By 2019, per capita consumption of sweet and savory snacks in India is expected to rise to 0.9kg – modest growth up from 0.4kg in 2013, according to Euromonitor data.
John George, ingredients analyst for Euromonitor International, said growth of the sector was set to continue, particularly in rural areas.
“In 2013 only 28% of sweet and savory snack retail value in India came from rural areas. When you consider that 68% of India’s population live in rural areas, it’s clear that sweet and savory snacks have only scratched the surface so far,” he told BakeryandSnacks.com.
In addition to the appeal in rural, poorer areas because of easy storage, snacks also drew interest from consumers with more disposable income and busier lifestyles, he said.
For ingredients manufacturers, this level of growth potential in the market could spell big business, he added.
The rise of supply
Some ingredients majors had already seen this potential, George said, with international flavor company Givaudan setting up an innovation center last year in Mumbai and Firmenich increasing presence in recent years.
However, opportunities remained for other internationals to move in, he said.
India’s specialty ingredients market grew at a CAGR of 12.6% between 2008 and 2013 and modest growth would continue, he explained.
“There are opportunities for a variety of ingredients companies.”
However, internationals had to get on the ground and understand local market trends, George said.
“Flavor companies should be noting the uniqueness of India and recognize that Western flavors are not managing to displace traditional favorites.”
Asked if there were more opportunities for international firms versus domestic players, he said: “This is difficult to say since local ingredients companies may have a better understanding of the needs of local manufacturers, and a better understanding of the types of ingredients which will appeal to the domestic market.
“On the flip side however, they will not be able to provide the same level of distribution as international ingredients firms and could struggle to deal with increased demand,” he said.
Local snack makers should be interested in working with larger, international suppliers, he said, because such a tie-up could help the manufacturer to branch out of their local region into other areas of India. “This level of distribution allied to potential new ingredients on offer should be making local manufacturers excited.”
However, cost remained key for local snack makers, he said, and so they would need to weigh up the risk of possible higher prices for ingredients against the ability to serve a bigger market and develop more innovative products.