Snapshots of Food Industry News
Hielo Beverages to Enter Premium Water and Juice Space
Hielo Beverages that make packaged drinking water is likely to foray into mineral and sparkling water as well as nectar- based fruit juices under the brand name Peaur. Since there is a high demand for premium water from health conscious and aware consumers Hielo has decided to enter the space especially as they already have a distribution penetration. Hielo will enter the market in phases and will be in direct competition with leading players Bisleri’s Vedica and Tata’s Himalayan, which also specialise in premium packaged water.
The unavailability of clean drinking water away from home and growing awareness of the risk posed by waterborne diseases are the drivers for continued growth in this segment. Research firm Euromonitor predicts that between 2016-21bottled water will grow 19.8% by volume and carbonated drinks at 6.8 percent. In terms of value too, bottled water will grow three times more than carbonated drinks at 16.5% in this same period. It is also possible that more brands will enter the natural mineral water space.
Nestle Considers a Foray into Water and Pet Care
Nestle already has a huge market for their Maggi noodles, Cerelac infant foods and Kitkat chocolates and is considering entry into new categories like water and pet food. The packaged food company is evaluating the potential of the market. Nestle has also stated that its growth story now comes from its non-noodle portfolio and will continue this trend. To keep focus on double digit growth it will increase products portfolio across categories.
The results for June have been impacted because of new GST tax regime but still reflect a growth increase of around 10 percent at Rs.263 crores. Nestle India cut prices of dairy whiteners, sauces and infant cereals because of GST tax slabs but unfortunately, prices of confectionery and coffee would see a rise in prices. Nestle stated that the transition to GST has been smooth despite the fact that they had 3,500 suppliers and 1,600 distributors and rates had to be recalibrated in about one million outlets.
IKEA’s trademark Beef and Pork Meatballs not on India Menu
IKEA is not only one of the biggest furniture retailers but is also one of the top restaurateurs that offer a predominantly Swedish menu at its DIY stores. The retail format along with the food mart is to enter the Indian market but with some changes. The trademark beef and pork meatballs will be replaced with chicken and vegetarian ones to cater to the desi palate. The first IEKA store is likely to open in Hyderabad in early 2018. The shopping area will be spread over 400,000sq.ft while the restaurant will be one of the largest with a seating capacity of a few thousand.
IKEA received government approval in 2013 to invest Rs.10, 500 crores for 25 hyper stores that will sell home items and furniture. The Hyderabad store will have 800 employees, against the IKEA global average of about 500 people per store, because these include delivery and installation staff. IEKA has stated that its menu in Hyderabad will comprise an extensive vegetarian menu including veg biryani as well as a number of other India vegetarian staples like idli, sambar, samosa, etc. they have employed an Indian chef who has managed the right blend of Swedish style and Indian taste. Food comprises a large chunk of IKEA’s business and in 2016 the company sold food worth $1.8 billion.
With the Entry into 5 New Markets Bira 91 Goes Global
Premium beer maker Bira 91 is looking to expand its global footprint and has launched its beer in five new markets in United Kingdom, Singapore and Hong Kong. They will begin distribution in Thailand and UAE very soon. Bira 91 is owned by B9 Beverages which was established in 2015 in India by founder Ankur Jain. The company aspires to bring a shift in the beer market by leaning towards flavoured forms. Their foray into the international arena is being seen as the first step in creating the first global brand of craft beers. The company manufactures four categories of beer – Bira 91 White, Bira 91 Blonde, Bira 91 Light and Bira 91 Strong and has a presence in 15 cities. In May 2017 the company was eyeing sales worth Rs.150 crores.
Britannia to Invest Rs.100 Crore to Reinvent Cream Biscuits Range
Britannia’s biscuits portfolio has been its mainstay and as a market leader with a 58 per cent share the company is all set to remake the cream biscuit range with an investment of Rs.100 crores. Brands like Treat, Bourbon and Pure Magic enjoy margins of 10% compared to the average biscuit margins in other categories. Britannia intends to increase the cream segment to 50 percent from the present 35 percent. Brands like Treat will have a make-over with new variants and including advertising will cost Rs.50 crores. With other cream brands Bourbon and Pure Magic to follow suit the investment could go up to Rs.100.
The company is revamping their cream biscuit portfolio to strengthen their position as ITC and Mondelez (Oreo) provide stiff competition. Britannia’s biscuit portfolio has a turnover of Rs.7, 500 crore and does not include the glucose and crackers categories. Britannia is expecting consumers to make a buying shift and turn to premium as they have stock keeping units (SKUs) at similar price points across brands. Therefore anyone buying their glucose biscuits Tiger at Rs.5 can easily make a shift to Good Day at the same price. Britannia has also doubled its distribution in the past three years from 7.5 lakh to 15 lakh outlets.
MTR to Manufacture Orkla’s Fruit-flavoured Chew Laban
MTR Foods will invest about Rs.40 crore to set up a facility for the Norway based parent company Orkla Group to manufacture Laban. Laban is a specially-crafted human-shaped, non-sticky, 100 per cent vegetarian, fruit-flavoured chew. Laban is a leader in the confectionery segment in Norway and the Indian foray is expected to do well with the expertise provided by MTR Foods. Laban has been localised with Indian flavours, such as strawberry, mango, green mango and orange. It will be available through general and modern trade outlets across India. The 26g pack of Laban will be priced at Rs10, and the 65g pack at Rs.30.
Developing the product for the Indian market required extensive research so it could be adapted for Indian tastes without losing the stretchy chewy quality attributed to brand Laban. Equipment for the manufacturing facility has been imported from Germany, Britain and Korea to put up a state-of-the-art production line. A robust supply chain and distribution network has been extended across the country to maximise the reach of the brand. Orkla is confident that the unique concept and the childlike joy Laban brings will popularise it among consumer. Orkla Group sees huge potential in the Indian confectionery market which they mean to tap into. The current estimates show a market close to Rs.8, 200 crore with growth prediction of seven per cent year on year basis.