Annual Growth

    The biscuit industry in India witnessed annual growth as below:-

            2003-04           -           13%

            2004-05           -           14%                         

            2005-06           -           14%

            2006-07           -           13%

            2007-08           -           14%

            2008-09           -           16%   

            2009-10           -           14%

            2010-11           -           11%

            2011-12           -          11%

            2012-13           -          09% (April-September 2012)

While the growth rate has been stagnating during last 4 years, it  picked up momentum during the 2008-09 mainly on account of exemption from Central Excise Duty on biscuits with MRP up to Rs.100/per kg, as per Union Budget for 2007-08. However growth further declined from 2009-10 to 2011-12 and the first half of 2012-13.

Annual Production:

The organized biscuit manufacturing industry‘s annual production figures are given below:

(In Lakh Metric Tonnes)

       2003-04   -   11.00

       2004-05   -   12.55     

       2005-06   -   14.29

       2006-07   -   16.14

       2007-08   -   16.85      

       2008-09   -   17.50

       2009-10   -   18.50

       2010-11    -   19.00

       2011-12   -   20.50

       2012-13   -   10.50(April to September 2012)

Segments:

The organized and unorganized sector of the biscuit industry is in the proportion of   70%:30% ratio.

·         EXPORTS of Biscuit was 14% of the annual production during the year 2010-11 which declined to around  12.5% in 2011-12.

·         IMPORTS of biscuits into India (mainly high end products) has not shown any significant growth during the last five years and has not affected production/sales by the Indian Biscuit industry.

Rural-Urban penetration of Biscuit:

Urban Market:  75% to 85%

Rural Market:   50% to 65%

Marketing

Wholesale and Retail marketing in the Biscuit industry is carried out with a network of Super Stockers Agencies (for States and specific Districts etc), Wholesalers and Retail shops.

HIKE IN COST OF PRODUCTION

 Biscuit Industry especially the Small & Medium Sector, consisting of around 275 units are facing erosion in their profitability and competitive capability, due to steep hike in cost of production on account of increase in prices of major raw materials, i.e. Wheat Flour Veg. Oil, Sugar, Milk, Packaging Materials, Fuel.  Wages, etc. Recent increase in prices of Petrol/Diesel in May 2008 has further resulted n cost push.

Value Added Tax

Imposition of Value Added Tax (VAT) by the State Governments @ 13.5% compared to VAT at 5% or 0% levied on other similar food products has also adversely affected biscuit industry.

On behalf of the industry, IBMA has been pursing the issue with the Chief Ministers/Finance Ministers of all States and also with the Chairman of the       Empowered Committee on VAT, seeking reduction in the rate of VAT on biscuit to 5%.  IBMA delegations have already met Chairman, Empowered Committee on VAT, as well as Deputy Chief Ministers & Finance Ministers of Bihar, Orissa, Jharkhand, Punjab, Haryana, Delhi, Andhra Pradesh, and officials of Uttar Pradesh etc. While most of the State Ministers have expressed their support of IBMA’s representation, however the issue has not so far received favourable consideration by the Empowered Committee on VAT.

IBMA estimates annual growth in the range of 20% to 25% and above in the event of reduction in the rate of VAT on Biscuits to 5%.

PER CAPITA CONSUMPTION of Biscuits in the country is only 1.8 kg, as compared to 2.5 kg to 5.5 kg in South East Asian countries and European countries, and 7.5 kg in USA 

Pattern of Biscuit Consumption (On Zonal basis) in the country are as below:

Northern Zone    -  25%

Western Zone     -  23%

Southern Zone    -  24%

East and North

East Zone            -  28%

(Including N. East)

The per capita consumption as well as pattern of consumption in the four regions, as shown above, will also increase considerably, in case the industry’s plea for reduction in the rate of Value Added Tax (VAT) from 13.5% to 5% is acceded to.

Main Categories of Biscuits are broadly as under:

Glucose, Marie, Sweet, Cream Milk

Popular Brands of Biscuits in the country are, Britannia, Parle, Priyagold, Anmol, Sunfeast, Biskfarm, Dukes, Cremica,  Priya, Veeramani, Bonn, Bhagwati, Raja, Madhabi, Nezone, Ankit, Nalanda, etc.

Meanwhile introducing Goods & Services Tax (GST) replacing VAT and other Taxes at the State Level and Central GST (replacing Central Excise Duty) is being delayed, due to differences between some State Government and Central Government.