Bikaji Foods got listed last fortnight with its stock listing 8% higher to its IPO price, is the third largest ethnic snacks company in India, a market estimated at Rs 1.5 lakh crore. The maker of traditional salty snacks and sweets is also the second fastest growing company in the Indian organised snacks market, according to information on its website.
According to Deepak Agarwal, managing director of the freshly listed Bikaji Foods, the Indian consumers are not very accepting of diet snacks and the category remains niche and Bikaji is are ready to change in the next five to ten years if consumer demand changes; but practically speaking, there is not much demand as of now for such products,” Agarwal added.
Diet, sugar-free and low-salt foods contribute less than 10% to overall packaged processed foods, even though large companies such as Parle, Mondelez, ITC and Dabur have been introducing products such as low-sugar biscuits, chocolates, juices and low-salt or roasted snacks.
As a matter of fact Bikaji is functioning towards reducing salt and sweet in its products, though the Indian consumers are still talking health, not walking health.
In September this year, food regulator Food Safety and Standards Authority of India (FSSAI) released a draft proposal to implement front-of-pack warning labels on all packaged foods, which ethnic foods makers said would negatively impact consumption, adding that consumers could be advised on the quantity of consumption, but not outright warnings on packs.
Agarwal said over the last four-five years, the snack company’s growth rate has been steady, and that it is expecting the same for next three to four years with the unorganised market gradually transitioning into the organised segment. Nevertheless, as of now, only 55% of the snacks market is organised.
While Bikaji was launched in 1993, the company’s lineage traces back to the founder of Haldiram Ganga Bishan Agarwal. Bikaji sees the much larger Haldiram as a “healthy competitor” now. The company is actively looking at strategic joint ventures and acquisitions.
“We would like to make Bikaji a total packaged foods brand and one of our priorities is to focus on acquisitions or joint ventures for the same,” he said. Bikaji has aggressively expanded its manufacturing units over the last one year, supplemented those with better logistics and supplies and is offering better margins to channel partners, according to Agarwal.
He said Bikaji is looking at stepping up exports, which are currently 4-5% of its total sales, and introducing newer categories like frozen foods, curries and breads.
Traditional snacks providers compete with the more organised western snacks market on one hand, and smaller regional brands which cater to just one-two territories, on the other. The Indian ethnic snack foods market is dominated by Bikaji, Haldiram, Bikanervala, Balaji Wafers and Prataap Snacks which makes Yellow Diamond.
Big companies with global backing like PepsiCo, or huge backend linkages like ITC, and various private equity players too have wooed some of the Indian snacks makers from time to time, so far unsuccessfully. “We have been approached by many private equity players before we launched our IPO,” Agarwal said. Soon after the IPO was launched, global investment agency Goldman Sachs Fund too bought shares through a bulk deal in Bikaji Foods.