fmcg-sectoranalysis

8/2/2019 FMCG-SectorAnalysis

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FMCG SECTOR ANALYSIS

THE BISCUIT INDUSTRY


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CONTENTS

Introduction

Overview of the Indian Biscuit Industry

Top Players

Primary

&

Secondary

Stakeholders

Stake-holders

Competitors

Back End Supply Chain Vendors

Front end Distribution Chain

Regulatory Framework

STEEP Analysis Trend Analysis

Investors

Advertising Agencies


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W


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OVERVIEW OF THE INDIAN BISCUIT

INDUSTRY Contribution of 8000 crore to the FMCG Industry Per Capita consumption of Biscuits less than 2.1 kg

Classified into 2 sectors

Organized 70%

Unorganized

30% BIG 3 Britannia, Parle, ITC (Sunfeast)

150 smaller biscuit factories

Current problems relating to increase in price of raw material Govt increased VAT to 12.5%

States with larger intake of biscuits Maharashtra, WB, AP,Karnataka and UP

Steady growth of 15% in the next 15 years according to FBMI(Federation of Biscuit Manufacturers of India)

Export of biscuits surpassing the target and hitting the globalmarket successfully


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CONTD

Organized Segment 1.30 million tonnes

Britannia and Parle account to 70% of the industry

Revenue of Britannia

27 billion

Parle derives a large portion of its revenues from its low pricedbiscuits

Britannia derives from the medium and the higher priced segments


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TOP PLAYERS

According to

www.marketresearchdata.org


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Stake-holders

Different Segments of Consumers

Employees of the company

Shareholders

Government

People staying around the biscuit factory

Farmers

Raw Material suppliers

Distributors

Retailers/Wholesalers


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COMPETITORS/CONSUMERS

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BACK END SUPPLY CHAIN

& VENDORS Tier 3

Wheat : raw wheat supplier

Sugar : Sugar cane, preservatives

Edible oil : raw seeds supplier

Tier 2

Wheat flour: B.H. Modi, Tanna Commercials Private Limited sugar: Mawana sugar

Edible vegetable oils: Godrej, Wipro, Olivia Impex Private Limited

Hydrogenated vegetable oils: Meghadoot oil mills

Invert syrup: Sai Sugar Products, Taste Agro Foods Pvt

Liquid glucose :Devson Impex Private Limited, A. B. Enterprises, Mumbai.

Packaging : ITC

Tier 1 Parle

ITC

Britannia


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FRONT END DISTRIBUTION

CHAINBRANCHES

CIRCLESConsist of 1-3 sectors

SECTORSConsist of 5-8 warehouse

distributors

WAREHOUSE

DISTRIBUTOR

Physical movement of goods

GODOWN/WSP

2 way

info

flow

CUSTOMER

RETAIL STORE


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Contd

Margin for Authorized Distributor 4.5% - 5% After expenses(Labour, Transportation) 2.2% - 2.5%

Wholesale Distributor 1%(of his margin)

i.e Wholesaler distributor given a discount of 1% on the billing rate

Wholesalers supplied directly by the distributor

Discounts and schemes

Margin 1% - 2% (given by the distributor)

Bulk purchases

Margin can go upto 2.5%of the billing rate

Retailer Supply from either the distributor or the wholesaler

Distinction is done on the basis of the size of the retailer

Big retailers supplied twice a week by distributors

Small retailers small quantities bought from the distributors


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REGULATORY FRAMEWORK

The Indian Parliament has passed the Food Safety and Standards Act, 2006 that overrides all other food related laws. It willspecifically repeal eight laws: The Prevention of Food Adulteration Act, 1954

The Fruit Products Order, 1955

The Meat Food Products Order, 1973

The Vegetable Oil Products (Control) Order, 1947

The Edible Oils Packaging (Regulation) Order, 1998

The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967

The Milk and Milk Products Order, 1992

Essential Commodities Act, 1955 relating to food

The Act establishes a new national regulatory body, the Food Safetyand Standards Authority of India, to develop science basedstandards for food and to regulate and monitor the manufacture,processing, storage, distribution, sale and import of food so as toensure the availability of safe and wholesome food for human

consumption.


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Contd

Additions to the Existing act:

Printing of Nutritional Value

Compulsory Printing of Name, Address, Tel. No


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STEEP ANALYSIS

SOCIAL

Worlds 3rd largest producer of biscuits

Age

Lifestyle

Perception

Catering to the local flavours


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STEEP ANALYSIS

TECHNOLOGICAL

Certain processes are automated

RFID used in Retail stores to avoid stock-outs

Retina analysis used in stores

R&D Use of Enzyme technology


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STEEP ANALYSIS

ENVIRONMENTAL

Eco-Friendly practices

Initiatives like Planting trees

Rain-water Harvesting


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STEEP ANALYSIS

ECONOMICAL

Increase in per capita Income

Food Inflation reduced to 9.42%

IndiasGDP growing at 8.4%


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STEEP ANALYSIS

POLITICAL

Taxes

Production and Distribution licenses


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TREND ANALYSIS

FMCG honchos eyeing market of the high street stores investing instand alone stores (reason being higher visibility and less cost)

Healthy living more preference shown towards multigrain, lowcalorie, fiber biscuits etc

Britannia is the pioneering leader Increased presence of foreign players UNIBIC, BISKFARM,

UNITED BISCUITS

Foray of non-biscuit companies into the biscuit market Cadbury,GSK

Companies facing extremely high and unprecedented cost scenario, Result Huge pricing pressure with a limitation on price hike and a

shrinking profit pool

Increase in prices of Oil, Wheat leading to increase in price ofpackaging, freight and production costs


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INVESTORS

Shareholding ofPromoter and PromoterGroup 51% shares

Public Shareholding(Institutional) 27%

Public Shareholding(Non-institutional) 22%

BRITANNIA Banks, FinancialInstitutions, InsuranceCompanies, MutualFund 37%

Foreign Companies 31.6%

Foreign InstitutionalInvestor 13.4%

Public and Others 12.9%

Corporate Bodies

5.1%

ITC


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ADVERTISINGAGENCIES


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KINDS OF ADVERTISING

Newspapers

Magazines

Brochures

Fliers

PRINT MEDIA

Billboards

Kiosks

Trade shows

Events

OUTDOOR

Television

Radio

Internet

BROADCAST

Advertising for Social CausesPUBLICSERVICE

Through Brand ambassadors and celebrities

CELEBRITY


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PAIN POINTS

Britannia Increased cost of the product

Decreased nutritional value of the product

Industry and technology requires high investment

Regular usage of processed food can cause alteration to health.

Parle Too much dependence on retailers and grocery stores for display and

sale of the product.

Too much dependence on the brand Parle G

Sunfeast ITC Not that established a brand as compared to Britannia and Parle


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New competitor


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