Branded foods take a bigger bite

Within a few years of their launch, branded foods have taken a sizeable share of the market.

Industry sources say while 30 per cent of the flour market has shifted to brands, the figure is 63 per cent for ketchup, 31 per cent for coffee, 16 per cent for spices and 47 per cent for tea. The size of the branded foods market is around Rs 4,000 crore (Rs 40 billion).

Five years ago, only 35 per cent of tea drinkers opted for branded tea, today the number is 47 per cent. For coffee, the market has changed from 24.5 per cent five years ago to 31.5 per cent now.

"Over the next 5-10 years, more than 50 per cent of the urban market will convert to branded spices, flour and tea," MTR Foods CEO J Suresh said.

Milk, butter and yogurt too have seen large scale branding by new entrants Amul, Mother Dairy, Nestle and Paras. Today over 35 per cent of the people in cities are buying branded milk.

Within a year of big brands selling yogurt, the branded segment has 5 per cent market share. And 60 per cent of the edible oil market is branded.

"Earlier, most brands were present only in the metros. Today, most brands are present in all the cities with over 100,000 population, which depicts a clear shift in consumer outlook," said R S Sodhi, general manager (marketing), Gujarat Cooperative Milk & Marketing Federation, which owns the Amul brand.

He, however, said manufacturers should keep the value addition in the brands at a high level to avoid the possibility of the brand becoming a commodity.

Sodhi added that the maximum differential between the prices of commodities and brands should be 10-15 per cent.