The changing lifestyle of the Indian consumers

The changing lifestyle of the Indian consumers has changed the entire scenario at the breakfast tables in many urban Indian homes. These days, with profusion of nuclear families with both husband and wife rushing off to their work there is little time for setting an elaborate breakfast table.

The days when the Indian breakfast varied from region to region – with a variety of recipes which differed from kutch in the west to Kolkata in the east; Srinagar in the north to Suchindram in the south seems to be over, especially in the context of busy post-modern urban India. These days, healthy RTE and RTC options are adorning many a breakfast tables in urban India.

This has opened up a wide scope for the cereal breakfast food manufacturers to expand their horizons and provided new entrepreneurs an opportunity to enter the fast expanding Indian cereal breakfast market. Ashok Malkani examines the scope for the entrepreneurs in India’s breakfast cereals market and looks at all the pros and cons of entering this promising market.

To tackle the day ahead successfully, a healthy and hearty breakfast is essential. And the youngsters in middle class urban India today do not prefer ‘dahi-parantha’ for breakfast anymore. We are witnessing a drastic turn in the breakfast culture in urban India.

This could be attributed to the fact that 65 percent of India’s population comprises of youth, who are responsible for changes in the India’s breakfast segment. Some of them are health freaks, some are tech savvy and some others just want to save their time.

Many among this young population in urban India are from nuclear families where both husband and wife go to work. Thus they often do not have the luxury to have elaborate breakfasts made at home. Besides that nowadays more Indians than ever before are well travelled and are exposed to global lifestyle, which includes global eating habits.

Moreover, today Indian consumers are more hygiene conscious, taste conscious, brand conscious and experimental than ever before. All these factors have contributed to the growth in the RTE(ready to eat) and RTC(ready to cook) breakfast options in the country.   

Mintel Trend ‘FSTR HYPR’ discloses that several brands in India have launched ready-made idli or dosa batter for households looking for easier breakfast or meal solutions that are not too different from everyday fare.

Formats range from shelf-stable dry mixes to fresh, ready-to-use batter. The popularity of the ready-made batter has spurred innovation, and comes in different formats—right from smart packaging to multi-grain formulations. Such an evolution of a category has the advantages of ensuring choice, immediate consumption and easy availability of a product not native to a particular region.

RTE, RTC and Healthy

Breakfast menu in post-modern India has changed since the day grandma made parathas with various fillings or malpuas that were lapped up by the family. Today, few have the time to lovingly develop these time consuming dishes. Moreover, these dishes are considered unhealthy by many upwardly mobile new generation of Indians who influence the market forces. Breakfast options comprising dishes made from ready-to-cook or ready-to-eat packages or cereals like cornflakes, muesli, oats, etc. are now common among middle and upper class urban Indian homes. Health consciousness has become the watchword for the new generation India. 

 Yes, one can truly say that the breakfast menu in India has undergone a conspicuous change. One of the major transformations that have occurred, according to Hitesh Keswani - Director Silver Beach Entertainment & Hospitality Private Ltd, is that organic and other natural ingredients have come to the forefront.

“Burritos have now become wraps, cupcakes have changed to chia puddings and traditional recipes like poha and upma are being spruced with rich quinoa, lentils and mixed beans while pancakes are pepped up with buckwheat. Florentines are being served gluten-free while omelettes are now made with ‘smart eggs’ option instead of one with all yolks. Avocado is being served in several forms. It is being served on toast, then you have an avocado smoothie, and avocado in eggs/sandwiches & avocado bowls are also there. Guests are also readily accepting ingredients and dishes from across the border,” Keswani affirmed.   

Several players have jumped into the fray to provide the Indian consumers with a variety of breakfast food options. Many multinationals and large domestic food companies are now fighting for a pie of the fast-growing breakfast category in India, which includes oats, cornflakes, muesli, dalia and mixes of traditional breakfast like idli and upma. The market provides a lucrative opportunity for new entrepreneurs.

MTR Foods has now introduced instant breakfast dishes like upma, poha, oats and kesari halwa. In fact, now they have come up with 3 minutes versions of these dishes, which used to take eight minutes to cook. All you do is take the packet (or cup) pour in hot water, keep for exactly three minutes and eat.

MTR has also realised that it needs to change its geographical perspective. It has thus moved from being a predominantly southern India focused company to a pan-India one. That is one of the reasons why, recently, it launched two large scale products – spicy sambar in the south and a ‘3 Minut Breakfast’ with a national focus.

PepsiCo’s Quaker India has launched Quaker Nutri Food — the oatmeal versions of traditional breakfast options such as idli, dosa, upma and khichdi to suit Indian taste buds. These are conventional Indian breakfast options, but with 40-50 percent oats and vegetable content. Deepika Warrier, Vice-president (Nutrition Category), PepsiCo India, declared, “Consumers want healthy options in easy-to-adopt formats, without compromising on the taste, so we took popular breakfast recipes like idli, dosa and upma and made them healthier.”

 “Our primary focus is millennials between the age group of 18-34, who lead rushed lifestyles,” she added.

 Just like one presumes olive oil to be an urban phenomenon, oats too seem to have a similar fate, in the Indian context. However, she is hopeful that her product’s future customer base will be from tier-II and tier-III cities of the country. “Tier-II and III towns of India are seeing the same fitness, health and wellness consciousness as the Indian metros. Our key task is to create the category and grow the habit of a nutritious packaged breakfast, which is as much an opportunity in the metros and in mini-metros of the country,” she proffered.

Bengaluru-based Britannia is also planning to enter the breakfast segment as part of its efforts to evolve into a total food company.

There can be no doubt that the Indian convenient food market is set to grow. This can be gauged from the fact that in 2012, Sequoia Capital invested Rs.3 crore in iD Fresh Food, a Bengaluru-based ready-to-cook idli and dosa batter-making firm. This came as a surprise to many fund watchers, as it was an investment outside the tech arena by the US-based technology venture capital firm, which once backed tech giants such as Oracle, Google, PayPal, Cisco and LinkedIn.

But the increasing demand for convenient food in India has also encouraged Helion Ventures, another India-focused tech fund, to invest Rs.35 crore in another convenient food firm.

And one can expect more investments from others as data from global marketing research firm Nielsen for the last four quarters (from Q3 of FY16 to Q2 of FY17) shows that the mixes market in India, which includes breakfast, is approximately about Rs.725 crore, of which the Indian breakfast mix market is Rs.255 crore.

According to ValueNotes, the heat and eat food industry in India was valued at Rs.2370 million in FY 2014. According to the same market and competitive intelligence firm, the industry was expected to grow at a CAGR of 22 percent in the next five years till FY 2019 due to rapid urbanisation, increasing disposable income, and an expected improvement in retail infrastructure. ValueNotes estimated that the industry would be worth approximately Rs.6405 million by FY 2019.

Breakfast Cereals’ Market

The Indian breakfast is not limited to idli, dosa and upma. There has been an incessant and increasing demand for cereals, particularly by the Indian youth and others in the country seeking healthy breakfast. Lifestyles are changing in tandem with increasing spending power, greater time-poverty, higher need for convenience, and health consciousness. These factors have encouraged Indians, especially in urban areas, to opt for breakfast cereals. The influence of ‘western’ lifestyles and eating trends has played an effective role in opening the gateway for experimenting with different tastes and varying eating preferences. Cereals constitute a part of the RTE and RTC breakfast market.

However, here it deserves a mention that cereals have always held their share of the Indian breakfast platter e.g. flattened rice flakes (chivda/poha) with milk is popular in western and central India, whole wheat grits (dalia) in northern India, etc. But now breakfast cereals in India have emerged in new avtaars.

In fact, the spread of popularity of breakfast cereals is much beyond India. Increasing trend to adopt western dietary patterns in emerging economies such as Indonesia, India and Malaysia is driving the growth in breakfast cereals market. Several urban consumers are getting accustomed to eating cereals with milk for breakfast which is easy to prepare and also offer many health benefits.

According to Transparency Market Research (TMR), between 2013 and 2019, regionally, Asia- Pacific as an attractive market for breakfast cereals is expected to rise at a prominent pace. The growth, during this period, is mainly due to the burgeoning middle class population in key economies, supported by the swift pace of industrialisation in various parts of the region. The constantly changing breakfast consumption patterns towards the consumption of packaged cereals are responsible for fueling the demand.

The success story of Kellogg’s, Bagrry’s, etc. has reinforced the belief of enterprising entrepreneurs in the potential of India’s breakfast cereal market, which is at a growing stage with few national and international players. The segment has witnessed healthy year-on-year growth in the past couple of years.

Aditya Bagri, Director, Bagrry’s India Limited, feels that urbanisation and increased preference for healthy eating are responsible for the growth trajectory in the country’s breakfast cereals market.” The other big reason for the growth of breakfast cereals market in India is the widespread communication on health, especially on the rising incidence of cardiovascular diseases, diabetes and obesity among Indians,”  he asserted. 

“Health and wellness is one of the fastest growing segments in India and at the same time there are enough developments taking place in the sub-urban sector of the country. With all of these, the breakfast cereal segment is growing both in urban and semi-urban markets of the country,” he expressed further.

The two major types of breakfast cereals in the market comprise ready-to-eat and hot cereals. Breakfast cereals market in India can be divided into ready-to-eat breakfast cereals, which include cornflakes, wheat flakes, muesli, biscuits, etc. which are often had with milk and yogurt. Cakes and muffins also fall in this category. They are not heated. Then there are hot breakfast cereals like oat and porridges. A large portion of the breakfast cereals market in India is accounted by cornflakes.

Bagri disclosed that his company had been innovating in the oats category in order to make oats a staple food for Indian consumers. With this in mind, they have introduced veggie masala oats, which serves the savoury category of cereals. In period of just two years, the oats category has gained 26 percent of the Rs.720 crore breakfast cereals market in urban India.

With innovations, India’s breakfast cereal market has been growing with a CAGR of 13 percent, from Rs.1168 million to Rs. 1450 million, over the last five years.

Breakfast cereals market in India is expected to exceed 43 billion USD by 2022.The market is expected to exhibit a growth rate exceeding 4 percent CAGR from 2015 to 2022. Kellogg’s, Nestle, PepsiCo, Heinz, MTR, Bagrry’s, Future Group are some of the important players in India’s cereal market.

Kellogg’s India retained the lead in India’s breakfast cereals market during 2017, holding a 56 percent value share. The company has products available in all categories of breakfast cereals and it frequently launches new products every year. Having had a presence in India for many years, the company has a good brand-recall level and has established a good distribution network, with its products being available across the nation. All these have put it far ahead of other players in its category, in the Indian market.

Entering the Market

Though the market for cereal breakfasts in India is enticing, a new entrepreneur must weigh all the pros and cons. One must realise that in India’s cereal market of present day, one will be competing with leading food giants like Kellogg’s, PepsiCo, Marico, etc. Apart from these brands, local players are also cause of concern as they have strong reach and distribution. Branded breakfast cereal players have already gained trust among the consumers, so new entrants will have to compete with them.

Another factor is that of inflation. Rise of cost of raw materials leads to an increase in cost of production which in turn leads to increased product price. In order to avoid the impact of inflation on consumers’ pocket, many a time the company is forced to bear limited profit margins. If price of a product is increased significantly, consumers may switch to other brand or product options. This principle can be very much applied for players in breakfast cereals market of India, as many in the country may still perceive breakfast cereals as non essential products, having price elasticity.

Another difficulty that all breakfast cereal manufacturers face in India is that since they have vegetables or fruits in dried form their freshness cannot be sensed. And freshness plays an important role in Indian kitchens.

But on the positive side, you have the fact that the country’s impressive economic growth has given rise to an emerging middle class – with new consumption patterns. They will be primarily responsible for rise in consumer spending and will account for 59 percent of the country’s total consumption by 2025. Also people are now becoming aware of the flaws of traditional breakfasts. They are turning towards balanced and healthy diet to keep control on lifestyle diseases. In this market, breakfast cereals of high nutrition content can have high potential to garner impressive consumer share.

Factors to Consider

Overall, whether manufacturers of cereal breakfast or not, the players in the RTC and RTE breakfast segment in India should also have in product packaging. Smaller packs which will encourage customers to try a new product should be the priority for new entrants in the market. The pack should also clearly indicate the main ingredients in the product.

Price of the RTE and RTC breakfast product is another factor in a price-sensitive market like India. Customers are looking for healthy products at economic prices. Besides these, right type of promotion in right channels through intelligent advertising is always helpful to carve a niche in this competitive market, especially for new entrepreneurs. Advertising needs to deliver right messages to right audiences at the right time.  

Of course, all the above strategies remain ineffective if product lacks appropriate distribution. Optimum utilisation of various channels of distribution can greatly facilitate sales, and this rule is valid for RTE and RTC breakfast segment in India too.

Succinctly, there is no doubt that market for healthy breakfast in India has great potential for growth. Factors like increase in urban population, rise in health consciousness and prevalence of lifestyle diseases like diabetes, hypertension, and heart attacks are encouraging consumers in the country to switch to healthy breakfast choices. However, players must be ready to constantly innovate and improve their products to meet the changing tastes of the customers.

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