Pepsi, Britannia eat into snack market; target health fans

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Pepsi, Britannia eat into snack market; target health fans

At Rs 300 crore, the Indian health snack market makes up just 5% of the entire snack market but that's not stopping giants like PepsiCo and Britannia from investing in the segment, reports CNBC-TV18's Nikita Rana.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show » Britannia BSE | NSE 30/05/12 Are Mutual Funds betting on Britannia?

At Rs 300 crore, the Indian health snack market makes up just 5% of the entire snack market but that's not stopping giants like PepsiCo and Britannia from investing in the segment, reports CNBC-TV18's Nikita Rana.

Despite a fairly massive ad campaign, PepsiCo's baked snack 'Aliva' did not brew up the desired storm in the Indian teacup but PepsiCo is not giving up.

The Rs 25 crore brand is now being complimented by a baked version of PepsiCo's popular chips brand 'Lays' priced at twice the regular product.

And PepsiCo insists there's a method to this perceived madness.

Vidur Vyas, marketing director - foods, PepsiCo India says, "As an offering, we are catering to the upper class segment and are targeting women. We have done a lot of research that shows that women as a consumer segment have greater affinity to this kind of a product which is 50% less fat."

Getting the product in select stores is part of PepsiCo's targeted distribution channel approach, which focuses on 5,000 modern retail outlets, and 95,000 kirana stores in the top 60 towns. And so far, the response has been good.

But experts say that sustainability is a key factor. After all, Saffola Zest and Parle's Monaco smart chips did not make much of an impression, for multiple reasons.

Anand Ramanathan, associate director, KPMG says, "One was because companies are not getting their supply chain right and also on account of getting their product right. You need to offer a healthy option which is also tasty."

But Britannia believes it has got the formula right. It already boasts the largest health portfolio, with a 60% share of the Health biscuit market, led by its wheat-based snack brand 'NutriChoice'.

Neeraj Chandra, chief operating officer and vice-president, Britannia says, "The NutriChoice brand that was zero 3 years ago has today become a sizeable brand. In three years it has become a sizeable brand. We're growing at twice the market growth rate."

And Britannia is hungry for more. That explains its latest launch - NutriChoice Multigrain Thins.

Priced 43% lower than PepsiCo's 'Lays Baked' and supported by a high-decibel ad campaign, Britannia says its investment in the brand is showing returns.

But no one is forgetting that the Indian snack enthusiast is fickle. Plus, given economic headwinds, it is possible the regular snack sees more demand, compared to the healthier variant.