Rising inflation, coupled with a new packaging legislation, will make price hikes of packaged foods inevitable, says the Divisional Chief Executive of ITC's foods division. On one hand the costs of inputs such as raw material, furnace oil and packaging material and even logistics have gone up, while on the other, the new packaging law that bans producers from reducing the quantity inside the packet, will leave them with no choice but to raise prices. This new Legal Metrology Act is likely to come into force shortly. At present, FMCG companies rely on reduced quantity to tackle rising inflationary pressure on input costs rather than changing the price points owing mainly to coinage issues. The new Act will make the price-point concept impossible, he said. On the demand-supply side, he said the company had to make a lot o f efforts to meet the spurt in demand for its cream biscuits.
Giving an example, he said the company’s premium range offerings such as Dark Fantasy and Dream Cream Bourbon have witnessed a growth of 118% in the second quarter over the first. Even other Sunfeast premium creams have shown a growth o f 72 percent in Q2 over Ql. Responding to a question on competition from global brands such as Oreo (from Kraft Foods), McVitie’s from (United Biscuits), and domestic brands such as Parle and Britannia, he said international competition is a reality.
It is good, as it aids ’premiumisation' o f the category. He said this has actually enriched Sunfeast's portfolio last year. On the domestic front, given the emerging trends in consumption patterns, the biscuit market offers enormous opportunities, scope for improvement both in terms of new products and segm en ts and also in term s o f operational excellence.
’The field o f play is large and we are encouraged and really excited about the years ahead,' he said. At present ITC's Sunfeast is the third largest national player after Parle and Britannia. The brand has 10% cent share o f the ₹ 15000 crore biscuit market. And, within this, in the creams segment (which accounts for over ₹ 3500 crore) Sunfeast commands 15% share.