Bakery: Backbone of the Food Industry in India

Mumbai / IN. (div) According to estimates the bakery industry in India is worth 69 billion INR (1,03 billion EUR). Out of this bread and biscuits hold about 82 percent of the share. Bread, biscuits, pastries, cakes, buns and rusk are some of the bakery products fast catching up with the popularity trend in India.

As per the data from several sources, the bread market has a business volume of 1,5 million tonnes. The bread industry has a production capacity of approximately 27 lakh (2,7 million) tonnes. Though the business is characterised by high margin it is highly fragmented. The major factors for growth in this segment are: Brand loyalty, volumes and strong distribution networks – according to the Indian «FnBnews».

The challenges faced by the organised bread sector at present are low margins of profit due to hike in the prices of major raw materials like sugar, vegetable oil, milk, and wheat flour which have been accounted for the industry’s low margins of profit.

The major players in the market holding about 90 percent of the market share are Britannia and Modern Industries Limited. The biscuits market has a total production volume of 1,1 million tonnes. The growth drivers for the biscuit industry are focused advertising, urban market, and new launches. The major players in the segment are Britannia, Parle, Bakeman, ITC Foods Limited, Surya Food and Agro Pvt. Limited and HUL. In terms of trends the traditional bakery models are changing. Franchisee is now coming in. Also customised bakers like the aunt in the neighbourhood baking cakes are becoming more popular, says FnBnews.

Complementary changes in the equipment industry are also seen. No one could imagine a dough sheeter kneading dough a few years back. On the import front of the equipment market, with the global recession the world is looking at the two fast growing Asian economies: India and China. Where China has a strong manufacturing set up India´s vast population makes it a supplier´s favourite. The companies like the US, Europe, Taiwan and China are importing equipment to India. Where export is concerned lots of companies are setting up distributors in India and directly selling their products here, while others are starting their own companies in the country. However, India´s performance on the export front is still not encouraging. Apart for a few exports to the African countries it cannot be credited much on exports.

However, positive news for India´s bakery segment is that recession has not made an impact here. Though with the rise in oil prices a few months back the input costs for the bakers had increased, with the prices back to normal the bakers are finding relief in the increased margins once again. «For cities like Mumbai that live on pav, the demand for bread can never reduce», says Chetan Salvi from Hospitality First business magazine to FnBnews.

In terms of suppliers, the market is highly unorganised. There are around 3’000 suppliers in Mumbai and around 60 to 70 percent follow traditional baking methods like using the wood. The transformation to electric, LPG etc is utterly important for redeveloping the cities like Mumbai that expands horizontally. The need is to look at energy saving resources, considering the power crisis.

The key drivers for the bakery industry also is the ever growing population and the growing middle class income. The challenge for the equipment industry is that it has to evolve with time. Regions like the Western India and Southern India which are leaders in the bakery industry need to develop more of the market. Bakery has formed itself as the backbone of the food industry over the years and it has to be pushed aggressively, sometimes gently to take it to the pinnacle it deserves to be at (source).