MUMBAI/ NEW DELHI: Packaged sev bhujia and chanachur are replacing potato chips and finger sticks in shopping bags, helping traditional packaged namkeen topple western snacks for the first time in the branded salty snacks market.

Branded namkeen such as dal, chivra, bhujia and nuts accounted for 52% of total salty snacks sales of about Rs 9,400 crore in the year ended June with both multinationals and home-grown companies pushing namkeen into hinterland with attractive packaging and pricing, industry officials said, quoting Nielsen data.

"A large part of unorganised market is gradually shifting towards namkeen as companies have increased availability and affordability of such products in recent times," said Mayank Shah, group product manager at Parle Products, which recently entered the traditional market in select states.

Such products are sold at almost every pan shops at 5 and 10 price points, he pointed out.

Just three years ago, the snacks market was dominated by western snacks such as potato chips and finger sticks that had nearly two-third of the market controlled primarily by Pepsi Frito Lays and ITC Foods.

This is changing as an increasing number of consumers start to buy branded namkeen instead of loose products from bakeries due to the hygiene factor. In other words, the boom in branded namkeen is driven by consumers upgrading from unbranded segment rather than consumers of western snacks shifting to traditional items.

Companies say the market potential is huge. "The unorganised market is so huge that it remains undocumented, and even we don't know the size of the total market," Chittranjan Dar, CEO of ITC Foods, said.

But it is not market leader Haldiram, which has almost half the market share in each sub-segment of branded namkeen that is riding this growth. "We are seeing average growth at 10-11% in most of our segments. The sales are not as high as what it used to be," Kamal Agarwal, MD of Haldiram Snacks, said.

It is facing increasing competition from western companies such as PepsiCo, regional players such as Balaji and Bikaji, and newer entrants like Parle Products that have realised ethnic namkeen is fast gaining popularity and also offer higher margins than potato chips.



"When you have to process and grade raw materials like potatoes, there is a lot of shrinkage and costs increase too. Cost of making namkeen is much lower compared to western snacks like chips," said Chandu Virani, MD of Balaji Wafers, which gets over half the revenues from western snacks now against over 80% a few years ago.



A PepsiCo spokesman said the company's Indian namkeen division Lehar Foods is growing faster than western snacks and the company expects it to account for a significant portion of its business in the near future.

Regional brands such as Balaji Foods, Bikaji and and Bikanervala are also aggressively increasing their distribution to match companies such as Parle and Haldiram that have access to 2.5-3 million retail outlets.



SS Agarwal, MD of the 400-crore homegrown Bikanervala Foods, which pioneered the concept of marketing and selling bhujia , said distribution is the key to higher consumer offtake.