The Hindu Business Line : A glucose drip for biscuits

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Mumbai Feb. 28 The excise relief announced in the glucose segment for Rs 50 a kg or less has checked an imminent price hike in the biscuits industry. Considering there has been a steady increase in input costs over the past two years, biscuit manufacturers were forced to reduce grammage to stick to the Rs 4 price point for its glucose brands.

"Input costs of commodities such as sugar and wheat have risen by almost 25 per cent and taken a toll on our profitability in the glucose segment. The Budget announcement will improve our profitability to some extent. There will be new marketing efforts made by the glucose players,'' observed Mr Praveen Kulkarni, GM - Marketing, Parle Products.

The biscuits industry had been reeling under margin pressure, unable to increase prices in the glucose segment for the past seven years. The glucose brands from Parle, Britannia and ITC have stood at Rs 4 for 100 gm and changes in grammage have been made in the past two months. While Parle decreased the grammage from 100 gm to 88 gm for its Parle G brand at Rs 4 a pack, Britannia dropped it to 90 gm for its Rs 4 Tiger brand. According to Mr Asad Wasi, Secretary, Federation of Biscuits Manufacturers Association of India, "The recent Budget will not have the glucose biscuit manufacturers pass on the benefits to consumers. At the same time, the consumer will be not be burdened with price increases from players who were considering a hike.''

Mr B. P. Agarwal, Managing Director, Surya Foods, the makers of the Priya Gold brand, said, "While profits will go up for players like Britannia and Parle, there is no chance of prices coming down in the glucose segment as a result of this Budget.''

Britannia MD Ms Vinita Bali said the price cuts would bring affordable nutrition to consumers, especially in a high-inflation environment. Biscuits are now in the 8 per cent excise category. However, the CEO of one of the biscuit players told Business Line that it was too early to arrive at any price peg post-excise exemption.

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