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India Biscuit Market: Will GST Stop Industry Juggernaut?

TechSci expects India biscuit market to grow in double-digits, but GST regime may cause teething troubles in the short-term … 

Just this week, India biscuit market leader Parle Products announced a tie-up with Manpasand beverages for distribution, network-sharing and cross promotion of their brands. While this step must be seen in a positive light, given that scaling up of non-production operations will lead to a boost in revenues, a looming post-GST tax increase is giving India biscuit market players nightmares.

TechSci Research experts responsible for the report India Biscuit Market, Competition Forecast & Opportunities, 2012 – 2022” were interviewed to provide cutting edge insights into various India biscuit market trends.

Aforementioned TechSci Research report suggests that India biscuit market size stood at $3.9 billion in 2016, and is projected to grow at a CAGR of 11.27%, in value terms, during 2017-2022, to reach $7.25 billion by 2022. With rise in affordability, major players are tinkering with different flavours to come up with different products catering to increasingly diverse set of people.

What follows then is a virtuous cycle where growing revenue generation is invested back in product diversification, leading to increased consumption which further improves revenues, thus leading to further promulgation in the India biscuit market size.

Given that a positive, self-sustaining ecosystem has been created in the India biscuit market, leading players have a lot more leverage for creative ways of gaining more market share. E-tailing of biscuit products, keeping with the times to offer healthy alternatives to enthusiasts etc.

Even though Parle Products is the undisputed leader in India biscuit market, they have to keep on their toes due to the growing competitiveness and dynamic nature of the market. Companies such as Britannia Industries, ITC Limited, Mondelez India Foods Private Limited, Surya Food & Agro Ltd.


GST Will Force India Biscuit Market to Look Elsewhere for Growth

The tie-up with Parle and Manpasand, however, must also be viewed through the prism of the inculcation of GST. India biscuit market players were blindsided with the implementation of an 18% tax on the product and this has led to much woe in the industry.

Livemint reported that major India biscuit market player Britannia’s net profit for the period fell 1.4% y-o-y to Rs216.12 crore even as revenues rose 6.21% to Rs2,375.01 crore. TechSci experts suggest that the decline in net profit in spite of enhanced revenues implies that the company’s margins have taken a hit post-GST. Britannia has some other pressing issues as well, pertaining to distributors, so GST is one of many factors responsible for the decline.

However, there is definitely a pattern that is being repeated throughout the India biscuit market, which leads to the conclusion that margins have dropped throughout the industry. In this case, major players will have to tinker primarily with the supply-side in order to ensure that the status quo in the demand-side is maintained.

Others, such as Parle, are going back to their own ways, by turning back to toffees. Obviously focusing on both biscuits and toffees at the same time would lead to a strain in the production capacities of the company, signifying that there will be decreased focus on India biscuit market products. Regardless, TechSci is keeping a close watch on the latest developments taking place in this industry.

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