Unibic India eyes larger market share with biscuits at Rs10

Bengaluru: Unibic Foods, known for its range of cookies, will expand its portfolio of Rs.10 biscuits in an attempt to gain share from the likes of Britannia and ITC at the lower end of the Rs.23,000 crore Indian biscuit market.

The strategy shift will help the biscuit maker gain clout in a market that sees the bulk of its sales at lower price points. It will also help the decade-old company gain distribution advantage. The Rs.10 and Rs.5 price points constitute more than 70% of sales in the Indian biscuit market, driven by large food companies such as Parle Products Pvt. Ltd, ITC Ltd and Britannia Industries Ltd. “We will look at hitting the Rs.10 price point, and see if we can build volume at that end of the market and expand our base as we enter newer markets,” said Unibic Foods India Pvt. Ltd’s managing director Nikhil Sen.

Over the next year, Unibic wants to double the reach of its products from 100,000 outlets currently and expand beyond south India, which is currently its strongest market.
Since its entry in 2004, the Indian arm of Unibic Australia has focused mostly on the premium end of the market, selling fruit and nut, and choco-nut cookies at Rs.25 for a 75 gram pack. According to data with the Registrar of Companies, it recorded a revenue of Rs.75 crore in 2013-14.

“We haven’t been attentive to the Rs.10 price point because we continue to be a premium biscuit company,” said Sen, formerly chief operating officer at Britannia, where he spent over two decades building brands such as Tiger. “But when you want to go from 100,000 to half-a-million outlets gradually, value pricing is conducive,” he added.
Unibic, which has one product at Rs.10 currently, will launch at least three-four more variants such as kaju-pista and butter cookies this year. Some gave a thumbs up to the move underscoring the need for any company looking at a national presence to offer biscuits at the Rs.10 price point.

“You cannot be restricted to the premium end of the market. You have to diversify,” said Mayank Shah, group product manager at Parle Products. “You need to offer both price and value.” However, brand-building at that level is a task that will take time, he added.

Analysts who track the sector view the move more as an investment by the company and expect the impact on margins to be compensated by the volume it gains by reaching more shoppers.

Unibic is trying to “recruit newer consumers”, said Gautam Duggad, vice-president of research (FMCG and retail) at Motilal Oswal Financial Services Ltd. The company has some good products and it is only logical that they are accessible to more people, Duggad added.

Over the past two years, the biscuit market in India has seen extensive consolidation across segments as manufacturers tweaked their portfolios and scaled more profitable brands. In January, the country’s largest biscuit maker Britannia said it would streamline its portfolio to focus on five power brands.

Sen is aware of the competition and investing in promotions accordingly. In 2013, Unibic initiated a new branding strategy, and spent on the brand’s logo and packaging to counter competition from ITC, Mondelez India and Britannia, which were widening their premium offerings.

“We are operating in a very competitive framework where you’ve got three major players to fight with,” said Sen, who is also overseeing the brand’s expansion in north Indian markets such as Delhi and Punjab.

(As published in live mint 25th June 2015)