INTRODUCTION:

History of Biscuit Industry:

Biscuits are a very significant part of the food industry in most countries of the world. A biscuit is a small baked product; the exact meaning varies markedly in different parts of the world. The origin of the word "biscuit" is from Latin via Middle French and means "cooked twice" (similar to the German Zwieback). Some of the original biscuits were British naval hard tack. That was passed down to American culture, and hard tack (biscuits) was made through the 19th century. Biscuit can flourish in any environment where there is a base population, in the immediate vicinity of the plant; a country with large population is well suited for a biscuit plant. Biscuit is most suited for local production. This factor alone has made India a big biscuit center. Biscuit Industry has flourished in India enormously over the years and is still growing phenomenally. This growth has funneled a growth of all facets of biscuit making in India. While the modern India is considered a centre for software development, many do not realize that one industry that has developed similar capabilities is Biscuit. Today India can boast of being

Most cost effective and reliable biscuit machinery making center. Most talented senior management and technical manpower pool for biscuit making.

Most number of biscuit production manpower and operating technicians manpower.

Most reliable center for outsourcing manufacture of biscuits. Most cost effective center for food testing laboratories. Most cost effective and talented centre for product development, research and formulation development.

Overview of The Indian Biscuit Industry:

Biscuit industry contribute Rs 9,986 crore to the FMCG industry and provide a vast 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 been 70% 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 14.5% has added to their woes .Biscuit consumption per capita in India has grown to 2.1kg per capita in comparison to 10kg per capita consumption in USA ,UK and Europe .

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

Even, the rural sector consumes around 55 percent of the biscuits in the bakery products. The total production of bakery products has risen from 5.19 lakh tonnes in 1975 to 18.95 lakh tones in 1990. Biscuits contributes to over 33 percent of the total production of bakery and above 79 percent of the biscuits are manufactured by the small 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 with a motive power of 25 K.W. Indian biscuit industry has occupied around 55-60 percent of the entire bakery production. Few years back, large scale bakery manufacturers like 2

Cadbury, Nestle, and Brooke Bond tried to trade in the biscuit industry but couldn't hit the 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 percent per 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 market successfully.

Sectors of Biscuit Industry:

In terms of volume biscuit production by the organized segment is estimated at 1.30 million tones. In the organized sector, the industry is dominated by Britannia and Parle, which account for 70 per cent of the industry's volumes. The two major organized players are Britannia and Parle. Parle and Britannia derive a fairly large share of their revenues from the medium- and premium varieties. In fact, Britannia's market share in the medium and premium varieties is significantly higher and Parles market share is greater in the low priced varieties. Other organized players include domestic players like Brakemans, Champion, Kwality, Priya and MNCs like SmithKline Consumer, Kelloggs, Sara, Heinz, Excelsia (Nestle) and United Biscuits.

The unorganized sector consists of small bakery units, cottage and household type manufacturing their goods without much packaging and distributing their goods in the surrounding areas. Lower overheads due to limited local area, family management, focused product lines and less expenditure on marketing helps the unorganized sector to grow. The organized biscuit manufacturing industrys annual production were around 1.25 million tons in 2004-05, 1.47 million tons in 2005-06, 1.62 million tons in 2006-07, 1.71 tons in 2007-08, 1.82 million tons in 2008-09, 1.95 million tons in 2009-10. 3

TWO SECTORS OF THE BISCUIT INDUSTRY

unorganizedsector organized sector

30% 70%

FEDERATION OF BISCUIT MANUFACTURES OF INDIA

FBMI, Established in 1950, from gathering of CEOs of small, medium and large Biscuit manufacturing organizations in the countrys capital city, the Federation of Biscuit Manufacturers of India, popularly known as FBMI has come to stay as the premier forum of the organized segment the biscuit industry in India, by virtue of its effective servicing and result oriented activities, with the prime objective of protecting and promoting the interests and development of the Biscuit industry. The FBMI represents the organized biscuit industry consisting of small scale, medium and large biscuit manufacturers located in all zones and all States of the country. As the apex body of the biscuit industry, the Federation strives to serve its members in particular and the biscuit industry in general.

Objectives of FBMI: To promote, protect and safeguard the interest of the Biscuit manufacturing industry, particularly in the small and medium sector

To promote and develop a systematic and hygienic Biscuit manufacturing Industry. To promote research and product development for the biscuit manufacturing industry and the establishment of any research organization for the purpose, particularly for the benefit of SMEs manufacturing biscuits

To assist the small and medium biscuit manufactures in the purchase of flour, inputs and other commodities and the provision for technical advice for improving manufacturing techniques and marketing method

To create appropriate bodies to advise Government of various aspects connected with the development of the biscuit manufacturing industry. To obtain from any such Government or authority rights, concessions and privileges which the Association may think it desirable to obtain and to carry out, exercise and comply with any such arrangements, rights, privileges and concessions.

List of The Players in The Industry:

The major Brands of biscuits are - Britannia, Parle, ITC Foods. Few regional players have made a mark in their respective zone. Harvest Gold, Cremica, Priya Gold, Dukes, Cookie Man, Anmol, Bisk Farm and Elite are some of the examples

Foreign players like United Biscuits and McVities have also entered the fray. However, these players have concentrated themselves in the super-premium and premium segments.

Brief Profile of the Players in the Industry

BRITANIA INDUSTRIES LIMITED:

Britannia Industries Limited is an Indian company based in Kolkata that is famous for its Britannia and Tiger brands of biscuit, which are highly recognized throughout the country. Britannia is one of Indias leading biscuit firms, with an estimated 38% market share. Once upon a time, in 1892 to be precise, a biscuit company

was started in a nondescript house in Calcutta (now Kolkata) with an initial investment 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 corporate identity - "Eat Healthy, Think Better" - and made its first foray into the dairy products market. Britannia strode into the 21st Century as one of India's biggest brands and the pre-eminent food brand of the country. It was equally recognized for its innovative approach to products and marketing.

Main products produced by Britannia industries: Good Day,Tiger,Marie Gold,50- 50,Choco -chips,Choco - nuts,Little Heart,Nutri Choice,Bourbon, NiceTime, Pure Magic, Milk Bikis,Jim -Jam,Cream Treats,Time Pass, Digestive, etc.

PARLE COMPANY In 1929 a small company by the name of Parle products emerged in British dominated India. The intent was to spread joy and cheer to children and adults alike, all over the country with its sweets and candies. Parle Products has been India's largest manufacturer of biscuits and confectionery, for almost 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 great taste. With a reach spanning even the remotest villages of India , the company has definitely come a very long way since its inception.

Many of the Parle products - biscuits or confectioneries, are market leaders in their category and have won acclaim at the Monde Selection, since 1971. With a 40% share 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 consumers it's a beacon of faith and trust, competitors look upon Parle as an example of marketing brilliance.

Parle biscuits are indeed much more than a tea- time snack, they are considered by many to be an important part of their daily food. Parle can treat you with a basket of 6

biscuits which are not only satisfying but are also of good and reliable quality. Parle biscuits cater to all tastes from kids to senior citizens. They have found their way into the Indian hearts and homes.

Major products of Parle: Parle - G ,Hide and Seek, Krackjack, Hide & Seek, Milano, Magix, Digestive, Marie Monaco Parle Marie, Kreams, Milk Shakti, Parle 20-20 Cookies ,Nimkin, etc.

ITC LIMITED: ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. TC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. 2003 witnessed the introduction of Sun feast as the Company entered the biscuits segment.

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

Leadership in the Food business requires a keen understanding of the supply chain for agricultural produce. ITC has over the last 90 years established a very close business relationship with the farming community in India and is currently in the process 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 produce for ITC's Foods Division.

Major products of ITC:

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 its commercial operations of manufacturing & selling of biscuits under brand Priyagold in October 1993. Over a period, It established strong manufacturing capabilities and have invested substantially in developing consumer preference for products. Its trademarks / brands Haq Se Maango & Priyagold have emerged as one of the most powerful brands in the FMCG sector. The company is committed to invest in brands, manufacturing capabilities, deliverables and distribution strength. Its strategy of strengthening the brands especially the umbrella brand Priyagold has resulted in creating immense brand recall value. The company is continuing with its effort of strengthening the brand with a scientific approach, which will result in growth of customer base, price premium, consumer loyalty which is expected to result in 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.

PRODUCT LINES AND CONSUMER BEHAVIOR:

Range of Products: Biscuit can he broadly categorized into the following segments (Based on productions) Glucose (44 percent), Marie (13 percent), Cream (10 percent), Crackers (13 percent), Milk (12 percent), 8

Others (8percent).

Product Description: Biscuits contain high nutritive value and are manufactured from wheat-flour, sugar, baking powder, condensed milk, ghee (fat), salt, jelly, dry fruits, various essences and flavouring etc. Different type biscuits can be classified,

Glucose Biscuits: Glucose Biscuits are made with pure wheat, sugar, salt and other ingredients. Glucose biscuits are the main stay of Indian biscuit industry. Glucose market share was growing at a very low rate but suddenly for the last three years there has been drop in glucose biscuit sale. All three major biscuit manufacturers( ITC, Parle, Britannia) has started re jigging their product mix (SKUs) in flavor of premium biscuits against glucose biscuit. The Glucose share is almost 50% of the total biscuit market share.

Cream biscuits: Basic Characteristics of this product are, Crisp or crunchy texture Distinctive flavors (orange, butterscotch, and mango etc.) Flavors that may change (loss of initial flavor)

Marie Biscuits: These products are fragile and characterized by a low moisture content (<6%) low water activity and are highly hygroscopic. It is viewed as a luxury tea-time snack but essential daily food component for an average Indian household.

Other Biscuits: Other biscuits include salt biscuits, sweet biscuits, cookies, and bourbon etc.

Complimentery Products:

Atta: Ground wheat (Atta) to flakes of wheat, or corn. Over the years, there has been a steady process of technology up gradation and modernization in the traditional milling industry. The grain-processing sector is largely un-organized, although there are a few 9

large players in the market. The Atta market appears poised to sustain a 40 per cent growth rate.

Since the packaged flour market was explored first at a national level by the Mumbai based DCW group in 1994, with "Captain Cook" Atta, some large players, like Hindustan Lever (with its Annapurna brand) and Godrej Pillsbury (Pillsbury), Agro Tech (Healthy World), Nature Fresh and ITC (Aashirvaad) entered the market. Traditional brands like 'Shakti Bhog' has also consolidated their position.

The market has huge potential as in urban areas (with market size of about 42 million tons), branded Atta accounts for 2-3% of consumption and is getting increasing acceptance.

Milk: Milk is main ingredient of manufacturing process as well as a complimentary product. Bread: Its a baked food product, which is made of flour or meal that is moistened into a dough, kneaded, and usually leavened with yeast. A major food since prehistoric times, bread has been made worldwide in various forms using a variety of ingredients and methods. The principal grains used in such breads are wheat, barley, millet, buckwheat, rye, and corn. In fact, bread is an excellent source of low-fat, complex carbohydrates. The renewed interest in bread has led to consumers' taste for a variety of bread types.

The per capita consumption of bread in India is only around 1.5 kg to 1.75 kg in various zones. The regional consumption of bread indicates that the southern states lead with 32% consumption while North, West and East zones consume about 27%, 23% and 18 % respectively of the total bread production.

The decline in production and the increased presence of branded players have also resulted in the closure of several bakeries in the small-scale sector. It is estimated that more than 250 small-scale bread units closed shutters during the last five years.

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Currently, the industry is witnessing a very competitive environment, and the customer's taste and preference is deciding the sales pattern of various bread brands in the market.

Chocolates: Food prepared from ground roasted cacao beans. It is consumed as candy, used to make beverages, and added as a flavoring or coating for confections and baked products. Duties and transportation cost make import of cocoa beans expensive. However, to fulfill demand, industry mainly imports cocoa butter and powder, said an senior official with the Central Arecanut and Cocoa Marketing and Processing Cooperative, a major grinding agency in the country. Chocolate consumption is gaining popularity in the country on increasing prosperity coupled with a shift in food habits, pushing up the countrys cocoa imports. India's annual per capita consumption of chocolates is extremely low at just about 200 grams compared with 8.5kg in Switzerland.

Wafers: A wafer is a crisp, often sweet, very thin, flat, and dry biscuit, often used to decorate ice cream. Wafers can also be made into cookies with cream flavoring sandwiched between them. They frequently have a waffle surface pattern but may also be patterned with insignia of the food's manufacturer or may be pattern less. Many chocolate bars that people eat have wafers in then such as Kit Kat and Coffee Crisp.

Bakery Products:

The bakery industry, production of which has been increasing steadily in the country, is the largest among the processed food industries in India. The two major bakery industries, viz. bread and biscuit account for about 82% of the total bakery products. The annual production of bakery products, which includes bread, biscuits, pastries, cakes, buns, rusks etc., is estimated to be in excess of 3 million tonnes. The cake and pastry market estimated at 0.4 million tonnes, is the fast growing market with volume growth of 16%.

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CONSUMER BEHAVIOR:

This aspect basically focuses on the consumer behavior and perception about the biscuit market, to find out the brand consciousness, purchasing capacity, taste and preferences of the consumers.

Frequency of Eating Biscuits

As per the study conducted by FBMI, On the basis of frequency of eating biscuits, most of the consumer consumes biscuits every day. Out of 50 peoples 27 said they eat biscuit everyday, 7 people said they take once in a week and 16 people take sometimes according to their mood. Thus, biscuit is major product of the FMCG sector.

Taste Preferences:
While considering the consumer preferences on taste, 51% of the people do not have any specific choice and they like to eat all kinds of biscuits. The remaining 19% like salty 12

biscuits, 15% like sweet and 15% like cream biscuits. Thus, most consumers do not have any specific taste preference.

According to the Survey conducted by the FBMI ,outcome of responses were based on various attributes like Crispness, Size, Nutrition, Ingredients, Freshness, and Flavors etc. Below mentioned chart depicts various age segments Vis -a Vis their choices of tastes.

Findings Out of the 4 respondents whose age was below 17 yrs, 75 percentage of respondents opting flavor as their highest priority.

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In the age category of 17 to 22, 60 percent of the respondents says that they eat on the basis of flavor and 40 percent opted nutrition as their best alternative. People in the age group of 22 to 30 considered Nutrition (45%) as their best choice. In the age segment of 32 and above, 71.4% of the respondents considered Nutrition as their best alternative. A mix trend of Ingredients and flavor was seen in this category as equal percentages (14.3%) of respondents went for both.

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 largest producer of Biscuits in the world, after the USA and China.

The biscuit industry is been experiencing steady growth of 14-15% annually. In 2010, the growth exceeded 19.5% mark on account of exemption from Central Excise Duty on biscuits. Indian Biscuit Manufacturers Association (IBMA), instrumental in obtaining the excise duty exemption, estimates annual growth of around 20% in the year 2009-10. Growth in biscuit marketing has been achieved also due to improvement in rural market penetration.

The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike in Central Excise Duty (from 9% to 16%). Production in the year 2001-02 increased very 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% 14

2009-10 - 19.5% 2010-11 20.2% (April to June)

The annual Growth showed a decline of 3.5% in 2000-01, mainly due to 100% hike in Central Excise Duty (from 9% to 16 %). Production in the year 2001-02 increased very marginally by 2.75% where in 2002-03 the growth is around 3%.Thereafter the annual growth increased to over 8 %. The Federation's estimate for the year 2007-2008 indicates a growth of approximately 8% to 9%. According to IBMA, the biscuit industry in India witnessed annual growth as 15% in 2003-04, 14% in 2004-05 and 2005-06, 13% in 200607, 15% in 2007-08 and 17% in 2008-09. While the growth rate has been stagnating during last 4 years, it has picked up momentum 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, as per Union Budget for 2007-08.

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

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Biscuit is a hygienically packaged nutritious snack food available at very competitive prices, volumes, and different tastes. According to the National Council of Applied Economic Research (NCAER) Study, biscuit is predominantly consumed by people from the lower levels of society, particularly children in both rural and urban areas with an average monthly income of Rs. 750.00.

Annual Production:
The annual production of biscuit in the organized sector continues to be predominantly in the small and medium sale sector before and after de-reservation. The annual production was around 7.4 Lakh tones in 1999-00. In the next ten years, biscuit production witnessed an annual growth of 19.5%, up to 2010-11. Though dereservation 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.

The production of organized and unorganized sectors of the biscuit industry is in the proportion 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 India have not shown any significant growth during the last two years and have not affected production/sales by the Indian Biscuit industry.

Growth Determinants: The main growth determinants of the industry are as follows: The focus on urban markets has also contributed significantly to the growth of the biscuit 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.

PRODUCTION TECHNOLOGY AND DISTRIBUTION: 16

Biscuit making process:

The process of biscuit manufacturing involves the following stages , Mixing: This is a process where all ingredients are put together in right proportion for dough formation. These ingredients are then fed into Mixers where mixing is done and dough is prepared for moulding/cutting .Major ingredients are flour, fat, sugar and others as per the product one would like to have.

Moulding: In this section we laminate the dough into sheet, which then passes down to gauge rollers, and sheet thickness is achieved for molder/cutter. Here we have a cutter or molder as per the variety where one gets the shape and sizes of biscuits.

Baking: This is the area where we pass these moulded wet biscuit into baking oven. The biscuits are baked on desired temperatures. Various type of heating are available now days as per the convenience and cost. Different type ovens are available 17

Cooling: These baked biscuits are then passed on to cooling conveyors for natural cooling prior too packing .The temperatures are brought down to room temperatures.

Packing: These biscuit are then stacked and fed into packing machine for packing Different packing material are available for packing of these biscuit in different packs slug packs , pouch pack or family packs etc. These packs are then put into secondary packaging like cartons to be transported to retailers.

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MARKETING:
According to Philip Kotler, Marketing can be defined as a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of values with others.

Wholesale and Retail marketing in the Biscuit industry is carried out with a network of C & F Agencies (for States and specific Districts), Dealers / Wholesalers and Retail shops.

Market share data for Indian biscuit industry:

Here are market share data for biscuit industry from report s available at IBMA (Indian Biscuit Manufacturers Association) . Major Market Share Holders Organized Sector Market share- Brands wise (volume ) PARLE BRITANNIA PRIYA GOLD ITC/SUNFEAST OTHERS 35% 31% 15% 09% 10%

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Market Share - Sector wise ORGANISED SECTOR 70% UN ORGANISED SECTOR 30%

Market share penetration- Population wise URBAN 85%-75% RURAL 65%-55%

Market share - Region wise : Market share of the industry in india as per region NORTH ZONE WEST ZONE EAST ZONE SOUTH ZONE Market Share product wise Marie and Glucose 50% 25% 23% 28% 24%

sweet, crackers , cream ,milk 50% 20

Marketing practices:

To establish a brand in this tough market is never easy. Since Biscuits are convenience goods, new tastes and new products are essential to built excitement in the market. Biscuits are consumed by people of all ages, from the rich to the poor, living in cities & in villages. While some have it for breakfast, For others it is a complete wholesome meal. For some it's the best accompaniment for tea. While for some it's a way of getting charged whenever they are low on energy. Biscuit industry practices mass marketing, which appeals to masses. It is a product liked by everyone and does not cater only to a specific group or part of the whole market. Thus the industry adopted mass production, mass distribution and mass promotion of products for all buyers.

Pricing Mix: Biscuit is a comparatively low margin food product in the PMCG (Packaged Mass Consumption Goods) sector. The commodity is also price sensitive, as a consequence of which, even when the Excise Duty was doubled on biscuits in 2000-01 biscuit manufacturers, including the major brands, were not able hike MRPs to the extent of the steep increase in the Duty. Taxation, both Central Excise Duty as also State Sales Tax, other miscellaneous levies i.e. turnover tax, local area tax, mandi taxes, purchase tax, octroi etc, has been a major deterrent in the growth of the biscuit industry.

The CII Study Report has identified Biscuit as one of the products that should treated as "Merit Good for the purpose of liberal tax policy both by the Centre and States.

Most of the companies in the industry adopted the Market Penetration strategy i.e. low price along with capturing of a large market Also they focus on providing good quality products at the same time, which means it uses the value pricing method. The value-for-money positioning helps generate large sales volumes for the products. 21

The biscuits industry now has two clear models. Parle products play the low price game at all varieties of biscuits from glucose to cream. Essentially, Parle plays a high volume, low margin game. But Britannia and Sun feast look at a two-pronged strategy. High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from both Britannia and Sun feast cost Rs 10 for 100 grams. Parle, however, only charges Rs 5 for its cream variants. Except for Hide & Seek, all of Parles products lie in the price range between Rs 4 and Rs 6 for 100 gram packs. To be fair, in Glucose and Marie, the companies have little choice. As there is little differentiation, consumers are extremely price sensitive. But these segments are important. Marie and the popular glucose varieties make up for nearly 55 per cent of the Rs 4,000 crore biscuits segment a significant Rs 2,200 crore. Packing: Biscuits packaging has undergone a swift transformation. From Britannia's functional Protective blister wraps, which prevent breakage, to Parle's stylish offering packaging has been completely transformed. The packaging of bakery products is closely interlinked with production, preservation, storage, transportation and marketing. The importance of packaging can further be gauged from the fact that packaging constitutes a fair portion (10 to 25%) of the entire cost of the pack. Its common sight now that retailers are keeping small packs of biscuit in Jar. Britannia as well as Parle s biscuits are now available in Jars and products priced in the range of Rs 12/- Rs15/- also. Promotion: Industrys ability to connect to large population through various promotional events (such as schools industry visits to plant, talk & TV shows, rural programs) to target different age segment will decide the market share. Biscuits are available to consumers, even in the most remote places and in the smallest of villages with a population of just 1500.

Advertisements: The products were advertised mainly through press ads. The communication spoke about the basic benefits of energy and nutrition. Good advertisement policies due to which people are motivated to buy their product at least 22

once. For instance, ITC has the advertisement about a child entering the cream world makes the children excited about the product leading to increase in sales. In the year 1997, Parle-G sponsored the tele-serial of the Indian superhero, Shaktimaan that went on to become a huge success

ITC typically follows a branding strategy under the umbrella name "Sunfeast". With multiple sub-brands created under this banner. This has been logical for ITC due to its late arrival into this category. A common brand name across its portfolio would ensure better recall among the consumers.

Innovation: Consumers today are demanding an increasingly wide variety of foods,

retail formats, and restaurant concepts. Food manufacturers, distributors, retailers, and foodservice operators face additional demands as they strive to profitably supply the large variety of goods and services on time and in the correct quantity. Innovations fall into several categories and include application of new technology, products & packs. Innovation in the product line biscuits with butterscotch cream with actual granules in the cream, strawberry cream with flavor-enhancers and orangeflavored Marie. The below graph shows the extent of innovation and technology adopted by the companies operating in biscuit industry:

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The companies, Parle and Britania are similar in technology and innovation and the remaining companies are followed by the two major players of the industry. Some of the new innovative products & packs introduced include Treat Fruit Rollz, NutriChoice Digestive, NutriChoice SugarOut, Good Day Jumbo, Tiger Banana (fortified with iron), Good Day Classic Cookies, Greetings gift packs and a variety of cheese variants. Several power brands were renovated to enhance their taste & health appeal. Britannia is the only biscuit company to have removed trans-fat from all its recipes. Labour: The Biscuit industry is a labor intensive and employees 3.25 lakh people directly and 35 lakh people indirectly. However, escalation in the cost of production coupled with price hike in raw materials has led to the closure of 8-10 small scale biscuit units and rendering 7,000 jobless Innovation in packaging: The biscuit pack must give mechanical protection to the product. This can be achieved either by packing the biscuits in end-fold style portion packs or by gas flushing the pillow packs, thus preventing breakage during transport and retail handling. Ready to sell individually wrapped packs eliminates the hygiene factor risks since the biscuits do not come in contact with the external environment. The appropriate films and correct sealing prevents any infestation by insects. The result is a product, which is fresh and tasty throughout its shelf-life. The pack must be perfectly heat-sealed in wrapping materials with the required barrier properties against light, humidity and external odours. In recent days, variety of flexible packaging materials are used for packing biscuits due to advantages such as functionality, lower cost, printability, light weight, savings in freight and other such factors.

Flexible Packaging Materials: These are used as wrappers, pre-formed pouches or form-fill pouches. The oldest flexible film to be used was cellophane because of its excellent gas barrier properties and heat sealability. MST, MSAT, Coated Cellophane (MXXT) offer excellent moisture barrier, heat sealability and gloss. Cellophane became less popular when it became too expensive and with the introduction of new materials 24

with better properties. Another material, which is widely used is Biaxially Oriented Polypropylene film commonly known as OPP. For less demanding applications OPP monofilm is used while for higher quality products, duplex OPP or OPP combinations (pearlised or metallised ) such as OPP/PE, OPP/PET etc. are used.

Today most of the biscuits are packed in flexible laminates of composite structures, where every component fulfills a specific function. These laminates have desirable properties such as moisture barrier, gas barrier heat sealability, printability characteristics, high production and overall economy.

ECONOMIES OF SCALE:
Economies of scale are factors that cause the average cost of producing something to fall as the volume of its output increases. There are two types of economies of scale: Internal: These are cost savings that accrue to a firm regardless of the industry, market or environment in which it operates. External: These are economies that benefit a firm because of the way in which its industry is organized. Internal economies of scale arise in a number of areas. For example, it is easier for large firms to carry the overheads of sophisticated research and development (R&D) In the recent scenario of the industry there is a crucial requirement for the companies to come out with innovative products. External economies of scale include manufacturing of bulk products, procurement of raw materials in bulk etc. Economies of scope: There is wider scope for the biscuit industry in India because of the following factors, Population of the country Biscuits are Consumed by all the segments of the market, like , children, youth, and adults 25

 Agriculture based industry: with the major inputs - wheat flour/atta sugar, milk vanaspati/vegetable oil etc all being agriculture produces. Mass consumer segment.

Logistics and Distribution:

The basic distribution channel implementing by the companies are,

MANUFACTURER

C &F AGENTS

SUPER STOCKISTS

STOCKISTS

RETAILERS

The below graph shows the price and distribution levels of the industry, as it shows , the Distribution of Britannia and Parle products are good with low price of products compared to remaining companies in the industry.

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STRATEGIES AND COMPETITION IN THE INDUSTRY:

Porters Five Forces Model:

Michael Porter provided a framework that models an industry as being influenced by five forces,

PORTERS FIVE FORCES ANALYSIS

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Rivalry within the Industry: Major players dominate the Indian market. High competition among the players in the industry to capture maximum market share. Unorganized sector cannot compete with major players in the case of Advertising.

Entry Barriers: Low entry barriers because of,

Capital intensive manufacturing, advertising and distribution Heavy competition from major players.

Bargaining Power of Suppliers:

In the case of major players bargaining power of suppliers is very low as they dictate the prices. The ingredients are basic commodities such as wheat, sugar etc.

Power of Buyers: High because of,

Availability of many biscuits from low, moderate prices Availability of biscuits from non organized sector Loyalty of the buyers to biscuits that have brand identity makes them more powerful in the case of new entries.

Threat of Substitutes: It is high because,

Substitute threat is more in the case of biscuits Growing packaged industry and bread industry Traditional Indian homemade snacks.

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High level of competition within the industry has lead to innovations in several areas, thereby raising the overall capability levels in the sector. This will facilitate sustained growth in the sector and help it to become globally

SWOT ANALISYS

Strengths
Brand building capabilities: Brand image of the company existing in the industry, every company has a strong brand image to consumers. Diversified product range of the industry covering al segments. The depth of distribution Low and mid price range of the products Industry catering to masses, as in most developing economies, increasing purchasing power is aiding the shift to affordable options.

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Weaknesses
Dependence on retailers and grocery stores for displaying diversified products on shelf. Lack of technology up gradation

Opportunities
Indian Biscuit Manufacturers Association (IBMA) estimates annual growth of around 20% in next couple of years. The $220 Billion food industry is expected to grow to $300 Billion by 2015. Per capita consumption of Biscuits in the country is only 1.8 kg as compared to 2.5 kg to 5.5 kg in South East Asian countries and European countries, and 7.5 kg in USA. Growing demand of Sugar free cream crackers & diet biscuits. Opportunity to further grown in Urban & Rural market; Current penetration levels are, Urban Market: 75% to 85% and Rural Market: 50% to 65% Grow in southern and east India. A package of fiscal incentives provided by various State governments like Himachal Pradesh, Uttaranchal, has encouraged companies to set up manufacturing facilities in these regions. The excise exemption for 10 years and income tax exemption for 5 years for units located in backward regions under section 80IA have encouraged many companies to set up new units

Threats
Fluctuations in the prices of raw materials, transportation costs & distribution cost due to high wedges and oil prices, Entry of ITC (having very good distribution channels) in to biscuit industry) Emerging local bakery products.

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BUSINESS ENVIRONMENT:
PESTEL Analysis
PEST factors play an important role in the value creation opportunities of a strategy. However they are usually beyond the control of the corporation and must normally be considered as either threats or opportunities. Macro-economical factors can differ per continent, country or even region, so normally a PEST analysis should be performed per country.

Political: Taxes: The Excise Duty on all Value Added food products like Nutritional and health foods, high value Ready to cook/serve products to be brought down to a maximum of 8% from 16 %. Production and Distribution licenses have been liberalized.

Economical Lack of technology up gradation in manufacturing, packaging etc has also been a factor affecting our industry, along with inadequate financial credit and support particularly for the medium and small scale biscuit units. Increase in per capita income in India Indias GDP growing at an average 8%

Social Increase in per capita consumption by all segments of the market India is 3rd largest producer of biscuit in the world Age: As a consequence of the high birth rates prevalent, a large proportion of the Indian population is relatively young - in the age group of 16- 25years. This group is also high in consumption and therefore, this trend is expected to provide a further boost to the growth of consumption in India.

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Lifestyle Increase in the population of working women and increasing prevalence of nuclear double income families, especially in urban areas, are other trends shaping lifestyles.

Positive Perception among the people regarding products (biscuits).

Technological Innovation: lack of innovation and technology in production but has been improving from past five years Improved Research and development activities in the industry.

Environmental Agriculture based industry Population in the country is also boosting the sales of the industry

Legal Taxation, both Central Excise Duty as also State Sales Tax, other miscellaneous levies i.e. turnover tax, local area tax, mandi taxes, purchase tax, octroi etc ,has been a major deterrent in the growth of the biscuit industry. The CII Study Report has identified Biscuit as one of the products that should treated as "Merit Good for the purpose of liberal tax policy both by the Centre and States. Zero duty import of capital goods and raw material for100 percent export oriented units. The excise duty on packaging materials and packaging machineries used for the processed food industry should come down to 8%. Packaging material for match sticks is exempted from excise duty. The Sales Tax or VAT rates for all machinery used should be lowered to the concessional rate of 4%

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CRITICAL SUCCESS FACTORS:

Critical success factors of the biscuit industry in India are,
Indias lower and middle class segment will continue to hold the key to success of the biscuit industry in India. Distribution (in rural markets) and advertising (in urban markets Innovation) and launching of new brands are being adopted by the companies to grab the market. The companies have added new variants into their existing brands including stylish packaging. The focus on urban markets have also contributed significantly to the growth of the biscuit industry. Standard grocers are the leading distribution channel, with one third of the Indian biscuit market, by value. Traditional grocers are the only other channel to take a double-digit share. Alliances The biscuit manufactures able to maintain good relations with distributors, whole sale suppliers and regional institutions (through CSR and other community oriented activities) will have greater market share due to BUZZ (mouth publicity) and media attention. Price The industry players will try to lower the procurement, production and distribution costs through programs such as JIT, JITD, TQM, Per SKU cost/Revenue analysis and will pass on these benefits to end consumers in terms of lowered prices. CONCLUSIONS: In Indian BISCUIT Industry even the small companies are able to make profits. Indian biscuit Industry has a continuous growth and will not be hindered due to external factors. Biscuit Industry has flourished in India enormously over the years and is still growing phenomenally Entrepreneurs or businessmen who are in process of buying , installation of new biscuit line should keep following points in mind ,apart from legal requirement of industrial licenses , pollution clearance's and of course finances.

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REFERENCES
www.google.com www.mofi.nic.in www.fbmi.in www.economictimes.com www.yahoo.com www.britannia.com www.parle-producuts.in

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