EXCLUSIVE: India Likes to Snack

The potato snacks market in India is expected to grow at a projected CAGR of over 12% during 2016-21, according to the figures provided by TechSci Research, a research based global management consulting firm.

According to TechSci Research, India is the second largest producer of potato, after China, and production was at more than 47.5m tons in 2015.

The factors for growth

Rapidly growing retail market is expected to accelerate the potato snacks segment in India during the forecast period of 2016-2021. Furthermore, growing urbanization has curtailed available cooking time and consumers are buying these snacks to satisfy their hunger on the way to office or on the way to school/college etc.; besides, India is home to over 1.20bn people and a large number of this population is young, the primary target consumer of these snacks. Per capita consumption of potatoes in India is around 21 Kg, while per capita consumption of processed potato stood at around 6-7 Kgs in 2015.

Potato chips or extruded snacks

Potato snacks market in India is broadly categorized into two major segments – potato chips and potato extruded snacks. Potato chips held a majority revenue market share of more than 75% in 2015, which can be attributed to the facts such as presence of few of the largest market players in this segment, acceptability of potato chips in urban and semi-urban areas of the country, easy availability, competitive pricing strategies of the players, availability of wide variety of flavors, etc.

Market players

PepsiCo, ITC, Prataap Snacks and Haldiram’s are the major players in the India potato snacks market which accounted for the majority of the revenue share. PepsiCo is leading the market with a revenue share of more than 50% in 2015. However, it is expected to decline over the next five years on account of entry of more domestic players which are offering potato snacking products as per regional taste and at competitive pricing with strong promotional activities and good penetration in tier II and tier III cities of the country.

“India is one of the fastest growing economies in the world with growing employment opportunities; following the high GDP growth and inflow of foreign direct investment. Kids and the young generation are the primary buyers of potato snacks and they are also the target customer of these products. Busy work life patterns, easy availability of raw materials and cheap labor cost makes India a lucrative market for companies operating in the potato snacks industry”, said Karan Chechi, research director with TechSci Research.