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Britannia, Marico, PepsiCo spot a big opportunity

Economic Times, Bangalore, November 3, 2010
Sarah Jacob

Breakfast is the most important meal of the day. Certainly for several packaged food companies , if not for everyone.

Call it the breakfast war, the scramble to serve the first meal of the day is getting busier with companies such as Britannia, Marico, PepsiCo, Kellogg India and MTR Foods offering more and more options to meet Indian consumers’ rising demand for quick-fix food.

Britannia Industries, which already occupies share of the breakfast table with bread, butter and cheese, is making early moves in the ready-to-cook breakfast meals segment, an official said.

One of the country’s largest biscuit makers, Britannia is conducting trials of packaged products such as buttermilk oats and sweet multi-grain porridge under ‘Healthy Start’ brand, and is also toying with traditional Indian options such as upma and poha, an industry official said. "Healthy Start is being positioned as an umbrella brand for Britannia’s plans in the breakfast space," the person said on condition of anonymity. The brand may be rolled out in Bangalore this year.

Britannia is one among several companies looking to cash in on a surge in demand for quick-fix breakfast options in urban areas where the number of double-income families and working professionals are rising and consumer lifestyle and food habits are changing. These products are targeted specifically at urban, working people and, hence, there is no price undercutting or margin pressure, helping the industry grow in double digits, in volume and value. Industry players estimate the branded breakfast foods market in India at around Rs 500 crore, offering enough room for new entrants. There is a ready market for such products.

A breakfast habits study conducted by Kellogg India last year revealed that at least one in three Indians and more women than men skip breakfast daily. Young girls and children were also opting out of the meal several times a week, the study said.

Packaged food companies spot a big opportunity here. "It is easier for consumers to adopt ready-to-cook meals for breakfast as against other meals because of the need for convenience," says Vidur Vyas, marketing director-Foods, PepsiCo India.

"This consumer is also gravitating towards healthy options while looking out for affordability per serving ," he says, adding that Quaker Oats appeals to the Indian habit of consuming dalia (broken wheat).

Also, the urban lifestyle is changing in line with the western world. "The Indian consumer today is more in tune with the lifestyle of western countries due to growing business travel and media exposure, which has been reflected in apparel and now in food as well," says Devangshu Dutta, chief executive of Third Eyesight, a retail and consumer products consulting firm.

At the same time, there is a good demand for ready-to-cook traditional breakfast. "Morning is the most high-pressure time of the day, particularly for the woman of the family. The adoption of ready-to-cook product is on the rise because she does not feel like she is compromising on the traditional breakfast," says Sanjay Sharma, CEO of MTR Foods, which sells instant breakfast mixes such as rava idli, dosa and uthappam.

The Rs 250-crore company, owned by Norwaybased Orkla Brands, said its breakfast segment sales increased 25% last month and that it expects the contribution of breakfast mixes to its revenues to double to 20% in three years.

In recent months, Marico too entered this segment with Saffola Oats and cereal maker Kellogg India launched Heart to Heart oats to cater to Indian preferences of a hot breakfast.

All this explains Britannia’s move to enter the segment. Analysts tracking the sector say the breakfast meals category would be a natural extension for the likes of Britannia as it provides multiple areas of synergy for the company.

"It would give the company greater sourcing flexibility for inputs such as milk powder and sugar , with volumes giving it the capacity to withstand seasonality," says Anand Ramananthan, manager at KPMG Advisory services. Besides broadening its portfolio with trade, on the demand front, it would help Britannia occupy greater mind space in the healthy foods segment, he says.

Incidentally, quick-service restaurant chain McDonald’s , which enjoys strong equity in the breakfast meal space globally, has also identified the gap in the breakfast market. Its chicken Mexican wrap, muffins and hash browns offering is being rolled out across Pune and Bangalore, beyond Mumbai and New Delhi, in two years. "With 200 restaurants in the country today, we are accessible to the on-go-consumer today," said Amit Jatia, Managing Director McDonald’s India (west & south).

(This article originally appeared in The Economic Times on November 3, 2010)

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