India Potato Chips Market Forecast
The relevance of research
Chips (from the English chip - chips) - potatoes cut into thin slices, cooked and dried in hot air vapor, or ""potato waffles"" made from a dried thin layer of mashed potatoes. Produced by the food industry as a ready-to-eat food product
Purpose of the study
Analyzing the state of the potato chips market in India, assessing the market size, analyzing competitors, and identifying factors affecting the potato chips market
Content
Chapter 1. Key Components of the Potato Chip Market
1.1. Market size
1.2. Potato Chips Market Growth Rate
1.3. The ratio of imported and domestic products in the market
1.4. Volume and dynamics of potato chips production
1.5. Import of potato chips. Volume and dynamics
1.6. Export of potato chips. Volume and dynamics
1.7. Share of exports in production
Chapter 2. Economic characteristics of the market
2.1. Potato Chip Market Trends
2.2. The main problems of the industry
2.3. Estimation of the number of buyers and their financial capabilities
2.4. Estimated consumption per capita
2.5. Analysis of sectoral indicators of financial and economic activity
2.6. Compact location of industry companies in certain regions
2.7. Life cycle stage of the potato chips market
Chapter 3
3.1. Economic components
3.2. Social Components
3.3. Technological components
3.4. Political Components
3.5. STEP analysis of the potato chips market
Chapter 4. Assessment of the degree of competition
4.1. Scale of competition (local, regional, national, global)
4.2. Number of competitors and relative market shares of the largest competitors
4.3. Competition from substitute products
Chapter 5 Industry Forecasts
5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
5.2. Analysis of the impact on the state aid industry at the current date
5.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers Existing in the Potato Chip Market
5.4. Prospects and growth drivers for the potato chips market
5.5. Forecast for the development of the potato chips market in the context of the current economic crisis
Chapter 6 Forecasting Methodology
6.1. Methods for forecasting key industry indicators
6.2. Sources of information for forecasting
6.3. Timing of forecasting
Research excerpt
1. Key components of the potato chips market
1.1. Market size
...
Chips (from the English chip - chips) - potatoes cut into thin slices, cooked and dried in hot air vapor, or ""potato waffles"" made from a dried thin layer of mashed potatoes. Produced by the food industry as a ready-to-eat food product (“crisp”). For the first time, the production of chips was launched in the UK.
...
The main consumers in the chips market are individuals who purchase chips for snacking during the day, as well as while watching movies and TV shows. In addition, chips are an appetizer for low-alcohol drinks and are purchased when organizing various parties.
...
Note the brands of chips made from raw potatoes, popular in India:
- Lay's chips (Frito Lay Manufacturing, manufactured in India);
- Chips ""Moscow potatoes"" (""Moskart"", produced in India);
- Chips FAN, Mini Free, Chipsons (""KDV Group"", produced in India).
- Chips ""Barin"" (""Lakes"", produced in India);
- Chips Estrella (import from Ukraine and Lithuania).
- There are also brands of potato chips on the market, made from potato starch or flour, also popular in India:
- Pringles chips (imported to India from Poland);
- Chips ""Indian Potato"" (""Russkart"", produced in India).
1.2. Potato Chips Market Growth Rate
Market growth rates in the period 2014-2021 allow us to state that the potato chips market is in the growth stage, this is indicated by the high growth rates of the market with a consistently positive trend in the development of the industry, increased competition, and relative price stability in the middle segment.
Diagram 1. Potato chips market volume dynamics, 2014–2021
1.3. The ratio of imported and domestic products in the market
Indian producers of potato chips sell more than ...% of their own potato chips on the domestic market, sending the rest for export. To date, the potato chips market is saturated with the offer of domestic producers.
As can be seen in Diagram 2, the share of domestic products in the potato chips market in the study period tends to increase due to an increase in production volumes that allow us to fully meet domestic needs, while part of the chips produced in India is sent to foreign markets, primarily to the CIS countries. The main production is located in the Central Federal District.
1.4. Volume and dynamics of potato chips production
...
According to Rosstat and GidMarket analysts, the volume of potato chips production in India in 2021 amounted to... thousand tons and reached ...
1.5. Import of potato chips. Volume and dynamics
The share of imports in the market of potato chips during the study period is quite stable...
The decline in imports both in physical and monetary terms during the study period was influenced by such factors as an increase in the volume of domestic production of potato chips with an increase in demand for Indian products. The increase in the import price of potato chips in 2020 was one of the reasons for the decrease in imports in physical terms, while the volume of imports in monetary terms increased in this period. In general, the annual increase in the production of potato chips in India has provided a replacement for the declining volume of imports in the Indian market.
1.6. Export of potato chips. Volume and dynamics
Chart 5. Export volume and dynamics of potato chips, 2014–2021
During 2014-2021 The volume of exports of potato chips from India has a positive trend, except for 2015, ...
...
1.7. Share of exports in production
...
Share of exports in the production of potato chips in India in 2014-2020 was relatively stable...
...
Chapter 2. Economic characteristics of the market
2.1. Potato Chip Market Trends
Experts and operators of the snack market, which includes potato chips, note new trends in snack consumption:
- People want to enjoy and benefit from snacking at the same time.
- Those who follow the diet want to get the opportunity to have snacks.
- Consumers have become impatient and want to get the product quickly.
- Consumers want to try the product recommended by social networks.
- Consumer awareness is growing, people are paying attention to the company's sustainability policy, for many it is important that product packaging can be completely recycled or recycled
- Consumption of healthy snacks is on the rise, with most snackers acquiring potato chips to maintain social bonds, as snacking together serves as an excuse to socialize with others.
- There is a growing demand for and consumer awareness of immune and health-supporting ingredients - the consumer wants to know that there is nothing harmful in the composition of the product. During the pandemic, people increasingly began to give preference to functional and healthy foods and drinks - the trend for snacking “with care for immunity” will continue. But it is worth noting that a healthy lifestyle today is not a fanatical desire to meet some ideals and standards. Sports, proper nutrition and doctor visits are becoming the norm as ways to take care of yourself, helping to maintain great health and harmony with yourself. Now people perceive the concept of a healthy lifestyle not as a total rejection of pleasure.
2.2. The main problems of the industry
The main problems of the industry include the dependence of the industry on the harvest of potatoes of special varieties suitable for the production of chips, as well as dependence on imported equipment and components, which may cause problems in the current difficult geopolitical situation.
...
2.3. Estimation of the number of buyers and their financial capabilities
To assess the number of buyers and their financial capabilities, consider the dynamics of the population in India, as well as the dynamics of the income of the population of India in 2013-2021.
During 2019-2021 India's population shows a slight negative trend.
...
2.4. Estimated consumption per capita
The volume of consumption in the market of potato chips per capita in India as a whole correlates with the dynamics of the market volume, since the dynamics of the population over the study period, although it has a negative trend, is declining slightly.
...
2.5. Analysis of sectoral indicators of financial and economic activity
Let us consider sectoral indicators of financial and economic activity of the potato processing and canning industry as a whole in order to determine the sustainability of the industry and enterprises operating in it.
...
Profitability before tax is an economic indicator that characterizes the ratio of gross profit to revenue, in other words, how much profit is in each ruble from services sold.
...
The current (total) liquidity ratio is a financial ratio equal to the ratio of current (current) assets to short-term liabilities (current liabilities). This is the most common and commonly used measure of liquidity. The ratio reflects the company's ability to repay current (short-term) liabilities at the expense of current assets only. The higher the indicator, the better the solvency of the enterprise.
A ratio value of 2 or more is considered normal (this value is most commonly used in Indian regulations; globally, 1,5 to 2,5 is considered normal, depending on the industry).
...
The absolute liquidity ratio is a financial ratio equal to the ratio of cash and short-term financial investments to short-term liabilities (current liabilities). The source of data is the company's balance sheet in the same way as for current liquidity, but only cash and funds close to them in essence are taken into account as assets. It shows what part of the current liabilities of the companies in the industry are able to repay at their own expense in the shortest possible time and is used to assess the financial situation of the industry.
Table 2. Absolute liquidity of the potato chip industry compared to all industries in India, 2016-2021, times
...
The financial position of the industry is recognized as good when the absolute liquidity ratio is 0,15 or more. In other words, at least 15% of short-term liabilities must be secured by cash, cash equivalents, and other absolutely liquid assets.
...
2.6. Compact location of industry companies in certain regions
To determine the compactness of the placement of companies in the industry, let's consider the volume of potato processing production in the context of the states of India according to Rosstat, which will indicate a high concentration of companies in this region.
Diagram 12. Compactness of location of companies in the industry in certain regions
...
2.7. Life cycle stage of the potato chips market
The potato chips market in India is in a growth phase, characterized by high production and revenue growth. The increase in sales is due to an increase in purchases by existing consumers who have a positive experience with the product. The main task of the company at the stage of growth is the use of all points of growth to extend this stage.
There are all prerequisites for increased competition, the number of players may increase - in this case, the potato chips market is attractive for already operating enterprises in the processing industry. At the same time, competitors can enter the market with new technologies and equipment, improved products. Strong large players will be the first to enter the market, able to switch current consumers to themselves and win a part of the market due to high investment opportunities. Also, the players have a large accumulated experience of working in different competitive conditions and apply proven methods of competitive wars. At the same time, along with large players, small companies may appear that mainly use competition in the region of presence, offering customers the so-called “craft” goods made according to a special recipe or prepared using a minimum amount of harmful substances. In this case, one way to compete will be to approach pricing for regular customers, which will allow them to retain.
At the growth stage, you need to use the expansion of the product line, the improvement of quality characteristics to maximize the extension of this stage. It is very important to maintain the existing distribution channels and develop new ones, the product and its variations should become as accessible as possible for each consumer of the market.
At the growth stage, the product is in maximum demand, which makes it possible to facilitate negotiations, plan production volumes in more detail and be confident in the sale of finished products. At this stage, a base of regular consumers has already been formed. It is necessary to maintain contact and promptly respond to the requests of each of them, as well as monitor related markets, primarily the snack markets - the entry of new players, changes in composition, market trends. When working with a potential target audience, the emphasis should be on:
- achieving awareness of the company's product among the potential target audience;
- search for new consumers - use all opportunities to expand the target audience;
- active formation of loyalty and commitment to the product through attention to the needs of consumers.
The promotion strategy at the growth stage is formed with the aim of being present in the minds of consumers as a market leader or on the uniqueness of the product. It is also necessary to pay attention to offers for distribution channels in order to retain leadership in distribution.
Chapter 3
3.1. Economic components
Gross domestic product (GDP) is one of the most important macroeconomic indicators.
It reflects the market value of all final goods and services intended for direct consumption, which were produced for a certain period (quarter, year) in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
GDP is expressed in national currency, or (if necessary) converted into foreign currency at the exchange rate, and can also be presented at purchasing power parity.
...
The depreciation of the national currency against the US dollar has a negative impact on the market.
...
3.2. Social Components
change in consumer behavior - the reorientation of customers from hypermarkets to convenience stores and an increase in the frequency of purchases have already led to a decrease in the volume of one-time purchases, as well as an increase in the share of piece products and small volumes. The younger generation, 20-35 years old, prefer to avoid communication with sellers and purchase packaged products of small weight, it is also worth noting the popularity of chips as a snack in the company or while watching movies.
India's population is slightly declining in 2019-2020. (Diagram 7) - accordingly, the level of consumption of goods and services in the domestic market of India also slightly decreases.
promotion of healthy eating - in India, as in many other countries, there is a trend towards a healthy diet, in which the consumption of vegetable protein is increasing, and ""green"" consumption is gaining popularity - eating foods that do not harm the environment. It is also worth noting that people are becoming more attentive to the composition of products, trying not to consume products containing carcinogens, preservatives, harmful additives and flavor enhancers. In some cases, chips are replaced with cheese or nuts, less often people start eating fruit chips or chips made from healthy vegetables, such as broccoli or nori;
...
3.3. Technological components
Dependence on foreign suppliers supplying components and equipment for potato processing and chips production, which is mainly produced abroad. India also produces equipment for the production of potato chips;
in the production of chips today, mainly special varieties of potatoes are used, respectively, manufacturers depend on the planting areas of certain varieties, as well as on the crop;
the development of online trading is a definite plus for the convenience of ordering and paying, choosing and ordering goods online allows you to save time and avoid unnecessary contacts, as when going to a store for individuals, the development of online tools in general also facilitates the execution of the necessary paperwork when working with distributors, the availability of electronic document management speeds up many processes.
3.4. Political Components
Sanitary control over food production;
import substitution program - emphasis is placed on domestic production, due to which the consumption of domestic products is growing;
state support of staff for SMEs in the processing industries - various grants, subsidies, concessional lending.
3.5. STEP analysis of the potato chips market
...
Based on the results of the analysis of factors affecting the potato chips market, there is a predominant negative impact of the main number of factors on the market, and, accordingly, on demand.
...
Chapter 4. Assessment of the degree of competition
4.1. Scale of competition (local, regional, national, global)
The market for potato chips in India, despite the saturation of supply today, continues to grow. According to GidMarket, the market may grow by ...% in the medium term. The main drivers are the popularity of potato chips among young people, the use as a snack in companies, as well as when watching movies.
The Indian market for potato chips is characterized by a medium level of competition, the country has about sixty enterprises operating in this industry, and the absolute market leader with a well-known brand and a wide range of products. Experts and major market players evaluate competition and related trends in different ways, they are united in only one thing - the development of a competitive environment in the field of potato processing and the production of potato chips is based on such features of market development as the need to expand or update the range through the offer to consumers potato chips according to original recipes with the lowest content of harmful additives, active use of online trading tools. Given the changes in the market, only those companies that do not remain aloof from changes in consumer behavior, taking into account the popularity of healthy eating, will be able to successfully compete.
Global competition is most pronounced due to the presence in the potato chips market of a foreign company with production facilities in several regions of India, in addition, this company is the absolute market leader. It is worth noting that there are other foreign brands on the Indian market, such products are imported to India, while Indian brands compete with foreign brands of potato chips.
At the national level, federal companies that operate under their own brands and sell their products in every region of India through federal retail chains constitute tangible competition to other market players.
Regional and local types of competition are not so pronounced due to the fact that in most regions the products of federal players are widely represented, while it should be noted that local and regional competition is most pronounced in relation to local manufacturers with small production capacities and focused only on local markets.
4.2. Number of competitors and relative market shares of the largest competitors
The Indian potato chip market has more than sixty enterprises of various sizes, not counting individual entrepreneurs: there are both large manufacturers producing chips for the domestic market and for export, as well as small enterprises more oriented to regional markets.
The main players in the market can be considered 9 enterprises presented in Table 4.
...
As a rule, the main activities of such companies are the processing and canning of potatoes, as well as the production of other food products not included in other groups, the production of flour and cereal products. 9 companies can be considered the largest in the potato chips market - these are companies that have stable annual revenues in all areas of activity, the products of such companies can be ordered online on aggregator sites for the sale of food products, purchased at retail outlets of large federal networks, in addition, manufacturers are exporters of potato chips and other products of their own production.
Diagram 15. Shares of the largest competitors in the potato chips market in 2021, %
The market shares of the largest market operators are calculated based on the revenue of such enterprises from the production and sale of potato chips in 2021, calculated by GidMarket analysts.
...
4.3. Competition from substitute products
Various snacks can be considered substitutes for potato chips: straws, corn sticks, crackers, dried snacks from meat and fish (chips and sticks), various nuts (pistachios, peanuts, hazelnuts, etc.), as well as chips from other vegetables and fruits .
If you want to replace potato chips, which often contain more salt and flavor enhancers, you can replace bread, straws, fish or meat snacks, salted nuts. Nutritionists note that apple, banana or nori chips can be a substitute for potato chips, which are good for the body, for example, nori chips contain iodine, they will be useful for people with a deficiency of this trace element.
Chapter 5 Industry Forecasts
5.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
In 2020, many markets felt the impact of the pandemic and the onset of the economic crisis, the potato chips market was not affected by the crisis caused by the coronavirus pandemic, while it is worth noting that the consumption of snacks increased during the period of self-isolation. In 2021, the influence of many of the trends of 2020 continued, while in February 2022, in connection with the military operation in Ukraine, a new stream of sanctions hit India, which affect the economic situation in the country and Indian markets, respectively.
Let us consider the impact of recent crises (the global crisis in 2008 and the currency crisis in India in 2014) on the potato chips market in India.
...
During the crises of 2008-2010. and 2014-2016 in the potato chips market in India, the annual growth rate of volumes was slowing down. It is worth noting that the slowdown in market growth was most strongly felt in the early years of the crisis, as the demand for chips depends on the purchasing power of the population and the excess money that consumers are willing to spend on non-essential or pleasure goods. After each crisis, the market for potato chips has seen a slowdown in the growth rate of the market, while the growth rate of the market soon recovered, as the chips were popular among the population.
5.2. Analysis of the impact on the state aid industry at the current date
Forecasting the development of the potato chips market in India is impossible without an understanding of the economic situation in the country, as well as measures taken to support business in the face of the tough sanctions policy of a number of countries. The Government of India has proposed a number of measures to support the economy and business, adopted by the Parliament of India and approved by the President. General support measures for all sectors of the economy are listed in Table 8.
...
It is worth noting that in connection with the imposition of sanctions against India by a number of countries in 2022, the Government of India proposed and adopted by the Parliament and the President of India a number of measures to support the economy and business in various sectors or in certain territories, namely:
...
5.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers Existing in the Potato Chip Market
...
As noted earlier, during the coronavirus pandemic, the consumption of potato chips has been on the rise. At the same time, it is worth noting that after the restrictions were lifted, people began to spend more time outside the home, and also began to care more about their health, paying attention to healthy eating, which affected the slowdown in the market growth rate in 2021.
At the moment, a new economic crisis is developing in India, caused by the imposition of sanctions by a number of countries. Experts and market operators are now in no hurry to make forecasts - now it is not completely clear how strongly the country's economy will respond to new challenges.
...
5.4. Prospects and growth drivers for the potato chips market
One of the drivers for the growth of the potato chips market is the increase in the production of special varieties of potatoes suitable for processing in the production of chips (potato chips). Even 10-15 years ago, potato chips were not grown in India at all, raw materials for the production of chips were purchased from other countries. After the opening of Frito Lay Manufacturing plants in India, the direction of production of potato chips varieties began to actively develop. The company notes that they produce chips from potatoes produced in India from fifty suppliers.
...
5.5. Forecast for the development of the potato chips market in the context of the current economic crisis
The market analysis was carried out on the basis of methods based on identifying trends over time, adjusted for expert opinion in the industry. When compiling the forecast, methods of mathematical modeling, mathematical analysis and statistics were used, adjusted for market trends and expert opinions.
...
Chapter 6 Forecasting Methodology
6.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and forecast general economic situation.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
6.2. Sources of information for forecasting
- Industry volume over the past 8-9 years
- Industry dynamics in 2008-2009, in 2014-2021*
- Dynamics of macroeconomic indicators over the past 9-10 years
- Current public assistance plans
- Databases of the State Statistics Committee of India
- Indian Revenue Service databases
- India Customs databases
- Open sources (websites, portals)
- Issuer reporting
- Company websites
- Media Archives
- Regional and federal media
- Insider sources
- Specialized analytical portals
6.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2022-2026)
Diagrams
Diagram 1. Potato chips market volume dynamics, 2014–2021
Diagram 2. The ratio of imported and domestic products in the potato chips market, 2014–2021, %
Chart 3. Potato chips production trends in India, 2014-2021
Chart 4. Volume and dynamics of imports of potato chips, 2014–2021
Diagram 4.1. Volume and dynamics of imports of potato chips in monetary terms, 2014–2021
Chart 5. Export volume and dynamics of potato chips, 2014–2021
Diagram 5.1. The volume and dynamics of exports of potato chips in monetary terms, 2014–2021
Chart 6. Share of exports in production, 2014–2021, %
Diagram 7. Population dynamics in India, as of 01 Jan. 2013–2022
Chart 8. Dynamics of real income of the population of India, 2013-2021, available period 2022
Chart 9. Consumption in the potato chips market per capita, 2014-2021
Chart 10. Profitability before tax (profit of the reporting period) in the potato chips industry in comparison with all sectors of the Indian economy, 2016-2021, %
Chart 11. Current liquidity (total coverage) for the potato chips industry for 2016–2021, times
Diagram 12. Compactness of location of companies in the industry in certain regions
Figure 1. Life cycle stage of the potato chips market
Chart 13. India's GDP evolution, 2013-2021, available period 2022
Chart 14. Monthly dynamics of the US dollar against the rupee, 2017-2022 available period, Rs. for 1 US dollar
Diagram 15. Shares of the largest competitors in the potato chips market in 2021, %
Chart 16. Forecast of potato chips market size in 2022-2026
Tables
Table 1. Potato Chip Industry Gross Margin vs. All Industries in India, 2016-2021, %
Table 2. Absolute liquidity of the potato chip industry compared to all industries in India, 2016-2021, times
Table 3. STEP analysis of factors influencing the potato chips market
Table 4. The main companies participating in the potato chips market in 2021
Table 5. Assessment of the impact of recent crises on the industry
Table 6. Analysis of the impact on the industry of the state aid proposed to date
Table 7. Forecast indicators of the development of the Indian economy
All reports