Companies

Oreo-maker to expand biscuit portfolio in India

Abhishek Law Kolkata | Updated on March 25, 2020 Published on March 25, 2020

Sudhanshu Nagpal, Associate Director – Marketing (Biscuits), Mondelez India

Chocolate-maker Mondelez India is looking to expand its biscuit portfolio as it looks for a greater distribution reach in the country.

The company, which produces chocolates under the Cadbury brand, has a foothold in the biscuits category with Oreo and Bournvita Biscuits. The plan is expand into all biscuit categories including premium ones such as ‘indulgence’ and ‘choco bakery’. To start with, it launched the Cadbury Chocobakes about three months back, targeting urban markets.

The choco bakery category is pegged to become a $1-billion market over the next five years; most major brands are targeting this segment to drive margins.

Sources said nearly 20 per cent of Mondelez India’s total sales come from rural markets that include smaller value packs of ₹1, ₹2, ₹5 and even ₹10.

Store expansion

Industry sources said the company added nearly 242,000 stores (selling biscuits) in 2019, of which 107,000 were in rural areas and the remaining 135,000 in urban areas.

According to Sudhanshu Nagpal, Associate Director, Marketing (Biscuits), Mondelez India, the company is working to expand the presence of 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 told BusinessLine.

Coronavirus disruption

The lockdown because of the coronavirus outbreak may come in the way of quick expansion, industry sources pointed out.

FMCG companies are already staring at supply and distribution chain disruptions. Product launches could be delayed by a few quarters.

Edelweiss, in a recent report, said the virus has led to panic buying, triggering 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.

Licensing pacts

For Mondelez India, biscuits continue to be a new category. It had 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.

Mondelez has manufacturing facilities in Maharashtra, Madhya Pradesh, Himachal Pradesh and Andhra Pradesh, in addition to external manufacturing facilities in Ludhiana, Rajpura and Bengaluru.

Published on March 25, 2020
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