THIS ARTICLE IS POWERED BY
-Sri Ram A.N (cbedit@imaws.org)
Bakery is one of the biggest segments in the food processing sector in India. It holds a very important place within the food processing industry and could be a traditional activity. The industry offers huge opportunities for growth, innovation, and job generation. India is a key player in the bakery sector internationally after the USA.
The Indian Bakery market stood at a value of approximately USD 10.1 billion in 2022. The market is further estimated to grow at a CAGR of 9.6% between 2023 and 2028 to reach a value of USD 17.44 billion by 2028. The Indian bakery market is being supported by the thriving biscuits and cookies sector in the region.
“Raising ingredients & raw material costs – an increased awareness of Healthier eating habits among customers – shifting to healthy food trends like millet and mushrooming of home bakers” are real threats to the industry. Here, 4 veterans have something more to share with us.
Experts from their views:-
Vijay Joseph, Minerva College of Catering and Hotel Management at Coimbatore said, “People today want to have a hygienic food omitting wheat from their regular use – but there is no relevant platform available currently here. The Multi-Grain bread, oats bread – which is basically costly compared with ordinary bread are very much available in the market but hardly have any takers. People are choosy in their spending & still prefer to buy a normal bread as they are habitat to the taste & cost. The industry has to change a little bit coming out with some innovative ideas to create awareness.
The cost of ingredients is raising abnormally. Like how the gold rate is fluctuating on a daily basis – the same issue prevails here as well. Particularly post covid, all the costs have increased tremendously. Ultimately lots of bakers are moving towards the second quality raw materials to meet the cost and pricing. Government has to fix a minimum price for each product and only then – a baker can at least sustain.
Every month, we train more than 50 home bakers in our institute. We offer them MSME Loans, guidance, and much more. Most home bakers come to this line only for passion and not as commercial players. They do not have a proper brand, or marketing strategy. Only when they all come out commercially – there will be more people to play as a new entrepreneur”.
Kamaraj Pandian, Sathuragiri Bakery at Coimbatore has something else to say. “There is no big challenge to hygienic food awareness among citizens. Business is as usual. Whereas, the increasing cost of raw materials is a big blow. We purchase on a daily basis and when the rates are fluctuating day by day, finance management becomes tough. The margins are drastically reduced. Customers today are not ready to put a thought on what is behind the making of this cake, the quality of ingredients used – but have an eye only on the pricing aspect. So, when we charge slightly higher, acceptance from the customer gets minimal.
He compares home bakers to the cinema industry. When OTT Platforms came, there was a say that theatres will lose on their footfalls, whereas in reality people still visit theatres for their real-time entertainment. Not all the products (for example Birthday Cakes), which are available in stores can be homemade. Likewise, home bakers may be termed as small-timers. Even though they eat a few percentages of the sales of an organized baker – this cannot be taken as a threat. However, there will be tremendous growth in the bakery industry.”
Rtn. V.M. Gokul Kumar, Blasta Cakery, at Salem – said “There is a belief that all bakery products are junk, but actually it is a myth. Fried Rice shall be considered junk. When premium products are used in manufacturing, we are proud to be a part of consuming healthier food patterns of the customers. FSSAI norms like displaying the number in the premise, and packs are strictly to be followed. Raising any complaints (if any) can also be registered with the authority through apps and multiple sources. The government is also monitoring the industry’s happenings. All serious businessmen really caring for their customers adhere to all these rules sincerely. So, we can’t say it is a threat.
The cost of raw materials is skyrocketing. The egg is the basic need of any bakery product, and you could see at what price it is available currently when compared with the price two years back. It is more than 100% when we calculate in terms of percentage. In the past 3 years, almost all the raw materials cost are increased by around 30% to 40%. Unfortunately, we were not able to charge that high with our customers.
Brands catering to A – Segment clients have their own way of marketing, whereas, medium and small players catering to the B & C Segments find it very difficult to match in pricing. When the average earning of people have not increased at par with the raw materials, they are not able to afford to the price increase and ultimately, they reduce their purchase quantum. In fact bakery segment is an option for any customer. They can’t say NO to Rice, whereas YES for a cake or pastry.
Recently FSSAI has made it mandatory to do a Lab Test for the products once a year and again we need to budget for that expense. These are the real challenges. We walk on a sharp knife on both sides without any handle. That is the reality.
Unorganized segments, termed as “Home Bakers” are also a threat. Most of them don’t have a proper license, GST Taxations, shop expenses, or salary, etc., If Government prepares some check measures for this segment, that will definitely be a solid helping hand for the organized players.
Ponnusamy, Chairman, Sri Mahalakshmi Dairy P, popularly known as “Aroma Bakery” Coimbatore, with more than 50 years of presence has something positive to share with.
He said, “As a President of Coimbatore District Bakery Owners Association I am happy that now both the Central & State Governments are taking steps in creating awareness on healthy food habits. Civilians are also having a similar thought. It is a welcome move. However, if more publicity and awareness is given probably by using a celebrity actor like Rajnikanth, this great idea will reach more people instantly.
As each and every individual has their own style of food habits, it will be a challenging assignment for anyone to make those changes in everyone’s mind. Earlier the income per family is limited as only the family head will be an earning member. Nowadays, almost all members of a family are earning and spending for their pleasure and taste is not at all an issue. The spending capacity for individuals has increased dramatically. So, the Government’s initiative, civilians’ healthy thoughts, and increased money flow in every family are all good for the industry, and I say strongly that this is not at all a threat to the bakery industry.
An increase in raw materials costs is quite normal in any industry. If we give perfect price options like low range, mid-range & high range, operating in a thin margin, customers will buy. So, this is also not a threat.
Home bakers cannot affect the market of organized & branded players. Even if so, the percentage will be meager – fully ignorable. Getting a comfortable, affordable rented house within city limits has become a real task and people have already started moving to outer locations. They don’t mind traveling back to the city for their offices and purchases. To have more outlets within the city and if possible, extending reach to neighboring areas where you can help the customers save a lot of time in traveling to buy your product, will solve this challenge.
People can live a life without basic comforts, entertainment, education, luxury, and much more, but, they can’t live without food. After implementing Food Safety Act by the Government with perfect checking parameters, creating awareness and giving guidance, taking action in case of any irregularities, cooperation by the shop keepers, consumers’ expectations on quality, and healthy consumption, the bakery industry will also flourish and grow manifold in the future. This industry never has an expiry date.
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