As one of the largest segments in the food processing sector in India.
The bakery industry offers huge opportunities for growth, innovation, and job generation. Separated into three categories, bread, biscuits, and cakes and pastries, the bakery industry reached a market value of USD 7.22 billion in 2018. As the second largest producer of biscuits after the USA, India is a key player internationally, and with the entrepreneurial spirit of Indian companies and individuals it is one of the most exciting regions for the bakery sector.
Changing consumer habits and lifestyle are shaping the bakery industry in India.
Part of a global trend, there is greater demand for healthier products and alternatives, particularly when it comes to bakery goods which are now more commonly consumed daily as opposed to being a treat. With high consumption rates, customers want baked goods that are ‘guilt-free’ and are increasingly seeking gluten-free products, or goods made with alternative ingredients such as multigrain and whole-wheat. Alongside healthier options, millennials in particular are always seeking new flavors and experiences, making flavor innovation key. With the recent influx of international café and bakery chains, on-the-go food has become increasingly popular. With hectic lifestyles, Indian consumers are prioritizing convenience, and as breads and biscuits are fast-moving consumer goods (FMCG), bakeries are a go-to option.
While there is demand and appetite for bakery products, the Indian bakery industry faces certain challenges. The industry is generally divided into organised and unorganised, with more than 2,000 organised or semi-organised bakeries, and 1,000,000 unorganised bakeries. Operational efficiency is a major issue in the industry, as is the lack of technology and skilled workers.
Although there are obstacles which are causing losses, there has been a boom in entrepreneurial endeavors in the bakery industry in India. Home baking has always been a popular pursuit, but with new technological innovations individuals have been able monetise their efforts. Founded by two women, homebakers.co.in provides a network for home bakers, the majority of whom are female, to promote and sell their products. On a smaller scale, local What’s App groups have become popular to supply neighbours and locals with baked goods, which highlights the power of networking technology.
Organised bakeries in India are also utilising social media to provide targeted and cost-effective marketing. Lacking the large budgets of international chains, local bakery cafes are eschewing traditional marketing to rely on word-of-mouth recommendations and social media engagement. Tapping into the artisanal market, smaller bakeries can concentrate on quality over quantity, while larger Indian chains such as Barista and Mad Over Donuts rely on creating larger quantities but with strong branding and associated trust.
At every level in the bakery industry in India there are challenges and opportunities. While the rise of local home bakers is encouraging, there are issues of hygiene practices and standards, and organized bakeries are also incurring losses due to lack of operational efficiency and skilled workers.
Despite certain difficulties, the forecast for the Indian bakery industry is positive with a projected market value likely to exceed USD 12 billion by 2024 expanding at a CARG of 9.3% during 2019 to 2024. Alongside these predictions, India occupies a unique position in the market as flavour innovation continues to grow in importance on a global scale. Indian traditions and access to interesting and unusual flavour combinations will allow them to continue to excel and innovate in this market.