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As a child you most certainly would have heard the story of two cats fighting over a chappati, and a monkey coming and taking advantage of the fight, and moving away with the chappati. The same story is going around in the Indian biscuit industry.
Competition emerges out of the woodwork and swamps the champion from all sides... any guesses who this competitor is???... Yes, its ITC... giving a tough competition to major players in the Indian biscuit market - Britannia and Parle.

The Rs. 4,500 crore Indian biscuits market has grown at the rate of 12-14 percent year on year. Britannia is highest selling in terms of value, followed by Parle and ITC. Britannia and Parle together command a 75-78 percent market share, which three years ago was 82 percent before the entry of ITC.

The biscuit market in India is extremely price sensitive. With Parle providing most of its biscuits in the range of Rs. 4.00-6.00, other players in the market can't think of increasing the prices. The onus now lies in the hands of brand managers to project their brands to capture a bigger market share. One factor on which smaller players like Bisk Farm, Priya Gold, etc., are leveraging is the "quality". Since most of the bigger players like Britannia and ITC outsource their manufacturing, there is difference in the quality of biscuits contrary to these firms who do the production in-house.

Role of distribution channel is very crucial for any FMCG product. Britannia and Parle have got more or less a very wide coverage for their products in whole of India. Parle is weak in Eastern India and Tamil Nadu. To cover up this loophole of theirs, they are giving scholarships to children in these states to cover up the corporate equity, which is less than Britannia in these states. ITC already has a good understanding of distribution channels. The company uses its existing network of convenience stores - the company's name for the hole-in-the-wall pan-beedi shops - for Sunfeast. Not content with the existing resources, the company is also looking at grocery stores and other retail formats. Smaller players like Priya gold are setting up new plants in Guwahati, Dehradun, Ranchi and Nagpur to gain market share in the eastern region as it is already growing fast in the north and west.

The Years 2000-2005 were the years in which the customers did not get any newer variants from the major players of the market. Then, in 2003 came ITC, which flooded the market with a lot of variants like flavored version of Marie, butterscotch flavored cream biscuits and many more. In face of the competition, Parle and Britannia also came up with newer variants like double-flavored Marie-gold and 50-50 Chakkar by Britannia. Parle Products introduced two new cookie variants under its chocolate chip cookie brand - Hide & Seek.

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* Contributed by: -
Manisha Singh,
PGP - II,
Xavier Institute of Management,
Bhubaneswar.