango Bite Chox Kachchamango bite Poppins other

Snacks

Fulltoss Parle Wafers Monaco smart chips


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CHAPTER 2GROWTH OF INDUSTRY


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GROWTH OF THE INDUSTRY

During the five and a half decades of post-independent India, the biscuit

industry in the country has achieved a position of pre-eminence as the third largestproducer of Biscuits in the world, after the USA and China.

The biscuit industry is been experiencing steady growth of 14-15% annually. In 2008,the growth exceeded 16% mark on account of exemption from Central Excise Dutyon biscuits. Indian Biscuit Manufacturers Association (IBMA) , instrumental inobtaining the excise duty exemption, estimates annual growth of around 20% in theyear 2008-09. Growth in biscuit marketing has been achieved also due toimprovement in rural market penetration.

The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike inCentral Excise Duty (from 9% to 16%). Production in the year 2001-02 increasedvery marginally by 2.75% where in 2002-03 the growth is around 3%.

2003-04 - 15% 2004-05 - 14% 2005-06 - 14% 2006-07 - 13% 2007-08 - 15% 2008-09 - 17%


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The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike inCentral Excise Duty (from 9% to 16 %). Production in the year 2001-02 increasedvery marginally by 2.75% where in 2002-03 the growth is around 3%.Thereafter theannual

growth increased to over 8 %. The Federation's estimate for the year 2007-2008indicates a growth of approximately 8% to 9%. According to IBMA, the biscuitindustry in India witnessed annual growth as 15% in 2003-04, 14% in 2004-05 and2005-06, 13% in 2006-07, 15% in 2007-08 and 17% in 2008-09.

While the growth rate has been stagnating during last 4 years, it has picked upmomentum during the 2007-08 and the first quarter of 2008-09 mainly on account of exemption from Central Excise Duty on biscuits with MRP up to INR 100 per kg, asper Union Budget for 2007-08.

On the other hand, import of biscuits, especially in the high price segment has startedfrom 1998-99, but however, the quantum of imports has not so far increasedalarmingly and has remained at around 3.75% of the consumption of biscuits in thecountry. Exports of biscuits from India have been to the extent of 7.5% of the totalproduction. Exports are expected to grow further in the year 2007-08 and beyond.

Biscuit is a hygienically packaged nutritious snack food available at very competitiveprices, volumes, and different tastes. According to the National Council of AppliedEconomic Research (NCAER) Study, biscuit is predominantly consumed by peoplefrom the lower levels of society, particularly children in both rural and urban areaswith an average monthly income of Rs. 750.00.

Annual Production:

The annual production of biscuit in the organized sector continues to bepredominantly in the small and medium sale sector before and after de-reservation.The annual production was around 7.4 Lakh tones in 1997-98. In the next ten years,biscuit production witnessed an annual growth of 17%, up to 2008-09. Thoughdereservation resulted in a few MNCs, i.e. Sara Lee, Kellogs SmithKline Beecham,Heinz etc entering the biscuit industry in India, most of them, with the exception of SmithKline Beecham (Horlicks Biscuits), have ceased production in the country.

According to the production figures of members available up to the calendar year

2009 to the FBMI, the total production is increasing from year to year. The productionof biscuit for the last 6 years is as under:


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(In Lakh Metric Tonnes )2003-04 - 11.002004-05 - 12.542005-06 - 14.29

2006-07 - 16.142007-08 - 17.14

2008-09-18.01

The production of organized and unorganized sectors of the biscuit industry is in theproportion of 60%:40% ratio. EXPORTS of Biscuit are estimated to be around 15%of the annual production during the year 2007-08. IMPORTS of biscuits into Indiahave not shown any significant growth during the last two years and have not affectedproduction/sales by the Indian Biscuit industry.

GROWTH DETERMINENTS:

The main growth determinants of the industry are as follows:

The focus on urban markets has also contributed significantly to the growth of thebiscuit industry.

Focused advertising and new launches helped the biscuit industry to grow Catering to the mass marketing segments The excise duty cut on biscuits from 16% to 8% has given a boost to biscuit industry.

0

5

10

15

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2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

ANNUAL PRODUCTION OF BISCUIT INDUSTRY


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CONSUMER BEHAVIOR FOR

Parle-G

In India it is a habit to have biscuits along with chai or tea - Parle G is referred to as"biskut" in rural areas - thus when asked for biskut to a shopkeeper it simply meansParle-G biscuit in rural areas. Understanding consumer behavior is tough. The studyof consumer behavior includes the knowledge about the consumer, his buying motives& buying habits.

Keeping all this in mind, the factors influencing the buying behaviour of consumersare:

Parle-G being a consumable product is not influenced by factors like cultural factors.As shown above, social factors are further sub divided into 3 parts namely referencegroups, family & social role & status.

Reference Group

People, especially kids are always influenced by the people around them. They areinfluenced by friends, relatives, family members specially elder siblings, etc. so if they see anyone around them having parle-G biscuit, they too want to eat it.

Family

In his case also, if its a usual habit of the family members to have pale -G with tea orcoffee, the kids in the growing stage or any new member joining the family for teawill form a similar habit or the later will be offered the same biscuit.

Personal Factors

The factors whose intensity differs from person to person are together termed aspersonal factors. They are as follows :-

Age

Parle-g is consumed maximum by the kids in the age group of 5-10 years i.e. thegrowing age group. Kids, who have formed the habit of having Parle-G in their earlystages of life, continue this practice even after growing up. They continue theirconsumption of Parle-G even after they grow up.


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Occupation

The buying behavior of the consumer is influenced also by the occupation he or she

belongs to. In case of Parle-G, the purpose for buying the product varies from aperson with a high post in a M.N.C. to a poor laborer. For the executive employee, hemay or may not buy the product. He may buy a more expensive or an imported biscuitbrand because he can afford it. Also he may buy it only to be one of the many snacksavailable to him. On the other hand, a poor laborer would buy a packet of Parle-Gsimply to satisfy his hunger. For him, it is not matter of choice or luxury, but anecessity because its the easiest & the cheapest he can get.

Income

Income of a person decides its core expenditure segment. If a laborer earns a fixedamount & if a biscuit like parle-g which for sure ensures high level glucose content &immediate energy regained, he would defiantly opt to buy a parle biscuit packet & notspend even that minimal amount of Rs.4 on anything else. But since Parle-G is a low-

priced, value for money product a persons income does not really play a role ininfluencing the purchase of the product. Consumers of all income groups do buy theproduct.

Psychological Factors

Motivation

For Parle-G the main & the basic motivation which pulls consumers towards buying itis simply hunger. This is what pulls the consumers towards the purchase of Parle-G.Also, since biscuits are perceived as snacks, when a consumer is drinking tea he orshe is motivated to buy Parle-G at that time.

Perception

Consumers believe Parle-G to be a good quality product which is cheap too. Theyalso perceive it to be a great snack with tea


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SWOT ANALYSIS

STRENGTHS

Low price as compared to competitors Sizeable market share in the country. Offers variety of products under its brand. Different sizes of packets are available. An experienced team of sales and marketing executives.

Deep and effective coverage Largest distribution system.

WEAKNESS

Breakage of biscuits while delivering to retailers No proper replacement system for broken biscuits to retailers Improper and irregular supply. Fewer shares in Premium biscuit market. Dependent on its flagship brand, Parle-G Poor packaging in family pack of glucose biscuits. Lack of schemes for retailers and distributors.

OPPORTUNITY

Rising demand for innovative packaging in packaged foods. Retaining loyal retailers or wholesalers. Improving supply system for established brands. Huge scope for some Parle products in medical shops.

Information revolution brought about by the television. Good scope for snacks and namkeens, if launched and properly promoted byParle.

THREAT

Highly advertised brands such as Britannia. Ever increasing competition from multinationals and local companies. Increase in sale of cheap local bakery products. Emerging substitutes like wafers, snacks and toast. Margin war among the major Brands


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MAJOR PLAYERS

BRITANIA INDUSTRIES LIMITED

Britannia Industries Limited is an Indian company based in Kolkata that isfamous for its Britannia and Tiger brands of biscuit, which are highly recognizedthroughout the country. Britannia is one of Indias leading biscuit firms, with anestimated 38% market share. Once upon a time, in 1892 to be precise, a biscuitcompany was started in a nondescript house in Calcutta (now Kolkata) with an initialinvestment of Rs. 295. The company we all know as Britannia today.

On the operations front, the company was making equally dynamic strides. In 1992,it celebrated its Platinum Jubilee. In 1997, the company unveiled its new corporateidentity - "Eat Healthy, Think Better" - and made its first foray into the dairy productsmarket. Britannia strode into the 21st Century as one of India's biggest brands and thepre-eminent food brand of the country. It was equally recognised for its innovativeapproach to products and marketing.

Main products produced by Britannia industries are,

Good Day, Tiger, Marie Gold,50- 50,Choco -chips, Choco - nuts, Little Heart, NutriChoice, Bourbon, NiceTime, Pure Magic, Milk Bikis, Jim -Jam, Cream Treats, TimePass, Digestive, etc.

ITC LIMITED

ITC was incorporated on August 24, 1910 under the name Imperial TobaccoCompany of India Limited. TC's foray into the Foods business is an outstandingexample of successfully blending multiple internal competencies to create a newdriver of business growth. It began in August 2001 with the introduction of 'Kitchensof India' ready-to-eat Indian gourmet dishes. 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment.

The packaged foods business is an ideal avenue to leverage ITC's proven strengths inthe areas of hospitality and branded cuisine, contemporary packaging and sourcing of agricultural commodities. ITC has stood for quality products for over 90 years to theIndian consumer and several of its brands are today internationally benchmarked forquality.


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Leadership in the Foods business requires a keen understanding of the supply chainfor agricultural produce. ITC has over the last 90 years established a very closebusiness relationship with the farming community in India and is currently in theprocess of enhancing the Indian farmer's ability to link to global markets, through the

E-Choupal initiative, and produce the quality demanded by its customers. This long-standing relationship is being leveraged in sourcing best quality agricultural producefor ITC's Foods Division.

Major products by ITC are,

Milky magic, Marie, Golden Bakery, Dark Fantasy, Glucose, Dream Cream, Snack,Sweet n Salt, Nice, Vita, Special, etc.

SURYA FOODS & AGRO LIMITED

Surya Food & Agro Ltd. was incorporated in November 1992 and commenced itscommercial operations of manufacturing & selling of biscuits under brandPriyagold in October 1993 . Over a period, It established strong manufacturingcapabilities and have invested substantially in developing consumer preference for

products. Its trademarks / brands Haq Se Maango & Priyagold have emerged asone of the most powerful brands in the FMCG sector. The company is committed toinvest in brands, manufacturing capabilities, deliverables and distribution strength.

Its strategy of strengthening the brands especially the umbrella brand Priyagold hasresulted in creating immense brand recall value. The company is continuing with itseffort of strengthening the brand with a scientific approach, which will result ingrowth of customer base, price premium, consumer loyalty which is expected to resultin increased earning and ultimately enhancing enterprise value of the company.

Major products produced by the company are,

Butter Bite, Classic cream, Kids Cream, Bourbon, Marie Lite, Big Boss ,Magic Gold,CNC, Cheese Cracker, Snacks Zig Zag, Don, Coconut Crunch, Cheez Bit, Chat Patta,and etc.


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PARLE VS BRITANNIA

Description Britannia Parle

Established 1896 1929

Nature of business Public ltd Family run business

No of manufacturing units 5 own ,40CMU 8 own units ,60 CMU

Market share ( value) 32.80% 32.94%

Ads Major methods Cricket events and players Celebrities endorse ment

New areas of promotion Environment Health and wellness

IMPORTANT BRANDS PITCHED AGAINST EACH OTHER

Category Britannia Parle Leader

Glucose Tiger Parle -G Parle-G

Marie Marie Gold Parle Marie Marie Gold

Salty snacks 50-50 Krack Jack Krack Jack

Choco chips Good day Hide n seek Good day

Milk Milk bikis Milk sakhti Milk bikis

Bourbon Bourbon Hide n Seek Bourbon

Nice Nice ------ Britannia Nice

Multi grain Nutri choice ----- Nutri choice

Cream Cream Treat Kreams Cream treats

Cookie Good day 20-20 Good day


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So the battle for market share continues and advantage is for consumers who will getbetter product from both these biscuit majors .

PORTERS 5 FORCES MODEL: PARLE G

Fig- Porters 5 forces model

The Porters Value Chain for Parle G has been assessed on the five parameters of power of suppliers and buyers, treats from substitute and new entrant and the internalrivalry are as follows:

The threat of a new entrant in the organized biscuit industry for Parle is low:The industry is capital intensive; with already so many existing players in the market,

a new entrant would find it really difficult to establish it. Investments in promotions,advertisements, and product establishment are very high. The distribution system iscomplex and difficult to duplicate.

The Power of suppliers to affect Parle G is fairly low:The basic commodities such as wheat, sugar are available. Though with the increasinggap between the WPI and CPI, prices of commodities is a worry. Sugar especially is abottleneck.


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Intra-industry rivalry for Parle is high:

Even though Parle is a comfortable market leader with 40% of the market share, thereis immense competition among the existing players to capture the maximum market

share. The USP of Parle G has been price. A biscuit pack at Rs. 3, readily availablein all pan-bidi shops made it such a success story. But today this business model isbeing duplicated by the other industry members.

The power of buyers is very high:Availability of many kinds of biscuits in the low and moderate pricing category. Thisforced Parle G to come out with a Rs. 30 family pack of biscuits. It also modified itsdistribution channel for the same purpose. The unorganized sector is always an optionfor the buyers.

The power of substitutes to affect the prospects of Parle G is also very high:The growing packaged snack industry is become a real cause for concern for thebiscuit industry. This is for this reason that most members of this industry haveventured into the confectionary and packaged snack business as well. The traditionalhome cooked Indian snacks are always a threat.


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EXPORTS

Almost all of Parle products are market leaders and as recognition of their quality,have won Parle 111 gold, 26 silver and 4 bronze Monde Selection medals since1971 .

Parle Products Pvt. Ltd. is a US $ 1 Billion conglomerate started in India in 1929.Parle manufacture and market biscuits and confectionaries. Parle have state-of-the-artmachinery with automatic printing and packaging facilities. Parle biscuit baking ovenis the largest of its type in Asia. Over the decades, the efforts of Par les Research &Development wing have made the repertoire of its products grow manifold. Inbiscuits, Parle Products has offerings in glucose, milk, sweet and salted cream, wafercrme, cumin seed and cheese categories.

In confectionery, Parle have a range of toffees and hard-boiled candies available inchocolate, mint, cola, and tropical fruit flavors. Some of these are double layeredtoffees and center filled candies. They are packed in rolls or pillow packs, or have asingle or double twist wrapping. Almost all of Par les products are market leaders andas recognition of their quality, have won them 111 gold, 26 silver and 4 bronzeMonde Selection medals since 1971. Parle enjoys a 40% share of the total biscuitmarket and a 15% share of the total confectionary market, in India.

Import-Export

The immense popularity of Parle Products in Ind ia was always a challenge to its production capacity. Now, using more modern techniques for capacity expansion, wehave begun spreading its wings and we are going global. Parle biscuits andconfectionaries are fast gaining acceptance in international markets, such as theMiddle East, Africa and South East Asia. The more sophisticated economies likeU.S.A., UK, Canada, Australia and New Zealand are also relishing Parle products.As part of the efforts towards a larger share of the global market, Parle has initiatedthe process of getting ISO 9000 certification. The Parle name symbolizes quality,health and great taste. And yet, we know that constantly innovating and catering tonew tastes has built this reputation. This can be seen from the success of its newbrands such as Hide & Seek, Mangobite etc.Today, the Parle brands have found their way into the hearts and homes of people allover India and abroad.The Parle biscuit brands, such as, Parle-G, Monaco, Krackjack,Marie Choice, Hide & Seek and confectionery brands such as Melody, Poppins,Rolacola, Mangobite enjoy a strong imagery and appeal amongst consumers acrossthe world.

This has resulted into Parle-G being the Worlds Largest Selling Biscuit.


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Milind Rk Parle g