PepsiCo going local in branded snacks

PepsiCo India is facing tough competition in branded packaged snacks despite being an early bird in this category.

The company was a pioneer, introducing global standard potato chips under the Lays label and crunchy snacks under Kurkure.

Today, it stands behind two local entities— Haldiram Foods and Balaji Wafers — in the ~335.6-billion savoury snacks market. And ITC, now at fourth spot, is catching up. Parle Products is fifth. Till 2016, PepsiCo was ahead of ITC and Balaji.

What has remained constant is the underlying theme of the market, where regional flavour is the consumer’s preference. Four of the top five firms are home-grown and have portfolios skewed towards traditional Indian tastes. Haldiram’s and Balaji are known for typical traditional snacks and late entrant ITC has also relied on basic Indian tastes for success.

“The population in different regions of India are migrating towards urban business centres, resulting in a diversified demography there. This migrant population

retained their food habits, irrespective of their new destination, resulting in a considerable rise in demand for regional favoured snacks in different parts,” said Prashant Roy, senior research analyst at Euromonitor International.

They said the savoury snacks category grew at a 19 per cent compounded annual rate since 2013, the highest among all snacks categories. This growth will remain high at 16.7 per cent till 2023, again the highest as compared to other categories.

This high growth in the segment is increasingly attracting fast-moving consumer goods entities towards the snacks business. For PepsiCo, the stakes are high. For years, its beverages business has remained in the red. It is trying to reduce use of sugar, to shed the tag of an unhealthy portfolio. It is raising the pitch in the profitable snacks business, now close to 45 per cent of its ~65.4-billion in annual sales.

While it continues to experiment with local flavours for potato chips under Lays, its bet to crack the market is Kurkure. In 2018, it has come up with close to a dozen local flavours, changed its packaging to highlight the transformation by placing pictures of regional flavours and spices, and tried formats favoured by Indians.

It has come up with half a dozen revamped packs. It is now is foraying into baked snacks, a trend that is seeing rising demand with a more healthconscious mindset among consumers. Launched in three flavours — Bikaneri bhujia, Andhra’s murukku, and Shahi namkeens — the new Kurkure Twist keen will help it gain momentum in the festive season, claims Jagrut Kotecha, vice-president for PepsiCo’s snacking category.

He said namkeen or traditional salty snacks were the biggest category in India’s ~220billion branded snacks market. Namkeen holds 37 per cent share by volume, followed by extruded snacks (36 per cent) and potato chips (23 per cent), housing 3,000-odd brands. The foray into non-fried snacks could be a move at the right direction. Roy from Euromonitor said healthy living was becoming a significant trend and manufacturers were aware of the potential for healthy snack alternatives.

As PepsiCo cuts salt levels in these snacks as well, this would be a plus point in the highly competitive market. In the coming months, more local flavours with lesser salt levels will be added to its baked and fried snack ranges, Kotecha said.

High growth in the segment is increasingly attracting FMCG entities towards the snacks business