With this piece, we take a look at the Mithai and Namkeen, aka. Snacks and Sweets industry in India. We look at the current state of the industry, the growth drivers, the bummers and finally discuss what’s next.
That being said, let’s jump right in the piece.
One of the oldest Industry
If you’re an Indian you probably have once or on multiple occasions heard the word “mithai“ even in your mythologies. The old tales of the Gods talk about how they savoured the milk and ghee laden Mithais. That is probably the reason we still savour these Mithai to this day, be it Modak on Ganesh Chaturthi or Makhan or Shrikhand of Lord Vishnu.
Mithai making is one of the oldest professions in India. Now although the purity may not be as good as it used to be, the industry is still making good money. The Indian sweet and candy market is currently valued at around $664 million, with sugar confectionery holding a 70 per cent share ($461 million), and chocolate confectionery accounting for the remainder ($203 million).
Related: Take a look at the Chocolate industry in India and the rise of Dark Chocolate
The Industry currently employs more than 1 crore people – and trust me, given how unorganized this industry is, the numbers are way higher. It has more than 100,000 manufacturers across the country and makes around 500 types of mithai, namkeens and savouries sold across India. However, one of the most iconic numbers of this industry – which it achieved earlier this year in April – is the 1 lakh cr in turnover this year. A feat few industries have achieved. The industry is united under the FSNM (Food Safety and Nutrition Management) banner and is expected to see double-digit growth in the near future as it has seen over the last century.
Now although COVID impacted the growth of this industry by a little because of the losses it faced during Raksha Bandhan and Ganesh Chaturthi in 2020, it still is looking at INR 65,000 crore in FY 2021.
Brands and start-ups breathing in the Industry
Given the potential of the industry had and has a global reach, a lot of brands in their early days made a name for themselves in the space. A few of the renowned ones are Haldirams, Balaji, Bikano, Bikaji, Yellow Diamond, Cornitos – the brands have not only achieved local but also a global footprint. In fact, the branded segment covers about 30% of this market and is growing at 25% per annum whereas the entire market is growing at 10-12 per cent. With the use of automation and better shelf life, the segment is all set to only grow further.
The entire namkeen segment is broadly divided into 3 segments. With the first one being traditional, which covers of 60-65% of the market and comprises traditional Indian wafers, etc. and second, which is a little more western. There’s also an emerging third type called “bridge snacks” – which has a local taste but western appearance. there obviously are other variations called the healthy-snacks category with brands like “The Green snack co” are trying to make a name for themselves.
The iconic Sweets Industry in India
Getting back to the sweet (aka Mithai) category, the segment has long been unorganized and is proving out to be tough for brands to make a mark. Primarily because the category has a very popular nuance that these brands are actively trying to capture. Can you guess what? It’s the habit of tasting, how many times did you walk up to a store for mithai and left without the mithai-wala helping you get the taste of the product? This is precisely why brands are struggling to expand here in a big way. However, COVID may actually end up helping brands, now that people are not walking to the stores.
A few of the startups are trying to build differentiation in the sweet industry by highlighting the current problems with the industry. The Bombay Sweet Shop entered the space with a simple message of “Bringing back the magic of Mithai” – they call themselves “next generation of Halwai’s” and want to make sweets exciting again.
Another startup, Hunger Inc. emerged out of its focus on solving common problems associated with the local players like bad packaging and lack of hygiene. They saw the gap when co-founders were in Paris and saw the bottle of French Mustard beautifully packaged mustard and wanted to bring the same love for Indian sweets. Now, obviously, there’s a premium you have to pay for a little bit of extra love that you get.
What are the growth factors?
One of the biggest growth factors for this industry is probably the rise in disposable income. Gone are the days when mithai was only for the royals and was only consumed during the festivals. A lot of the previously mentioned startups are actually trying to make sweets a non-festive consumption. Even the snacks are increasingly seen to be consumed during lunch hours resulting in the increased consumption. Rise of accessibility and options is yet another reason for this growth. The rise of online delivery services and a general influx in the number of retailers are a few other reasons.
Finally, the awareness about health, convenience and innovation is also driving other health-based variants in this category. Although the # of mithai types hasn’t seen a lot of growth lately, we only probably remember Kaju Katli and Soan Papdi – for excessively gifting during Diwali, the variations of sugar-free mithai and fried-free snacks is motivating people to consume these more often.
Related: Take a look at the Marketing funnel
The bummers of the industry
The rising awareness about ill-effects of sugar have toned down the potential of sugar-laden sweets and fried snacks consumptions and have limited them to occasions. COVID is obviously another bummer as people are now hesitant to actually buy a mithai box for gifting. And finally, the emergence of other more decorative categories like Cadbury celebrations have turned out to be an attractive alternative.
Related: Take a look at the story of Mondelez India
What’s next you ask? Well, there’s a lot of technological potential for the industry still, as the behaviour of the consumers evolve and the target segment changes, the local players must evolve too in order to stay relevant. Consuming sweets isn’t really why we buy sweets most of the time, we buy it so we could gift, but we buy chocolates mostly for self-consumption. Which is slowly changing with time. With the rising standards and expectations, aesthetically pleasing packaging must be incorporated – even if it means a little more premium for the customer.