Local brands ace the taste test in burgeoning packaged food market

Step into a supermarket anywhere across the country and it is impossible to miss the rows of neatly stacked snacks, all promising the taste of lost flavours or claiming to cater to the spicy Indian palate. Be it big multinational brands or local labels, from chips and crisps to other snacks—everyone is claiming authenticity to Indian tastes. For a reason; as brand ranking reports and consumer surveys show, Indian consumers rarely stray far from their habits when it comes to food.

This has been the trend for several years, powering the steady rise of local food brands in the annual Brand Footprint surveys by Kantar-IMRB. “Among the top ten penetrated food brands in India, there is only one multinational brand, which is Maggi. All others are homegrown brands. MNC brands tend to have a good presence/ penetration only in cases where they have pioneered a category like noodles (Maggi), lemony drinks (Sprite), milk food drinks (Horlicks), ketchup  (Kissan),” says K Ramakrishnan, GM and country head, South Asia at Kantar Worlpanel.

LOCAL VS GLOBAL

• Local brands grew in 2017, taking 64.6% of all brand spend, versus global brands’ 35.4% share
• Global brands are stronger but losing share in homecare, and beauty and personal care categories, taking 47% and 58.4% of global spend per sector respectively
• Only in the beverages sector are global brands winning, having gained share from local brands three years in a row (38.3% global versus 61.7% local in 2018, compared to 38.1% global vs. 61.9% local in 2015)

Source: Brand Footprint Survey 2018, Kantar-IMRB   

The desire to eat local, is driving the rise of Indian snacking brands despite the phenomenal rise in global options on Indian shelves. Global brands such as PepsiCo have had to adapt to local flavours (Lay’s, Kurkure) to compete against local companies. The preference for local foods has also helped Indian food and dairy brands. For instance, Amul, the market leader in dairy in India has seen its brand grow stronger. In the 2018 Brand Finance report, it makes it to the top 10 strongest brands in India, the only food and dairy brand on the list.

Ramakrishnan says that the top penetrated food brand in home grown brands is Parle at 78 per cent while the top penetrated MNC food brand is Maggi at 40 per cent. Biscuits, salt, oils and atta (flour) tend to lead the penetration in categories and he adds that these are categories traditionally dominated by homegrown brands. “The reason maybe because home grown brands create exclusively for the Indian palate, while MNCs need to adapt their global offerings to local tastes,” he said. 

Haldiram’s and Yellow Diamond (Prataap Snacks), have cashed in on rising demand for desi snacks

The rush for local has also helped one of the oldest home grown snack brands, Haldiram’s, catapult onto the national stage. It has led to the rapid rise of relatively new brands such as Yellow Diamond, Balaji and others in the chips and wafers category. 

A recent survey by YouGov India of young Indians showed that Haldiram’s is their favourite snack brand. The tastes of Indian consumers are skewed towards local traditional snacks over western options like potato chips and popcorn, the survey suggested. However the survey found that Gen Z chose to contradict this trend and revealed a stronger preference for western snacks and brands. Deepa Bhatia, general manager, YouGov India, said, “Interestingly, we see younger consumers are choosing coffee brands over tea but keeping their snacking options firmly local in flavour.”

It is important to note however that homegrown players have a certain advantage in terms of rural distribution network as well as local taste sensibilities which speaks for their popularity, noted consumer retail expert Dhanraj Bhagat, partner, Grant Thornton India. “They (Indian players) have also got the price points and package sizes right in a lot of segments (as in case of namkeen/Indian snacks). On the production side as well, they could have a slight advantage in terms of the manpower costs as well as packaging, where global MNCs have to adhere to the highest standards,” he said.