Basmati mart grows 5-fold on retail push

The expansion of retail stores and hypermarkets has led to a five-fold increase in the branded basmati rice market in the last four years.

"The share of branded basmati in total basmati consumption has seen an exceptional rise from 10 per cent in 2003 to 50 per cent now. With the widespread presence of retail chains such as Big Bazaar and Reliance Fresh, the consumer is turning to brands", said Anil Mittal, chairman and managing director of KRBL, the producer of 'India Gate' basmati. The annual consumption of basmati in the country is estimated at 10 lakh tonnes.

A consumer prefers to buy a leading brand of rice as it offers him a better quality and attractive packaging as compared with loose unbranded rice, said Mittal. Moreover, a brand enjoys a consumer's trust, build over a number of years.

While loose rice offers scope for adulteration and price manipulation, it is not possible for a retailer to do so with packaged rice. Mittal expects the branded rice category to grow up to 80-90 per cent in the next 3-4 years.

The impressive growth of brands in a commodity such as basmati stands in contrast with sugar, which is an everyday-use commodity.

Companies such as Dhampur Sugar, Triveni Engineering and Simbhaoli Sugars have been trying to promote sugar brands, but the segment is still at a nascent stage. Most consumers probably find no reason to pay a premium for packaged sugar.

"Modern retail is inducing a shift in the consumption pattern from unbranded to branded rice, though this squeezes our margins. If a brand has established its presence in terms of quality, the consumer is even willing to pay a premium of Rs 1-2 a kg for that particular brand", said N C Gupta, executive vice president of LT Overseas, producer of 'Daawat' basmati rice.

The local shop owner, who had a long-term association with the buyer, used to previously influence the consumer's purchase.

The consumer would buy loose basmati on the shop keeper's recommendation. But with the expansion of retail stores, the consumer is free to choose a particular brand based on his perception, said Danish Beg, assistant financial controller of Rei Agro, producer of 'Real Magic' basmati.