PROJECT WORK

Under Guidance of Prof. Shibashish Chankraborthy, IIM Ranchi

By
Venkat Raman, PGEXP/13-15/0095

TOPIC:
A study on feasibility of selling Traditional Indian Snacks
(Namkeens) online and develop a distribution channel strategy
The Namkeen Market:
As the ethnic foods category is growing, cash-rich companies make a beeline
for a share of the salty snacks market. Around 1,000 snack items are sold in
India spanning varioust a s t e s , f o r m s , t e x t ur e s , a r o ma s , b a s e s , s i z e s ,
s h a p e s a n d f i l l i n g s . S o me 3 0 0 t y p e s o f s a v o r i e s s e l l h er e a n d
t h e o v e r a l l s n a c k p r o d u c t m a r k e t ( i n c l u s i v e o f s w e e t me a t s ) i s
estimated at Rs.25,000 crore. The branded salty snacks market (size: 1200
Crores) is 40% of the total market (size:3000 Crores), it's bustling
nevertheless. The branded segment is increasing at the rate of 25% per annum
whereas the entire market is increasing at the rate of 7%. In the past 2-3years
the unbranded sector has witnessed a decline of 5% per annum. Indians seem to
be snacking on ethnic foods with a vengeance. This is good news for the
corporate sector, given that the past few years have seen a perceptible
shift towards the branded sector at the cost of the unbranded segment

Market Opportunities:
The average annual per capita consumption of commercial snacks is just 500g
and that byurbanites is 10 times more than that by rural consumers.
This may be since most ruralhouses make these at home or buy from
the local vendors that come in the unorganized market. Consumers from
Western India are the leading snack consumers, followed by the North. While
the domestic ethnic snack foods industry is hugely diverse, has easy
access toindigenous technology and involves low entry barriers,
standardization of product quality and backward links to testing facilities are at
woefully low levels. Naturally, opportunity is screaming from the rooftops. The
big question is whether branded players will edge past their unbranded
counterparts? Brand marketers say they will. Factors like hygiene and quality is
steadily bringing about a switch from unorganized to branded namkeens.
One will not grow at the cost of theother and that both categories will co-

exist. Cottage-industry-level players offer themselves as suppliers to deeppocketed marketers.

T h e A P E D A s t u dy s t a t e s t h a t t h o u g h b a c k r o o m o p e r a t i o n s d o mi
n a t e e t h n i c s n a c k s , improper labeling, haphazard distribution channe
ls, storage problems and inadequate marketing efforts take their toll.
Branded players, with their quality control systems and standardized raw
material sourcing in place, can effectively weed out those
problems.One differential between branded and unorganized namkeens is that
of price (roughly 25%) but thats not a perceptible bottleneck, marketers say.
An aspect that leads to quick movement of ethnic snacks is the consumption
convenienceor `consume anywhere-anytime' factor. It can be had with
cocktails, at teatime, as props with regular meals like breakfast or as starters
with dinner.

Scope of the study:

The study will focus on to find out how big is the market and feasibility of
going online. Namkeen is such a product which is an impulse purchase so we
need to find out if consumer will wait till the product arrives or rather will they
place an order for such a product.