Chocolate-maker Mondelez India is planning to expand its biscuit portfolio with an intent to increase its distribution reach in the country.
The company, which produces chocolates under the Cadbury brand, has a foothold in the biscuit’s category with Oreo and Bournvita Biscuits. The idea is to increase its portfolio into all biscuit categories including premium ones such as ‘indulgence’ and ‘choco bakery’. The company launched the Cadbury Chocobakes about three months back, targeting urban markets.
Most brands are targeting the choco bakery category as it is pegged to become a US$ 1-billion market over the next five years.
According to the sources, nearly 20 per cent of Mondelez India’s total sales come from rural markets that include smaller value packs of Rs 1 (US$ 0.014), Rs 2 (US$ 0.028), Rs 5 (US$ 0.071) and even Rs 10 (US$ 0.14).
In 2019, the company added nearly 242,000 stores (selling biscuits), of which 107,000 were in rural areas and the remaining 135,000 in urban areas.
According to Mr Sudhanshu Nagpal, Associate Director, Marketing (Biscuits), Mondelez India, the company is planning to increase its presence in its biscuit brands across all markets. For instance, there are distinct plans to expand Oreo’s penetration into the family biscuits category, while Bournvita Biscuits are being placed as a ‘healthy morning snack’ option. Cadbury Chocobake is being placed in the nascent choco bakery category.
“We have taken a long-term view of the country and are working on building our biscuit business accordingly. It’s not a matter of just one or two quarters in terms of putting our expansion plans in place or getting the distribution done. So, we will work out things,” he said.
The lockdown because of the coronavirus outbreak may act as disturbance in the way of quick expansion, industry sources pointed out.
This may cause in delay in launch of products by few quarters while FMCG companies are already staring at supply and distribution chain disruptions.
According to Edelweiss, in a recent report, due to panic buying because of the virus has triggered a stock-out in essentials and is also advancing demand.
“This, we believe, will benefit HUL, GCPL, Nestle, Britannia, ITC and Dabur,” it said, adding that the pandemic is likely to push the already stressed rural areas (growing at half the urban) to the brink. “Overall recovery to be delayed by at least two quarters (from H2 FY21),” it added.
Biscuits are a new category for Mondelez India, and company entered the segment with Oreo in 2011. Over the years, the company explored adjacencies by getting into licensing pacts with ice-cream makers.
A company spokesperson said the immediate concern is to “protect the health and safety of its employees”. “In parallel, we are working to ensure that we continue to make available our products to consumers across the country,” the spokesperson said, adding that the situation is being monitored daily.
Presently, Mondelez has manufacturing facilities in Maharashtra, Madhya Pradesh, Himachal Pradesh and Andhra Pradesh, in addition to external manufacturing facilities in Ludhiana, Rajpura and Bengaluru.