Bikaji Foods International Ltd Management Discussions

Packaged Foods in India¹

Industry Overview

Packaged foods have become a significant part of our modern lifestyle, offering convenience, variety, and extended shelf life. It is driven by the evolving needs and demands of consumers, particularly due to their hectic lifestyles and increased travel frequency. This has created a preference for convenient food options that are easily accessible and require minimal cooking efforts. Packaged foods have successfully catered to these preferences by providing ready-to-eat alternatives. With their time-saving benefit, packaged foods have seamlessly integrated into modern-day living, becoming an essential choice for individuals seeking practical and hassle-free meal solutions.

Over the past few years, the packaged food industry in India has witnessed a remarkable surge in demand. In FY 201415, the retail revenue of packaged food reached an impressive value of Rs.2,434 Billion. Since then, it has witnessed significant growth increasing to Rs.4,240 Billion in FY2022, achieving a remarkable CAGR of ~8.3% from FY 2014-15 till FY 2021-22.

1 Industry report on savouries, sweets and papad in India, 30th September 2022.

Categorising the Industry

The India Packaged Food Market valued at Rs.4,240 Billion is segmented into dairy products, snacks and sweets, biscuit and snack bar, baked products, ready to eat meals and others. Among Indian consumers, the dairy products segment dominates the market with the largest share of 38.8%, followed by the snacks and sweets segment at 32.3% and the biscuits segment at 14.5%.

Category wise packaged food retail market, India, FY 2022: K4.24 Trillion

Classifying the Distribution Reach

The packaged food industry relies heavily on a robust distribution network. The mode of distribution in India is divided into two categories: the offline channel and online channel. The offline channel is driven by supermarkets, hypermarkets, convenience stores, brick-and-mortar outlets, and others, while the online channel is particularly led by e-commerce. Although the offline market holds majority share, the online market has emerged as a prominent platform for the packaged food industry in the past few years as more people shift towards digitalisation.

Why Packaged Food MattersRs.

Protection: One of the most significant advantages of food packaging is that it protects the food from external factors such as air, light, moisture, and contamination, which can affect its quality, taste, and safety. Packaging also helps to extend the shelf life of food, reducing waste and ensuring that food stays fresh for longer.

Convenience: Packaging makes it easier for consumers to transport, store, and use food products. Packaging provides easy-to-use and convenient storage options that can help make it easier to transport and consume food while on the go.

Differentiation: Packaging can also help differentiate products in the market, making it easier for consumers to identify different types of food products and brands. This differentiation can be critical for products that may have similar ingredients, flavours, or nutritional values.

Safety: Food packaging is critical in maintaining the safety of food, particularly during transportation and storage. Packaging helps prevent food from being contaminated, reducing the risk of foodborne illness and ensuring that food is safe for consumption.

Sustainability: Many food packaging materials can be recycled or reused, making the industry more sustainable by reducing waste and minimising the environmental impact of packaging production and disposal.

India Packaged Food Market Drivers¹

Swift modernisation is anticipated to boost the market growth.

The urban population in India has experienced significant growth over the years. This trend is expected to continue, with projections indicating that the urban population could reach 70% by 2030. Urban areas offer better access to packaged foods due to well-established infrastructure, widespread retail outlets, and e-commerce services.

The governments focus on planned urbanisation further supports this market growth.

Bettering retail and rising disposable incomes are expected to boost market demand

The Indian retail industry is experiencing remarkable growth and is projected to reach a significant value in the coming years. The presence of key players like Reliance, DMart, and Amazon contributes to the industrys competitiveness. Additionally, the expanding user base of internet users provides opportunities for e-commerce companies to expand their operations. Rising exports contribute to economic prosperity and increased disposable incomes among consumers. Furthermore, initiatives such as production-linked incentive schemes drive market growth.

Outlook

The packaged food market in India is projected to reach a size of Rs.5,798 Billion by 2026, exhibiting a CAGR of 8% from FY2022 till FY2026. The growth is primarily fuelled by factors such as the rise in product and packaging innovation, a growing focus on healthy food options, and the increasing demand for convenient food products.

Indias Dominance on Snacking²

Industry Overview

Amidst a rich and diverse food culture, India stands out for its deep-rooted fondness for snack items. Snacks play an integral role in the countrys food culture, offering a wide array of flavours, textures, and regional specialties. From traditional street snacks like samosas, pakoras, and vadas to modern twists on snacks like chips, biscuits, and namkeens, India offers a treasure trove of snacking options.

Indias savoury snacks industry has experienced substantial growth, with its value increasing from Rs.500 Billion in the FY2015 to approximately Rs.751 Billion today. Within this market, the organised sector, characterised by well-packaged, labelled, and branded products, accounts for around Rs.423 Billion. Among the organised sector, western savoury snacks hold a dominant position, contributing Rs.242 Billion and represents approximately 57% of the total organised savoury snacks market.

Division of Indian Snacks Market The savoury snacks market in India is characterised by the presence of numerous unorganised players operating across different product segments. Each snack item has its regional significance, leading to the entry of many small businesses in the market. These players typically offer a limited product portfolio focused on traditional snack items within a specific category. Due to their geographical limitations, these businesses primarily cater to a single city or state. To gain popularity, they rely on competitive pricing and the appeal of traditional flavours associated with their products.

Large FMCG companies have capitalised on the snacks market potential, utilising their robust supply chains. Distinguished by diverse product portfolios, aggressive advertising, and R&D, these players have gained an upper hand as factors like demonetisation, GST, and the pandemic led to the closure of small unorganised businesses. The organised segment has experienced significant growth through innovative launches, targeting urban and rural consumers, with strategic advertisements and celebrity endorsements amplifying their success. This trend is projected to persist, further solidifying the positior of organised players.

Outlook

The outlook for the Indian savoury snacks market is promising, with an estimated value of Rs.1,227 Billion by FY 2026. This growth will be largely driven by the organised players in the market, who are capturing a significant market share. As these players continue to prioritise quality, convenience, and adherence to safety standards, they are well-positioned to meet the evolving consumer demands and capitalise on the markets growth potential.

India Savory Snacks Market in India

Segment-wise Organised Indian Snack and Sweet Market³

Ethnic Namkeen and Snacks, Ethnic Bhujia and Western Snacks

The organised market for savoury snacks like ethnic namkeen, bhujia and western snacks in India is currently valued at Rs.423 Billion. It is further projected to grow at a CAGR of 15% until FY2026. This growth can largely be attributed to the organised sectors ability to leverage celebrity endorsements and conduct effective marketing campaigns, thereby engaging and expanding their audience base.

With such capabilities and significant contribution, today, the Western snack category continues to dominate the organised market, holding a substantial market share of 57.2% in the Indian savoury snacks segment. Ethnic namkeen and snacks contribute 26.9% to the organised savoury market, while ethnic bhujia holds a share of 15.9% in the overall savoury snacks market.

Organised Indian Savory Snacks Market- Market size by type, FY 2022

Sweet Market

Sweets hold a prominent and cherished place in Indian households, representing a deeply rooted and popular cultural tradition. The Indian sweet market boasts a substantial valuation of Rs.593 Billion, yet the organised sector accounts for only a fraction of this, amounting to Rs.58 Billion.

Within the organised sweet market, major players have segmented their offerings into various categories. These include milk-based sweets, soan papdi, dry fruit sweets, and other delectable varieties that cater to diverse consumer preferences and tastes.

Organised Indian Sweet Market size by Type,

FY 2022

Papad Market

Papad, a ready-to-cook product enjoyed as a snack or as an accompaniment to meals, holds immense popularity in Indian markets. It is widely available, ranging from local mom-and-pop stores to popular e-commerce platforms.

In certain states of India, a meal is considered incomplete without the addition of papad to the serving.

The papad market as a whole is valued at Rs.78 Billion, with the unorganised sector holding the majority share. The organised market, comprising 32.9% of the total market, is primarily dominated by established players with a rich legacy who have successfully implemented systematic processes and practices.

Major Split of the industry by Region

The demand for savoury snacks is high in North and West India, where namkeen forms an integral part of food habits, particularly in Rajasthan and Gujarat. The popularity of ethnic namkeen and bhujia segments is driving growth in these regions. In East India, consumption of savoury snacks, along with street food, is considerable. The sweets market is driven by North India, followed by East, South, and West India. Papad is widely consumed with meals and as snacks in states like Rajasthan, Gujarat, and Madhya Pradesh.

India Savoury Snacks, Sweets and Papad Market - Split by Region, FY 2022

Company Overview

Bikaji Foods International Limited is a prominent brand in India that specialises in ethnic snacks and has established a global presence. Our company is one of the fastest-growing players in Indias organised snacks market and aspires to become a significant player throughout the country. While we have a strong base in Rajasthan, we have also made our mark in Bihar and Assam. Our company has gained market leadership in these areas, and we are continuously expanding across India.

In addition to our domestic success, we are proud to be the top exporters of snacks, sweets, frozen food, and savouries to over 25 countries worldwide. Our reach extends across North America, Asia Pacific, the Middle East, the European Union, Africa, and the United Kingdom.

Our diverse product range comprises over 300 different items, including namkeen, sweets, western snacks, chips, and cookies, which provide us with a robust presence in the Indian snacks industry. Bhujia is our best-selling product, followed closely by other categories such as namkeen, sweets, papad and other snacks.

IPO Listing

In this year, we launched our IPO on November 3, 2022, offering 2,93,73,984 equity shares with a face value of Rs.1, amounting to a total of f881.22 Crores. The IPO witnessed a robust investor response, with shares sold in the price range of Rs.285-300 per share. The subscription rate surpassed 26.67 times during the period of November 3-7.

Following a successful listing on November 16, 2022, at a price of Rs.321.15, our companys share price has experienced growth, reaching T362.60 as of March 31, 2023. The market capitalisation of the Company has marked its presence under the list of Top 500 Companies. As per the market capitalization list released by NSE and BSE, the ranking of your Company stood at 345 and 348, respectively, as of March 31, 2023.